Using analytics to better understand customer satisfaction, profitability, retention and churn while increasing cross-sell and up-sell are the most dominant uses of cloud-based analytics today.

Jim Ericson and James Taylor presented the results of Decision Management Solutions’ cloud predictive analytics survey this week in the webinar Predictive Analytics in the Cloud 2013 – Opportunities, Trends and the Impact of Big Data.  The research methodology included 350 survey responses, with a Web-based survey used for data collection.  The survey centered on the areas of pre-packaged cloud-based solutions, cloud-based predictive modeling, and cloud deployment of predictive analytics.  You can see a replay of the webinar at this link.

Key takeaways of the study results released during the webinar include the following:

• Customer Analytics (72%), followed by supply chain, business optimization, marketing optimization (57%), risk and fraud (52%), and marketing (58%) are the areas in which respondents reported the strongest interest.
• When the customer analytics responses were analyzed in greater depth they showed most interest in customer satisfaction (50%) followed by customer profitability (34%), customer retention/churn (32%), customer management (30%), and cross-sell/up-sell (26%).
• Adoption was increasingly widespread and growing, with over 90% of respondents reporting that they expected to deploy one or more type of predictive analytics in the cloud solution.

• Industries with the most impact from predictive analytics include retail (13% more than average), Financial Services (12%) and hardware/software (4%). Lagging industries include health care delivery (-9%), insurance -11%) and (surprisingly) telecommunications (-33%).  The following graphic illustrates the relative impact of cloud-based predictive analytics applications by industry.

Adoption of Cloud-based Predictive Analytics by Industry

• The most widespread analytics scenarios include prepackaged solutions (52%), cloud-based analytics modeling (47%) and cloud-based analytic embedding of applications (46%).  Comparing the 2011 and 2013 surveys showed significant gains in all three categories, with the greatest being in the area of cloud-based analytic modeling.  This category increased from 51% in 2011 to 75% in 2013, making it the most likely analytics application respondents are going to implement this year.

Comparison of Analytics Applications Most Likely To Deploy, 2011 versus 2013

• 63% of respondents report that when predictive analytics are tightly integrated into operations using Decision Management, enterprises have the intelligence they need to transform their businesses.

Impact of Predictive Analytics Integration Across The Enterprise

• Data security and privacy (61%) followed by regulatory compliance (50%) are the two most significant concerns respondent companies have regarding predictive analytics adoption in their companies.  Compliance has increased as a concern significantly since 2011, probably as more financial services firms are adopting cloud computing for mainstream business strategies.

Concerns of Enterprises Who Are Using Cloud-based Predictive Analytics Today

• Internal cloud deployments (41%) are the most common approach to implementing central cloud platforms, followed by managed vendor clouds (23% and hybrid clouds (23%). Private and managed clouds continue to grow as preferred platforms for cloud-based analytics, as respondents seek greater security and stability of their applications.  The continued adoption of private and managed clouds are a direct result of respondents’ concerns regarding data security, stability, reliability and redundancy.

Approach To Cloud Deployment

• The study concludes that structured data is the most prevalent type of data, followed by third party data and unstructured data.
• While there was no widespread impact on results from Big Data, predictive analytics cloud deployments that have a Big Data component are more likely to contribute to a transformative impact on their organizations’ performance.  Similarly those with more experience deploying predictive analytics in the cloud were more likely to use Big Data.
• In those predictive analytics cloud deployments already operating or having an impact, social media data from the cloud, voice or other audio data, and image or video data were all much more broadly used as the following graphic illustrates.

Which Data Types Deliver The Most Positive Impact In A Big Data Context

(Cross-posted @ A Passion for Research)

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Since 1999 we have been investing in companies that develop SaaS applications targeting the mid-upper and global enterprise.  Through these investments and the hundreds of other SaaS companies, targeting these and other segments, we have considered during this period, we have started to notice a transition in the way companies utilize cloud computing infrastructures platforms […]

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Enterprise Irregulars is sponsored by Salesforce.com and Workday.

An interesting thread is now on within the enterprise irregulars group on what constitutes private clouds –as again very enlightened discussion therein. The issue that I want to talk about is if private cloud do indeed exist, then what is their adoption path ? Lets start from the beginning : the issue is can we can use the term ”cloud” for describing the changes that happen inside IT architectures within enterprise? Thought there can be no definitive answer – a series of transition to a new order of things, will in my opinion, become imminent.

The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The The pressures would mean more begin to seriously look at SaaS, re-negotiating license terms, rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.

The change in many senses may make IT inside enterprises to look , behave and perform like cloud computing providers – though there would be limitations( in most places serious) on scale, usage assessments , security and the like. There are strong incentives propelling enterprises to channel their efforts and investments over the next few years in mimicking a private cloud service architecture that gets managed by them internally. This could well become their approach of staging towards finally embracing the cloud(public) over a period of time . These baby steps to nearly full blown efforts are needed in preparing organizations to embrace clouds and it may not be feasible at all to make the shift from on-premise to cloud like flip switch. Serious licensing issues, maturity, lack of readiness, integration concerns, security all come in the way of enterprises looking at public cloud in a holistic way. These steps need not be looked down – they would very well become the foundation to move into public clouds in a big way.

Let’s for a moment assess this theme from a security perspective – a dominant concern business expresses when it comes to clouds. While assessing security requirements in public clouds,we see the recognition that a whole host of chnages need to be done at application architecture levels, the need to accomodate specific compliance requirements, privacy provisions in the public cloud etc.

Lets think through this : setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. IT teams while conceptualizing private clouds are happy to retain existing architectural designs, happily propose a clasical DMZ/Perimeterized model for providing security and enabling access, too often leveraging a highly virtualized infrastructure. More often than not, it’s enabling virtualization, automation and self service and color it as private cloud. Do recognize the implicit differences in constructing a private cloud and a public cloud. Comfort with the status quo with some adjustments versus an opportunity to rethink architecture, security, privacy,compliance needs in a way summarizes the nature of thought process and expected results between the private and public clouds. Speaking more directly, public clouds present the opportunity for enterprises to review and achieve specific requirements in the areas like agility, flexibility and efficiency at optimal effort Versus a skewed , boxed implementation of private cloud setup. Taking advantage of the public cloud benefits would far outweigh the advantages of getting boxed inside with private clouds.

Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!

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Enterprise Irregulars is sponsored by FinancialForce.com, Salesforce.com and Workday.

Digital Strategy From The Analysts At Constellation Research

Constellation’s year end checklist offers suggestions designed to enable you to take control of your digital strategy in 2015. Consider these actions to ensure you dominate digital disruption in the new year.

1. Matrix Commerce: Scrub your data

By Guy Courtin

When it comes to Matrix Commerce, companies need to focus on the basics first. What are the basics? Cleaning up and getting your data in order. Much is discussed about the evolution of supply chains and the surrounding technologies. However these solutions are only as useful as the data that feeds them. Many CxOs that we have spoken to have discussed the need to focus on cleaning up their data. First work on a data audit to identify the most important sources of data for your efforts in Matrix Commerce. Second, focus on the systems that can process and make sense of this data. Finally, determine the systems and business processes that will be optimized with these improvements. Matrix Commerce starts with the right data. The systems and business processes that layer on top of this data are only as useful as the data. CxOs must continue to organize and clean their data house.

2. Safety and Privacy – Create your Enterprise Information Asset Inventory

By Steve Wilson

In 2015, get on top of your information assets.  When information is the lifeblood of your business, make sure you understand what really makes it valuable.  Create (or refresh) your Enterprise Information Asset Inventory, and then think beyond the standard security dimensions of Confidentiality, Integrity and Availability.  What sets your information apart from your competitors?  Is it more complete, more up-to-date, more original or harder to acquire? To maximise the value of information, innovative organisations are gauging it in terms of utility, currency, jurisdictional certainty, privacy compliance and whatever other facets matter the most in their business environment. These innovative organizations structure their information technology and security functions to not merely protect the enterprise against threats, but to deliver the right data when and where it’s needed most.  Shifting from defensive security to strategic informatics is the key to success in the digital economy. Learn more about creating an information asset inventory. 

3. Data to Decisions – Create your Big Data Plan of Action 

By Andy Mulholland

Big Data is arriving at the end of the hype cycle. In 2015, real-time decision support using ‘smart data’ extracted from Big Data will manifest as a requirement for competitiveness. Digital Business, or even just online sellers, are all reducing reaction and response times. Enterprises have huge business and technology investments in data that need to support their daily activities better, so its time to pivot from using Big Data for analysis and start examining how to deliver Smart Data to users and automated online systems. What is Smart Data? Well, let’s say creating your organization’s definition of Smart Data is priority number one in your Big Data strategy.  Transformation in Digital markets requires a transformation in the competitive use of Big Data. Request a meeting with Constellation’s CTO in residence, Andy Mulholland. 

4. Next Gen CXP – Make Customer Experience Instinctual

By Natalie Petouhoff

STOP thinking of Customer Experience as a functional or departmental initiative and start thinking about experience from the customer’s point of view.

Customers don’t distinguish between departments when they require service from your organization. Customer Experience is a responsibility shared amongst all employees. However, the division of companies into functional departments with separate goals means that customer experience is often fractured. Rid your company of this ethos in 2015 by using design thinking to create a culture of cohesive customer experience.

Ensure all employees live your company mythology, employ the right customer and internal-facing technologies, collect the right data, and make changes to your strategy and products as soon as possible.  Read “Five Approaches to Drive Customer Loyalty in a Digital World”.

5. Future of Work – Take Advantage of Collaboration

(Cross-posted @ A Software Insider's Point of View)

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Back in January, I made a controversial prediction that private clouds will be discredited by year end. Now, in the eleventh month of the year, the cavalry has arrived to support my prediction, in the form of a white paper published by a most unlikely ally, Microsoft.

Titled simply The Economics of the Cloud (PDF), the document succinctly sets out the economic factors that make the public cloud model an inexorable inevitability, substantiating my long-held views. It deserves a full reading â don’t settle for the overview in the authors’ blog post announcing it. Here are some headline numbers that should give pause for thought:

• 80% lower TCO. The combination of large-scale operations, demand pooling and multi-tenancy create enormous economies in public cloud data centers: “a 100,000-server datacenter has an 80% lower total cost of ownership (TCO) compared to a 1,000-server datacenter.”
• 40-fold cost reduction for SMBs. “For organizations with a very small installed base of servers (<100), private clouds are prohibitively expensive compared to public cloud.”
• 10-fold cost reduction for larger enterprises. “For large agencies with an installed base of approximately 1,000 servers, private clouds are feasible but come with a significant cost premium of about 10 times the cost of a public cloud for the same unit of service.”

Since I know there’s a subset of ZDNet readers who will leap into Talkback to cry wolf on cloud security without bothering to read either the rest of this blog post or even looking at the white paper, here’s what it has to say on that particular canard:

“Large commercial cloud providers are often better able to bring deep expertise to bear on this problem than a typical corporate IT department, thus actually making cloud systems more secure and reliable … Many security experts argue there are no fundamental reasons why public clouds would be less secure; in fact, they are likely to become more secure than on premises due to the intense scrutiny providers must place on security and the deep level of expertise they are developing.”

That paragraph alludes to one of the key factors that I’ve been highlighting in my recent evangelism of the cloud model, the economies of scale for collective scrutiny and innovation. Amazingly, the document reaches its conclusions without adding in the additional economic benefits of this factor, which surely must deliver a knock-out blow to the private cloud concept. The collective feedback and testing from a diversified customer base enhances not only the security of a public cloud infrastructure but also informs and directs its evolution at a far more rapid pace than any private cloud will allow. There’s a virtuous cycle here, of course, in that public clouds are already more cost-effective as platforms for innovation, so that there is going to more innovation happening here than on private clouds anyway. That innovation will help to further accelerate the evolution of public clouds, thus amplifying…

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Enterprise Irregulars is sponsored by FinancialForce.com, Salesforce.com and Workday.

Several private clouds are now coming to market based on the Vblock technology developed by VCE, a joint venture forged by Cisco, EMC and VMWare. Last week I groaned inwardly as I saw not one, but two announcements plop into my inbox. First came Sungard’s “fully managed cloud offering”, and then a couple of days later CSC got in touch to brief me about the launch of CSC BizCloud, “the industryâs first on-premise private cloud billed as a service.”

It’s entirely predictable of course that we’ll see a surge of fake cloud roll-outs this year, and I shouldn’t be surprised to find the usual suspects eager to host them. It’s a lucrative business when, as I highlighted last year when quoting a Microsoft white paper, “private clouds are feasible but come with a significant cost premium of about 10 times the cost of a public cloud for the same unit of service.”

There are occasions, though, when even I’ll admit that implementing private cloud can make sense as a stepping stone on the way to a fully native, cloud-scale infrastructure. In the past, I’ve framed this largely in terms of the technology challenges. In conversation last week with CSC’s vice president of cloud computing and software services, Brian Boruff, I learnt that there’s also an important cultural angle. It’s simply too much of a mindset adjustment for many organizations to move directly to cloud computing from where they’re starting right now.

“I don’t think cloud computing is a technology issue. The technology’s there,” Boruff told me. “It’s a people and a labor and a business issue. BizCloud â think of it as a sandbox. They can bring it inside the data center and start playing with it.

“Two years from now,” he continued, “I think you’ll see workloads that have moved into BizCloud moving into the public cloud â but it’s a journey.”

Some organizations of course are way ahead of the crowd. Boruff spoke of three generations that differ dramatically in their attitudes to outsourcing and subcontracting. At one extreme are the first-generation outsourcers, he said. “Some people that have never outsourced are scared to death of this cloud computing thing.” Others have been doing it for twenty years or more and it’s second nature to them. “We have one client,” he revealed, “that is a $35bn multinational whose strategy over the next three years is to move everything they do into an as-a-service model.”

For those who aren’t yet ready to go all the way into the cloud, halfway-house platforms like BizCloud provide an opportunity to get some of the benefits of virtualization and automation immediately while taking time to adapt to the wider impact of full-blown cloud computing, he explained. Since CSC offers fully multi-tenant public cloud infrastructure built on the same platform as BizCloud, it will be much easier, he assured me, to move to a public cloud infrastructure from BizCloud than it would be from a classic enterprise IT environment. In the meantime, IT management buys time to transition its workforce to the new realities of cloud.

“It’s not just capital investment. Think about all the people, all the labor investment of people that are running around managing highly inefficient workloads,” said Boruff. “If you’re the VP of infrastructure and somebody’s telling you to move to the public cloud, what does the future of your career look like?

“BizCloud is a way inside of someone’s data centers to say, instead of three people doing that workload, maybe you only need two or one. Let’s retrain them to run these highly virtualized data centers and then go after some of the applications.”

While it may still cost more than a true public cloud implementation, the cost savings compared to the existing enterprise infrastructure can still be huge. Telecoms billing provider Cycle 30, an early Sungard cloud customer, is said in its press release to have “saved millions of dollars” by adopting a cloud solution, albeit without specifying how the savings were calculated.

Nor is CSC holding back customers from moving all the way to the cloud if they’re ready â whatever the hit to its own revenues. Boruff cited the example of Britain’s national postal service, Royal Mail Group, which CSC helped move from an in-house implementation of Lotus Notes to Microsoft’s cloud-hosted BPOS suite (soon to be known as Office 365). “We were charging Royal Mail Group a lot of money to run Lotus Notes for them,” he said. “We had 40 people on site. We had to get rid of their jobs.”

That kind of story probably doesn’t help make IT decision makers any more eager to accelerate their progress cloudwards. If a hybrid cloud strategy buys a bit more time to allay staff fears and manage retraining and redeployment, maybe it’s not such a bad thing after all.

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I wrote part 1 of this post last October, highlighting a Microsoft white paper that convincingly established the economic case for multi-tenant, public clouds over single-enterprise, private infrastructures. Part 2 would wait, I wrote then, for “the other shoe still waiting to drop … a complete rebuttal of all the arguments over security, reliability and control that are made to justify private cloud initiatives. The dreadful fragility and brittleness of the private cloud model has yet to be fully exposed.”

The other shoe dropped last month, and from an unexpected direction. Rather than an analyst survey or research finding, it came in a firestorm of tweets and two blog posts by a pair of respected enterprise IT folk. One of them is Adrian Cockcroft, CIO of Netflix, a passionate adopter of public cloud infrastructure. The other is Christian Reilly, who engineers global systems at Bechtel and had been a passionate advocate of private cloud on his personal blog and Twitter stream until what proved to be a revelatory visit to Netflix HQ:

“The subsequent resignation of my self imposed title of President of The Private Cloud was really nothing more than a frustrated exhalation of four years of hard work (yes, it took us that long to build our private cloud).”

Taken together, the coalface testimony of these two enterprise cloud pioneers provides the evidence I’d been waiting for to declare private cloud comprehensively discredited â not only economically but now also strategically. There will still be plenty of private cloud about, but no one will be boasting about it any more.

As both these individuals make clear, the case for private cloud is based on organizational politics, not technology. The pace of migration to the public cloud is dictated solely by the art of the humanly possible. In Cockcroft’s words, “There is no technical reason for private cloud to exist.” Or as Reilly put it, “it can bring efficiencies and value in areas where you can absolutely NOT get the stakeholder alignment and buy in that you need to deal with the $, FUD and internal politics that are barriers to public cloud.”

Cockcroft’s post systematically demolishes the arguments for public cloud:

• Too risky? “The bigger risk for Netflix was that we wouldn’t scale and have the agility to compete.”
• Not secure? “This is just FUD. The enterprise vendors … are sowing this fear, uncertainty and doubt in their customer base to slow down adoption of public clouds.”
• Loss of control? “What does it cost to build a private cloud, and how long does it take, and how many consultants and top tier ITops staff do you have to hire? … allocate that money to the development organization, hire more developers and rewrite your legacy apps to run on the public cloud.”

Then he adds his killer punch:

“The train wrecks will come as ITops discover that it’s much harder and more expensive than they thought, and takes a lot longer than expected to build a private cloud. Meanwhile their developer organization won’t be waiting for them.”

But it’s Reilly who adds the devastating coup de grace for private cloud:

“Building the private cloud that is devoid of any plan or funding to make architectural changes to todayâs enterprise applications does not provide us any tangible transitional advantage, nor does it position our organization to make a move to public cloud.”

In a nutshell, an enterprise that builds a private cloud will spend more, achieve less and increase its risk exposure, while progressing no further along the path towards building a cloud applications infrastructure. It’s a damning indictment of the private cloud model from two CIOs who have practical, hands-on experience that informs what they’re saying. Their message is that private cloud is a diversion and a distraction from the task of embracing cloud computing in the enterprise. It can only make sense as a temporary staging post in the context of a systematically planned transition to public cloud infrastructure.

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Organizations Seek Measurable Results In Disruptive Tech, Next Gen Business, And Legacy Optimization Projects For 2011

Credits: Hugh MacLeod

Enterprise leaders seek pragmatic, creative, and disruptive solutions that achieve both profitability and market differentiation. Cutting through the hype and buzz of the latest consumer tech innovations and disruptive technologies, Constellation Research expects business value to reemerge as the common operating principle that resonates among leading marketing, technology, operations, human resource, and finance executives. As a result, Constellation expects organizations to face three main challenges: (see Figure 1.):

• Navigating disruptive technologies. Innovative leaders must quickly assess which disruptive technologies show promise for their organizations. The link back to business strategy will drive what to adopt, when to adopt, why to adopt, and how to adopt. Expect leading organizations to reinvest in research budgets and internal processes that inform, disseminate, and prepare their organizations for an increasing pace in technology adoption.
• Designing next generation business models. Disruptive technologies on their own will not provide the market leading advantages required for success. Leaders must identify where these technologies can create differentiation through new business models, grow new profit pools via new experiences, and deliver market efficiencies that save money and time. Organizations will also have to learn how to fail fast, and move on to the next set of emerging ideas.
• Funding innovation through legacy optimization. Leaders can expect budgets to remain from flat to incremental growth in 2011. As a result, much of the disruptive technology and next generation business models must be funded through optimizing existing investments. Leaders not only must reduce the cost of existing investments, but also, leverage existing infrastructure to achieve the greatest amount of business value.

Figure 1. Innovative Organizations Face Three Main Challenges In 2011

Disruptive Technologies: Growing Enterprise Adoption – And A Few Bumps Along The Way

A flurry of mobile, social, cloud, analytics, and unified communication technologies from the consumer tech world continue to enter the enterprise. Technology buyers can expect that:

• IT teams will face device proliferation while hardware vendors will face device flops (@maribellopez). In the mobile landscape, organizations have spent the past decade trying to consolidate everything into a single device which we deemed the “smartphone”. Today, the adoption of devices like the iPad and Kindle demonstrate that consumers and businesses are willing to embrace a device that excels at a singular or small number of functions. IT will soon realize that it will be supporting at least two devices per person, if not three. Why? Tablets can’t replace laptops for most employees; and smartphones while ubiquitous are good for specific tasks. Thus, organizations will see employees using different devices for different apps. A majority of the tablets in use in 2011 will remain employee-purchased which will cause IT to formalize employee-liable policies for security, manageability, and reimbursement. After the successful introduction of the iPad, everyone believes they can build and sell a tablet. Dell, HP, RIM, and others will struggle to compete against Apple as they look for the right combination of user interface and applications to drive demand. Android-based tablets will fare better but only if the OEM has provided significant software wrappers to plug security, manageability and UI issues.
• Large enterprises will stall on adoption of cloud for voice communications (@eherrell). Despite announcements by major vendors, the cost model for replacing on- premises based voice equipment will not justify moving voice communications to the cloud in 2011. Cloud adoption will most likely begin to pick up during last quarter of the year, when pricing models become more competitive.
• Cloud security will trump on-premises efforts (@fscavo). 2011 will be the year when SaaS providers find the issue of security turning from a perceived weakness of their offerings to a perceived strength. A handful of well-publicized targeted attacks against in-house IT applications, similar to what was seen with the recent Stuxnet worm, will lead many corporate executives to conclude that their in-house IT organizations can’t match the level of security offered by SaaS providers.
• Forecasts in cloud security breaches will call for partly cloudy cloud adoption (@rwang0). Despite the woes in on-premises security and move to the cloud, cyber attacks will force companies to move from public clouds to private clouds in 2011 . Concern about cyber gangs hacking into commercial and military systems leads to a worldwide trend that temporarily reduces public cloud adoption. Hybrid models for apps in the public cloud and data in the private cloud emerge as users migrate from on-premises models. Data integration and security rise to key competencies for 2011. The bottom line – improved data security reliability will drive overall cloud adoption in the latter half of 2011.
• Android will become more enterprise friendly by fixing major manageability issues (@maribellopez). Android, while very popular with consumers due to its Verizon relationship, still strikes fear in the heart of IT. Its lack of on device hardware encryption, which even Apple supports, makes it a non-starter for some IT organizations. In general, Android will need to fix its support for Exchange including areas such as 802.1x WPA2 wireless network authentication, corporate proxy servers, Cisco VPNs using certificates, OpenVPN, CalDAV, remote wipe, and managed apps and configurations. Sure, Android is a consumer platform, but consumer phones are now enterprise phones. Google must address these issues or risk losing share in its war against Apple.
• Social media landscape transforms into information commerce (@briansolis). The social media landscape will undergo an interesting transformation as it ushers in a genre of information commerce and the 3C’s of social content – creation, curation, and consumption. While blogging typically resides in the upper echelons of the social media hierarchy, new services further democratize the ability to publish and propagate information. 2011 heralds the year of information curation and the dawn of the curator. Curators introduce a new role into the pyramid of Information Commerce. By discovering, organizing, and sharing relevant and interesting content from around the Web through their social streams of choice, curators will invest in the integrity of their network as well as their relationships. Information becomes currency and the ability to recognize something of interest as well as package it in a compelling, consumable and also sharable format is an art. Curators earn greater social capital for their role in qualifying, filtering, and refining the content introduced to the streams that connect their interest graphs.
• Enterprise social software migraine (@sameerpatel). On the Technology front, expect a lot of noise and confusion on the social and collaborative front when it comes to customer, employee and partner collaboration. Technology will come from 4 camps: Pure Play Enterprise Social Software Vendors, ERP and CRM providers layering in collaboration and community features, Networking and UC providers adding social networking to VOIP and Online Meeting offerings, and finally, specialist HR and LMS vendors extending their offerings to include collaboration. From a distribution perspective, today’s largely direct sales model will see expansion into Telco reseller providers who have sold managed hosting solutions such as email and messaging in the past, as well as system integrator and strategy consulting providers that are ramping up practices. Due to the nature of rapidly evolving use cases for social software, traditional sourcing mechanisms and criteria that might work for static ERP and CRM system selection will be inadequate to make long term and roadmap decisions on tools and integration for enterprise social software.
• Tools, networks and services that cater to the role of the curator will emerge (@briansolis). Storify, Curated.by, Pearltrees, and Paper.li break through as the coveted services of choice amongst curators as they not only enable the repackaging and dissemination of information, but also deliver in captivating and engaging formats. Similar to blog posts, curated content represents social objects and curation services will spark conversations and reactions, while also breathing new life and extending the reach of existing content – wherever it may reside. Curators play an important role in the evolution of new media, the reach of information, and the social nicheworks that unite as a result. Curators promote interaction, collaboration, as well as enlightenment. More importantly, services that empower curators will also expand the topography for content creation. Forrester estimates that 70% of social media users are simply consumers, those who search and consume the content available today…but never say anything in public about it. However, the ease of curation combined with the pervasiveness of micro-blogging start to entice consumers to share information, converting the static consumer into a productive curator or creator
• Social analytics will evolve from ad hoc experiments into refined information services (@rwang0). Organizations will continue to experiment in listening services that filter out noise from the social sphere, identify trends that deliver insight, and create models that support prediction. As algorithms increase in complexity, adapt to regional and cultural differences, and require greater vertical specialization, the end customer organization will no longer be able to support in house efforts. A new breed of information brokers will deliver social analytics at a scale that will support the challenges of big data in heterogeneous systems. Expect vendors such as Alterian, Attensity, Buzzmetrics, Cymfony, IBM, Radian6, SAS, Scoutlabs, Telligent, and Visible to shift their business models from software vendors to information brokers.
• “The Cloud” will become the new Social Media (@ekolsky). Always looking for a technology or tool to overhype, the recent announcements from Oracle, SAP, Microsoft, Salesforce and many smaller vendors in the enterprise applications world has placed “The Cloud” as the center of controversy for 2011 and into 2013-2014. The lack of coherence and understanding of “The Cloud” will result in many wasted dollars trying to implement models that are not sustainable, or reliable, for organizations, fees paid to consultants with no real knowledge of the market, and failures that will only serve to reduce the speed of adoption of “The Cloud”. Buyers will still have to wait until 2015+ to see what happens, as most vendors have just begun developing their strategies and organizations have not yet adopted the model in sufficient numbers to justify faster R&D from vendors (with few exceptions).

Next Gen Business Models: “Outside In” Strategies Proliferate – With An Eye Towards Pragmatism.

Business model innovation will rely more on disruptive technology in 2011. Leading organizations will strive for a better synergy between business and technology. Constellation expects that:

• Citizen engagement platforms will get more open despite the emphasis on security (@ideagov). The combination of the blow back from wikileaks; and the Republican takeover in the U.S. House of Representatives will lead to a rash of “military grade encryption packages” that will be stacked on top of many apps and platforms. Whether they work or not will not matter. Conversely expect to see an explosion of citizen engagement platforms striving to be even more “open.”
• Organizations will put business back into social business (@sameerpatel). As organizations increasingly start to see the benefits of deploying social and collaborative initiatives to improve employee, customer and partner engagement, they will soon begin to realize that the decade old notion of streamlining repeatable processes made popular by ERP and CRM system-of-record deployments was largely over promised. In practice, customers and prospects have unique questions not answerable in the knowledge base or by marketing; employees living in rigid ERP systems need to constantly find experts who have the best answers and to collaborate with them. And reseller partners are constantly spending time looking for the right answers not available on asynchronous partner portals to keep end customers happy. Silo’d but open collaboration initiatives on activity streams and other enterprise social networking utilities currently being deployed will expose such engagement not historically possible in an ERP or CRM laden design. Consequently, LOB and IT leadership will realize that traditional process approaches and fluid collaborative constructs need to come together to truly accelerate business outcomes.
• Sexy will be out for social media (@ekolsky). Organizations will realize that for something (social media) to feel sexy there is a lot of work that needs to happen behind the scenes. Time to pay the piper, as they say, and begin to build integrated platforms that can leverage social channels in constructing healthier, better relationships with customers. Despite the focus on tools and technologies, leaders will begin to realize that it is just about processes and people with support from technology. Want to get ahead? Plan, plan, plan – then roll up your sleeves and start doing, strategically speaking.
• Organizations will get serious about mobilizing apps and embrace the platforms to support mobility (@maribellopez). In 2011, firms will deploy enterprise mobility management tools to support multiple device types and operating systems. Companies will also focus IT resources on moving line of business apps to devices. While cloud-based platforms and SaaS gain in importance, a majority of firms (75+%) will turn to in-house resources for development. As a result, firms will adopt mobile enterprise applications platforms and mobility frameworks to help them port apps using existing IT resources.
• The distinction between BPO and ITO will blur (@pfersht). Integrated offerings from service providers with broad capability gain market share. With the leading IT services providers all heavily pushing BPO capability, there will be increased blurring of offerings as industrialized process solutions become more popular. Process-only BPO will continue to proliferate across horizontal offerings where there is significant labor arbitrage opportunity, namely finance and accounting, order management and procurement, however within industry-specific process, platform-enabled offerings are the only way providers can develop cost-effective utility models across their clients.
• P2P will displace the old notions of B2B and B2C in social business (@rwang0). B2B and B2C will cease to exist in 2011. Organizations will conduct social business through Peer-to-peer (P2P) relationships. Attempts to stove pipe individuals into forced-fit, artificial market segmentations will fail because each individual brings multiple roles to the community. Each role brings a new perspective and a set of expectations in customer experience. Organizations will have to retool to the new rules of business and also move beyond social.
• Sustainability software will lead to global starvation (@dahowlett). Sustainability software will conclusively prove that cows are the biggest contributors to greenhouse gases. The ensuing bovine cull will ensure population starvation on a massive scale thus solving our climate change issues. Those flogging carbon solutions will be put out of business.

Legacy Optimization: Flat IT Budgets And New Projects Increase Pressure On Legacy Costs

Between 66% and 75% of most technology budgets go towards supporting legacy systems. In order to make the shift to support new business models and disruptive technologies, leaders will have to find ways to optimize existing investments. Leading organizations can expect that:

• Corporate IT spending will barely keep up with dollar inflation (@fscavo). Corporate IT spending in the US and Canada will increase a small 2.0% at the median, after two years of flat budgets. In addition, although most IT organizations are not currently adding to staff counts, we do see a significant upturn in initiation of new major projects, extended work hours for IT employees, and increasing use of IT contractors. This will lead to an improved IT employment picture by mid-year.
• Technology refresh cycles will accelerate through 2011 (@ekolsky). The recent 2-3 years “nuclear winter” in enterprise applications, which coincided with the advent of social channels and social technologies, will give way to a massive acceleration of technology refresh channels – especially in Customer Service departments – leading to large-scale adoption of both new technology related to social media as well as new technology that was scheduled for later adoption. This large-scale adoption will result in several smaller vendors with innovative offerings gaining a sizable presence in Contact Centers and a disruption of the model for old-technology vendors that cannot adapt quickly to the changes we are seeing.
• Organizations will cautiously recommit to BPO (@pfersht). Business Process Outsourcing uptake will creep back throughout 2011, as the recovery stutters and buyers pull the trigger on sourcing initiatives, however, many of the deals for the first-time buyer will be small in scope. Many businesses paralyzed by the Recession have been operating a “wait and see” strategy through 2010 regarding their Business Process Outsourcing (BPO) options. However, a slowing recovery and a growing pressure to meet budgets will drive a steady wave of increased BPO evaluation and contract signing in 2011, especially in Finance and Accounting and Procurement. HfS demand-side research has pinpointed a strong interest from buyers to increase scope in existing BPO contracts, and close to one-in-four businesses in the mid-market ($1bn – $3bn in revs) are expecting to investigate their first steps into F&A BPO. Moreover, many BPO services providers are more determined than ever to “penetrate and radiate” customers with initial small-sized contracts, due to the shortage of attractive captive acquisitions and affordable competitive acquisition candidates.
• Organizations that reevaluate their IT strategies and contracts hand in hand will save the most money. (@rwang0) Most technology procurement strategies fail to align with IT strategy and vice versa. Consequently, buyers end up with extra device capacity and shelfware. As organizations consider their legacy optimization strategies, successful teams will bring enterprise architects, IT leaders, procurement teams, and business units together to identify waste to pay for innovation. Two -tier ERP and third party maintenance will prove to be examples where alignment can be achieved to create win-wins for IT and line of business leaders.
• Organizations held hostage by high and useless software maintenance contracts will lead a massive backlash (@rwang0). Organizations faced with market pressures to create strategic differentiation amidst the burden of legacy systems will need to find a way to pay for innovation. Software maintenance fees will come under attack as user groups and leading organizations will spearhead efforts to renegotiate existing enterprise software vendor contracts. Existing software vendors caught off guard will suffer through a PR disaster that will cost them significant future sales. Third party maintenance vendors will continue to emerge to combat vendor-lock in and maintenance hegemony.

Your POV.

Ready for 2011? Got a prediction we missed? Add your comments to the blog or send us a comment at info (at) ConstellationRG (dot) com.

Please let us know if you need help with you in 2011. Here’s how we can help:

• Disruptive technologies. Assessing the market for social, mobile, cloud, analytics, UC, and internet of things. Providing vendor selection frameworks. Comparing vendor capabilities. Negotiating vendor contracts. Providing independent validation and verification.
• Next gen business models. Advising management teams and organizations on disruptive technology adoption leading practices. Designing next gen business models in Social CRM, digital marketing transformation, cloud adoption. social business, virtual commerce strategies, business process innovations, and cloud services.
• Legacy optimization. Reviewing existing technology strategies for cost savings. Renegotiating existing maintenance contracts. Providing go forward optimization plans.

Resources and Report Download

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact sales@ConstellationRG.com.

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

Copyright © 2010 Constellation Research, Inc. All rights reserved.

(Cross-posted @ Constellation Research)

Research Report: Constellation’s Research Outlook For 2011 is copyrighted by R "Ray" Wang. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

Enterprise Irregulars is sponsored by Salesforce.com and Workday.

2017 Trends Reflect Faster, Better, Cheaper, Safer, Mantra Of Hyperscale

Source: Google

As clients make a shift from on-premises traditional data centers to the cloud, mega vendors will rush to build out their hyperscale data centers.  Hyperscale data centers use nodes to flex up and flex down on compute power, storage, networking, and memory as demand increase or decreases.  While only 6 to 7% of the world’s workloads are in the cloud today, Constellation estimates that by 2020, 67% of the world’s workloads will be processed by cloud data centers.  Moreover, the growth in public cloud continues to exceed the growth in private cloud due to operational efficiency, improved security, and improvements in hyperscale.  Constellation predicts by 2020 305 million (66.8%) of the cloud workloads will shift to the public cloud with 151 million (33.2%) in the private cloud data centers.

Constellation sees the following trends in 2017 for the data center:

1. Expect higher power density for the power plants for the new economy. With AI in the cloud driving workloads and demand, clients will buy compute power by the Kw/H. These hyperscale data centers have got to ramp up 10 to 100X in compute power and efficiency. The goal is to improve server side usage from 15 to 17% to 40 to 50%. Network functions virtualization (NFV) will improve this. The goal is to drive down PUE sizes and quickly flatten data center architectures.  Workload density will move beyond the aspirational 3.0 workloads per server benchmark by 2018.
2. Push towards more green, more cold. The quest for efficiency continues with data center construction in colder locations and zones.  Where possible, new construction requires more green power, more underground design, and higher efficiency of systems.  A lot of engineering is going into the design of more efficient connections, better use of power, and more importantly distribution efficiency. The biggest opportunity will be in the smaller data centers, not the hyper scale ones. Constellation estimates almost 40 billion kw/hrs to shave off from the legacy on-premises data centers alone.
3. Increase security at the chip level and in the physical perimeter. Given the criticallity of the data center, organizations must up both their physical security as well as their network security.  Expect an increase in more physical security systems.  Importantly, security at the chip level is helping to improve the scale of defense required in sophisticated hacking and reducing the impact of inside jobs.
4. Greater use of DCIM to benchmark performance. The result is anywhere from two to three times less down time. Resiliency and high availability take center stage in improving up time.  The convergence of logical and physical layers through SDDC should improve in maturity.
5. Continued adoption of OCP. With Facebook leading the way in the open compute project (OCP) and industry standardization, Constellation expects better inter-operability over time across all areas of the data center.  More importantly, how organizations bridge the gap in hybrid data centers will exponentially improve efficiency. This industry shift enables on-premises and cloud environments to work well together.

Your POV.

Understand the cloud and AI requirements for your data center strategy?  Ready to ditch yours and jump to Amazon, Google, IBM, Microsoft, or Oracle?  Let us know what your experiences have been and feel free to reach out.  Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

(Cross-posted @ A Software Insider's Point of View)

Trends: Five Data Center Trends For 2017 is copyrighted by R "Ray" Wang. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

Enterprise Irregulars is sponsored by Salesforce.com and Workday.

• Digitally transforming enterprises (63%) is the leading factor driving greater public cloud computing engagement or adoption today.
• 66% of IT professionals say security is their most significant concern in adopting an enterprise cloud computing strategy.
• 50% of IT professionals believe artificial intelligence and machine learning are playing a role in cloud computing adoption today, growing to 67% by 2020.
• Artificial Intelligence (AI) and Machine Learning will be the leading catalyst driving greater cloud computing adoption by 2020.

These insights and findings are from LogicMonitor’s Cloud Vision 2020: The Future of the Cloud Study (PDF, free, opt-in, 9 pp.). The survey is based on interviews with approximately 300 influencers LogicMonitor interviewed in November 2017. Respondents include Amazon Web Services AWS re:Invent 2017 attendees, industry analysts, media, consultants and vendor strategists. The study’s primary goal is to explore the landscape for cloud services in 2020. While the study’s findings are not statistically significant, they do provide a fascinating glimpse into current and future enterprise cloud computing strategies.

Key takeaways include the following:

• 83% Of Enterprise Workloads Will Be In The Cloud By 2020. LogicMonitor’s survey is predicting that 41% of enterprise workloads will be run on public cloud platforms (Amazon AWS, Google Cloud Platform, IBM Cloud, Microsoft Azure and others) by 2020. An additional 20% are predicted to be private-cloud-based followed by another 22% running on hybrid cloud platforms by 2020. On-premise workloads are predicted to shrink from 37% today to 27% of all workloads by 2020.

• Digitally transforming enterprises (63%) is the leading factor driving greater public cloud engagement or adoption followed by the pursuit of IT agility (62%). LogicMonitor’s survey found that the many challenges enterprises face in digitally transforming their business models are the leading contributing factor to cloud computing adoption. Attaining IT agility (62%), excelling at DevOps (58%), mobility (55%), Artificial Intelligence (AI) and Machine Learning (50%) and the Internet of Things (IoT) adoption (45%) are the top six factors driving cloud adoption today. Artifical Intelligence (AI) and Machine Learning are predicted to be the leading factors driving greater cloud computing adoption by 2020.

• 66% of IT professionals say security is their greatest concern in adopting an enterprise cloud computing strategy. Cloud platform and service providers will go on a buying spree in 2018 to strengthen and harden their platforms in this area. Verizon (NYSE:VZ) acquiring Niddel this week is just the beginning. Niddel’s Magnet software is a machine learning-based threat-hunting system that will be integrated into Verizon’s enterprise-class cloud services and systems. Additional concerns include attaining governance and compliance goals on cloud-based platforms (60%), overcoming the challenges of having staff that lacks cloud experience (58%), Privacy (57%) and vendor lock-in (47%).

• Just 27% of respondents predict that by 2022, 95% of all workloads will run in the cloud. One in five respondents believes it will take ten years to reach that level of workload migration. 13% of respondents don’t see this level of workload shift ever occurring. Based on conversations with CIOs and CEOs in manufacturing and financial services industries there will be a mix of workloads between on-premise and cloud for the foreseeable future. C-level executives evaluate shifting workloads based on each systems’ contribution to new business models, cost, and revenue goals in addition to accelerating time-to-market.

• Microsoft Azure and Google Cloud Platform are predicted to gain market share versus Amazon AWS in the next three years, with AWS staying the clear market leader. The study found 42% of respondents are predicting Microsoft Azure will gain more market share by 2020. Google Cloud Platform is predicted to also gain ground according to 35% of the respondent base. AWS is predicted to extend its market dominance with 52% market share by 2020.

By 2020 83% Of Enterprise Workloads Will Be In The Cloud is copyrighted by Louis Columbus. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

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Services Revenue Mix Could Reach 20% By 2020

Photo: @rwang0

1. Apple News+. New service adds 300 magazines, the Wall Street Journal and more publications to 875 million iPhone users across 1.4 billion active devices around the world. The terms, as high as 50% of subscription revenue, expand reach and access, especially for mid-tier publishers. Users pay $9.99 a month for this service based on the Texture acquisition and Family Sharing is included in the subscription access. The initial analysis sees Apple News+ elevating journalism and fighting click bait and fake news via a subscription based ecosystem.
2. Apple Arcade. The jump into the gaming business gives developers an opportunity to join an exclusive Apple ecosystem built on subscriptions. With an expected 100 unique titles to be added across 150 countries, Apple’s foray into gaming will go up against Google Stadia, Microosoft Xbox Games Pass, and Sony’s PlayStation Now. Some of the best gaming legends such as Final Fantasy mastermind Hironobu Sakaguchi and Sim City’s Will Wright will create exclusive content. As part of the process, “Apple will help fund the creation of new games that will then be exclusive to Apple Arcade”, noted Ann Thai, a senior product manager of AppStore who was on stage to make the announcement. Pricing has not been announced.
3. Apple Card. Apple, GoldmanSachs, and MasterCard battle against card issuers with a new card ecosystem aimed at users who seek daily cash back and tools for managing personal finance without selling out on privacy. With only half of Apple users using ApplePay and payments as the core to the services foundation, Apple has created an offering that includes both a physical card, digital wallet, cash rewards, and personal finance management tools to spur adoption. Daily cash back offers 2% cash back on Apple Pay purchase, 3% cash back on Apple Products, and 1% cash back for all other purchases. Security provides a big differentiator with biometric verification on the device, one-time dynamic security code generation, and contactless payment.
4. Apple TV+. Apple TV+ should not be confused with the device. As the videos subscription service, Apple TV+ will be accessible across all platforms and devices. With $1 billion committed to content creation, Hollywood converged on Cupertino as Apple demonstrated its seriousness in creating original content. The big guns, Steven Spielberg. J. J. Abrams, Reese Witherspoon, Jennifer Aniston, Oprah Winfrey, and even Big Bird took a few moments on stage to talk about their shows and emphasize the compelling nature of their content. Pricing for Apple TV+ remains to be determined.

Figure 1. #AppleEvent First Step To A Services Oriented Apple

Photo: @rwang0

Figure 2. Twitter Moments for #AppleEvent

Event Report: Apple Formally Launches Services Strategy #AppleEvent

Catch the news coverage:

VIDEO on TDAmeriTrade

VIDEO on Yahoo!Finance

The shift from products to services drives the first step of many as Apple embarks on its own digital transformation journey. Apple’s not only building multiple and recurring revenue streams to hold and drive device sales, but also activating its brand promise from innovation brand to inspiring a consumer movement around privacy and commerce. By prioritizing trust over click bait, fake news, and ad sales based on privacy data, Apple can expand its base oof 1.4 billion iPhones, iPads, Macs, and other devices.

Your POV.

Will the discussions in Davos make a difference? Can leaders come together? Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

Please let us know if you need help with your Digital Business transformation efforts. Here’s how we can assist:

• Developing your digital business strategy
• Connecting with other pioneers
• Sharing best practices
• Vendor selection
• Implementation partner selection
• Providing contract negotiations and software licensing support
• Demystifying software licensing

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales .

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Disclosures

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy,stay tuned for the full client list on the Constellation Research website. * Not responsible for any factual errors or omissions. However, happy to correct any errors upon email receipt.

Constellation Research recommends that readers consult a stock professional for their investment guidance. Investors should understand the potential conflicts of interest analysts might face. Constellation does not underwrite or own the securities of the companies the analysts cover. Analysts themselves sometimes own stocks in the companies they cover—either directly or indirectly, such as through employee stock-purchase pools in which they and their colleagues participate.

As a general matter, investors should not rely solely on an analyst’s recommendation when deciding whether to buy, hold, or sell a stock. Instead, they should also do their own research—such as reading the prospectus for new companies or for public companies, the quarterly and annual reports filed with the SEC—to confirm whether a particular investment is appropriate for them in light of their individual financial circumstances.

Copyright © 2001 – 2019 R Wang and Insider Associates, LLC All rights reserved.

Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Executive Network

(Cross-posted @ A Software Insider's Point of View)

Event Report: Apple Formally Launches Services Strategy #AppleEvent is copyrighted by R "Ray" Wang. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

Enterprise Irregulars is sponsored by Salesforce.com and Workday.

Everyone’s talking digital transformation in today’s volatile, uncertain. complex and ambiguous business landscape.   We all want our organisations to keep relevant, reinvent themselves and avoid going the way of a Thomas Cook or a Kodak.  To support the transformational change that’s required enterprises have been talking app modernisation for a while, and moving business processes to the Cloud, sometimes “as is” and sometimes by redeveloping them from scratch.  Today, both in terms of cost and agility, using Cloud technology for new developments is a given, but for most organisations there is no one right Cloud.  We live in a Hybrid Cloud World whether we like it or not.  Depending on the size of your organisation, from medium to large, according to the Rightscale State of the Cloud survey, you might be dealing with 5 different Clouds, along with the business critical systems you are, most likely, still running in your data centre.  Even a born in the Cloud start up usually has more than just one Cloud/SaaS platform to drive their business.  There is no single Cloud platform that has all the answers, and the three major Public Cloud providers are adding features and functions to their platforms continuously.  How do we manage that Multicloud challenge?  There is no one answer to that either, but a few days ago I heard HPE’s new angle on looking at the problem from the data layer, which ought to be the starting point for thinking about business solutions in any case.

The ingredients of their solution, in my mind, involve a combination of data abstraction and 3 Cs – Cloud, Containers and Choice.  Let me explain their product and what I mean in a little more detail.

HPE Cloud Volumes

HPE explained their new Cloud Volumes series of data and management services at a workshop run by Nick Dyer, their Field CTO for Nimble and Intelligent Storage, and Tony Stranack, their EMEA Head of Information and Data Strategies.  The problems they are trying to address are common across the Multicloud enterprise. They want to allow portability between the various Public Cloud options and/or on premises hardware so customers can choose the right tool for the job both now, and over time as platforms, circumstances and costs change.  They want to provide those services with enterprise grade resilience and availability.  They want to make the data repository itself easy to manage and in a unified way across the options.  Above all they want to give customers choice and flexibility, whether you are working on existing mission critical apps, or developing new apps with an agile and DevOps mode of develop and deployment.

Nick asked the question “where is the right place for my data” and then went on to explain that data always has “gravity”.  By that he means that data is bound by the constraints of where and how it was created, and how it is being stored.  Depending on that context, there are various factors “pulling” at that data if and when you want to move it and use it.

Ingress and Egress  

The biggest pull is Ingress and Egress, now a normal part of our cloud terminology, but why don’t we just say in and out?  Putting my quibble about words aside, we are talking about the costs of getting your data in to and out of the major Cloud provider’s platforms.  For Microsoft Azure, Amazon Web Services and Google Cloud Platform moving your data in to their platform doesn’t cost a thing.  Of course, they charge you for the storage you use, and they hope you stay a long time, but then they charge you when you want to move that data out of their platform, back on premise or to some other destination.  The costs can be significant.

Data Abstraction

With the Cloud Volumes service your data is held in a single repository that is logically connected to your on-premise compute, or to any of the 3 Public Cloud Services.  This brings significant benefits in both time and cost.  Because the data isn’t being physically moved, there are no egress charges and no elapsed time for the data to move.  This gives you all the flexibility and portability between platforms that you need, with the advantage that HPE only bills you for exactly the amount of storage and management services you consume.

Enterprise Grade Availability

You need enterprise grade security, resilience and availability.  The service uses HPE’s Nimble storage, designed for low latency with 256-bit AES encryption and 99.9999% availability.

Potential Solutions

The key benefits the approach drives are choice and flexibility.  Cloud Volumes allows you to move workloads and data from on-premises to any cloud (and back) simply and efficiently, helping you avoid being locked in to the first Public Cloud you chose.  It allows you to develop natively in Cloud and deploy on-premises or vice versa.  You could run production on-premises but apply AI and analytics logic in the Cloud adding the ability to scale capacity up and down as necessary.  The service allows you to run multiple instances across several Clouds and on-premises simultaneously.  You could run production on-premises but recover in the Cloud.  It allows you to spin up a new instance to try something in seconds.

Data Management

Cloud Volumes allows choice on management of the data service too, as well as providing a consistent approach across Cloud and on-premises.  You can use their portal, a Software as a Service based data management approach, as well as command line or cloud first APIs.  The service embraces Docker and Kubernetes to support the kind of Continuous Integration, Continuous Delivery approach to allow you to release more, faster and better – to develop once and deploy anywhere.

Underpinning the service is HPE’s InfoSight.  This is an AI based tool that analyses and correlates millions of sensors from all of their globally deployed systems.  It constantly watches over your particular environment but has learned from managing the entire HPE customer hardware estate to predict problems.  If it uncovers an issue, it resolves the issue and prevents other systems from experiencing the same problem.  It continuously learns so it gets better and more reliable over time.  It takes the guesswork out of managing infrastructure and simplifies planning by accurately predicting capacity, performance, and bandwidth needs.  Pretty smart.

Conclusion

Cloud Volumes provides a new angle on the Multicloud management problem that every enterprise faces.  By separating out the data it addresses a key cost and time issue as you are moving your data between platforms logically, not physically.  It simplifies the options for developing new cloud first apps, dealing with mission critical systems, disaster recovery, fail over and more.  It’s a set of tools that helps you choose the right Cloud, use a modern containerised approach, and allow you to change your Cloud or on-premises choice as the cost equation or other factors change.  From what I saw at the workshop it’s well worth exploring, and we hear there will be more announcements around the service coming very soon.

Check back here once we’ve had that briefing, or contact me if you want more detailed advice now.

Views from my colleagues who also attended the Cloud Volumes workshop:

• Richard Arnold’s take
• Bill Mew interviewed Nick Dyer
• Ian Moyse thoughts TBA

Hewlett Packard Enterprise is a customer and includes me in their global influencer programme. 

(Cross-posted @ Agile Elephant)

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Enterprise Irregulars is sponsored by Salesforce.com and Workday.

An interesting thread is now on within the enterprise irregulars group on what constitutes private clouds –as again very enlightened discussion therein. The issue that I want to talk about is if private cloud do indeed exist, then what is their adoption path ? Lets start from the beginning : the issue is can we can use the term ”cloud” for describing the changes that happen inside IT architectures within enterprise? Thought there can be no definitive answer – a series of transition to a new order of things, will in my opinion, become imminent.

The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The The pressures would mean more begin to seriously look at SaaS, re-negotiating license terms, rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.

The change in many senses may make IT inside enterprises to look , behave and perform like cloud computing providers – though there would be limitations( in most places serious) on scale, usage assessments , security and the like. There are strong incentives propelling enterprises to channel their efforts and investments over the next few years in mimicking a private cloud service architecture that gets managed by them internally. This could well become their approach of staging towards finally embracing the cloud(public) over a period of time . These baby steps to nearly full blown efforts are needed in preparing organizations to embrace clouds and it may not be feasible at all to make the shift from on-premise to cloud like flip switch. Serious licensing issues, maturity, lack of readiness, integration concerns, security all come in the way of enterprises looking at public cloud in a holistic way. These steps need not be looked down – they would very well become the foundation to move into public clouds in a big way.

Let’s for a moment assess this theme from a security perspective – a dominant concern business expresses when it comes to clouds. While assessing security requirements in public clouds,we see the recognition that a whole host of chnages need to be done at application architecture levels, the need to accomodate specific compliance requirements, privacy provisions in the public cloud etc.

Lets think through this : setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. IT teams while conceptualizing private clouds are happy to retain existing architectural designs, happily propose a clasical DMZ/Perimeterized model for providing security and enabling access, too often leveraging a highly virtualized infrastructure. More often than not, it’s enabling virtualization, automation and self service and color it as private cloud. Do recognize the implicit differences in constructing a private cloud and a public cloud. Comfort with the status quo with some adjustments versus an opportunity to rethink architecture, security, privacy,compliance needs in a way summarizes the nature of thought process and expected results between the private and public clouds. Speaking more directly, public clouds present the opportunity for enterprises to review and achieve specific requirements in the areas like agility, flexibility and efficiency at optimal effort Versus a skewed , boxed implementation of private cloud setup. Taking advantage of the public cloud benefits would far outweigh the advantages of getting boxed inside with private clouds.

Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!

The Transient Nature Of Private Clouds is copyrighted by Sadagopan. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

Enterprise Irregulars is sponsored by Salesforce and Zoho.

Recently, I had the chance to catch up with the Eucalyptus team, getting an overview of the new release and then a demo:

Interview

Mårten Mickos gives us the quick rundown of features: performance and scale improvements, storage versioning (as done with S3), and other enhancements and fixes.

Demo

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Enterprise Irregulars is sponsored by Salesforce and Zoho.

Image credit: Rackspace

I talk with the press frequently. They thankfully whack down my ramblings into concise quotes. For those who prefer to see more, I try to dump publish slightly polished up conversations I have with press into this new category of posts: Press Pass.

SAP made several announcement around virtualization, private cloud, and in-memory analytics today, during SAP TechEd. I spoke with a couple reporters on the topic, mostly sorting out “what it all means.”

Making SAP Applications (Private) Cloud-ready

Here’s a conversation I had with Chris Kanaracus around his story this afternoon covering announcements around “a new solution designed to manage SAP system landscapes in data centers using modern virtual infrastructure and clouds.”

SAP announced the start of a project to, as I understand it, make their applications run better on highly virtualized environments, or “private clouds.” (“Private cloud” has all but consumed “virtualization” for the most part at the moment, so it’s marginally safe to use those concept interchangeably at this high of a level.) Along with that re-working/optimizing, they have some additional management software targeted at that type of deployment.

I don’t have any figures or data, but the obvious question to ask is how many SAP installs are already running on such environments, highly virtualized ones if not “private clouds.” I’d guess from SAP starting this project, not many.VMware had some nice numbers around the types of applications running on their stack about a month ago, covered by Jon Brodkin recently: Exchange and SQL Server topped the list (see Bob Warfield’s SaaS-y take), while only 18% had virtualized SAP applications

Why would SAP do it’s own management software instead of having partners just do it? Well, most application companies like to bundle their own management tools – Oracle does, for example [hello William!]. Esp. for when it comes to things like installation, provisioning, and configuring things within the application, not just the infrastructure supporting it. Not knowing exactly what the “landscape management solution” would do, it’s tough to say. But, in theory if an application as beefy as SAP applications are was running on-top of a “private cloud” (or a “highly virtualized environment”) there would be a lot of application-level management needed beyond the usual event management, green-light red-light monitoring, and service request management. Indeed, the announcement lists functionality such as:

[S]ystem clone and copy framework, automated capacity management, SAP landscape visibility in all layers, and capabilities intended to help simplify the provisioning and management of SAP systems in virtual and cloud infrastructures.

Those are all things you’d worry about when running and application in a highly virtualized (or “private cloud” environment). Much of it has to do with automated otherwise manual tasks – like on-boarding new users and services, and allocating the infrastructure for it, etc. For example, in the retail space, if a new store popped up, you’d have to do provisioning within various SAP systems to setup new employees, track inventory, etc. In the utopic cloud world, much of that would be self-service automated with “private cloud” voodoo. Like setting up a Google Apps corporate instance, or a Salesforce.com account.

They say it’ll take a year, sound right? – For sure – re-architecting something as big as SAP applications to run on some whacky new environment like “private cloud” (which has about as many definitions as “pudding” does in the English language) takes a long time. And then there’s all the supporting tools, training materials, putting together SI engagement plans, and the marketing to prove to people that you should put in the time and money to switch.

How about the partners mentioned, and what about OpenStack? – I’d expect SAP to just partner with big name companies like Cisco, EMC, VMware – the whole UCS gang [in the announcement below, IBM is a big partner around analytics]. If a company came along …

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Enterprise Irregulars is sponsored by Salesforce and Zoho.

An interesting thread is now on within the enterprise irregulars group on what constitutes private clouds –as again very enlightened discussion therein. The issue that I want to talk about is if private cloud do indeed exist, then what is their adoption path ? Lets start from the beginning : the issue is can we can use the term ”cloud” for describing the changes that happen inside IT architectures within enterprise? Thought there can be no definitive answer – a series of transition to a new order of things, will in my opinion, become imminent.

The pressures on IT & the engulfing sense of change in the IT landscape are hard to overlook. The The pressures would mean more begin to seriously look at SaaS, re-negotiating license terms, rapid adoption of virtualization etc. As part of this and beyond, internal IT would be forced more and more to show more bang for the buck and it is my view that organizations would begin to look more and more to question committed costs and begin to aggressively look at attacking them more systematically – earlier sporadic efforts marked their endeavors. This could also unlock additional resources that could potentially go towards funding new initiatives. There are enough number of enterprises going this route and their service partners are also in some cases prodding them to go this way.

The change in many senses may make IT inside enterprises to look , behave and perform like cloud computing providers – though there would be limitations( in most places serious) on scale, usage assessments , security and the like. There are strong incentives propelling enterprises to channel their efforts and investments over the next few years in mimicking a private cloud service architecture that gets managed by them internally. This could well become their approach of staging towards finally embracing the cloud(public) over a period of time . These baby steps to nearly full blown efforts are needed in preparing organizations to embrace clouds and it may not be feasible at all to make the shift from on-premise to cloud like flip switch. Serious licensing issues, maturity, lack of readiness, integration concerns, security all come in the way of enterprises looking at public cloud in a holistic way. These steps need not be looked down – they would very well become the foundation to move into public clouds in a big way.

Let’s for a moment assess this theme from a security perspective – a dominant concern business expresses when it comes to clouds. While assessing security requirements in public clouds,we see the recognition that a whole host of chnages need to be done at application architecture levels, the need to accomodate specific compliance requirements, privacy provisions in the public cloud etc.

Lets think through this : setting up private cloud is a motherhood statement at best( in many organizational surveys, one can find setting private clouds is not in the CIO’s top three priorities – if anything virtualization finds a place-) to make this happen in a credible way means re-examining most parts of IT functioning and business –IT relationship inside enterprises. IT teams while conceptualizing private clouds are happy to retain existing architectural designs, happily propose a clasical DMZ/Perimeterized model for providing security and enabling access, too often leveraging a highly virtualized infrastructure. More often than not, it’s enabling virtualization, automation and self service and color it as private cloud. Do recognize the implicit differences in constructing a private cloud and a public cloud. Comfort with the status quo with some adjustments versus an opportunity to rethink architecture, security, privacy,compliance needs in a way summarizes the nature of thought process and expected results between the private and public clouds. Speaking more directly, public clouds present the opportunity for enterprises to review and achieve specific requirements in the areas like agility, flexibility and efficiency at optimal effort Versus a skewed , boxed implementation of private cloud setup. Taking advantage of the public cloud benefits would far outweigh the advantages of getting boxed inside with private clouds.

Most elements of the bedrock gets affected – the processes, culture, metrics, performance, funding, service levels etc. Well thought out frameworks, roadmaps need to be put in place to make this transition successful. These frameworks need to cater not only to setting up internal cloud but eventually help in embracing the public cloud over the years- not an easy task as it appears. A few of those organizations that master this transition may also look at making business out of these – so it’s a journey – that needs to be travelled onto embracing public clouds. Some business may take a staged approach and call it by private cloud, internal cloud or whatever but eventually the road may lead into public clouds!

The Transient Nature Of Private Clouds is copyrighted by Sadagopan. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

Enterprise Irregulars is sponsored by Salesforce and Zoho.

Back in January, I made a controversial prediction that private clouds will be discredited by year end. Now, in the eleventh month of the year, the cavalry has arrived to support my prediction, in the form of a white paper published by a most unlikely ally, Microsoft.

Titled simply The Economics of the Cloud (PDF), the document succinctly sets out the economic factors that make the public cloud model an inexorable inevitability, substantiating my long-held views. It deserves a full reading â don’t settle for the overview in the authors’ blog post announcing it. Here are some headline numbers that should give pause for thought:

• 80% lower TCO. The combination of large-scale operations, demand pooling and multi-tenancy create enormous economies in public cloud data centers: “a 100,000-server datacenter has an 80% lower total cost of ownership (TCO) compared to a 1,000-server datacenter.”
• 40-fold cost reduction for SMBs. “For organizations with a very small installed base of servers (<100), private clouds are prohibitively expensive compared to public cloud.”
• 10-fold cost reduction for larger enterprises. “For large agencies with an installed base of approximately 1,000 servers, private clouds are feasible but come with a significant cost premium of about 10 times the cost of a public cloud for the same unit of service.”

Since I know there’s a subset of ZDNet readers who will leap into Talkback to cry wolf on cloud security without bothering to read either the rest of this blog post or even looking at the white paper, here’s what it has to say on that particular canard:

“Large commercial cloud providers are often better able to bring deep expertise to bear on this problem than a typical corporate IT department, thus actually making cloud systems more secure and reliable … Many security experts argue there are no fundamental reasons why public clouds would be less secure; in fact, they are likely to become more secure than on premises due to the intense scrutiny providers must place on security and the deep level of expertise they are developing.”

That paragraph alludes to one of the key factors that I’ve been highlighting in my recent evangelism of the cloud model, the economies of scale for collective scrutiny and innovation. Amazingly, the document reaches its conclusions without adding in the additional economic benefits of this factor, which surely must deliver a knock-out blow to the private cloud concept. The collective feedback and testing from a diversified customer base enhances not only the security of a public cloud infrastructure but also informs and directs its evolution at a far more rapid pace than any private cloud will allow. There’s a virtuous cycle here, of course, in that public clouds are already more cost-effective as platforms for innovation, so that there is going to more innovation happening here than on private clouds anyway. That innovation will help to further accelerate the evolution of public clouds, thus amplifying…

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Organizations Seek Measurable Results In Disruptive Tech, Next Gen Business, And Legacy Optimization Projects For 2011

Credits: Hugh MacLeod

Enterprise leaders seek pragmatic, creative, and disruptive solutions that achieve both profitability and market differentiation. Cutting through the hype and buzz of the latest consumer tech innovations and disruptive technologies, Constellation Research expects business value to reemerge as the common operating principle that resonates among leading marketing, technology, operations, human resource, and finance executives. As a result, Constellation expects organizations to face three main challenges: (see Figure 1.):

• Navigating disruptive technologies. Innovative leaders must quickly assess which disruptive technologies show promise for their organizations. The link back to business strategy will drive what to adopt, when to adopt, why to adopt, and how to adopt. Expect leading organizations to reinvest in research budgets and internal processes that inform, disseminate, and prepare their organizations for an increasing pace in technology adoption.
• Designing next generation business models. Disruptive technologies on their own will not provide the market leading advantages required for success. Leaders must identify where these technologies can create differentiation through new business models, grow new profit pools via new experiences, and deliver market efficiencies that save money and time. Organizations will also have to learn how to fail fast, and move on to the next set of emerging ideas.
• Funding innovation through legacy optimization. Leaders can expect budgets to remain from flat to incremental growth in 2011. As a result, much of the disruptive technology and next generation business models must be funded through optimizing existing investments. Leaders not only must reduce the cost of existing investments, but also, leverage existing infrastructure to achieve the greatest amount of business value.

Figure 1. Innovative Organizations Face Three Main Challenges In 2011

Disruptive Technologies: Growing Enterprise Adoption – And A Few Bumps Along The Way

A flurry of mobile, social, cloud, analytics, and unified communication technologies from the consumer tech world continue to enter the enterprise. Technology buyers can expect that:

• IT teams will face device proliferation while hardware vendors will face device flops (@maribellopez). In the mobile landscape, organizations have spent the past decade trying to consolidate everything into a single device which we deemed the “smartphone”. Today, the adoption of devices like the iPad and Kindle demonstrate that consumers and businesses are willing to embrace a device that excels at a singular or small number of functions. IT will soon realize that it will be supporting at least two devices per person, if not three. Why? Tablets can’t replace laptops for most employees; and smartphones while ubiquitous are good for specific tasks. Thus, organizations will see employees using different devices for different apps. A majority of the tablets in use in 2011 will remain employee-purchased which will cause IT to formalize employee-liable policies for security, manageability, and reimbursement. After the successful introduction of the iPad, everyone believes they can build and sell a tablet. Dell, HP, RIM, and others will struggle to compete against Apple as they look for the right combination of user interface and applications to drive demand. Android-based tablets will fare better but only if the OEM has provided significant software wrappers to plug security, manageability and UI issues.
• Large enterprises will stall on adoption of cloud for voice communications (@eherrell). Despite announcements by major vendors, the cost model for replacing on- premises based voice equipment will not justify moving voice communications to the cloud in 2011. Cloud adoption will most likely begin to pick up during last quarter of the year, when pricing models become more competitive.
• Cloud security will trump on-premises efforts (@fscavo). 2011 will be the year when SaaS providers find the issue of security turning from a perceived weakness of their offerings to a perceived strength. A handful of well-publicized targeted attacks against in-house IT applications, similar to what was seen with the recent Stuxnet worm, will lead many corporate executives to conclude that their in-house IT organizations can’t match the level of security offered by SaaS providers.
• Forecasts in cloud security breaches will call for partly cloudy cloud adoption (@rwang0). Despite the woes in on-premises security and move to the cloud, cyber attacks will force companies to move from public clouds to private clouds in 2011 . Concern about cyber gangs hacking into commercial and military systems leads to a worldwide trend that temporarily reduces public cloud adoption. Hybrid models for apps in the public cloud and data in the private cloud emerge as users migrate from on-premises models. Data integration and security rise to key competencies for 2011. The bottom line – improved data security reliability will drive overall cloud adoption in the latter half of 2011.
• Android will become more enterprise friendly by fixing major manageability issues (@maribellopez). Android, while very popular with consumers due to its Verizon relationship, still strikes fear in the heart of IT. Its lack of on device hardware encryption, which even Apple supports, makes it a non-starter for some IT organizations. In general, Android will need to fix its support for Exchange including areas such as 802.1x WPA2 wireless network authentication, corporate proxy servers, Cisco VPNs using certificates, OpenVPN, CalDAV, remote wipe, and managed apps and configurations. Sure, Android is a consumer platform, but consumer phones are now enterprise phones. Google must address these issues or risk losing share in its war against Apple.
• Social media landscape transforms into information commerce (@briansolis). The social media landscape will undergo an interesting transformation as it ushers in a genre of information commerce and the 3C’s of social content – creation, curation, and consumption. While blogging typically resides in the upper echelons of the social media hierarchy, new services further democratize the ability to publish and propagate information. 2011 heralds the year of information curation and the dawn of the curator. Curators introduce a new role into the pyramid of Information Commerce. By discovering, organizing, and sharing relevant and interesting content from around the Web through their social streams of choice, curators will invest in the integrity of their network as well as their relationships. Information becomes currency and the ability to recognize something of interest as well as package it in a compelling, consumable and also sharable format is an art. Curators earn greater social capital for their role in qualifying, filtering, and refining the content introduced to the streams that connect their interest graphs.
• Enterprise social software migraine (@sameerpatel). On the Technology front, expect a lot of noise and confusion on the social and collaborative front when it comes to customer, employee and partner collaboration. Technology will come from 4 camps: Pure Play Enterprise Social Software Vendors, ERP and CRM providers layering in collaboration and community features, Networking and UC providers adding social networking to VOIP and Online Meeting offerings, and finally, specialist HR and LMS vendors extending their offerings to include collaboration. From a distribution perspective, today’s largely direct sales model will see expansion into Telco reseller providers who have sold managed hosting solutions such as email and messaging in the past, as well as system integrator and strategy consulting providers that are ramping up practices. Due to the nature of rapidly evolving use cases for social software, traditional sourcing mechanisms and criteria that might work for static ERP and CRM system selection will be inadequate to make long term and roadmap decisions on tools and integration for enterprise social software.
• Tools, networks and services that cater to the role of the curator will emerge (@briansolis). Storify, Curated.by, Pearltrees, and Paper.li break through as the coveted services of choice amongst curators as they not only enable the repackaging and dissemination of information, but also deliver in captivating and engaging formats. Similar to blog posts, curated content represents social objects and curation services will spark conversations and reactions, while also breathing new life and extending the reach of existing content – wherever it may reside. Curators play an important role in the evolution of new media, the reach of information, and the social nicheworks that unite as a result. Curators promote interaction, collaboration, as well as enlightenment. More importantly, services that empower curators will also expand the topography for content creation. Forrester estimates that 70% of social media users are simply consumers, those who search and consume the content available today…but never say anything in public about it. However, the ease of curation combined with the pervasiveness of micro-blogging start to entice consumers to share information, converting the static consumer into a productive curator or creator
• Social analytics will evolve from ad hoc experiments into refined information services (@rwang0). Organizations will continue to experiment in listening services that filter out noise from the social sphere, identify trends that deliver insight, and create models that support prediction. As algorithms increase in complexity, adapt to regional and cultural differences, and require greater vertical specialization, the end customer organization will no longer be able to support in house efforts. A new breed of information brokers will deliver social analytics at a scale that will support the challenges of big data in heterogeneous systems. Expect vendors such as Alterian, Attensity, Buzzmetrics, Cymfony, IBM, Radian6, SAS, Scoutlabs, Telligent, and Visible to shift their business models from software vendors to information brokers.
• “The Cloud” will become the new Social Media (@ekolsky). Always looking for a technology or tool to overhype, the recent announcements from Oracle, SAP, Microsoft, Salesforce and many smaller vendors in the enterprise applications world has placed “The Cloud” as the center of controversy for 2011 and into 2013-2014. The lack of coherence and understanding of “The Cloud” will result in many wasted dollars trying to implement models that are not sustainable, or reliable, for organizations, fees paid to consultants with no real knowledge of the market, and failures that will only serve to reduce the speed of adoption of “The Cloud”. Buyers will still have to wait until 2015+ to see what happens, as most vendors have just begun developing their strategies and organizations have not yet adopted the model in sufficient numbers to justify faster R&D from vendors (with few exceptions).

Next Gen Business Models: “Outside In” Strategies Proliferate – With An Eye Towards Pragmatism.

Business model innovation will rely more on disruptive technology in 2011. Leading organizations will strive for a better synergy between business and technology. Constellation expects that:

• Citizen engagement platforms will get more open despite the emphasis on security (@ideagov). The combination of the blow back from wikileaks; and the Republican takeover in the U.S. House of Representatives will lead to a rash of “military grade encryption packages” that will be stacked on top of many apps and platforms. Whether they work or not will not matter. Conversely expect to see an explosion of citizen engagement platforms striving to be even more “open.”
• Organizations will put business back into social business (@sameerpatel). As organizations increasingly start to see the benefits of deploying social and collaborative initiatives to improve employee, customer and partner engagement, they will soon begin to realize that the decade old notion of streamlining repeatable processes made popular by ERP and CRM system-of-record deployments was largely over promised. In practice, customers and prospects have unique questions not answerable in the knowledge base or by marketing; employees living in rigid ERP systems need to constantly find experts who have the best answers and to collaborate with them. And reseller partners are constantly spending time looking for the right answers not available on asynchronous partner portals to keep end customers happy. Silo’d but open collaboration initiatives on activity streams and other enterprise social networking utilities currently being deployed will expose such engagement not historically possible in an ERP or CRM laden design. Consequently, LOB and IT leadership will realize that traditional process approaches and fluid collaborative constructs need to come together to truly accelerate business outcomes.
• Sexy will be out for social media (@ekolsky). Organizations will realize that for something (social media) to feel sexy there is a lot of work that needs to happen behind the scenes. Time to pay the piper, as they say, and begin to build integrated platforms that can leverage social channels in constructing healthier, better relationships with customers. Despite the focus on tools and technologies, leaders will begin to realize that it is just about processes and people with support from technology. Want to get ahead? Plan, plan, plan – then roll up your sleeves and start doing, strategically speaking.
• Organizations will get serious about mobilizing apps and embrace the platforms to support mobility (@maribellopez). In 2011, firms will deploy enterprise mobility management tools to support multiple device types and operating systems. Companies will also focus IT resources on moving line of business apps to devices. While cloud-based platforms and SaaS gain in importance, a majority of firms (75+%) will turn to in-house resources for development. As a result, firms will adopt mobile enterprise applications platforms and mobility frameworks to help them port apps using existing IT resources.
• The distinction between BPO and ITO will blur (@pfersht). Integrated offerings from service providers with broad capability gain market share. With the leading IT services providers all heavily pushing BPO capability, there will be increased blurring of offerings as industrialized process solutions become more popular. Process-only BPO will continue to proliferate across horizontal offerings where there is significant labor arbitrage opportunity, namely finance and accounting, order management and procurement, however within industry-specific process, platform-enabled offerings are the only way providers can develop cost-effective utility models across their clients.
• P2P will displace the old notions of B2B and B2C in social business (@rwang0). B2B and B2C will cease to exist in 2011. Organizations will conduct social business through Peer-to-peer (P2P) relationships. Attempts to stove pipe individuals into forced-fit, artificial market segmentations will fail because each individual brings multiple roles to the community. Each role brings a new perspective and a set of expectations in customer experience. Organizations will have to retool to the new rules of business and also move beyond social.
• Sustainability software will lead to global starvation (@dahowlett). Sustainability software will conclusively prove that cows are the biggest contributors to greenhouse gases. The ensuing bovine cull will ensure population starvation on a massive scale thus solving our climate change issues. Those flogging carbon solutions will be put out of business.

Legacy Optimization: Flat IT Budgets And New Projects Increase Pressure On Legacy Costs

Between 66% and 75% of most technology budgets go towards supporting legacy systems. In order to make the shift to support new business models and disruptive technologies, leaders will have to find ways to optimize existing investments. Leading organizations can expect that:

• Corporate IT spending will barely keep up with dollar inflation (@fscavo). Corporate IT spending in the US and Canada will increase a small 2.0% at the median, after two years of flat budgets. In addition, although most IT organizations are not currently adding to staff counts, we do see a significant upturn in initiation of new major projects, extended work hours for IT employees, and increasing use of IT contractors. This will lead to an improved IT employment picture by mid-year.
• Technology refresh cycles will accelerate through 2011 (@ekolsky). The recent 2-3 years “nuclear winter” in enterprise applications, which coincided with the advent of social channels and social technologies, will give way to a massive acceleration of technology refresh channels – especially in Customer Service departments – leading to large-scale adoption of both new technology related to social media as well as new technology that was scheduled for later adoption. This large-scale adoption will result in several smaller vendors with innovative offerings gaining a sizable presence in Contact Centers and a disruption of the model for old-technology vendors that cannot adapt quickly to the changes we are seeing.
• Organizations will cautiously recommit to BPO (@pfersht). Business Process Outsourcing uptake will creep back throughout 2011, as the recovery stutters and buyers pull the trigger on sourcing initiatives, however, many of the deals for the first-time buyer will be small in scope. Many businesses paralyzed by the Recession have been operating a “wait and see” strategy through 2010 regarding their Business Process Outsourcing (BPO) options. However, a slowing recovery and a growing pressure to meet budgets will drive a steady wave of increased BPO evaluation and contract signing in 2011, especially in Finance and Accounting and Procurement. HfS demand-side research has pinpointed a strong interest from buyers to increase scope in existing BPO contracts, and close to one-in-four businesses in the mid-market ($1bn – $3bn in revs) are expecting to investigate their first steps into F&A BPO. Moreover, many BPO services providers are more determined than ever to “penetrate and radiate” customers with initial small-sized contracts, due to the shortage of attractive captive acquisitions and affordable competitive acquisition candidates.
• Organizations that reevaluate their IT strategies and contracts hand in hand will save the most money. (@rwang0) Most technology procurement strategies fail to align with IT strategy and vice versa. Consequently, buyers end up with extra device capacity and shelfware. As organizations consider their legacy optimization strategies, successful teams will bring enterprise architects, IT leaders, procurement teams, and business units together to identify waste to pay for innovation. Two -tier ERP and third party maintenance will prove to be examples where alignment can be achieved to create win-wins for IT and line of business leaders.
• Organizations held hostage by high and useless software maintenance contracts will lead a massive backlash (@rwang0). Organizations faced with market pressures to create strategic differentiation amidst the burden of legacy systems will need to find a way to pay for innovation. Software maintenance fees will come under attack as user groups and leading organizations will spearhead efforts to renegotiate existing enterprise software vendor contracts. Existing software vendors caught off guard will suffer through a PR disaster that will cost them significant future sales. Third party maintenance vendors will continue to emerge to combat vendor-lock in and maintenance hegemony.

Your POV.

Ready for 2011? Got a prediction we missed? Add your comments to the blog or send us a comment at info (at) ConstellationRG (dot) com.

Please let us know if you need help with you in 2011. Here’s how we can help:

• Disruptive technologies. Assessing the market for social, mobile, cloud, analytics, UC, and internet of things. Providing vendor selection frameworks. Comparing vendor capabilities. Negotiating vendor contracts. Providing independent validation and verification.
• Next gen business models. Advising management teams and organizations on disruptive technology adoption leading practices. Designing next gen business models in Social CRM, digital marketing transformation, cloud adoption. social business, virtual commerce strategies, business process innovations, and cloud services.
• Legacy optimization. Reviewing existing technology strategies for cost savings. Renegotiating existing maintenance contracts. Providing go forward optimization plans.

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Research Report: Constellation’s Research Outlook For 2011 is copyrighted by R "Ray" Wang. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

Enterprise Irregulars is sponsored by Salesforce and Zoho.

Several private clouds are now coming to market based on the Vblock technology developed by VCE, a joint venture forged by Cisco, EMC and VMWare. Last week I groaned inwardly as I saw not one, but two announcements plop into my inbox. First came Sungard’s “fully managed cloud offering”, and then a couple of days later CSC got in touch to brief me about the launch of CSC BizCloud, “the industryâs first on-premise private cloud billed as a service.”

It’s entirely predictable of course that we’ll see a surge of fake cloud roll-outs this year, and I shouldn’t be surprised to find the usual suspects eager to host them. It’s a lucrative business when, as I highlighted last year when quoting a Microsoft white paper, “private clouds are feasible but come with a significant cost premium of about 10 times the cost of a public cloud for the same unit of service.”

There are occasions, though, when even I’ll admit that implementing private cloud can make sense as a stepping stone on the way to a fully native, cloud-scale infrastructure. In the past, I’ve framed this largely in terms of the technology challenges. In conversation last week with CSC’s vice president of cloud computing and software services, Brian Boruff, I learnt that there’s also an important cultural angle. It’s simply too much of a mindset adjustment for many organizations to move directly to cloud computing from where they’re starting right now.

“I don’t think cloud computing is a technology issue. The technology’s there,” Boruff told me. “It’s a people and a labor and a business issue. BizCloud â think of it as a sandbox. They can bring it inside the data center and start playing with it.

“Two years from now,” he continued, “I think you’ll see workloads that have moved into BizCloud moving into the public cloud â but it’s a journey.”

Some organizations of course are way ahead of the crowd. Boruff spoke of three generations that differ dramatically in their attitudes to outsourcing and subcontracting. At one extreme are the first-generation outsourcers, he said. “Some people that have never outsourced are scared to death of this cloud computing thing.” Others have been doing it for twenty years or more and it’s second nature to them. “We have one client,” he revealed, “that is a $35bn multinational whose strategy over the next three years is to move everything they do into an as-a-service model.”

For those who aren’t yet ready to go all the way into the cloud, halfway-house platforms like BizCloud provide an opportunity to get some of the benefits of virtualization and automation immediately while taking time to adapt to the wider impact of full-blown cloud computing, he explained. Since CSC offers fully multi-tenant public cloud infrastructure built on the same platform as BizCloud, it will be much easier, he assured me, to move to a public cloud infrastructure from BizCloud than it would be from a classic enterprise IT environment. In the meantime, IT management buys time to transition its workforce to the new realities of cloud.

“It’s not just capital investment. Think about all the people, all the labor investment of people that are running around managing highly inefficient workloads,” said Boruff. “If you’re the VP of infrastructure and somebody’s telling you to move to the public cloud, what does the future of your career look like?

“BizCloud is a way inside of someone’s data centers to say, instead of three people doing that workload, maybe you only need two or one. Let’s retrain them to run these highly virtualized data centers and then go after some of the applications.”

While it may still cost more than a true public cloud implementation, the cost savings compared to the existing enterprise infrastructure can still be huge. Telecoms billing provider Cycle 30, an early Sungard cloud customer, is said in its press release to have “saved millions of dollars” by adopting a cloud solution, albeit without specifying how the savings were calculated.

Nor is CSC holding back customers from moving all the way to the cloud if they’re ready â whatever the hit to its own revenues. Boruff cited the example of Britain’s national postal service, Royal Mail Group, which CSC helped move from an in-house implementation of Lotus Notes to Microsoft’s cloud-hosted BPOS suite (soon to be known as Office 365). “We were charging Royal Mail Group a lot of money to run Lotus Notes for them,” he said. “We had 40 people on site. We had to get rid of their jobs.”

That kind of story probably doesn’t help make IT decision makers any more eager to accelerate their progress cloudwards. If a hybrid cloud strategy buys a bit more time to allay staff fears and manage retraining and redeployment, maybe it’s not such a bad thing after all.

Building a halfway house to the cloud is copyrighted by Phil Wainewright. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

Enterprise Irregulars is sponsored by Salesforce and Zoho.

I wrote part 1 of this post last October, highlighting a Microsoft white paper that convincingly established the economic case for multi-tenant, public clouds over single-enterprise, private infrastructures. Part 2 would wait, I wrote then, for “the other shoe still waiting to drop … a complete rebuttal of all the arguments over security, reliability and control that are made to justify private cloud initiatives. The dreadful fragility and brittleness of the private cloud model has yet to be fully exposed.”

The other shoe dropped last month, and from an unexpected direction. Rather than an analyst survey or research finding, it came in a firestorm of tweets and two blog posts by a pair of respected enterprise IT folk. One of them is Adrian Cockcroft, CIO of Netflix, a passionate adopter of public cloud infrastructure. The other is Christian Reilly, who engineers global systems at Bechtel and had been a passionate advocate of private cloud on his personal blog and Twitter stream until what proved to be a revelatory visit to Netflix HQ:

“The subsequent resignation of my self imposed title of President of The Private Cloud was really nothing more than a frustrated exhalation of four years of hard work (yes, it took us that long to build our private cloud).”

Taken together, the coalface testimony of these two enterprise cloud pioneers provides the evidence I’d been waiting for to declare private cloud comprehensively discredited â not only economically but now also strategically. There will still be plenty of private cloud about, but no one will be boasting about it any more.

As both these individuals make clear, the case for private cloud is based on organizational politics, not technology. The pace of migration to the public cloud is dictated solely by the art of the humanly possible. In Cockcroft’s words, “There is no technical reason for private cloud to exist.” Or as Reilly put it, “it can bring efficiencies and value in areas where you can absolutely NOT get the stakeholder alignment and buy in that you need to deal with the $, FUD and internal politics that are barriers to public cloud.”

Cockcroft’s post systematically demolishes the arguments for public cloud:

• Too risky? “The bigger risk for Netflix was that we wouldn’t scale and have the agility to compete.”
• Not secure? “This is just FUD. The enterprise vendors … are sowing this fear, uncertainty and doubt in their customer base to slow down adoption of public clouds.”
• Loss of control? “What does it cost to build a private cloud, and how long does it take, and how many consultants and top tier ITops staff do you have to hire? … allocate that money to the development organization, hire more developers and rewrite your legacy apps to run on the public cloud.”

Then he adds his killer punch:

“The train wrecks will come as ITops discover that it’s much harder and more expensive than they thought, and takes a lot longer than expected to build a private cloud. Meanwhile their developer organization won’t be waiting for them.”

But it’s Reilly who adds the devastating coup de grace for private cloud:

“Building the private cloud that is devoid of any plan or funding to make architectural changes to todayâs enterprise applications does not provide us any tangible transitional advantage, nor does it position our organization to make a move to public cloud.”

In a nutshell, an enterprise that builds a private cloud will spend more, achieve less and increase its risk exposure, while progressing no further along the path towards building a cloud applications infrastructure. It’s a damning indictment of the private cloud model from two CIOs who have practical, hands-on experience that informs what they’re saying. Their message is that private cloud is a diversion and a distraction from the task of embracing cloud computing in the enterprise. It can only make sense as a temporary staging post in the context of a systematically planned transition to public cloud infrastructure.

Private cloud discredited, part 2 is copyrighted by Phil Wainewright. If you are reading this outside your feed reader or email, you are likely witnessing illegal content theft.

Enterprise Irregulars is sponsored by Salesforce and Zoho.