Many cloud computing boosters use the selling point that establishing large amounts of storage or computing requires no “up-front capital investment”. Pleading before the gods of capital within corporations has been a bane for IT and business operations functions forever. All those appropriation request forms and cash flow analyses – not much fun when you want the servers installed and the software loaded.
What has always been interesting to me is that more thought, analysis, decision-making and accountability goes in to managing the capital investment portfolio than you often see in managing operating expenses. The irony here is that “op-ex” is very often many multiples larger than the “cap-ex” spend in any given fiscal period. If a $400 million company (in terms of revenue) has an operating profit of 20%, then the company managers spent $320 million with likely much less oversight than the $15 million that they might have spent on projects.
At the end of the day, there is no free lunch. Just like leasing became the way to ensure “technology refresh” every 3 years, let’s make sure that cloud computing and all something-as-a-service offerings don’t wind up costing your company more or that the standards of decision-making are usurped by being able to fly more stuff under the financial controls radar.
The saying “you can pay me now or you can pay me later” became a “tag” line in old oil filter commercials where the idea was that you might pay more now for a premium filter but you would be avoiding the cost of replacing the entire engine later. Of course, the assumption is that you would own the car long enough for this to pay off. This was in the era when the majority of people traded-in and bought new cars in 3 or 4 year cycles. Not long after, 3 year leases perpetuated the cycle.
The reality, then, was that most people wound up paying now and they got to do it over and over because later never came!
Another myth that is related is the 3,000 mile oil change. Again, another marketing bonanza because it got people to pay to replace their oil and filters twice as often as the auto manufacturers recommend in the owner manuals.
So back to op-ex and cap-ex and buying infrastructure/software/platforms as-a-service. If I take the op-ex view, it is almost always an incremental view as in year-over-year budgets and the dearth of zero-base reviews. If I take the cap-ex view, everything is an investment and is evaluated as cash-flows over a defined “economic life”. This takes rigor and commitment and the potential for more eyes to see and more ears to hear.
It is not a bad thing to have the option of paying for something as a service. However, it is a bad thing if the selling point is that you get to relieve yourself of the burden of evaluating and justifying the all-in costs of doing it one way or another.
Remember, you can pay now or pay later. Some times, it is nice to get to pay later.
This is about the 20 millionth blog post or article that has been written with some reaction to last week’s *new* Google Chrome OS announcement. For the most part, it was a surprise announcement – mostly because it was not leaked to the press.
I have posted about Google in a mostly positive light (“Google: No brag, just fact”; “What’s the Thing with Bing?”) but I do not own any Google stock or have any financial interest whatsoever, directly or indirectly. And, my point-of-view is going to be widely different than most of what is out there. Since I am not wedded to any particular technology, all I have to ask is, why would or should I care (as a CIO, consultant, consumer, etc.)?
I have read some great posts (PC Mag’s Michael Miller; CIO.com’s Steven J. Vaughan-Nichols) that have really thought out and carefully presented the author’s arguments in the following major categories: 1) Microsoft killer; 2) Linux killer; 3) gives Google the keys to the world; 4) is it really ‘open’; 5) is this really ‘new’? All good questions and perspectives, but the answers don’t really mean much.
So, to the fundamental question: why would I (or you) care? I guess I would care if it changed my (or your) life in some way or another, positively or negatively. So, if I am a CIO, I might be concerned about this throwing a monkey-wrench into my carefully thought out strategic technology plan.
As Twitter becomes more mainstream, it is tantalizing to think about what could be a powerful component of Enterprise 2.0. And, before anyone thinks that I am against such tools, think again. My purpose as a leader is to drive the dialogue that leads organizations to flawless execution of change. This is what most people would consider “doing the right things right”.
But, anyone who is even moderately social on Twitter can easily become impeded by what I would call the three “S’s”: “Scam”, “Spam” and “Slam”.
“Scam” would be loosely defined as the dominance of “multi-level marketing”, success coaches, “law of attraction experts”, follow-me follow-you services and get-rich quick snake oil. It can also take any other form of human frailty-fraud, abuse, theft, misrepresentations, malware, trickery and all other forms of maliciousness.
“Spam”, closely-related to, and a key tool of the Scammers, clogs up the timeline with auto-generated inoccuous inspirational messages, timed bursts of 5 or 10 tweets, incessant direct messages to your e-mail accounts, and all other ‘junk’ that floats into otherwise fruitful conversation.
“Slam” is, for now, a catch-all term for the impact of living in a social media world. For the individual, it may be dealing with the potentially addictive and distracting time sink of being social with an ever-increasing network of friends and follwers. It takes time to fall in line with learning the lingo and understanding the norms, following the trends, etc.
For an enterprise, “Slam” will be the tidal wave of dealing with establishing policies, legal implications, regulatory compliance i.e. SEC, confidentiality, intellectual property, employee rights, training, security, user support, integration with other communication channels and methods.
At the end of the day, “Slam” will be the biggest headache of all. Why? Because it involves linking the outside world to the inside world in ways that have, to this point, been rudely rebuffed by the corporate firewall.
If you want to think about it another way, what will the new meaning become to this well-known phrase: “what’s said in this room, stays in this room”. Consider that within the last few weeks, Twitter became the voice of a country (Iran) as it was experiencing wrenching social change. It was able to take us to places that no other medium was able.
Now, consider a multi-national enterprise. Are they ready to go totally social – all ‘books’, meetings, presentations, hallway conversations, strategy sessions, pricing discussions, competitive intelligence gathering – flung open, total transparency? No way. Controlled ‘experiments’ and gradual learning, perhaps.
I saw a really great blog post that documents one company’s attempt at opening-up Twitter at an all-employee meeting. After they conducted the meeting, they evaluated what had happened:
“The after-action review surfaced one of the primary concerns about using Twitter in the enterprise: security. While most employees are and will be sensitive to providing sensitive information about the company on Twitter, it’s always a risk. In this case, the corporate IT security folks had raised a (very big) red flag about using Twitter for the employee forum, but the CEO decided that, for this short duration experiment, the risk was manageable.”
In my opinion, you’ll someday see a ‘corporate’ version that is sanitized, monitored, partitioned with strong ID and credentials management. But, the ‘door’ to the outside world will, for the foreseeable future, remain closed.
It has been about two weeks sine the big launch of “Bing”. Great name. Love the hype. Cool TV.
Why would I care?
I already have a hammer in my toolbox – Google. If Bing was there first, perhaps it would be in the box instead of Google.
Every time I open a browser window, Google greets me with little fanfare, an occasional art curiosity to add a subtle touch to the spirit of a holiday or some other social theme.
I even switched my default home page to Bing, to see how it felt. In a day, I was back to Google.
There is a lot of money to be made with every point of share of the search engine pie. Bing is a curiosity, at the moment, and has picked up a few points. Maybe that is a good thing. Market leaders should always feel the hot breath of a competitor from time-to-time.
But, this is Google’s ‘turf’. Live Search with a new paint job just isn’t enough innovation for me.
To be fair, I have a potentially opposite situation with browsers. I have been using Google Chrome to see if it can pull me away from IE8. Say what you want about IE. But, like Google search, IE was in my toolbox first. I have built my online existence around it. IE8 is nice, although IE7 almost lost me.
So, what’s the thing with Bing? For me, interesting, but not worth trading.
Also, there are more and more seasoned, veteran practitioners of information technology (“IT”) that have been at conferences, had prosepctive suppliers call on them and, in a number of cases, carefully “dipped their toe” in the water on a self-contained project.
But, at the end of the day, does anyone really know what cloud computing really is? I am sure this video with a number of well-known names will clear it up for you:
“…the survey was undermined by the fact that most of those surveyed admitted to not knowing what cloud computing is. The reason is not ignorance, but the many and various ways the term is used. The common strand is that it is something to do with the internet, but even that is undermined if we describe virtual on-premise servers as a “private cloud”.
The closest that I ever came, as a CIO, to entrusting my large company’s e-mail and office apps to a third-party vendor, it was Google that I considered. Unfortunately, a merger got in the way of making good on that idea. But, looking back, the most incredible thing is that I was willing to get serious about doing something that drastic almost 4 years ago!
In this age, 4 years is like a thousand eternities. Since then, Google has only gotten better — way better.
They have an impressive record of producing not only the user-facing eye-candy, cool widgets and very useful, quality applications, but they are world class in mundane-but-important functions like data centers, networks, accounting, project management and support.
It really seems to focus on contacts – on people – which we feel is the direction communication is taking. Email applications currently focus less on people and more on the content of the message. We think tools like Facebook and Twitter better balance the need to know the person behind a message and the message itself. Google Wave moves in that direction…… Overall assessment: It’s already got certain aspects, like navigation, absolutely right. With some great 3rd party apps and greater customization, Google Wave could actually match its hype.
So, Google Wave will be launched soon and will unify web communications in such a way that it will be the container for everything else. It is being built on open source technologies which will create huge developer interest and many add-ins and extensions.
I don’t own Google stock or am associated in any way with the company. But I have to say that I truly believed 4 years ago, and feel much stronger about it now, that they could make certain large software, hardware and services companies irrelevant in just a few more years. And, when that day comes, I would hope that the company stays true to its values. And, when they say that they are the best, all they will have to do is immediately follow with that famous line, “.. no brag, just fact.”
SaaS, the very cool acronym for “software as a service”, seems to have captured center stage in terms of mind share and marketing hype. It is a very alluring concept that also lends itself well to conversations about another overheated marketing concoction known as “cloud computing”. The bottom line is, and always has been, how does a business run its applications environment on a variable cost model rather than a fixed cost model. This was something that we used to call “paying by the drink”. It has certainly been tried before and with some notable successes, such as Salesforce.com.
But, of course, many questions remain as this is an unfinished canvass and the paint is not yet dry. Large software suppliers have a lot at stake in preserving their revenue streams in licensing, true-ups (unfortunately not true-downs), shelfware, maintenance, services, hosting, etc. Customers also have a lot at stake in terms of their customizations, integration, security and a well-developed and understood cost model.
At the end of the day, what will make this worth doing for suppliers? Obviously, the opportunity to generate incrementally more revenue and profitability. In other words, how can I charge you more for a service that costs me less to provide? For customers, it is obviously how can I operate more efficiently in terms of cost and flexibly meet the business needs in an increasingly dynamic environment?
To the extent that innovation is introduced, the market will reward those suppliers. Money-grabbers might “win” in the short-term but will lose-out in the long run as the value proposition becomes more obtuse.
For customers, cavaet emptor (“let the buyer beware”) has never been a more appropriate guiding principle. For IT Leaders, CIOs, CTOs get on board quickly and understand how you are going to handle this tidal wave. For some thoughts, read-up on implications of these technologies on your role.
We have Web 2.0, Enterprise 2.0 and now CIO 2.0. Technically, this is not new, as a number of articles and bloggers have dealt with the subject over the past 12-18 months. A good treatment of the subject appears in the latest CIO Rant post. IT and business leaders should become acquainted with the concepts behind the transformation of this important role.
In a recent article, the question of whether Twitter was a useful tool was put to a panel of CIOs in the UK. The comments are interesting and we thank silicon.com for publishing them. On our companion site, CIORANT, we explored why CIOs might not be using Twitter or other social media tools. Bottom line: many organizations have a decison to make about how “open” to social media they want to be and this openness starts at the firewall. Beyond that, there is a bit of science that has yet to be applied to the question about whether productivity, privacy, information security and assorted legal issues exist. Until that gets sorted out, look for zero risk approaches to be the rule.
According to ExecuNet, LinkedIn and other sources, the job market for executive positions “bottomed-out” in the first quarter of 2009. This would seem to suggest that things will be getting better. However, information technology executives remain pessimistic about the near future recovery for chief information and technology officer positions.
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