Walter Adamson

Unparalleled cloud opportunity in Australia - Parallels

The Parallels Australia SMB Cloud Insights survey caught my attention. It's released as a pre-conference marketing promotion but it still contains some useful unbiased results.

The fact that it's benchmarked to similar surveys across the developed world is what makes it most relevant and interesting. It turns out that Australia is a poor cousin when it comes to cloud adoption, particularly in SMBs with 20 to 250 employees. For example, In other developed countries 49% of those report using hosted servers, whereas in Australia the figure is 22%. For smaller Australian businesses the uptake is about 60-70% of the other developed countries.

Of course "hosted servers" aren't really "cloud" - but managing hosted servers is what Parallels sells. The figures can be taken as indicative of the general attitude toward broader cloud services, with hosted servers being used as an example.

I wanted to post a question on the Parallels' blog, but what grabbed my attention was this, which I've never seen before:

WOW! Nifty.I've never seen that before. It helps both parties SEO-wise, to get the cross links, and I think it encourages a response (like mine!).

My questions

1. Parallels concludes that the strongest growth opportunity among Australian SMBs is targeting small businesses with less than 50 employees. What are the signals that would tell a service provider that such a business is getting ready to buy?
   I don't mean cold calling asking the direct question. But what, for example, would be the indirect question and signals - would it be mobile adoption or an application upgrade for example?
2. The larger, up to 250 employee, businesses were the real laggards compared to the rest of the world. They have bigger budgets, but the implied inhibitor is their own IT staff. What are the key inhibitions of the IT staff and how should they be addressed? Knowing that would open up a much bigger set of opportunities.

Is Australia lagging everywhere?

At the same time as Parallels noted Australia lagging in cloud adoption, I saw this report Security Risks Lead To A Third Of Australian Employers Banning Social Media. The biggest trends of our time, which will dramatically effect how business is done, are cloud, social and mobile. So our businesses are behind in cloud and banning social media!

Next we only need employers to come out with a survey saying "Employers declare iPhone a work menace!" and we'd have to start shedding tears. But wait - Australian employers “paralysed” in the face of consumerisation of IT - oh NO!

Unisys Asia Pacific vice president and general manager of IT outsourcing, Lee Ward, said employers were "paralysed" by the BYOT challenge, "over the last 12 months, employers have moved from "blissful ignorance" to "paralysed awareness" in the face of consumerisation of IT", she said.

What does this spell out? Opportunity!

Opportunity opportunity opportunity

For those who understand the business shifts and gains from cloud, mobile and social this spells out an "unparralleled" opportunity to get well ahead of the pack.

I'll be interested to see more details of the final Parallels Australian report, which they are releasing at their APAC Summit.

Where do you think the best opportunities lie, in the less than or more than 50 employee SMBs?

Where do you see the best business opportunities at the convergence of cloud, social and mobile?

See my question on Quora.

Please comment below.

Walter @adamson
http://xeeme.com/walter

Are Cloud Computing AND Social Enterprise both at Tipping Points?

A tipping point is when a small input related to a change pattern suddenly creates great change - perhaps takes off to critical mass. I wonder if Marc Benioff of Salesforce has done that within the last couple of weeks in relation to both cloud and social enterprise? My bones are stirring!

Security and privacy no longer a barrier

"... people erect these barriers around security and privacy, which in some ways are very unfounded. And the reason I think they’re unfounded and ridiculous ..."

Who said that - someone from Amazon, or Microsoft, or Salesforce?

No, it was said at a Dreamforce 2011 panel by the former US federal government chief information officer, Vivek Kundra.

He added:

... is because the United States government already has outsourced over 4700 systems. These systems are already in the hands of Lockheed, Raytheon, Boeing, Northrup-Grumman — you name it. Yet when it comes to Cloud, for some reason, these fears are raised.

To me that's huge. That's game over for governments everywhere.

Of course the US Government, and its cloud suppliers, can afford to have US-based storage and clear legal jurisdiction. Which means THAT issue is the fundamental issue for other governments to resolve and then they can plan their move to cloud.

Same story for business. But actually much less of a story since 99% of businesses aren't bound by the same restrictions and vanity requirements of governments.

The 10 years which Benoiff has been pushing cloud, and it's been a hard sell, may be about to pay off in a big way. And his efforts will take the whole industry forward with him across the whole spectrum of "cloud" services.

Social enterprise is suddenly everywhere, thanks to Dreamforce

Much more recently Benioff has become a leading advocate of social business and the social enterprise. The change just now is that at the 2001 Dreamworld social enterprise was everywhere! This spurned a huge lift in reporting e.g. Salesforce.com Steers Social Enterprise Movement Amid Cloudy Outlook. And see what Liza Sperling from Seesmic said:

Dreamforce 2011 is over, and many attendees are likely still reeling from the energy, enthusiasm and explosion of information about the social enterprise.

Most surprisingly to me was that the way it was reported was almost like fait accompli. Remarkable!

I completed my certification in Social Media Strategy back in 2009, from the Palo Alto-based Social Media Academy founded by Axel Schultze. Professionally I've benefited enormously from that superb business-based training program and the methodologies. But it's still been something which has to be pushed.

Much of my consulting is centered at the intersection of cloud computing, mobile, social business, and collaborative commerce, and what businesses need to do to prepare for and survive the impact of the coming shifts. And that's also been somewhat evangelical - I only see the innovative, forward-thinking types.

But I am getting a feeling that this is all heading mainstream right now, at least the cloud and the social enterprise parts of the equation. Mobile has a bit to go. It is being catalysed by the consumerization of IT, and Apple, but not yet at the tipping point. And collaborative commerce is still only early thinkers and adopters (as far as how all these impact "traditional" business models, I mean).

Social enterprise front, left and center

But in social business, social enteprise we hear this:

During the week-long Dreamforce, the common catch-all phrase from Salesforce.com executives was that Social Enterprise has become the rocket ship "that will propel the business of anyone associated with the vendor’s platform and applications strategies to stratospheric levels".

But we don't just hear and read it once, and just from Salesforce. We are starting to hear it everywhere and all sorts of business people are picking up the message - see here and see what you find on Google News.

Something is happening, and I think the next 12 months might be a lot less evangelical and a lot more practical, thanks to the education effort of players like Salesforce and Marc Benoiff.

What kind of sense do you feel about cloud, and social enterprise, as business trends?

Do you think we're near a tipping point for either and why?

See my question on Quora.

Please comment below.

Walter @adamson
http://xeeme.com/walter

PS Some readers may think that Salesforce is just another quite shallow vendor hyping its latest Chatter enhancements with a show about social enterprise. In that case you should read some of the thoughts underlying it, in particular those of JP Rangaswami.

Image from www.enterpriseirregulars.com

Would the real cloud innovation please stand up!

The topic of "Innovation" has been trending ever since Steve Jobs announced he was quitting.

It makes a plethora of interesting reading about how companies innovate and how Apple is said to innovate, whether Jobs was critical to their innovation,and in fact the greatest CEO ever! There is even raging debate over the word itself including "creative disruptive" innovation! (It makes sense!). We have warnings against gamification of innovation, against democratization,  and in favour of democratization, and about the long nose of innovation. We read of encouraging positive deviance and emergent employees. And we even have debates about whether Henry Ford said or did not say "If I had asked people what they wanted, they would have said faster horses".

And then there's the cloud! Is it innovative or not?

Cloud innovation, real or not?

I'm a fan of Simon Wardley and Randy Bias on this (and throw in some Berard Golden). Cloud computing per se is not really disruptive innovation. That's not to say that it is not innovative. And it is certainly not to say that it is the same old thing we've had for years just rebadged by marketers.

Is Cloud Computing Old Hat?

That "old hat" line, used by the best salesmen in the old enterprise software and new private cloud vendor organisations, is simply a ploy. It's a sales ploy to keep the buyer in their comfort zone while they sell them some more "stuff" to keep them away from the real cloud.

Need to get your head into the value not the features

As far as the IT infrastructure goes it's fair to say that it is evolving, or sustaining, innovation and not disruptive innovation. Even though for the major cloud operators and providers e.g. Facebook or Amazon, it has required a lot of innovative pursuits, the result from the consumers' viewpoint is not disruptive innovation.

For instance, let's consider virtualization, because it is often discussed as the core "innovation" of cloud computing. I've picked it for 2 reasons. The first reason is that often becomes the sink hole for discussions on cloud, as the be-all and end-all, and the second reason is that it illustrates the point about evolving innovation.

Discussions about cloud often centre on virtualization. But cloud and virtualization are independent, especially as far as the potential of disruptive innovation is concerned, and I'll come to that later. Google, Facebook, Amazon don't use virtualisation. Why not? It's probably more complex but the reasoning at its simplest is that they can't afford to use it. It would increase their capital and operating costs and cut their margins by doing so - think of a 20% hit to each.

Why then, do so many big IT shops use virtualization. Good question!

Here's the uncommon answers  - firstly they have to clean up their mess, and secondly they haven't got the talent not to.

I'll explain:

• Cleaning up the mess. When you've built an infrastructure mess which is getting worse, it can become economically attractive to impose layers of inefficiency since those inefficiencies are less costly than continuing to build more mess. 
• Haven't got the talent. The big cloud providers are magnets for the top talent, and it takes talent to get all this right. The Amazon and the Googles and the Facebooks and the Microsofts have the most challenging cloud workloads on the planet - even the big banks don't rate at this scale. It takes talent to move your core systems into a real cloud environment and especially a super-efficient non-virtualized one a la Facebook.

Virtualization does offer a path forward for those "normal" big IT shops who have a mess to clean up. It's an effective way to get some mess under control and hopefully to get a tighter and more efficient architecture out of the transition going forward out of virtualization. But it is not fundamental to "cloud computing".

Conclusion, if you could do it, you often would be better to not virtualize anything in building your core services into a real cloud environment. At best virtualization is a feature, not a benefit.

The second reason I mentioned virtualization was to illustrate its evolutionary heritage. It's certainly not new.

Most often people reference the late 70's and IBM. But it was in commercial use in the early-70s by Burroughs, and by ICL of the UK. ICL's George 3 operating system allowed for multiple copies of its predecessor, the George 2 OS, to be hosted within it as a migration strategy. All the old programs could be run "as is" under George 2, while the system as a whole ran under George 3. This feature offered many advantages in systems administration, but was ineffecient. I know, because I was a George 2 and a George 3 systems programmer, and I wrote my Masters thesis on Machine Portability in the mid 70s.

So the point is that the myriad of developments needed to deliver cloud as a service are part of a chain of evolutionary innovation. This is of no interest to the business consumers of cloud, as these are simply features of cloud not benefits to the business user.

The key for business is that the delivery chain of cloud has now reached a point where it can enable disruptive innovation for the business.

It's about the business bozo!

That is, the features of cloud have been cleverly developed over a long time - they do represent something new in their combination. But the potential of cloud is in the benefit to business to create new business models, new services, new sources of wealth, and new agility.

Those can be disruptive, at the business and industry level. That's why business should be extremely interested in cloud and very uninterested in how it is delivered.

Does it interest you how telco carriers have evolved and developed the technology to deliver us better internet access? For 99.99999% of us the answer is no. But we are interested in how we can make money from having that asset, and particularly if we can layer on a disruptive business model.

Cloud is a vehicle for disruptive innovation by those higher up the value chain - not on the provider side but in the higher order application on the customer business model side.

In fact it's the biggest disruptive opportunity for business for the last 20 years. That's where the opportunity for real cloud innovation lies. And that's also the reason that those businesses which stick their heads in the sand about cloud may well be placing their business at risk of being attacked by more nimble and cost-effective competitors.

If you are driving your business forward and see innovation as an ingrained strength then you must come to grips, as soon as possible, with how cloud computing can help deliver shareholder value.

Why do so many firms find themselves debating cloud innovation rather than business innovation from cloud?

See my question on Quora.

Please comment below.

Walter @adamson
http://xeesm.com/walter

10 Questions when Data Localisation stalls cloud computing

We often see data localisation bought up as an issue - a reason not to adopt cloud computing. There are the black and white cases, the gray and emotional cases, and the government.

The government is the government; they have money and they can spent it how they want and they can go play somewhere else if they don't like you. That's also the bottom line - the more games government play the more it costs the taxpayer, simple as that. That extra cost may well be justified, for the reasons that the government would wish to promote.

As far as data localisation is concerned, some state governments are specifying that all data must be kept within the state, so that it is unambiguously within reach of the state jurisdiction and only the state jurisdiction.

Constraints cost money

That is a costly constraint, unless the major cloud service providers each happen to have a local facility, and can control and restrict the flow of data. Of course it is unlikely that each of the major providers will have a local facility. Which means that any that do have not only an inside run but also a monopolistic chance to grab the government business. The business outcome of this all-in-State requirement can only be a higher cost, and less flexibility, for the government client.

In the rather famous, or notorious, case of the LA Police Department, Google had to set up a separate data environment called GovCloud - only to be used by Government Agencies. But even then it was not specified that all data had to reside in the state. But Google, and Microsoft, have committed to their government cloud environments maintaining all data within the US.

That's obviously a double standard, since in other parts of the world e.g. Australia, cloud providers such as Google and Micrsoft are promoting the safety and compliance of their cloud offer's eminating from outside Australia e.g. Singapore. It's also an acknowledgement of the commerical reality that the cost of marketing and selling around the objections are higher than the cost of building "GovClouds" in the US.

We only want what you are giving US governments and agencies

So it's a fair question - if you Mr Cloud Provider are bowing to US governments and agencies then what we are requiring in terms of local data housing must be a reasonable and logical request isn't it, after all we probably have relatively similar laws which relate to this area?

Yes it's a fair question.

It just comes down the the business case and the ROI for the provider. The decisions about local in-country or in-state cloud centers are purely based on a business case. If a government can commit to spend enough, over a sufficient period of time, then things can be done.

Ironically the burden of that type of commitment is something which real cloud computing is offering customers the chance to avoid. That's an expensive commitment for customers e.g. goverrnments.

Are there other alternatives?

Does all the data really have to housed locally?

Let's examine some options:

• If the state legislation really requires and can only operate on the basis of all data being held withing a state then that's pretty much the end of the story;
• But actually that's unlikely, we already have outsourcing, and those contracts often using out-of-state centers;
• Then the question is which data, what type of data is mandated to be held locally, and why?
• Is it a quesion of access, or one of denying access to other jurisdictions?
• Is it to conform wholly with Privacy legislation, or are there other important regulations which come into play?

Piece by piece, except in the blanket "all data mst be help here" case, the reasons can be broken down and the alternatives assessed. Even in the case of Google and the LAPD, the interpretation of both the LAPD's security requirements and the FBI's requirement that the Google Apps for Government system be compliant with its Criminal Justice Information Services (CJIS) standards was a matter which required extensive review and determination.

So the interpretation of legislation is often not black and white, and it is in these details that the real cloud strategy and data location requirements need to be discovered.

10 Questions to ask

Digging deeper into what is possible in terms of data location requires that we ask some questions:

1. In which jurisdiction will the service provider store the primary data?
2. Which local laws apply to getting access to that data by local authorities, and what type of authorities would have access? (The US Goverment requires that only US citizens with proper clearance and authority have access to GovCloud.)
3. How will we be notified if local authorities seek access or are given access to our data?
4. Under what circumstances will that data be copied, moved to, or shared with other jurisdictions?
5. How will the cloud provider contractually ensure that the privacy and access conditions for the data, in the "external" jurisdiction, are maintained to at least the same level as that required by the customer government?
6. Which specific part of the State legislation require local data, and for what purposes?
7. Are these requirements blanket omnibus requirements, or specific technical aspects of specific legislation?
8. Can any of the restrictive requirements be amended with an acceptable effect on their objectives or intented outcomes?
9. Which other government bodies or agencies require the State to conform with legislation which impacts on the ability to host data out-of-State?
10. What is the cost implication in terms of total contract and lifecycle cost of an in-state data location requirement versus out-of-State or even out-of-Country or "don't care where"?

Those questions will get into the "whys" of data localisation and help sort out the options and costs.

Risk management

It's also worth noting, as in any risk management exercise, that the risks which are identified with out-of-State data can be treated in 5 ways - they can be accepted, rejected, mitigated, transfered or avoided. The options within each of those 5 categories provide the path for action.

In summary, data localisation is both an emotional and a logical issue for cloud service providers to address. Putting aside a "blanket No" then the real issues can be assembled and then broken down into their key components and their risk, cost, and political implications.

That's not always going to be an easy task. In fact in the case of Google and the LAPD these types of issues caused major overruns and change orders to their cloud migration project.

But the issues can be sorted and will reach a sound conclusion which is cost-effective and meets all the jurisdictional goals.

What do you see as the biggest issue in data location for cloud customers?

Have you seen original restrictve requirements loosened after more detailed analysis?

Walter @adamson
http://xeesm.com/walter

Walter Adamson was the Independent Advisor to the IT Strategy Board of the Government of Victoria for several years commencing 2005.

3 reasons Office365 helps Google Apps and vice-versa

After more than eight months of hype Microsoft's cloud-based productivity suite, Office 365, formally went live Tuesday with Microsoft launch events from New York and around the world. Google Apps has proclaimed a premature victory, but as we all know price isn't everything - both Office365 and Google Apps will be winners.

Google reacted with 365 reasons to consider Google Apps on the Official Google Enterprise Blog. Frankly I thought that it was an immature response; perhaps it just illustrates that if you're not using a competitor's product in earnest then you'd better be careful what you say it cannot do. The fact that in the post Google could only come up with 4 reasons, and those were barely credible, made for poor PR.

A lot of fluff, and unnecessary. Both Google and Microsoft will benefit from the launch of Office365, for the following reasons.

1. Office365 raises the whole perception of the cloud to new level of trusted service

Sure, we've had cloud now for a while, and we know about Dropbox and various very useful ancilliary services we use daily in the cloud. And we've had Google Apps for a good while. But let's get real, Google Apps is still struggling - it's doing OK but not making much money for anyone. See for example that Keboko Ltd in the UK, a cloud evangelist and Googe Apps reseller just folded - not due to no sales but to the long tail of the 20% margin taking far longer to kick in than the business could support. That is, cloud has been feasible, but hard to achieve and harder to sustain for resellers.

Office365 brings cloud to everyone's desktop, in a familiar and virtually transparent mode. AND, it runs "off-shore" for Australians - out of Microsoft's data centre in Singapore. In one fell swoop that takes a lot of the heat out of the "offshore" argument - because actually no-one really cares and it becomes a non-argument - it just reverts to a sales trick but with far less momentum. And on this count of non-local computing Office365 and Google Apps help each other.

Google Apps will benefit from the realignment of the general acceptance of cloud computing for the everday desktop. Office365 will improve the achievability of Google Apps partners surviving!

2. Google pricing will help people understand the value of Office365

Google Apps are know for their "low cost" - US$50 year per user (Google Apps for Business). Office365 comes in with a lowest price of US$72 per user per year (although Australian users pay up to 76% more than US users; Australia pricing from Telstra). That's more for Office, for sure, although when you do the total cost of ownership sums (as Google encourages you to do) then any current Microsoft user will start avoiding a whole series of other support and operational and licensing fees.

On the basis of getting rid of infrastructure Google Apps and Office365 will come out square, except that with Office365 you'll be able to do it on a phased transparent basis, as against a big-bang basis with Google Apps. If we're getting serious here, we'd have to add in the cost of retraining to Google Apps. That's a sum which is going to far far exceed the $22 savings for the first year of Google Apps.

And if we're getting serious we have to also say that Office365's collaboration and communication capabilities are a world apart from Google Apps. No-one, except the Official Google Enterprise Blog, is going to claim that anything offered by Google Apps matches up to Exchange, Sharepoint, and Lync (the old communication server). Lync itself is an under-rated component of the Office365 offer - the unsung hero as PC World puts it, and off course Skype fits in there somewhere.

There is huge value in that extra $22 charged by Office365. Contrary to popular belief, I expect that this small difference, for such a large value-increment, is going to put a lot of pressure on Google Apps.

3. Office365 will accelerate the restructuring of the channel, helping Google Apps

Office365 proclaims that "cloud" is here to stay. Microsoft CEO Steve Balmer proclaimed Office365 is where Office meets the cloud. Up until now the cloud - as it is thought of by business - has been a bit foggy, and that also applies to the channel and resellers, where discontent has been running high.

From now on, If you’re not asking yourself if the cloud is right for your company, your CFO, CIO, or other another executive, or a competitor, will. Office365 is going to catalyse those questions, raise their profile, and accelerate change. It's a key strategic leg for Microsoft, and they will make sure it is on every business agenda possible.

This means that Microsoft will also have to sort out their relationships with their hundreds of thousands of service-provider partners. They have been working on that for years now, and through BPOS learnt some tough lessons. They are actually far more advanced in tackling this very tough problem than any other vendor, in my opinion. Compare Google's partner and channel experience to Microsoft's - it doesn't compare - Google's doesn't even rate on that scale. 

But as Microsoft get on top of this, and as the channel adjusts and restructures, Google will be able to leverage the enormous effort put in by Microsoft to create its own advantage. There are no doubt new channel opportunities for cloud services - it's about how to reinvent the channel not replace it, and to avoid the business dangers.

Conclusion

At the end of the day, I think that Office365 is good for everyone - for business, for users, for cloud, for Google, for the channel, for consultants, and for the future of IT. Whether the ultimate "winner" will be the total off-premise Google model, or the combo on-premise off-premise model of Microsoft I don't know. Although I do feel for now that the combo cloud plus on-premise vendors are best placed for the SMB SaaS opportunity.

What's your view of Office365 and the Google Apps war? - please leave your comment in the box below.

Walter @adamson
http://xeesm.com/walter

PS I'm mostly a Google Apps user, but I still use Office regularly.

Related post: Office365 and Partners - crisis = danger plus opportunity

Like my coverage, then please Fan my blog - upper right, thanks.

2 Business Transformation Markers from Apple WWDC 2011

There's news galore about Apple's Worldwide Developer Conference announcements, but amongst the mountain of new feature analysis and reporting I see two transformational items which haven't got much press. The first is related to the "home media center" transformation, and the second to the cloud computing transformation.

Home media center

Windows has a home media centre. It's on a PC, duh! Some reports of Apples new iCloud gushingly headlined this type of summary "Apple pins its hopes on the iCloud as users drift away from computers". That's a poor headline, although that actual article in the Guardian is very good. 

Users aren't drifting away from "computers". We're being more and more surrounded by them, almost embedded with them!

BUT! The universe IS drifting away from the PC as the centre of anything, and especially the home media centre.

That IS a transformation - not technically but business-wise, personally, socially and emotionally. The blurring of personal and business life, and entertainment, is all part of what makes this a real transformation. People interacting with their music, TV, work, and social channels "simultaneously" is not going to revolve around a PC. And guess who is placed best for where it will happen, Apple. Not because they have the devices, but because they have the devices and the ecosystem and the assets.

Which brings me to my next point

Cloud Computing - the transformation accelerates

Apple is reputed to have spent $1 billion on their new data centre in North Carolina to support iCloud.

There is still lots of noise and emotion about cloud computing, and our trusty sales folk are making hay while the sun shines with traditional Fear Uncertainty and Doubt to keep customers from making the big  choice.

But which companies, in the world, can afford to spend what the big cloud providers are spending on their data centres? Microsoft is said to be spending $500 million per centre. Plus they attract the very best people, because they can and because it is leading edge. The world's smartest computing scientists and IT practitioners and operational experts are working for Amazon, Apple, Ebay, Facebook etc. Not for the banks, and the traditional IT vendors. Those "old" sources are good, but not transformational, perhaps with the exception of Microsoft in a perverse way. Microsoft's cloud solutions are very good and they are coping with the cannabilization issue after many years of internal conflict.

All this means is that the transition to the cloud, for 98% of businesses, is just a matter of time. That time period will be largely a matter of emotion, pushed by a build-up of cost and competitive pressures on the laggards.

If you can't afford to spend $500m to $1 billion on your data centre, then you need to ask serious questions about why you are investing any money in "computing" and not planning the path forward to cloud and the necessary communications support. You may need to invest in new access devices, and communications, but you don't need what you had.

The IT world is in transition - business transformation follows

Just these two trends, accelerated by a "consumer" company are enough to show that the whole IT world is heading for massive transition, and the business transformation opportunities are big.

PS I was going to title this post "iOS 5 is irrelevant" but that's a bigger topic I'll leave for another day.

What do you think was the biggest transformation from WWDC?

How do you think the cloud transformation will play out with most businesses?

Walter @adamson

The reluctant customer - OK I'll buy even if I don't Like you

I like the look of the new Telstra Digital Business bundle, even though like many (most) people I'm not a fan nor an advocate of my telco provider. I'm certainly not about to Like them anywhere in the social ecosphere!

I don't Like you but the others are probably worse - I fear

I'm a "hostage" customer in that I think the couple of other "competitors" are just as bad if not worse. Telstra has earned it's share of the rising number of complaints to the Telecommunications Industry Ombudsman (but to be fair its proportion of the complaints has fallen). And the marketing telebabble which all the players indulge in has been likened to Orwell's 1984 doublespeak - it's decidedly scammy but that's the world in which their marketing departments live.

So despite in the past having to endure up to 6 hours on the phone trying to rectify my accounts (they eventually offered me $500 to "settle" one blunder) I have "registered my interest" in their new Digital Business offer.

What is the real "natural market" for telco business extensions?

The future for telcos is a hot topic and the big events on this get the attention of the top people, especially if Tomi Ahonen is on the stage!

That's because it's not so obvious. For example, personally I don't buy the argument that telcos are the "natural owners" of cloud computing services and that this will be their new salvation.

Over the last decade telcos have said to be the natural owners of many things - web hosting, general hosting, media, entertainment, sports, SMB services, SaaS portals, systems integration services, enterprise software services, buying groups, trade exchanges, trade markets, trade directories, trade forums - but few if any have had any traction despite the billions poured into these initiatives globally. 

Let's face it, although the "app store" and "iTunes" was invented and commercialised by Japanese carriers 5 to 6 years before Apple the telco world elsewhere universally proved to be the dead hand which crushed such initiatives, and others such as mobile payments.

Apple didn't innovate iTunes, it innovated out of the dead hand of the telcos

Apple's innovation wasn't in iTunes or the app store, they were proven models in Japan, it was in taking control out of the dead hands of the telcos and music companies. That was a true commercial innovation. And I suspect Apple will also take control of a broader payment system as well. In these respects telcos universally are duds and they've lost those races.

Telco 2.0 provides industry research and strategy, and their model has 6 "opportunity types". Telstra's Digital Business initiative lies across 2 of those types - Vertical Industry Solutions, and Embedded Communications. The bundle comprises:

• New voice calling features: including an "Auto attendant" redirecting calls to fixed phones in up to three locations and mobiles;
• High-def call quality – SME voice-over-broadband;
• Sophisticated voicemail – fixed and mobile voicemail messages are collected in a single hosted voice box and can be forwarded to staff as email or SMS;
• New pricing – businesses pay a ‘per user' fee rather than "per phone line", with a flat rate for services including hosted email;
• Free calls - all voice calls between phones on a Digital Business account including mobiles are free of charge;
• Domain Registration - access to professional email and web addresses;
• Hosted email via Microsoft Exchange Online - real-time and synchronised email, calendar and address book information across computers, laptops, tablets or smartphones;
• Broadband back-up service via the Next GTM network – can switch businesses automatically to wireless in the event of a fixed network outage.

I'm sure that there are many similar bundles offered by telcos elsewhere, and this stikes me as an attractive package to small businesses like mine. If the rumoured entry price of $120 per user per month is correct then that is attractive, subject to the detail. I'm paying almost that much now just for my mobile phone. (And if Tesltra would add in virtual fax then it would be a real winner.)

Scaling is always the killer because the channel is the choke

The $64 question for Telstra is how can their distribution channel cope with a product of this "complexity". After all just signing up for a mobile phone has the channel extended to its limits. It doesn't matter to me personally, as long I as I can sign up without too much grief. But in order to achieve scale the digital and the retail engagement model will need to be designed and executed with care and a lot of attention to operational excellence and digital engagement.

I'll buy!

I'm not about to Like Telstra, but I am looking forward to the detail of the new offer, and I'll very likely sign up. If they get it right then Telstra will suck the wind from the sails of many of the smaller existing IT service providers to the SMB market, particularly the "Medium", and that's something which which should be keeping these providers awake at night. Don't bet on Telstra's previous incompetence, if nothing else their price point is going to crunch the market.

It's not as if relationships don't have a strong role. The smaller service providers have this advantage with their current customers. It's just that at some stage the value offered by the local service provider falls below the value created by the low price point of offers like Telstras.

I actually hope that Telstra can deliver as if it is well done it will help small business productivity with the suite of integrated services. It's a sign of "cloud" productivity and economics hitting the mass market.

Are you a user of a similar bundle, from your telco or elsewhere?

What natural markets do you see for telcos to extend into?

How threatened should smaller IT service providers feel by these kinds of bundled offers?

Walter @adamson

Cloud directions Facebook versus IBM, light-bulbs versus furnances

IBM and Facebook are not really fighting each other, just looking at the world from opposite ends of a telescope.

Consider, IBM has to make big inroads into the cloud computing world as a commercial necessity - to sell lots of servers (hardware) and lots of layers of management applications (software). It's a hardware, software and services business, right?

Facebook operates one of the world's most massive web-systems, far bigger than any bank and far different from any bank, which in fact are not web-systems but just very traditional datacentres and networks. Facebook's front is as social platform, but one of its key competencies is massive web-systems operations. Tim o'Reilly said Operations is the new secret sauce, and Facebook is a master operator - just look at the travails of Twitter or Tumblr, both notorious for their multiple system failures.

So perhaps Facebook and IBM have some common business competencies. Both know a huge fundamental amount about hardware, servers, networks, configurations and operations - on a very big scale. Both have some of the best brains in the industry.

But how they see the cloud world is remarkably different - they are laying their bets on difference races. For example IBM just had a major cloud announcement - IBM Unveils Cloud-Computing Initiative Aimed At Large Companies. This actually means "companies with very large computing requirements" and in this context Facebook is a very large company. 

The gist of the IBM announcement is that "IBM is attempting to differentiate itself from some of the main players who have already made big bets on the cloud. Competitors such as Amazon's Web Services, Microsoft and Google". That's a good aim and given its assets IBM should be able to do that.

The IBM SmartCloud "will enable clients to use a Web-based interface to install applications and configure databases on a platform provided by the company". That notion centres on configuring and managing servers as the key unit.

On the other hand Facebook has just announced its Open Compute Project, which makes public and gives away all of it's design and construction plans and details for its new data centre - all the building works, the aircon, the electrical wiring etc - and all the server architecture and design. Facebook designed their own "vanity free" servers, in the same vein as Google using commodity servers. They don't need brands, fancy face plates and video cards in their servers. For its efforts, Facebook's new data centre uses 38% less energy to do the same work as it's existing facilities, while costing 24% less. For example, the data centre uses ethernet-powered LED lighting and passive cooling infrastructure to reduce energy spent on running the facility.

But more, Facebook don't see the server as the object of their attention. Facebook really sees a server as just another lightbulb. And the amount of attention they give to managing a flashed-out server is just the length of a flash. Comparatively, the attention needed in the "old" server-centric world is equivalent to that needed to re-start a blast furnace.

Complex management interfaces, architected upwards from a server-centric model, can't manage what Facebook needs. So they've architected it themselves from the top down, while at the same time redesigning hardware from the bottom-up.

IBM's not doing anything stupid, they're just doing what the rest of the industry is doing. The point is that Facebook isn't perceived as a technology company, far from it. It's often not perceived as an innovative company - when they do innovative things the social media is repleat with condemnation and those stating "that was obvious any fool could have done it". Facebook is not perceived as an expert in data centre design and rarely as an operator of massive web-scale systems that eclipse the complexity of the banks and airlines.

But Facebook is all those things. It's extremely technology-astute, it's innovative, it's ground-breaking, it's astoundingly connected in web-services and data-interfaced world (think the super-strong network effects of its social graph, and the way it has made itself core infrastructure e.g. Facebook Connectthroughout the web), and it has access to all the capital it needs to do anything.

And it's Open Compute Project may just unleash a whole wave of creativity which will dramatically change the way massive cloud computing is implemented, and for sure will encourage many start-ups to do things the Facebook way as versus the "industry" a la IBM way.

Should we expect it, as the norm, that companies with web-systems like Facebook could not use what IBM offers for cloud computing? This is kind of a high level statement, but true. If they did use the industry-commercial offers then this would kill Facebook, or Google, same story. Facebook and Google aren't building their own systems from the ground up because they really want to, but it's because they know they have to, for economic and performance reasons, because they understand fundamentally what is needed, and they can. 

The cloud is going where the likes of Facebook and Google (and Amazon and Rackspace) are taking it. Not where the IT industry might hope it might be based on their current inventory and skill set.

The cloud shift is accelerating. It's not hype, it's not only remodelling business and business opportunities but also the whole IT industry and it's ecosystem, and it hasn't even started yet!

What do you think are the implications of Facebooks own-build of cloud computing?

What do you think is the ultimate potential of the Open Compute Project - just PR or a shift in industry power?

Walter @adamson

5 Takeaways from #Msft Global SMB Cloud Adoption Survey

Microsoft's new SMB cloud survey is impressive because of the coverage - almost 200 SMBs in each of 16 countries, having between 2 and 250 employees. In terms of methodology it looks quite sound.

Headline

The Microsoft headline: "Microsoft Survey Reveals 39 Percent of SMBs to Pay for Cloud Services Within Three Years"

My headline: "More than 50% of SMBs unable to make informed decisions about cloud computing - global survey".

It's actually 53%, see slide 16 - "I don’t know enough about cloud computing to be able to make decisions about using cloud services".

Leading indicator is accessing email through multiple methods

My 5 key findings for this survey group are:

1. The leading indicator of paid cloud adoption is accessing email through multiple methods - web, mobile, desktop app etc.
2. Irrational fears still drive decision-making:
   - better control over inhouse applications and data than cloud 57%
   - cloud services unproven and too risky 30%
   - data not secure in the cloud 30%
3. There is a strong prevailing belief that local presence is "critical or important" ( 82% )
4. This belief, which I also believe is irrational, never-the-less provides good opportunities for local service providers
5. The highest growth areas for those opportunities are the vanilla services such as data archiving and compliance, file sharing, and web conferencing - slide #9 - followed by CRM and collaboration.

Findings don't align with Microsoft's global online services strategy

It's all rather ironic since Microsoft's "All In the cloud" strategy is entirely about selling online services directly to SMB's - globally. For example, Australia is serviced out of a data centre in Singapore. Well actually who cares where, except that predictably our SMB survey audience still do!

It also has to be the grand plan, even if not trumpeted from the roof of MS HQ, that base level of global online services includes support sufficient to attract customers, and therefore to cut out local support requirements - think email, web conferencing, file sharing, storage and backup, archiving and compliance.

That leaves accounting and payroll, CRM, collaboration, and specific business applications as potential value-added areas for local service providers.

Milk the cash cow of ignorance

The good news is that the SMB's irrationality and ignorance of cloud provides a so-called "window of opportunity" for local service providers to leverage the "local presence" bandwagon.

There is also the legitimate value of migration services, and although one-off this can be good cash for local providers, providing that they have very cost effective migration tools (if they don't, this could be done by remote or offshore or at least non-local specialist providers).

They can use that cash-flow to transform their own business, in anticipation of their SMB customers becoming educated about cloud, to support higher value offers and support for the more complex cloud services.

It seems callous to take money from the ignorant but according to the survey SMBs are willing to pay for their irrationality so it is a golden opportunity for transformation for local service providers.

Action plan, from the survey

The plan is - focus on the SMB segment currently or planning to access email through multiple methods, milk the full suite of current services for local support, pick up the cloud migration projects, sell hard into the highest cloud growth areas as that's where the customers have an appetite, and use the funds to build value-add in cloud accounting and payroll, CRM, collaboration, and specific business applications.

What is your main conclusion from the survey?

What do you see as the greatest opportunity for local service providers in support of SMBs using global online services?

Walter @adamson

3 Reasons Cloud Computing as Business Transformation is misunderstood

The BBC recently published an article which became popular in the buzz - Getting your business cloud-ready. This was often retweeted as "cloud taking off in 2011". The essence of the article was captured by an early paragraph header - "From zero to server in 30 seconds".

It's this type of common misunderstanding of cloud which pervades the media, both popular and technical, and it's a great pity because it comforts people in the face of an oncoming tsumani.

Three reasons that the "infrastructure" myth of cloud pervades the conversation are because of vested interests, business inertia, and poor sales models.

It's not about scaling infrastructure

The Cloud: Battle of the Tech Titans - in BusinessWeek recently, was a good overall coverage, but fell for the same line about cloud being just more "stuff" which we have all seen before, but this time massively scaled:

What's different this time—as compared with the rise of the mainframe or the PC—is scale.

Wrong! That's actually what's the same as could be extrapolated from the past. Sure, scale leads to economies, but that's only the motivation for change not the strategic benefit. It's not the core of cloud.

The danger of "business as usual"

Let's take another look, we find thousands of articles with this type of definition:

A cloud computing solution is essentially a move from a traditional premise-based IT infrastructure to computing services that are delivered as a utility from a remote datacenter.

Sure, if that IS your definition then cloud isn't any different. Could reading that type of definition make you think that cloud is an enabler of business transformation, on a scale not yet seen in the history of IT?

I don't think so. Therein lies the danger.

It's a danger for service providers - they can go out of business. It's a danger for IT staff, a core of those, say 20% will become redundant. It's a danger for vendors of stuff you put in your own real estate - from software licences to hardware iron. It's a danger to businesses, because they can rapidly become uncompetitive.

3 reasons the misunderstanding continues

So if all this is true, why is cloud misunderstood?

Here are three reasons:

1. Vested interests. Vested interests in the current products, services and supply models, and buyers, want it to be seen as "business as usual". The Business Week article quoted above hit the nail on the head: "Gin up a pitch that sounds good to cautious CIOs and will ensure another round of technology purchases." Nothing wrong with that, it is the way of the world - it's the little Dutch boy holding his finger in the hole in the dyke, except that it won't have that happy ending. This is a very powerful force, it will prevail for years, and if history repeats those responsible will have moved on when the downside consequences manifest themselves.
2. Business inertia. The vast majority of businesses, despite the literature and legend of management advice about forward planning and strategy and positioning etc etc, do not act until driven by fear, or competition, or cost cutting necessity (which could be thrown back into to fear basket). At the moment, in the cloud revolution, businesses do not feel any fear from cloud-enabled and cloud-agile competitors, or cloud-enabled and cloud agile customers making new demands, and they don't feel the pain of uncompetitive cost burdens in their organisation from their current IT investments and implementation. They will continue in "business as usual" mode until fear or cost burdens force change. Cloud is all about business NOT as usual, but it will take a while to impact.
3. Sales models. The cloud vendors, be that Amazon or Google or even "old" Microsoft, are stuggling with their sales and channel models, which results in most often the lowest common denominator of cloud services being sold, which is the simple infrastructure scale-up scale down. This is just a "virtual" replacement for owning your own stuff. All three have a problem in that they have no channel to promote and assist with the real business transformation of cloud. Microsoft has an additional problem in the hostility of thousands of current service provider partners who see cloud as a threat to their livelihood. This is a deeply unsettled distribution issue.

Opportunity for agile businesses

None of these reasons is going to fade quickly. They are all deep-seated. The period over which their influence will decline is years.

This represents a fantastic opportunity for those businesses that do get the real business transformational value of cloud to get way ahead. In fact this is a seminal point in computing history for this breakpoint to happen, it may not present itself again for another 20 years.

Those business that do assess cloud in it's full potential and consciously align that potential with their business strategy will outpace their competitors, I have no doubt.

Clouds are ecosystems - offering business advantage

Clouds are about ecosystems, about large collections of interacting services including partners and 3rd parties, about inter-cloud communication and sharing of information through such semantic frameworks as social graphs.

A cloud ecosystem is a collective set of capabilities from multiple organizations and potentially services spanning multiple platforms and cloud environments which together form an ecosystem which feeds and build upon each other.

That's CLEARLY business transformational, whereas "computing services that are delivered as a utility from a remote datacenter" are NOT.

By the way, to understand what cloud really is read anything of Werner Vogels (Amazon), or this from  David Chou (Microsoft).

Do you think "cloud" is just another "business as usual" technology?

Do you think business which strategically adopt cloud can in fact gain competitive advantage?

What do you think will be the key force to move business to adopt innovative cloud solutions?

Walter @adamson