I have compiled a 10,000-foot view of Day 1 from my attendance at SIIA's "All About the Cloud" conference. In a post that's designed to be read in fewer than five minutes, I cover five major topics from yesterday's discussion. Ready? Go.
We are still early in the adoption cycle
The larger-than-expected attendance at a kick-off "Introduction to the Cloud" session made me realize just how early we are in the adoption cycle. Approximately one-third of total conference attendees were present for the session, leaving me to make the broad assumption that one-third of all attendees were in the process of deployment and the remaining two-thirds lie somewhere in between. Market-research firm Saugatuck Technology confirmed my guesstimate. The research group presented survey results which placed buyer expectations for cloud-based spending through 2010 at 30% of the total IT budget. The same survey results presented the expectation that by 2014, only 50% of IT spend will have transitioned to cloud-based resources. The anecdotal evidence and surveys suggest that despite the initial hype, we still have a multi-year ramp before market maturation for cloud-based resources.
License provisioning is a detriment to ELAs
Several attending organizations are presenting their multi-user login solutions for cloud-based environments, which are frequently built around a single admin user login. These solutions are nothing to brag about, and I am sure the problem they attempt to bandage will eventually be addressed directly by the hosting service.
The important piece of their presentation is the license provisioning which is provided through multi-user login solutions. This is best demonstrated through an example. In the historical packaged-software environment, a 250-employee organization purchases 250 licenses for Microsoft Word under an enterprise license agreement (ELA), to be installed on each of the employees' computers.
License provisioning, however, would analyze the use of Microsoft Word and suggest that at a single moment in time, only 100 employees, on average, use Microsoft Word. Since Microsoft Word (for our example) is now being hosted and does not physically lie on a single user's computer, the organization can now save costs by purchasing only 100 Microsoft Word licenses. As employees rotate in and out of using Microsoft Word, resource provisioning allocates a license to the requesting employee.
This is a very basic example, and the concept was first developed as VMware introduced the virtual-machine environment. The solutions, however, are reaching a greater level of maturation and adoption. The demand for these solutions is driven primarily by the ability of the organization to audit, in real-time, license usage, preventing ELA disputes between the customer and product distributor. In the past, I have spoken with organizations that believed the cost of auditing their license usage by hand was more expensive than many of the fines they received for ELA violation. During their budget process, they would merely allocate funds for next year's fine, in place of a proactive audit.
The return of best-of-breed solutions
This is a short and sweet concept, but paramount to the decision by organizations to move to a SAAS solution. Software vendors, in their effort to sell higher-margin "suite" solutions, use the fear tactic of "a la carte solutions are expensive and timely to integrate." (See the 80/20 paradox in the next paragraph.) Hosted software allows organizations to benefit from the choice of best-of-breed solutions. This choice is a growth accelerator for the firm because internal solutions can be tailored to individual departmental needs without the struggle and learning curve associated with settling for what is best for the organization as a whole. This new power of choice for implementing organizations implies that competition will increase for software developers who must execute and can no longer rely on selling a higher-margin suite of products. I, however, have always been of the mindset that true innovation cannot occur in an apathetic environment.
SAAS allows the CTO/CIO to return to a position of innovation
During an organization's early, start-up phase, the CTO/CIO as founder or co-founder is a key strategist and resource for driving company innovation and growth. Unfortunately, as the business scales and customers begin to require "four nines" of reliability maturation, the CTO/CIO settles into a position of complacence, trying to simply keep the ship stable. This is often referred to as the 80/20 paradox, where the CTO/CIO is required to spend 80% of the total IT budget merely to maintain the current system, while only 20% of the budget is available for innovation and trial solutions. SAAS solutions limit both the monetary and time expenditures that are required for arduous maintenance processes such as upgrade-testing. Transitioning the 80/20 paradox to one of 50/50 or, if you are lucky, 20/80, means the CTO/CIO is moved into a position of innovation. This position change could, at its most simple, result in cost savings, or in the best-case scenario, drive the organization's underlying growth rate. The availability of new platforms, new software, and new solutions within the organization mean that new products, developed around market-leading technologies, are delivered to the customer ahead of the competition.
Don't forget that SAAS has a meaningful impact on hardware and networking resources too
Finally, the external ramifications for the supporting hardware and systems on which the cloud operates are equally as important as the cloud's impact on software development and delivery. Announcements that were made separate to, but during the conference that influenced conference discussions included: (1) Marvell's production of ARM-based processor cores for use in data centers. The expected impact is a five-fold reduction in power consumption when compared to the incumbent Intel x86 architecture. (2) Microsoft is expected to announce today (5/12/10) a full-functionality free version of Office Suite , to be known as "Office Web Apps." The free version will only be available on-demand and is Redmond-Giant's response to existing solutions, primarily Google Docs. (3) NetApp announced that it is the first storage provider to have deployed over one exabyte of deduped storage systems . The massive size of total deployments by a single storage vendor made conference attendees step back and realize just how expansive our digital universe is, and just how dependent we are on it.
Please feel free to comment on those areas of my discussion that were most significant to you and your organization, and I would be happy to expand on any of my topics as a follow-up post for the entire community.