10 Things You Don’t Need to Do In the Clouds

Sometimes a breakthrough paradigm shift eliminates the need for all kinds of things.  Word processors and laser printers killed a lot of other things that were once thriving including typewriters, liquid paper, and Linotype machines.  So it is with the Cloud.  When I chat with my Director of Operations at Helpstream, we’re always chuckling about how much better life is in the Amazon Cloud for our company.

As I read through unread blog posts with Google Reader, I’m going to note 10 things we don’t need to worry about since we’re in the Cloud:

1.  NetApp’s new DataDomain data de-duping product.   NetApp bought a company with a cool technology.  Plug it in place of you tape backups and you can backup to hard disk because this thing eliminates redundant data–sort of a very backup-savvy compression algorithm.  But if you’re in the Cloud, who cares?  Your Cloud vendor worries about this stuff.  You just buy it by the gigabyte, as much as you like, and do whatever.  Backup already looks like it is a hard disk with S3 and especially Elastic Block Store.  This is one whole chunk of costs and complexity you can safely ignore because it just doesn’t matter to you and you couldn’t install it in your vendor’s Cloud if it did.

2.  Server power consumption.  It’s out of your hands.  Sure there are really cool new technologies, like Dell’s Fortuna server that is the size of a hard disk and uses 20-30W.  But it doesn’t matter.  You aren’t choosing the servers in your Cloud.  The good news is that any really large scale Cloud vendor like Amazon will be choosing servers with great performance per watt, because it lowers their cost basis.  If they’re selling a commodity, like EC2, they’ll have to pass those savings on to you too.  Best of all, you can feel good about these being more green solutions than you’re likely to have the expertise to create in your own data center.

3.  Worrying about big iron or little iron (or little big iron where a proprietary cpu is in a small chassis?).  Should I run the best servers Sun (or some other Big Iron vendor) can provide?  Or should I just run lots of little commodity “Lintel” (Linux + Intel/AMD) boxes?  Quit worrying about it, because you can’t affect this.  In all likelihood your Cloud vendor has Lintel.  You have no idea which hardware brand they use, so you can quit caring about that too.  All those specs, which rack form factor, yada, yada, just don’t matter any more.  You have a handful of virtual machines you can choose from.  There are relatively few specifications to focus on for those virtual machines.  Someone else has probably already figured out how to set up memcached or whatever on those machines and how to optimize the software for that footprint.  You should certainly try some experiments because your software may be different, but the search space is sharply limited.  That’s a good thing, isn’t it?  Now you can focus instead of poring over a gillion spec sheets outer joined to a gillion different purchase deals.

4.  Worrying about MIPs in general.  As Om Malik so correctly points out, its the megabits (of connectivity) not the MIPs that count these days.  We haven’t been able to get more MIPs like we used to for a while, because of the multicore crisis.  Sure, we get more cores, but we don’t get faster clock speeds.  Everyone is ooohing and aaaahing that the iPhone will get a 1.5x faster cpu.  Does anyone remember back when you got a PC twice as faster every 18 months?  They never felt twice as fast.  Most of the time you could only tell if you went back to the slower machine, which seemed sooooo slooooow.  People will hardly notice the faster iPhone, unless they go back to an older one.  Meanwhile, those in the clouds can get all the MIPs they want, provided they’re ready to use elastically scaled cores loosely coupled over a LAN.

5.  Wholesale bandwidth costs.  Why worry about it if all your data is in the Cloud?  All you care about is how fast an individual browser can access that Cloud.  Granted, a big office requires a fair bit of bandwidth, but nothing like a data center.  Moreover, your Cloud vendor probably has multiple data centers in multiple geographies as well as CDN capabilities, so you are now geographically distributed in terms of connectibility.

6.  Which load balancing box to buy.   Forget about it.  Your Cloud vendor does this for you, and even if they didn’t, you’ll have to use software because you don’t get to install any custom hardware in their Cloud.  With the advent of Amazon offering load balancing as a service of their Cloud, all you need to think about is how to use it with your application.  Life gets simpler and more focused again.

7.  Hardware monitoring.  Amazon’s new CloudWatch service tracks all the usual low level monitoring (cpu load, disk i/o, network i/o, and so on) on one minute intervals.  The data is kept around for two weeks.  This is all stuff you’d have to monitor somehow.  You’d have to find some monitor software, install it, learn how to use it, yada, yada.  With CloudWatch, you just have to learn to use what’s already there.  Amazon had to get this and a lot of other things to work just to have a Cloud.  You get a handy assist from that.  People who want to compare Amazon on a raw server cost basis never look at these kinds of costs.

8.  Creating multiple data centers for redunancy and for multiple geographies.  Werner Vogels, Amazon’s CTO, makes it sound so simple:

The Amazon Elastic Compute Cloud (Amazon EC2) embodies much of what makes infrastructure as a service such a powerful technology; it enables our customers to build secure, fault-tolerant applications that can scale up and down with demand, at low cost. Core in achieving these levels of efficiency and fault-tolerance is the ability to acquire and release compute resources in a matter of minutes, and in different Availability Zones.

Elastic availability of compute resources in multiple different Availability Zones (e.g. datacenters) in a matter of minutes?  First, it’s impossible for small companies to afford multiple redundant data centers.  They all reach a scale before dealing with that.  The Cloud levels that playing field so anyone and everyone can afford it day 1.  Just the sanity of having your data backed up to S3 with multiple copies in different physical locations is wonderful.  Second, even when you reach the size of being able to afford multiple data centers, it is a hugely expensive and complex undertaking.  Why would you ever want to deal with this if you didn’t have to?

9.  Exactly how to configure complex software like MySQL for my particular server instances.  Most of the Clouds have libraries of machine instances where somebody else (hopefully even the vendor who made the software) has set it all up, blessed it, snapshotted the image, and made it available.  Mount that image on an EC2 virtual server and away you go with something you know works.  Even if you are not on Amazon and don’t have Amazon Machine Instances like that, other clouds have these options too.  3Tera, for example, builds software for Cloud Owners and has what they call their Enterprise App Store.  These are pre-configured and ready-to-run instances. 

10.  Worry your engineers are spending valuable time worrying about infrastructure and worse physically visiting that infrastructure instead of doing something that gives your company a distinct competitive advantage.  Why build a datacenter if everyone else has one?  Let them make that investment while you invest elsewhere.  Werner Vogels gives a great example that is appropriate since the Indy 500 just ran Sunday.   Their site has a unique problem.  It requires a huge amount of resources to deliver a rich user experience:  multiple video streams including views from the cockpits of drivers’ cars with audio feeds and telemetry.  The challenge, as Vogel puts it, was that it isn’t used very frequently:

This is a high load application but it only runs three times a year. They found that they had to move a lot of engineers into data centers to keep their servers up. When they moved to cloud infrastructure they made 75% cost savings, the majority of which was on the people side; now they can manage everything from their armchair at home.

So there you have it.  10 things you don’t have to deal with if your data center is in the Cloud.  These are 10 things based on the pseudo-random collection of blog posts in my Google Reader RSS feeds.  There are many more out there, and I’m not even going to claim these are the 10 most important things.

Don’t you need fewer things to worry about so you can focus on what actually makes the difference?

eBook Replacing Scientific Calculator?

I’m going to date myself here, but the memories are just too fond.  Starting in high school, I was a total scientific calculator junkie.  You know, the programmable kind?  As a pubescent alpha geek, that was my iPhone of the day.  We were past the slide rule era and just pre-PC.  I did have a little CP/M system with a rompin’ stompin’ 4K of hand soldered 2102 RAM for those that remember that sort of thing, and the rich kid down the block had an Apple II that threw out so much RF interference he had to sit in one corner of his room with the Apple II and quint to see the TV monitor in the diagonally opposite corner. 

My buddies and I who couldn’t afford Apple II’s (we did manage Trash-80’s when those came out) were all programming these calculators to do all sorts of funky things.  Lunar landers games of varying sophistication, prime number calculation, iterative equation solvers, you name it.  I started with a Texas Instruments calculator, a TI-59.  I still remember opening the package.  It was probably the first thing I got in life that had all those little gadgets (chargers, memory cards, instruction manuals, yada, yada) and that had that wonderful “new consumer electronics” smell.  Nothing like the uber sleek Apple packaging an iPhone comes with, but for the day it was exhilarating to get a package like that.  In those days, a kid was doing good to get a Schwin bike as a gift, a Lionel train set if they were really lucky.  We didn’t hope for multiple game consoles, cell phones, and the rest of the stuff kids take for granted today.  The $299.95 TI-59 was quite an expensive luxury.

But I didn’t rest for long with it.  Eventually I came to embrace the amazing conceptual elegance of Reverse Polish Notation (you know, the calculator only the real geeks could understand how to work?) and that meant an HP.  HP’s fit, finish, and packaging were a whole level above that of the TI.  Texas Instruments may have invented the electronic calculator, but HP perfected it.  After having used the TI-59 for 2 years, I sold it to a friend and bought an HP-41C to take with me to college.

At the school I went to (Rice University), we divided the student body into two types:  Academs and SE’s.   Academs were Fine Arts majors of one kind or another, and Business majors were lumped into that category.  Rest assured that the HP-41C was not a machine for Academs.  They scarce seemed to use a calculator at all, perhaps the little HP-12C financial calculator (still a great little machine!).  SE’s were Science and Engineering majors, the Geeks, and we all had programmables, mostly HP’s if you were a really good geek.

Which brings me to Amazon.  There were always a lot more Academs running around than SE’s, even though my school was primarily an Engineering school.  The world seems certain Amazon is about to introduce a new Kindle intended for textbook reading.  Why not?  Seems like the ideal power tool for Academs.  At last, a knowledge slate able to convey a classical education and not just scientific notation.  The new machine will have 9.7″ screen instead of the current 6″.  Cool!

People wring their hands over Kindle pricing, but if you’ve been reading along you must realize that Kindle is bargain compared to the calculators I’ve been writing about.  We scraped our pennies together in times that were both leaner, and where pennies went a lot further, to pay darned near as much as the Kindle costs today for our little bundles of computational joy.  This doesn’t begin to describe the relationship between the cost of a textbook-sized kindle and the ridiculously expensive wood pulp tomes we used to pay for in the on campus bookstore every semester.  Maybe Amazon can actually cut those costs enough so students are net ahead on spending money.   If nothing else, they’ll head off back problems as students quit having to carry so much weight across campus in their backpacks. 

I think it’s fantastic that the Kindle will be serving the textbook market.  Some important questions remain: 

-  How do I highlight my textbooks?

-  How do I use it to check out books from the University Library?

-  Can I get all the scientific journals without paying the exhorbitant sums these periodicals charge?

Time will tell.

Jon Hansen’s Cloud Computing in the SaaS World

Jon Hansen runs an excellent podcasting/Internet radio show called PI Window on Business. Recently I was invited to join one of these casts, but couldn’t due to another commitment, but I wanted to pass along this program because it concerns Cloud Computing and SaaS. Host Jon Hansen is talking with guest and blogger Michael Dunham from Scio Consulting. They’re talking about the recent McKinsey study that claims the Cloud does not deliver any savings for large organizations, and the program starts with a pretty decent introduction to Cloud Computing.

They key differentiator in Cloud Computing is that like SaaS, it is a Service. The customer pays for it without worrying how it works. The entire infrastructure in the background is transparent. That’s as it should be, BTW. There isn’t a lot of value and there is tremendous cost in having to be aware of every implementation detail to use a service. Dunham likens the Cloud to the telecommunications infrastructure that’s existed for a long time.

I wanted to go back over a number of issues raised in the show and give my own perspectives. This will be a longish post, because it was a half hour show that touched on a lot of issues.

There were lots of interesting parallels raised in the show. One theme is that Cloud really isn’t something completely new. As mentioned, we’ve had telecommunications and other kinds of Clouds for a long time. One of Hansen’s first questions was, “Who needs to be involved with the Cloud?” Will it be confined to an Oligarchy of Concentrated Expertise with the Large Players?

First thing to note is that the Cloud benefits from scale. It is essentially a commoditization phenomenon. There’s not a lot of benefit in buying services from a Cloud that is too small, unless those services are very unique. That will therefore drive scale on the vendor side of the equation except for more specialized kinds of Cloud. A lot of people I talk to wonder if Amazon isn’t already so far ahead of the pack scale-wise that it will be hard to catch them. The good news is that their offering is pretty generic, so there is an opportunity to differentiate. The bad news is that except for the largest possible companies, the IBM’s, Sun/Oracles, and the like, Amazon may already be too far along and so it will be essential for the other players to differentiate.

“Is it safe to say the expansion is occurring as the market is decentralizing? “

I don’t think of it so much as decentralizing as changing the locus of centralization. We move from centralizing around large corporate IT datacenters to centralizing around relatively fewer Cloud vendors’ large datacenters. One of the reasons companies are starting to scramble on the vendor side is this centralization.

The Cloud aggregates transactions. If I am selling servers pre-Cloud, I have lots and lots of customers. Win or lose any particular one, and it is not a big concern. There are a lot of fish in the sea. But, whichever vendor is lucky enough to close Amazon on their servers, wins a whole ton of virtual accounts (Amazon’s customers) by default. The stakes are much much higher. We will see Cloud providers dictating to such vendors the same way Wallmart and GE dictate to their suppliers how business will be done. Major new forces are being created in the market because Cloud Vendors represent the collective buying power of all their customers.

“So the general user and population don’t need to worry about this?”

The general user already spends most of their computing time in the Cloud. Every web app is in the Cloud from the standpoint of an end user. Don’t we already spend the majority of the time on our PC’s in web apps? So we have the reverse of the “last mile” problem of residential Internet access. The “last mile” is in place as we use all these web apps. The Cloud is about the “first mile” where the datacenter begins. What is your web browser connected to?

As the Enterprise grows increasingly distributed, this again favors the Cloud which is purpose-built for a webby world. It’s no accident one of the biggest Cloud vendors is also one of the oldest and most successful Web businesses. They know how to do that stuff!

“What about reliability, dependency on expertise, and support for the Cloud?”

Well, how reliable are your web apps? Do they crash more often than your Microsoft apps (LOL)? Mine sure don’t.

Are we happy with where the expertise lies with these apps? Tim Chou started the SaaS business at Oracle many years ago, and he is the first one I heard talking about the idea of “Who better?” Would you rather have your apps supported by your internal IT? Not me. They’re smart, but this is the first and only time they’ve ever run whatever app we’re talking about, and they didn’t build that app. I want the vendor to run the app for me and support it. They developed it, and they’ve run it for a lot of customers over a much longer period than my IT people. They’re the world’s foremost experts. Who better?

“What is the importance of standards?”

Michael Dunham was very concerned that we haven’t evolved enough standards yet in the Cloud world. I’m a lot less concerned. Amazon is a very straightforward service to adopt. The differences between what you have to know there are no greater than the differences between Sun SPARC Solaris vs HP/UX vs IBM AIX vs Wintel vs Linux Intel in a traditional data center. They’re no different than Oracle vs DB2 vs SQL Server vs whatever other platforms. In fact, they’re actually much less because a big part of what Amazon provides comes from these very same standards already. They haven’t added that much. I think it’s pretty straightforward to understand and take advantage of it. Standards are not holding us back to any appreciable degree, though IT loves to clamor for standards. It’s just their way of delegating some of the responsibility to understand.

What’s much harder for IT is the loss of control. They’ve built a lot of distinctive competencies over thousands of procurement decisions made over many years. They’re loath to revisit that fabric. But the advantages compel them to at least consider it.

“How is the organization involved with Cloud decisions? IT? Purchasing? Does this hasten the obsolescence of the CIO?”

There is a profound impact, no doubt about it. But I don’t think that impact is really that different from mega trends that have been at work in IT for a long time. IT has largely gotten away from being the arms and legs. They manage the arms and legs. I was having coffee with a friend from a Big SI the other day. She was lamenting they hadn’t yet embraced the Cloud, but she went on to say it was for the best because Customers lose control, there are security risks, and all the other chestnuts.

I responded that customers had already lost control and had all the same risks. Most of them are not running their IT today. The bulk of the people costs are going to outsourcers of one kind or another, either overseas, or IBM, or some other large service organization. I’ve worked with Fortune 500 companies that told me only 5-15% of the IT employees were actually employees of the company versus outsourcers. Why is the Cloud so different? She blinked, laughed, and agreed.

“Is there a concern that the big players don’t have enough experience with the Cloud? Remember, nobody ever got fired for buying IBM. Is this a big leveler?”

First, the big players are not blind to all of this. The Cloud and SaaS are highly disruptive. It’s very hard for them to flick a switch and be there overnight. The cost to their business model is just too high, and as was mentioned on the program, it touches every part of the organization and every aspect of doing business.

With that said, big license sales are slowing and have been for some time. Maintenance is becoming an increasing component. Acquisition of other company’s maintenance bases has become the growth vehicle. Ultimately, the source of organic growth will be Cloud/SaaS.
As I say, the big players are not blind. I wrote the post on the Red Cloud. I believe Oracle made the Sun acquisition largely in response to the whole Cloud movement. Moreover, Oracle has been active for many years with a SaaS business. It’s doing very well, though they don’t advertise it very loudly. SAP is less far along with Business By Design, but clearly they also see they need to be developing the expertise.

For the time being, there is still a tremendous advantage for newer players. It is more of an architectural advantage. I’m talking about both their software and their organizational architectures. As was mentioned on the program, it’s easier to start clean sheet for the Cloud than convert after the fact. The bigger the company, the harder to convert, and the slower that conversion must be.

“McKinsey recently said the Cloud is more style than substance because:

 Nobody agrees on the definition
 It doesn’t scale to Enterprise
 It distracts attention from areas where tangible value can be unleashed.

Why would they say that? Are they being influenced because they’re in line with the old model and vendors?”

First, I did not think the McKinsey report reflected a very deep analysis. The coverage I saw on it was universally negative. From my perspective, they picked a conclusion and then drew up an analysis that supported their conclusion, so yes, I’d say they’re part of the Old School “Military Industrial Complex” around IT. They have an agenda.

SaaS eliminates a lot of value from the ecosystem for third parties like McKinsey precisely because it is service and that’s what McKinsey and the SI’s are in the business of delivering.

That particular report did a lot of silly things in analyzing the cost of the Cloud for larger organizations. The per-server cost for corporate IT were ridiculously low compared to many other estimates I’ve seen (just the power costs alone from data center studies I had seen were a big fraction of what McKinsey claimed). They burdened the analysis with a lot of costs that were irrelevant to the choice of Cloud or Data Center. That just added a lot of fixed costs that masked variable cost differences.

Given their great name, the study really doesn’t reflect very well on their expertise. But it will be a handy piece of collateral for those that want some air cover from the advantages the Cloud is bringing and the attendant disruptions that entails to an industry.

A Vision for Oracle’s Cloud Platform: The Red Cloud

Helpstream’s CEO (my boss), Tony Nemelka, penned a great piece on the Helpstream Blog about what the Oracle/Sun acquisition might mean.   A lot of attention has been focused on the potential for negative outcomes.  Will Oracle kill MySQL or at least damage it with worse than faint praise (fascinating post by fellow Enterprise Irregular Josh Greenbaum)?  Other note (quite rightly) that Oracle can’t really kill MySQL because of its Open Source basis.  I found WordPress founder Matt Mullenweg’s post to be particularly eloquent of this.

What I found intriguing about Tony’s post was the more positive scenario it envisions.  Read the post, but let me summarize for purposes of this discussion.

Tony was recently in Japan and has a long history there having been an executive for PeopleSoft, Epiphany, and then Adobe in charge of the region.  Needless to say, his contacts are pretty high up the food chain, so they know what’s going on.  In that world, the System Integrators are the gatekeepers for the market.  They’re very powerful, and the interesting discovery Tony made is that they absolutely love Force.com.  It’s not hard to see why.  The SaaS model squeezes the SI ecosystem.  The normal meat and potatoes business around just getting on-premises software installed is greatly reduced.  The business of just keeping the lights on is almost non-existant for SaaS.  Yet SI’s have a lot to bring to the table.  A good SI often understands the Domain, its Best Practices, and the key Business Processes better even than the software vendor.  Having access to a SaaS platform makes it possible for the SI to turn that valuable knowledge into product which can then be sold.  That’s why having a platform on which to do that is so important to them.

Tony goes on to speculate that Oracle is picking up the components necessary to create such a platform.  If nothing else, Oracle’s Japanese SI’s are screaming that they need one.  I have to imagine SI’s everywhere are grokking the essential value of a platform to the SaaS ecosystem.  There’s nothing about the Japanese market that would make that a unique requirement there.  So far, Oracle is really stuck in that department.  I suppose they would argue the coming Fusion represents such a platform.  At the same time Sun, like every big hardware vendor, was hard at work crafting a Cloud strategy.  They all know the Cloud is a tidal wave that can profoundly impact their businesses.  The Cloud represents the federation of many smaller deals into fewer gargantuan deals.  One over simplified way to view it is as a whole new sales and marketing channel.  Failing to suit up for the game guarantees a loss and the stakes are high. 

Some I’ve talked to say that Oracle just “doesn’t get it.”  They don’t believe in SaaS, they don’t understand SaaS, and they can never execute this kind of nuanced strategy until it is way too late. 

The idea that Oracle wouldn’t try or wouldn’t deliver anything is not something I’d want to put too much money on.  It’ll probably take them longer than anyone would like, or they might surprise us too.  Even Oracle can’t really fight the Cloud/SaaS tidal wave.  Remember that the guy at the top believes it in, don’t forget that Larry Ellison has put his money into SaaS companies many times.  It happens to be inconvenient at the moment for the various financial metrics Wall Street cares about for Oracle to switch wholesale to SaaS, but even that is something they can manage over time.  Also, we know Sun was working hard on their own Cloud strategy.  Suddenly there is a lot more Cloud DNA coming into Oracle. 

I suspect Oracle’s vision of what a PaaS (Cloud Platform) is will be a lot different than what you or I might choose.   If nothing else, it won’t be a clean sheet of paper approach.  Let’s think about what it might be.

First, I would expect the initial version will not be multitenant.  Multitenancy as it is delivered today is too deep in the guts of the application.  It forces too much change to architectures, which creates too much adoption friction for a platform at the outset.  Oracle will want to deliver the promise of running any app on their Cloud Platform, or at least any app built to run on their now very comprehensive stack.  It spans hardware (SPARC et al) to OS (Solaris) to DB (Oracle/MySQL) to App Server (BEA) to Business Intelligence (Hyperion) to <you get the idea, phew!>. 

Second, if not multitenant, what?  Think virtualization.   Don’t they need to buy VMWare to get that?  They may buy VMWare, but they don’t need it for virtualization.  Sun Solaris has a wonderful virtualization capability built right in.  I’ve used it before to create a SaaS application and it works extremely well.   Imagine an Amazon-like capability to start up these virtual Solaris machines.  If Oracle is smart, and they usually are, you’ll be able to start up virtual “appliances” in the Red Cloud (my new name for Oracle’s Cloud) that deliver database, app server, and many other functions.  Consider:

-  Storage:  This one is obvious.  Sun has a big storage business, Jonathan Schwartz has blogged about their great ZFS storage technology, and so Oracle can easily deliver the “Amazon S3″ storage piece of the Red Cloud.

-  Identity Management:  Control over who logs on to the Cloud.  Sun is strong in Identity Management, for example.  Oracle already had a business there.  The combination of the two would create a leader to rival IBM and possibly be the world leader.  Having Identity Management built into the Red Cloud would be a decided work savings over Amazon, for example.  And Identity Management is one of those things on-prem apps are used to farming out to another module.  Hence it would facilitate their migration to the Red Cloud.

-  Business Intelligence:  This is another of those modules everyone wants to OEM instead of having to build for themselves.  It’s an ecosystem component, like Identity Management, ETL, and a host of other things.  Oracle can again deliver a virtual appliance in the Red Cloud that makes it simple to connect.

-  Integration:  This will be essential to making the Red Cloud Appliances work.  But when you have one vendor that controls so much of the stack, they should be able to make it work better than anyone else.  This is where the vision of being the “Apple for the Enterprise” can best be seen.  This is where a lot of the Fusion work, as well as work from BEA could tie in.

OK, that’s a pretty darned impressive first tier vision if you ask me.  It’s taking the old pitch about buying a suite from one vendor and ratcheting it up significantly in terms of scope.  Not everyone will buy into it, but Big IT might just need something like this before they can start moving to the Cloud.   If Oracle can deliver such a thing, it will be an enormous business.  Someone I was talking to recently said they thought Microsoft was Oracle’s ultimate acquisition target, but I think Larry has a shot at rivaling much bigger entities if he can execute.  The IBM’s and HP’s are starting to appear on his horizon.

But there are some warts.  It will be a hodgepodge unless some Fusion-like glue can make it all fit.  It will be an enormously complex offering to market and sell.  It will be nearly impossible to take in the scope of it or understand all of it.  All of the Enterprise complexity that Big IT loves, but that SaaS has tried to ameliorate will be there.  Granted, this is better than the old on-prem complexity.  Oracle can deliver at least some of the SaaS advantages.  But what about cost?  Can we really get the SaaS cost advantages without multitenanacy?  In a word, “No!”  I just wrote an article about the pitfalls of thinking virtualization is a substitute for true multitenancy.  I stand by every word I said.  But Oracle has a unique opportunity to virtualize multitenancy itself, not in the first iteration of the Red Cloud, but in later iterations.

Whoa!  What the heck is Bob on about now?  Virtualizing multitenancy, what does he mean?

What I mean is a mechanism whereby single tenant applications can be made to have all the benefits of multitenancy without radical architectural change.  There are two ways this can happen. 

The approach is to have the database itself virtualize multitenancy.  The most popular model for multitenancy is what I call columnar:  a column in the database tells which tenant each record belongs to.  A suitable feature set in the database server can completely automate this and make it radically simpler for the application to work along this model.  A second common model gives every tenant their own set of tables.  Here again, special support in the database can radically simplify the implementation.  Note that Oracle already does partitioning (they may have invented it, but I am not sure of that), which is a feature that makes a bunch of physical tables look like a single table and that greatly improves scalability.  So now Oracle could deliver a Multitenant DB Appliance in the Red Cloud.

The second approach attacks the costs of being single tenant.  In my post on the subject, I talked about the idea of fixed costs and variable costs.  The difficulty is that the database server uses up a bunch of system resources on each virtual machine even if there is no data loaded into it.  This is because the database server is unaware of the other database servers in their respective virtual machines.  They are isolated.  But what if they were aware of each other and could pool those fixed cost resources to reduce the overhead?  What if the operating system itself facilitated this?  Those fixed costs could be dramatically reduced.  Moreover, if a comprehensive integrated feature set was aimed at reducing the cost of administering such as system, we would likely start closing in on true multitenant efficiency levels. 

That would be my vision for Oracle’s Red Cloud.  It would be a first-class Cloud platform, although much more Enterprisey and Old School than the New Cloud Age SaaS and Amazon-style Cloud visions.  Oracle and BigIT will view that as an advantage.  The biggest challenge in all this will be execution.  It is a gargantuan task on a level Oracle has never delivered before.  It involves both coordinating a lot of existing parts and pieces as well as delivering some genuine innovation (Virtual Multitenancy will be non-trivial!).   They may not be able to pull it off.  But the stakes are very high, and they will have years to work at it.

What do you think of the Red Cloud?

AmazonFail Shows Data Matters Too

No software company in their right mind would change code and move it to production without extensive testing to make sure the new code wasn’t broken.  It’s a tried and true business process supported by tools like automated build (gather up all the files, compile as necessary, package, and produce a running version), source code control systems (check in and check out with auditing so all the files that go into a particular version are known and verified), and so on.  That’s all fine and well, and though I do sometimes find a company that hasn’t made it to even that basic stage of operational process, there is a level of complacency associated with having such a process working.  The AmazonFail incident shows us that there is a lot more than just program code at stake here. 

First, what was the AmazonFail incident?  It seems that Amazon suddenly started delisting Gay and Lesbian publications from their sales rankings.  This had the effect of removing the books from search according to the WSJ.  Needless to say, the incident resulted in a great hue and cry since many assumed Amazon had done this intentionally and took it as evil behavior (along the lines of Google’s “do no evil” mandate).  Before long there were charges of  online censorship, and Twitter and the blogosphere were lit up bright talking about it.  Rumors even emerged that the incident was a result of hackers.  Eventually the whole thing became known as “AmazonFail“, and there is a hashcode for that on Twitter if you want to read all about it.  As I write this, “#amazonfail” is the third most popular search term on all of Twitter.

Clearly it’s been a major PR black eye for Amazon, but what caused it?

Amazon calls it, “an embarassing and ham-fisted cataloging error.”  Ultimately it affected over 57,000 titles including books well beyond the Gay and Lesbian themes first reported.  A more detailed internal story comes to us from Andrea James of SeattlePi:

Amazon managers found that an employee who happened to work in France had filled out a field incorrectly and more than 50,000 items got flipped over to be flagged as “adult,” the source said. (Technically, the flag for adult content was flipped from ‘false’ to ‘true.’)

“It’s no big policy change, just some field that’s been around forever filled out incorrectly,” the source said.

Amazon employees worked on the problem well past midnight, and then handed it over to an international team, he said.

Doesn’t this sound just like the sort of problem that can be caused by making a minor code change and then rolling out the changed code to production without adequate testing?  First, it was a minor change.  One field was filled out incorrectly by one person in France.  Second, it created a huge problem as minor changes in code often can.  Third, the problem was not immediately obvious, nor was the cause, so it got pretty far along before it could be fixed.  Yet it wasn’t code, it was just data.

In this day and age of Cloud Computing, SaaS, and web applications, data is becoming increasingly just as critical as code.  Metadata, for example, is the stuff of which customizations to multi-tenant architectures are made of.  In that sense, it is code of a sort.  “Soft” heuristics are common in search applications that have to decide which words to ignore completely, how to weight different words, which words might be profanity (or adult content in this case), which words are positive, negative, might be Spam related, and all the rest.  That’s all critical metadata to a search engine such as Amazon’s.  There’s a lot of other critical data to consider including credit card and other privacy-related information, financial information (what if someone gets the decimal point wrong when entering sales tax for a particular area?), and so on.

Data drives modern applications so completely, that we have to think about what this means for the security and robustness of our applications.  We’re still in our infancy on that front.  Modern software will test all the data entered to be sure it doesn’t contain a malicious payload (the SQL injection attack is one way to hack by entering special data in a field exposed to users) and there are many similar low level tests that are made.  But what about the business process that ensures the integrity of that data?  How can a single individual in France create such a big problem for Amazon by changing a little bit of data?

Let’s assume for the moment that we choose to treat that data as code.  That would mean we do some or all of the following:

-  Archive all the data changes in the equivalent of a source control (also called a “version control“) system.  We’d know every version of the data that was entered, who entered it, when they entered it, and there would be comments about why they entered it.

-  The incorporation of that data into a production environment would happen only at carefully orchestrated times (called “releases”) and only after testing had been done to ensure no problems were created.

-  If a problem manifested itself, an automated system would be available to roll back the changes one or more versions until the problem went away.  This is an important step with extremely serious problems because earlier releases will have been functioning long enough that there are no known serious problems.  Rolling back gives time to find the error without exposing all the customers to it in the meanwhile.  The error is eliminated and then the updated change is tested, and rolled out again.

Does that sound hopelessly painful as a process?  It’s exactly what most software developers go through for even the slightest change to code.  I’ll admit it would be too painful for every data change.  Amazon must add, delete, or change thousands of new listings every day.  Each one can’t be a full development release cycle.  But it does seem that applications should have some safety valves built into their fabric, and into the all-important data that they rely on.  Changing a listing is different than changing some data that almost 60,000 books rely on in search.  That data should be marked as sensitive and handled differently. 

There’s lots of architecture and process work to think about in order to avoid or minimize similar problems in the future for a whole host of applications.

Related Articles

It’s the Data Stupid.  Vinnie Mirchandani offers more examples of how we get into trouble with data.

TechCrunch gets it all wrong in a guest post by Marry Hodder.  Hodder argues unconvincingly that this was all due to an algorithm gone wrong and kept secret.  What happened is precisely NOT an algorithm.

If it had been an algorithm, it would have been an unambiguous set of rules by Hodder’s own Wikipedia-quoted definition.  Algorithms are explicit for their creators, and they are not accidental.  That they may be hidden from users does not detract from their explicitness, purposefulness, or unambiguity.

To assume an algorithm is at fault, is to misunderstand what an algorithm is, or to assume to Amazon purposefully set about creating an explicit and unambiguous set of steps to discriminate against Gay and Lesbian titles.  While the conspiracy theorists may like to natter on about this theme, it ain’t so.

The problem here, and my point in this blog post, is that we assumed we could focus on the algorithm and ignore the data that fed it.  Clearly a bad assumption.  In so doing, we allowed a minor change by an individual to create a major PR problem.  If we really think it was all a conspiracy against all things Gay, why not look for more explicit evidence.  Did Patricia Cornwell’s books about Kay Scarpetta, which include some Gay themes (Scarpetta is Gay) disappear as well?  I don’t think so.

It’s been true since we’ve had computers:  garbage in leads to garbage out.  The data is just as important as the algorithms.

Catching Up With 3Tera in the Clouds

Recently I had a chance to catch up with 3Tera CEO Barry Lynn and SVP of Sales and Marketing Bert Armijo.  It’s been a little while since I chatted with these guys and they’ve been busy!

It’s now been roughly 3 years since their first beta test.  Incidentally, they claim that beta makes them the first Cloud vendor, since Amazon S3’s beta was 1 month later!  Not sure selling Cloud infrastructure is the same as selling the Cloud like Amazon (that’d be like making the gold pans before the gold is found), but I do applaud their pioneer spirit.  If not the first, they’re certainly among a very small group of original Cloud Thinkers.

Good Catching Up With You Guys.  What’s New Since We Talked?

Our latest version is 2.48, which was recently released.  The big change there is we’ve added support for Solaris and Windows, and there is integrated monitoring.  We now have service on 4 continents, soon to be 5.  And we have customers taking advantage of that.  A customer can get presence on 4 continents in a day with 3Tera.

How Many Customers Do You Have Now?

Several hundred live customers, mostly through partners.

We have a number of hosting partners, and we’re always looking for more.

Tell Us About Your Partnering Strategy

People are starting to realize the need for private clouds.  People are starting to get it.  Federal Government and Large Enterprise want it.  There are legal restrictions on where data can be put.

For a long time partnering was unique to us.  People in the space all wanted to build their own cloud.  Our customers can work with multiple operators from Day 1.  Our customers do this on a daily basis.  It’s routine.  We have a button for it in the GUI to automate it.  Backing up to multiple points of presence, for example.

The product is maturing and we’re starting to see a change in types of customers coming on board.  Don’t know if it’s the economy or the Cloud industry.  A year ago, most customers were web or SaaS.  Now the vast majority are Enterprises.  It is a profitable and stable business though it puts a different kind of requirements on the product.

Why Enterprise?  I’ve Talked to a Lot of SaaS Companies Having Difficulty With Large Deals.

First I haven’t heard SaaS companies are having any particular problem with Enterprise sales.  There’s stress everywhere, but we don’t see the Enterprise as particularly stressed.  When business is good companies want control over price like SaaS offers.  But when business is bad they want economies of scale.

We love this economy.  Everything requires a bit of luck.  Here’s what’s going to happen.  This is the hardest hitting recession we’ve yet seen in the shortest period of time.  Some companies want quick ROI investment, particularly around saving money.  Others get completely frozen and don’t do anything.  There’ll be companies in both of those camps.

<The frozen camp is where I’m hearing the Enterprise problems.  Larger orgs seem more prone to freezing.>

If you look at things like Siebel or other SaaS having a problem, where customers cut back is in discretionary vertical functionality.  Do I have to do it at all?  We greatly lower the cost of almost everything.  We don’t build apps, we build platforms.  So we replace something non-discretionary with something also non-discretionary but cheaper.  Others are making discretionary spending cheaper.

A datacenter upgrade or tech refresh cycle was poised (last one was dotcom).  Now they lost budget for that, so its, “How do I run my business?”

You can’t run a business without IT infrastructure.  I may get rid of my cable TV, but I still have to buy food.  I just want cheaper food.  That’s what we’re out to do.  We can show them the catalyst for cheaper IT infrastructure.  We can even enhance quality while saving. 

People get the same level or more control as when the hardware was in their datacenter.  In fact, it’s more, because they have better tools to abstract large distributed systems.

How do you get the word out?

We look more like a web company there.  We don’t have a big field sales force.  We don’t have big Enterprise software contracts.  What we’ve done is to simplify and create a small incremental purchasing decision.  Even multinationals can start for a few hundred dollars a month, increasing spend as they see value.  That eliminates long eval cycles and the committee sale.  We’re more efficient and we pass that along to the customer.  We’re more focused on value instead of artificial billings like services and support. 

<This incremental pay-as-you-go cost is what I love about the Clouds.  We’ve seen it at my own company Helpstream when using Amazon.>

So we use telemarketing, or what a lot of people call Sales 2.0.  A lot of sales are Webex.  We only go visit customers who have an established footprint with us.

We minimize the onboarding cost and eliminate the lock in.  We avoid API’s that people have to write code to—that creates lock in which worries customers.  This minimizes the perception of risk.

We have a full blown disruptive product.  It is subscription based.  It’s incremental.  You can try it out slowly and then move quickly when you’re convinced.  That helps a lot in this economy. 

Customers save the capex because they don’t have to own the software.  They save personnel costs because people don’t manage servers, they just manage applications using our platform.  Saving thoses costs together with faster time to market really is a cheaper and better proposition. 

We use a combination of methods to attack the marketing problem.  We are voracious practitioners of PR.  PR offers so much more value than any ad we can place ever would, whether that’s a Google ad or a print ad.  Having some writing and putting their intelligence into it creates value. 

We also do some Google ads, though we have cut back on that a little bit.  It is valuable because it brings new people into the space.  It causes them to go find the PR.  We also do a few conferences.  We don’t go to big trade shows, but there are some decent focused small conferences.  We like conferences with a few hundred people because we can spend time educating someone there.

Often these conferences are vertical or geographic.  For example, there are Cloud Conferences for Government people.

Most of our leads are inbound.  Soon, we want to look at more outbound techniques, but without spending a huge fortune.  For example, we’ll be at the Web 2.0 show in SF.  We’re also doing the Sitcom Cloud Event in NY.  We’re doing Forrester’s Cloud Event.  We actively participate in Cloud Camp.

Tell Us More About Your Partner Strategy

When we started, it wasn’t clear this was the right path.  We got a lot of pushback, but we stayed committed to it.  Cloud is not going to be a one size fits all market.  There’s a lot of different purchasers and a lot of different requirements.  Banks want their systems of record in their data center.  Healthcare likewise.  Europe has a lot of laws about this.  There are many geographical issues, even involving physical limitations of the speed of light.

The level of service customers need and can afford is also all over the map.  One company can’t build a data center that meets all of those requirements.  We see a Federation of Clouds where users can take their workload to where their requirements are met.

It’s very popular to have developer systems in a different area than production.  The latter has geography, redundancy, and other requirements.  We transfer the workload seamlessly from one to the other, which is powerful.

We have a tiny little startup that has facilities and points of presence in three continents.  Startups couldn’t begin to do that in the past.  We have customers on military contracts that have very special security requirements. 

Only by partnering could we meet all of these requirements.  Our job is to build the best possible enabling platform.

We’re very conscious of our partners and want to make sure they make money.  We don’t charge them up front or make them sign up for huge commitments.  Its win-win, customers save money, but partners make even more money with us than on their own.

The real strategic value is there will be an evolution over the next couple of years.  Many companies are just not in the infrastructure business.  Yes, they spend billions, but at some point they’re going to stop building that infrastructure and start using the Cloud.  It’ll start slow, they’ll move bits and pieces, but at some point, they won’t need to own datacenters.  There is a whole industry growing up to service this.

What About Amazon, Google, Microsoft, et al?

Cloud computing will be a federation of many many clouds.  There are thousands of telcos in the world.  We see cloud computing playing out the same way.  Of course we see Amazon, Google, and the others playing in that game.

There should be standards to increase the interoperability and make it better for all.  Networking is a very successful example of this today.  Telephones with rotary dials still work today.  Other industries struggle to get to that point.

Why Not Amazon Today?

What does that mean? 

<Bob laughing, “I want your graphical management tool working for me in the Amazon Cloud!”>

We set out to do a particular thing.  Amazon didn’t exist back then.  We set out to make it easy to deal with large systems.  We built an underlying infrastructure to support the user interface that you see.  AppLogic’s Cloudware infrastructure identifies pieces that can be broken out as services.  We are starting to see how to do that.

There’s the UI, there’s a grid OS, we look at heartbeats, failures, etc.  We have a catalog system, we have a metering system, and we generate billing information.  Each could’ve been a company.  But we built it all together as a seamless whole.

Now that we understand how this all fits together, we can look and see how to do it on systems that have fewer services.  EC2 is one of those targets.  We’ve been open about that.  It won’t happen in a month or two, but it’s something we’d like to do.  Amazon is one of several.

We don’t want to be seen as a front end for a cloud. 

Thanks Guys, Great Discussion!

<3Tera remains one of the Cloud Leaders that I like to keep an eye on.  They’re enabling the hosting world to build their own Clouds using 3Tera’s platform.  That ensures a lot more Clouds will be available with lots of interesting features and distinctions.  It’s all good for the end users!>

 

Did Amazon Just Damage Their Ecosystem?

There’s a lot of back and forth over whether Amazon has just damaged some of their ecosystem partners by launching the AWS Console, which provides an easy way to control your Amazon Cloud usage from a web browser. 

Elastic Vapor trumpets, “Amazon Crushes Ecosystem.” 

GigaOm says the new offering competes with RightScale, Elastra, and Enomoly, but doesn’t crush them out of existence.

This is not the first time this has happened.  Elastra and others were queing up to solve EC2’s persistence problem and Amazon delivered Elastic Block Store and made the whole issue moot.

So what’s the deal?  Is Amazon doing evil to its ecosystem?  Have they violated my oft-repeated dictum that platform vendors have to act like Switzerland?  Is this good for the competition, as Paul Lancaster Business Development Manager at GoGrid says:

“Better opportunities for other cloud vendors as AWS console de-values partners who build business on the platform. Good news for the competition.”

I don’t think Amazon has done evil and I do think ecosystem players need to position themselves to expect this sort of thing.  Amazon needs to do whatever is necessary to make adoption of its platform easy.  Ultimately, that will grow the ecosystem too.  Yes, there was some pretty low hanging fruit out there in the form of gaps in Amazon’s initial offering.  EC2 persistence was one.  Having only a command line interface and no web client (addressed by this AWS Console announcement) is another.  It’s fine for the ecosystem to be nimble about nailing such opportunities early on, but they can’t very well expect Amazon to let them hold on to franchises that are pivotal to Amazon’s own success as a platform.  As such, I don’t see Amazon’s actions as evil.  I think the ecosystem has to expect this sort of thing. 

In fact, all indications are that companies like RightScale were in the loop that the announcement was coming.  That’s a pretty clear indication Amazon didn’t mean to do evil to them, but wanted them to have a chance to prepare themselves and respond. 

When you’re riding the wave that is someone else’s ecosystem, it behooves you to stay well informed about their direction, anticipate they’ll fill in their functionality, and keep pushing the envelope to stay ahead of them.  If your ecosystem addition was built by a small team in record time to solve an obvious need, keep the thought in the back of your mind that it may just have been a little too easy and start looking for something harder to do to add value.

If You Thought SaaS Was Annoying, The Cloud Babies Will Piss You Off!

I’ve been enjoying a spirited exchange with some of the Enteprise Irregulars around SaaS and Big Software for the Enterprise.  I won’t bore you with too many of the details, but we wound up in one of the classic cul de sacs these arguments often do.  Big Software was expressing their annoyance that once again incredible magic was being claimed, “Because it was SaaS.”  They were so annoyed at all the hype they percieved SaaS to be, and felt it was duping customers into believing too much in the name of SaaS.  If you read this blog at all (or have had a look at my resume), you will know I am an unabashed SaaS supporter, so when I hear someone shaking their head and bemoaning that SaaS is just a lot of hype, I spring into action.  Like any good evangelista, I launched into a long sermon about the many innovations SaaS has brought about that would be appropriate for any Enterprise (Big Software) Software to adopt regardless of whether they have a SaaS offering.

As it was happening, I was surprised myself at how it was coming out.  I’m not sure I ever heard anyone say SaaS had innovations that should be copied back into on-prem software before, but as I was waxing forth on the topic, I realized it was one of those things that had been germinating in the back of my mind for quite some while.  Let’s talk about that for a minute and then I’ll get into the whole Cloud Babies thing. 

What innovations has SaaS created that others would do well to adopt?  I’m talking about product architecture and functionality here.  Largely, it boils down to the idea of making software that is flexible without requiring expensive custom SI work.  Big ERP is legendary for the amount of expensive SI work that is required to install it.  The cost of such work is extraordinary, and the price tag when that work goes awry has created some legendary scandals in the Big ERP history books.  Getting away from all that is one of the promises of SaaS, and as I was quick to point out in that debate, it’s not just hype.  The economics of SaaS won’t support the expensive SI customization work. 

So how do SaaS vendors deal with the problem?  First, let me be the first to admit that a lot of them don’t.  They just restrict the scope of their offering and you live with that.  Sometimes that means the offering can only be successful for Small or Medium sized businesses and Big Enterprises can’t make use of it.  But that’s not the best answer.  The best answer is to find a way to deliver the flexibility in a way that doesn’t require expensive custom work.  There are two ways the SaaS world tackles this–for some problems metadata is the answer, and for other problems end user-approachable self-service customization works.  Let me give some examples of each.

Metadata is literally “data about data“.  As such, it is a beautiful thing.  Let’s consider the database.  It is very common for different organizations to want to be able to customize the database to their own purposes.  Let’s say you have a record that keeps information about your customers.  A lot of this information will be common, and could be standardized.  We all want the customer’s name, their address, phone number, and perhaps a few other things.  But then there will also be a lot of things that differ from one organization to the next.  Perhaps one wants to assign a specific sales person to each customer.  Another wants to record that customer’s birthday (obviously this is a much smaller organization than the first!).  And so on.  Without metadata, each database has to be customized and changed.  With metadata, rather than changing each database, you build the idea of custom fields in, and then you can just tell the database what the custom fields will be in each case but the structure needn’t change.  Metadata is not unique to SaaS, but it is an important part of the “multitenant” concept.  It makes it possible for all those tenants to live in the same database, but still get to have all their custom fields.

Metadata can also make it possible to enable that second method for flexibility.  Customizing a database without metadata is going to require someone to get into the database, modify the schema, make sure reports are modified to deal with the new schema, make sure the schema changes don’t break the product, and on and on.  Such work is definitely the province of expensive and highly technical experts.  However, once we have metadata, we can create a simple user interface that lets almost anyone add new fields, and that handles all the rest of it automatically.  Suddenly we have made what had been a difficult and expensive technical task approachable in a self-service way by non-technical customers.  Not only that, but they can make these changes quickly and easily, and they can even iterate on them until they get it just right.

Hopefully you can see why making expensive “flexibility customization” easy like this is essential to SaaS.  It makes no sense to sign up for cheap monthly Software as a Service and then have to spend millions to get it customized before you can use it.  Salesforce.com and others have done a fabulous job figuring out how to deliver this kind of thing.  There were a few non-SaaS companies doing this earlier, but nobody had made it an end-to-end requirement for the whole application install experience before the SaaS world came along and its economics made it imperative.  One example of a company that did this sort of thing to good effect was Business Objects.  It’s essential BI innovation was to make it possible to have the DB experts define the metadata needed to make querying the objects easy.  My old alma mater Callidus Software was another.  Our software computed Sales Compensation, which requires a lot of complex business logic.  Most of the players required expensive custom work to create comp plans, but we offered a product where business analysts could create the comp plans using formulas a lot like what you’d find in Excel.

The time is ripe, I would argue, for Big Software to be examined for opportunities to apply the same lessons.  Much Big Sofware is a couple generations older than the SaaS products of our time, so it isn’t suprising there should be some innovations worth looking at.  And in fact, Big Software are no dummies either.  See for example this discussion with Henning Kagerman of SAP’s changes in thinking about how to customize business processes.  Their Business By Design offering is not only a SaaS offering, but also a new generation concept for On-premises, and it is ripe with these sorts of ideas.  SAP has long been one of the customization heavyweights, but the pendulum seems to be swinging to the idea that next generation architectures might need to find ways to maintain flexibility while reducing the cost of customization. 

Adoption of these new ideas by the mainstream even outside of SaaS will be a good thing for all concerned.  But such adoption usually signals the maturation of an area, and this triggered little warning bells in my head.  If Big Software is upset and annoyed at the SaaS upstarts, who will upset and annoy the SaaS guys?  Who will unleash not just all the hype and disruption, but like SaaS, a set of innovations that SaaS, Big Software, and others will want to adopt too.  We’ve got a billion dollar SaaS leader in Salesforce, a gaggle of successful SaaS public companies still growing rapidly, an economic climate set to magnify the SaaS advantage further, and a number of exciting SaaS startups such as my own Helpstream.  The other thing is I’ve noted that when bubbles burst and everyone is wringing their hands in anguish, just as the hype from the last binge is dying down and consolidation is setting in, that’s usually when the next cycle is being born.  You just have to look around for it and it’s probably right there in plain sight.  Enter the Cloud Babies.

I call them Cloud Babies not out of any desire to denegrate, but because the Cloud is still in its infancy.  I am intentionally distinguishing SaaS from the Cloud too.  I mean the Cloud in the sense of Amazon, and perhaps Force.com.  The Cloud as a platform and a datacenter that is not only not the customer’s datacenter, but not even the software vendor’s datacenter.  I mean utility computing and everything that implies.

The Cloud Babies will be just as annoying to those not yet on the Cloud as SaaS is for those not yet selling (or buying) SaaS.  It’s going to seem ridiculously over hyped.  It’s going to seem like it isn’t real, that it won’t last, and that it will only matter to certain market segments or to small businesses but never large enterprises.  In fact, you can already ready most of that out there.  But I have already seen enough of the Cloud (Helpstream moved to Amazon recently) to know that there is a lot more to it than that.  There is a kernel of hard reality to it.  The Cloud is disruptive.  It will lead to innovation.  It will lead to architecture changes that give fundamental advantages.  If you thought the Sequoia memo of doom about what startups should do in this economy was serious, they missed an important point.  Any startup running their own datacenter today is at a huge disadvantage to those who are already in the Cloud.

I saw on Twitter earlier today that Fred Wilson means to sell GOOG and AAPL tomorrow and buy AMZN.  I agree.  If the SaaS Guys were annoying, you ain’t seen nothing yet.  The Cloud Babies are really gonna piss you off!

Helpstream in the News

There’s been a lot of great blogging activity around my company, Helpstream, lately. 

The latest is Paul Greenberg’s write up on CRM 2009 where he tells what really sets Helpstream apart:

Each of them is a genuine gem – in the case of Helpstream, I can’t even find a flaw. 

and:

This is my paradigm company for a CRM 2.0 feature set.  Para-digm.  They seem to have it all together.  They are the ones that I use as the example of the difference between CRM 2.0 and Web 2.0.  They are my numero uno for explaining the difference between CRM 2.0 and Web 2.0.

Thanks for the kind words, Paul!  This is exactly the kind of discussion we have with our partner Oracle, which is extremely interested in the whole “Social CRM” phenomenon.  Helpstream is, as Paul suggests, a really unique combination of traditional Customer Service technologies with some new Web 2.0 technologies that really rocks the house with new levels of ROI.

Also on deck are a couple of fabulous articles about Helpstream’s recent move to the Amazon Cloud.   Larry Dignan says we are “the blueprint” for how others can move to the cloud.  Thomas Foydell says Helpstream “moved up a whole other level” relative to other SaaS vendors like Salesforce and Netsuite by moving its datacenter into the cloud. 

They’re both great articles if you want to know more about the company that is my day job.

Interview with RightScale’s Michael Crandell

Few things are more fun for me than to hear a CEO speak passionately about their company.  For that reason, I love interviewing them for this blog.  I recently had the opportunity to interview Michael Crandell, CEO of RightScale.  RightScale is a fascinating company that has an automated Cloud Management Platform. 

We use it at my company, Helpstream, to help us manage our virtual cloud IT assets, and like the software.  Evidently we’re not the only ones because RightScale has grown rapidly.  The three founders (Michael, CTO Thorsten von Eicken, and VP of Engineering Rafael Saavedra) started with a seed round of $700K in September 2007.  They took their first full VC round of $4.5M from Benchmark in April 2008.  That was recently followed by a $13.5M round from Index and Benchmark.   It takes a lot of momentum to pry that much capital loose from VC’s in these times!

In terms of customers, they have just under 10,000 free customers and several hundred paid customers.  RightScale’s service is such that you can start out using the free version and getting great value and then graduate to the paid version.

Last part of the profile, Michael and Co. have the wonderful luxury of being based in Santa Barbara, which is a wonderful town to be in. 

With the background out of the way, let’s dive into the interview:

Michael, give me your company’s elevator pitch, what does RightScale do?

RightScale is an automated Cloud Management platform.  It’s a platform in the sense you can control manage and develop IT infrastructure in the Cloud.  It’s your window or portal to your virtual data center.

We offered it to provide 3 points of value:

1.       Automation.  Customers are very interested in making it easy to get on to the cloud.  We provide pre-packaged solutions for common tasks to create an easy on-ramp.  MySQL, Web Site front end, grid.  Also Automation of server admin.

2.       Multi-Cloud Support.  Companies don’t want to be locked in to a single cloud source.  We can provide some portability.

3.       Transparency.  You can get at any level of the stack on your servers, so it’s a true platform.

Why do your customers want to be in the Cloud and on Amazon?

There are two reasons, really:

1.       Cost Savings is compelling.  Driven by capex vs opex.  Variable vs fixed costs.  Pay as you go is less capital intensive.  Elasticity.

2.       Agility.  Get servers quickly, get projects up and running quickly.

<Aside:  I mentioned that Helpstream has saved about 60% of our datacenter costs by switching to Amazon and Michael said this was pretty typical among his customers.>

What’s the neatest thing you’ve seen your customers do with the Cloud?

Tough question.  One of the great aspects of my job is that it’s fun to see all the neat solutions.  Here are some examples:

-          Animoto:  A cool service that creates photo slide shows set to music.  <I agree and love Animoto!>

-          Playfish: British educational games.  They needed scalability and geographical distribution.  <Amazon has worldwide datacenters and makes it easy for small companies to deliver a service worldwide.>

-          TC3 Health:  Health insurance claim fraud analytics.  They use Rightscale to spin up 100’s or 1000’s of servers to go through millions of transactions in order to weed out the fraudulent ones.

-          A large pharma company:  Has a program where a drug researcher can spin up a grid for protein analysis.  <Protein analysis is very compute intensive!>

Why does RightScale support multiple clouds?  Why would a customer look at another cloud?

It’s all about avoiding lock-in.

For example, a big media company we’re working with <you’d recognize the name!> has an outbound media site and wanted to do fan profiles.  They wanted to do it in the cloud because traffic is unpredictable.  But, they have an internal policy that prohibits any single source solution.  So we worked with them to do a non-cloud solution (at the time that’s all that was available) so they could prove their solution wasn’t single sourced to Amazon.

Today we support Flexiscale and GoGrid.  We’re adding Rackspace in the future, as well as others. 

We also support Eucalyptus, which is an open source solution that lets you build an EC2 compliant cloud on your own hardware.

Don’t most customers use Amazon? 

This is more a matter of keeping the door open for the future.  Amazon has a big lead as a first mover.  They established the category by making it so easy to rent servers with a credit card in a way that’s no harder than buying a book.

<Translation:  RightScale gets more Amazon companies to buy their product as an insurance policy should they need or want to use other Cloud infrastructure.>

Tell us about the impact of the economy on Clouds, SaaS, and RightScale?

I’ve never seen anything like it.  We’re in unprecedented times.  It’s tough to predict, but we believe Cloud Computing is really strong in the downturn.  There’s tremendous demand for cost savings coupled with the benefits of outsourcing. 

People running datacenters in house often don’t look at fully burdened costs.  If you really look at it straight up, Amazon is a lot cheaper.  <I agree and have seen the numbers from Helpstream that leave no doubt. It’s funny, you constantly read people trying to do back of envelope math and concluding Amazon is expensive, but they aren’t adding up the full datacenter costs!>

That big pharma company I mentioned told me, “If we can avoid buying another blade server ever, we’re going to.”  There’s a lot of companies that feel that way.

It won’t be every workload and it won’t be tomorrow, but there is a lot of pent up demand for that.

How are you going about getting your leads in this market?

We have a particular market approach.  Our Benchmark Board Member, Kevin Harvey, calls it “advantaged customer acquisition.”  No advertising.  We grow via word of mouth and PR.  We also have a free edition that is an engine of growth from the start.  It will be permanently free and it has a lot of utility.  We do well with Webinars, including a series on best practices.  We try to deliver content.  If we provide value and information, the business will come.

We don’t argue or educate about the Cloud, it’s rather about how we can help.

Is there anything special about the Amazon ecosystem you can rely on to help?

Two answers.  Amazon has been a good partner since the beginning, but at arm’s length.  There are no special favors.  Within the limits of the fact that companies drive business to them.

Selfishly we’d like them to favor some of the larger players because we think that serves customers. 

We cooperate on specific tractionable engagements.  They refer customers to vendors who ask how to solve a problem to the right vendor to help.  Conversely, we help them with startup camp speakers and such.  We’re also on their developer advisory committee, so we give them a lot of feedback to help bring out new Amazon functionality.

Let’s talk about social media and community for RightScale.

We love that world.  It’s helped drive RightScale’s growth and success to date via our Advantaged Customer Acquisition.  It’s part of our plan to expand that to do an even better job to encourage a developer and ISV community.  We’d like to develop our own ecosystem.

It’s also a fact that there are a lot of Web 2.0 companies in our customer base.  We see more complex web sites with database backends==complex multi-tenant web scale operations.

<At this point I took the opportunity to point out that Helpstream has an integrated solution combining community and customer service that’s right up his alley.>

Conclusion

Great interview with Michael.  I learned a lot and had a lot of things I suspected about the Cloud world and marketing in this economy confirmed.  RightScale certainly has the numbers that show them gaining tremendous traction despite the tough times.  I love their approach to selling by using a content-rich and social outreach program.  Heavy on PR, light on advertising.  This is a lot like what the folks at Rally Development use too.