Cloud Computing: Out of the Boardroom into the Cloud
Great piece on driving corporate IT adoption of Cloud Computing by realizing value in the areas of development and testing, not necessarily production applications and resources. Testing processes and infrastructure resources are huge black holes (and subsequently afterthoughts) in many large organizations, which should logically point the testing function to “The Cloud” to evolve capabilities and grow capacity…we’ve been on projects where the lead time just to get a server provisioned in the data center was a minimum of 14 weeks, and the testing organization was told 2 weeks before the scheduled go-live date that they had 1 week to develop a test plan, procure the requisite resources, execute the test plan, and somehow be responsible for the delivery of a bug-free deliverable. Perhaps utilizing Cloud Computing won’t necessarily keep the testing team from being neglected and abused, but it should give them a new set of tools to respond with under unrealistic expectations and constraints. At the very least, this is a good path into the IT organization to start demonstrating value, allaying fears, and creating the cognitive dissonance required to drive acceptance of Cloud Computing.
SaaS Business Profitability – Build for the long tail and get the rest for free (almost)
The key takeaway from this posting is that if you focus on being lean and build SaaS applications with the lowest-profit customer in mind, then scaling up to midmarket and enterprise customers will give you more flexibility with regard to pricing, customization, and sales / marketing. This is a simple yet powerful message, and one that we have built our business around. One of the primary reasons for partnering with Coghead early on was that we understood the implications of Platform as a Service (PaaS) in changing the economics of SaaS application development and service delivery; by building SaaS applications on PaaS, we eliminated all upfront capital expenditures for IT infrastructure and were able to take our innovative, “Long Tail” niche applications to market quickly and for a fraction of the cost of traditional ISV development efforts. This in turn allows us to offer SaaS applications with deep functionality that automate common business processes to customers in markets that have traditionally been underserved by larger software companies. Because of Coghead’s unique multitenancy model, we can also provide our SaaS applications with tiered levels of customization based on our customers’ functionality and integration requirements…all at pricing levels that Mom and Pop shops can easily afford, even in tight economic environments.
A Place in the Cloud
This is one of the most comprehensive and pragmatic articles we have seen from the perspective of explaining cloud computing in terms of business value. Topics include how cloud computing shifts capital expenditures to operational expenses, the value of provisioning capacity on demand, how barriers to IT resources are removed and cycle times are improved, and how cloud computing improves IT efficiency and reduces IT resource requirements.
Will IT of the future have its feet firmly planted in the “Cloud?”
This article doesn’t cover any new ground, and in fact it’s basically a summary of a couple of Gartner and Forrester reports, but we thought it was interesting from the perspective that a banking industry journal found the topic of cloud computing compelling enough to include a story about it. If the seed of cloud computing has been planted in such a data security and privacy-minded industry, one would think that it should be on just about everyone’s radar by this point…with the exception of probably health care and public sector.
Capitalizing on the Cloud
This is likely the most succinct analysis of the challenges that cloud computing faces in becoming a viable paradigm in delivering technology services that we’ve found anywhere on the Interweb. M.R. Rangaswami ties together some high-level research from Merrill Lynch on the value of the cloud computing market with adoption challenges and Gartner’s prescriptive view of considerations that we face as companies trying to monetize services in the cloud.
Key takeaways:
- Cloud computing needs to be defined. Is this critical on a micro level for providers that leverage the cloud for service delivery in order to drive customer adoption? Probably not so much – most people buy Salesforce because it’s a great CRM product, not necessarily because it’s “in the cloud.” Is it critical on a macro level to define cloud computing in a comprehensive yet accessible manner? Absolutely. Confusion in the cloud computing message only underscores the immaturity of the space and can impact mainstream adoption.
- Focus on value. Explaining the value proposition to those of us that are able to run our entire businesses on SaaS applications that automate the end-to-end “virtual value chain” as opposed to having to hire half a dozen people with comparable functional expertise is preaching to the choir…the value is self-evident to early adopters. The key challenge is to find the right value proposition for the various tiers of the market; the SMB market that can leverage SaaS to gain access to applications that just 5 years ago had too many zeroes in the price tag see the value immediately (or with minimal nudging), but the enterprise end of the spectrum still bristles at the thought of giving up control of IT resources to providers outside of the walls of the corporation…the thought of not being able to walk into a server room and know that all is right in the world because you can see thousands of blinking green lights is just science fiction in the majority of enterprise CIO’s minds at this point.
- Figure out how to sell this stuff. Marketing and selling services in the cloud requires a radically different approach than selling software out of a box. We know this, but that doesn’t make the prospect any easier. How do we price it? How do we position it? Are competitors really competitors, or are we all complementary and connected in this new world of cloud computing? What business models will hold up as the everything-as-a-service, pay-as-you-go model gains real traction in the market? Nobody has the answers. Yet.
