Operation Bootstrap

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SaaS & Cloud Computing - the Obvious Future.

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So, here we are at the end of 2008 reading all of the year-end wrap ups of what happened this year, who stepped in doggy-do and who came out shinny clean. One of the big things this year was not only the massive adoption of cloud based services, but the very public failures of some of these services. I think most of these failures have been more sensationalized by the media as a reason to write stories than have actually directly impacted public opinion, but lets look at the real advantage these services provide.

When you consider the utility of a Salesforce.com, Google Apps, Amazon web services, or any of the other cloud based services, you are buying expertise. These days, anybody can pay money, buy hardware and software, hire an IT geek, and cobble together their own service to do just about anything they want. You’ve got a lot of variables to work in your favor in that scenario. Your servers need to come in on time and work as advertised, the software should do what it’s supposed to without a lot of trouble (how often does this happen?) and probably the biggest variable – that IT geek had better be ready for some firefighting. If she’s good, you are probably in good shape no matter how trashy the other pieces are. If she’s not good, then you are up a smelly creek with a leaky raft and a payload of heavy servers. Oh, and lets not even get started with disaster recovery.

What Amazon promises with AWS is a highly available, scalable and secure platform on which to operate your services. By all measure, they’ve provided that with a few bumps along the way. Amazon has put a lot of expertise behind their web platform and to date it is one of the most comprehensive solutions available to businesses. And it is this that I believe will push businesses toward using these services in the future. If you already have legacy hardware with legacy software and legacy IT folks operating it all then you are set, why change? If however, you are building something from the ground up, you would be well advised to take a different route.

Google Apps is a very consumer oriented application which is trying to drive back into business. I’m not sure how successful it’ll be, but the idea is right. Google has made some serious progress offering the core business pieces – mail, documents, calendar and chat. These all work well if your whole company is using them, and for some companies it’s all they need. At $50/user per year – you can’t beat the price, period. It is not yet Microsoft Exchange, but as far as core services go it’s darn close.

Both services had a few outages this year which surely had a very real impact on customers. Both Google and Amazon operate very critical Internet infrastructure but Amazon’s impact is hidden behind the many businesses who’s services fail when Amazon does, they are the foundation. Google, on the other hand, is observed by every subscriber and the blame is placed squarely on Google. Amazon I think is also less understood by your average consumer, whereas everyone who doesn’t live in a cave knows what Gmail is. So, who do you influence when you publish stories about either of these giants? My guess, the IT guy who’s services are compared to these two giants.

There seems to be, and perhaps it’s just my narrow view of things, a distinct shortage of IT folks who are very educated about cloud services unless you work in a company who offers them. Why is that? I tend to think it’s because when you use SaaS and Cloud services you spend more of your money on professional services, developers, and integration services than you do on IT guys to do that same work. Hence, how many IT guys become experts? Any IT guys who manage to become experts probably go work for a service provider who does this day in and day out and who can help them extend that knowledge. So, where does that leave the traditional IT guy? A dinosaur. Not very motivating for the decision makers in these companies. Keep those nasty stories about Google service outages coming!

So, it’s specialization in a way which will fuel this move and it will be pushed from the top down, not the IT guy up. Consider a few analogies. Laundry services – besides prisons, who do you suppose uses their own labor force to do the laundry? Is that because laundry requires special knowledge or hardware? Not exactly, but running a cost effective laundry business does require experience. Experience that most businesses aren’t interested in trying to hire and re-hire for. They’d rather get the benefit of a cost effective business unit by just paying for it and focus their expertise on their business. Does that decision get made by the guy who’s job depends on managing 30 people who do laundry? Umm.. no.

Car maintenance. I know 30 years ago everybody fixed their own cars but today, not so much. Today, it requires a bunch of specialized equipment and facilities just to change the spark plugs. Regardless of the reasons for the complexity, today cars routinely require maintenance but much of that maintenance is not something a home mechanic can easily do without substantial investment in knowledge and tools. We’re happy in some ways with this – we like having an “expert” repair our cars. It transfers the risk from us to someone else and gets the job done at the same time. Changing your oil still isn’t all that difficult, but most of the people I know have someone else do it – even if that someone else is a 17 year old who can’t tell your oil pan from your automatic transmission. It’s not your problem right?

So, for both consumers and businesses services are good. They transfer risk (sometimes), they offer more expertise at a lower cost, and generally leave the business and user to focus on their own life or business.

I see SaaS in much the same light. As a business, we want to focus on our business. We want to hire and pay for and manage the expertise that we require and that is directly benefiting us. Commodity services such as payroll, email, phone, financial systems, taxes, you name it can be done by another business who knows them better and can provide that service at a lower cost than we can provide it ourselves. SaaS is taking every area of IT which has been traditionally performed in-house and finding a way to build a service around that same capability and offer it to businesses.

Add to all of this the regulatory requirements which are quickly maturing and becoming part of every businesses everyday life. It’s much easier to simply say “xyz handles it” and rely upon their status as a certified organization with all the necessary audits and controls taken care of by them. Many start-ups today have many of their services outsourced for this very reason, it makes good business sense.

Lastly, disaster recovery. This is honestly where I think SaaS and cloud computing in general has yet to prove itself. Infact, many many businesses are nowhere near as prepared as they could/should be for disaster – I suspect the same is true for many SaaS providers. DR/BCP is one of those things which require a substantial investment in time and expertise to put in place and maintain. They are never done, so there are recurring costs which grow as your plans become more elaborate and comprehensive. Wouldn’t it be fantastic to just shift this responsibility to a 3rd party and be done? It would, if only it were so simple – probably something for another post. That said, at least being able to tell your board of directors and auditors that you have transferred that risk is often sufficient today – even if there is no real audit process to ensure success.

In any case, the old model of in-house IT is just that – “old”. It’ll diminish over the years. What will not go away is the network – the connective tissue and nerves which hold all of this together. Expertise in this area will probably be concentrated with service providers who manage your network for you, but the physical equipment and expertise will still be required.

Even your desktop computer is rapidly evolving into a glorified web browser. Netbooks and Google OS show that operating 100% from the web is becoming possible and even quite functional. This is the future.