Cloud Computing thinking within The Board

By Nick Hortovanyi

I'm presently doing the Australian Institute of Company Directors, Company Directors Course for management education. I elected to do this, as when I went to the information sessions, I found out, to my surprise, that they are suggesting that company boards look to appoint more IT focused Directors. In Australia at least, the majority of directors have had an accounting/finance or legal background. If this is different in other countries, please let me know.

My understanding is that, in general, the boards have relied on the advice from or they have deferred to the accounting/finance based directors when difficult governance issues have arisen, that have related to IT. I've often wondered why this is the case, in particular now, with the commoditisation of hardware and software in this area being ERPs. The net effect is, in most cases, they just allow the companies to operate more efficiently. To keep the cost base at a point to compete against their existing competitors.

I myself, have not worked on an Accounts Payable, Accounts Receivable and/or General Ledger system for a number of years now. Whilst understanding the importance of them to the operations of the business, I find that they are not the areas that occupy the forefront of innovation within an organisation.

One of the modules, last Friday was Strategic thinking. The lecturer, actually mentioned Cloud Computing, which was something that I was not expecting at all, as an example of thinking laterally. Others, that I talked to at the course, had not heard of the term Cloud Computing before.

But this is the issue, Human Capital and Information Capital, are now beginning to be at the forefront of new organisational strategies. Where I live in Adelaide, South Australia, the local state based government, is expecting 50% of the workforce to retire within the next ten years. I've also heard figures as high as 60% of the workforce in some utilities over the same period. These Human Capital issues compound the Information Capital issues, because better means are required to capture that Information Capital of an organisation before it retires out the door.

At the same time, new strategies are required to either compete more effectively in existing Red Oceans or to find new Blue Ocean strategies.

How is the strategy going to be underpinned? Potenially by using technology! SaaS (Software as a Service) based applications that utilise Cloud Computing infrastructure services are being steadily used as new strategy option. They may not be the answer, to every strategy, but increasingly, as it becomes more difficult to find resources willing to work within companies, they will become a core part of an organisation's strategy.

Are current boards or your existing board up to the challenge around this? Am interested to hear your opinions about this.

Focus on competitiveness with SaaS, not security perils

By Nick Hortovanyi

Some are expressing concerns about the security risks and perils related to compliance, availability and data integrity of using cloud based SaaS services. James Governor, summed it up nicely here, when promoting CloudCamp London by referring also in the title to Avoiding Monsters. 

I'd argue that the services that will be first consumed through a SaaS mechanism will be transactions that do not offer a competitive advantage to that particular business. That is it just enables them to work more efficiently.

If so, what benefit will other organisations, or individuals, have with accessing information regarding these non competitive transactions?

Even if they did have a glimpse, that picture portrayed by that glimpse is only representative of that point in time and will quickly change to another picture.

What may be deemed competitive information, in this case, is the aggregate information of these transactions containing a dimension of time. Therefore with careful partitioning any potential security risks can be mitigated.

So avoid the FUD, as James said "Dangers and Perils - Here Be Dragons. Ah yes the beauty of FUD."

SaaS - those that get it and those that don't

By Nick Hortovanyi

Two camps are evolving in the software world. Those that see SaaS (Software as a Service) as the future of software delivery to end users and those that don't.

Entrepreneurs and innovators see that providing access to their software over the internet through a hosting provider as the main viable method of delivery to consumers. Establishing traditional channels via distributors and resellers is too cost prohibitive, as well as potentially a prohibitive barrier to entry. This is the great disinter-mediation that is happening with software.

It is also some what silent from the perspective of people working inside of larger corporates and government organisations.

At this time, the majority of IT executives perceive that their organisations will continue to install software on-premise and support it. For the majority of IT consulting organisations this is still a lucrative business to persue. There is services revenue for customisation, training, installation & support as well as from the initial product sale, and with some vendors from support renewals.

So what you can see is a conflict developing here. There are groups of people that want to make the SaaS model work to break down the barriers and obstacles that are stopping them from selling their products. On the other side, there are also groups of people that want to preserve the current status quo with on-premise software installations.

If they do get it, they can see the world of hurt that is coming.

Software multitenancy drives operational efficiency

By Nick Hortovanyi

Over the last week, I've been evolving a presentation regarding our multitenancy commercialisation efforts through Business Portal Server. For the most part it has been received positively.

In one session that I gave though, a VC (Venture Capitalist) who was participating in the group, stated that we gave an excellent presentation but our business model was flawed. I of course disagreed prefusely. The argument presented was the classic of the internet as a disintermediation agent between organisations who provide SaaS services and the consumers there of. However, the model I see, is that new channels will evolve through eco systems of organisations working together. These organisations will focus in their particular areas of expertise be it software application focused or technical infrastructure to form stronger composite services.

The larger organisations that I deal with for on-premise consulting are continuously trying to reduce the number of vendors that they interact with. The lower the number, the less points of interactions. The argument being here the more efficient the internal procurement process. I believe also, that there is limits to the number of meaningful relationships that can be maintained to add value.

The complexity of development and support of production SaaS infrastructure is growing rapidly in complexity. Its only natural for consolidation and specialisation to follow. How these organisations work together will form the new software channels. It will also be shaped, rightly or wrongly, by procurement processes which drive how organisations purchase.

Will Microsoft be relevant in the SaaS world?

By Nick Hortovanyi

As some reading this might know I'm a bit tired of Microsoft everywhere, so I apologize in advance if you perceive some negative sentiment towards Microsoft. I have been like that since 2001/2002, when .NET was announced/released and everyone came knocking on my door - you have to look at this. I'd turn around and say Why? its an earlier version of what I'm working on with J2EE. I'd already worked out how to use EJBs and related technology properly by that time and how to specify J2EE projects for delivery (hard, hard work getting to that point though) using geographically distributed development teams.

I suppose .NET woke some of the J2EE guys up by having the Microsoft People say "Don't rule us out, .NET can do it too!" but at the same token the Microsoft aligned developer community needed something to move to. As VB, ASP and MS C++ development was no longer exciting at that time or able to scale. Now did you notice that I said "Microsoft People"? What surprised me, was that there was an option for these Microsoft People to explore alternate technology besides the newly introduced .NET. After all, who uses version 1.0 software? I wonder how many explored alternate technology only to say that .NET Ver 1.0 was the way to go as it protected our investment in VB and ASP skills? Many did just this, they kept to the Microsoft technology, even though there were maybe better alternatives for their circumstances, thus I call them Microsoft People.

SaaS (Software as a Service) is the future of software delivery, being that it will be off-premise delivery of software as a service to the consumers of the products. There is lots of interest in this subject and the analysts are always commenting about strategies that organisations will adopt to transform over time to the SaaS delivery model. For Microsoft, there will be a loss of income as the number of licenses installed on-premise will dissipate as these off-premise services become more pervasive. SaaS will also be extremely disruptive on the IT services community that is supported by these Microsoft People. I can see many Microsoft People becoming disgruntled, especially in the Microsoft software channel as the need for the software channel dissipates through the direct to consumer engagement model of SaaS.

Microsoft is a company that has grown up with packaged software on-premise and its technology has grown to support that model. Because the technology was for on-premise and used extensively in lower concurrent user usage scenarios, emphasis was not placed on those items for higher concurrent usage and availability scenarios like in-process fail over. I'm still not certain if .NET can support this or not? Now this is where the J2EE technology shone in so many ways above that of .NET. 

I think there is some very turbulent times ahead for Microsoft and the recent Yahoo take over activity shows that they are looking for more ways to accelerate this change then what can be achieved through internal change and innovation alone. As they say, a large ship can not easily be turned by a small rudder.

Now I grew up in my early teens programming Microsoft Level II Basic (this is giving away my age), and entered the work force as the PC was becoming ubiquitous in business operations. So much so, that I avoided learning how to program the Mainframe. I bought a copy of MS-Access Ver 1.0 at a discount. I used to program using early versions of Microsoft Studio for C etc but during that time and up to now, I have never seen Microsoft have it's "IBM Moment".

Is the Yahoo takeover activity an early signal or is it the continuing emergence of SaaS as a disruptive influence potentially signaling Microsoft's "IBM Moment"? I'm not a 100% certain, what I believe though is that there may be too much inertia with Microsoft's current business model to enable it to change rapidly enough to be relevant in the SaaS world of tomorrow.