Cloud Computing

The term “Cloud Computing” is getting a lot of air play these days—it is the computing equivalent of a U.S. Presidential Election. It has loads of twists and turns, plenty of eager participants, lots of money being spent on it and it gets to consume large amounts of the news cycle… often without a lot of new information. So what exactly is “Cloud Computing”? I′m gonna have a crack at answering that question and (as an encore) talk a little about where Workday stands in the whole Cloud Computing debate….

The Wikipedia definition of Cloud Computing provides a mainly technology focused narrative that outlines the core technical elements involved in computing that resides in the cloud—wherever that is! My definiton is somewhat different. I′ll propose that Cloud Computing is “the business model opportunities that emerge when applications delivered over the network are open, extensible and interoperable”.

Let′s look at what′s out there.

The spectrum of offerings within Cloud Computing starts to the left, with providers of generic capabilities like hosting, moving across to Web-based development platforms and business-specific solutions. It is also useful to think of it as starting with infrastructure and technology and moving through to domain-specific application ecosystems.

The middle of this axis—commonly referred to as Platform-as-a-Service (PaaS)—has attracted a great deal of attention. Companies like salesforce.com, coghead and bungee are working to create generic application development and deployment platforms. These are designed to enable 3rd party developers to both build and deploy applications that reside in the cloud. (Of course applications built for the Salesforce cloud won′t run on the Coghead cloud—and vice versa).

The business models and motivations for companies wanting to offer technologies and solutions at different points in the axis are clearly very different. However, there are a number of observations that can be made:

1. While it never lived up to the pre-bubble hype, hosting has become a real business. Loads of companies are outsourcing some or all of their datacenters. Even on-demand players look to datacenter specialists to take care of things like power, Internet connectivity and physical security. It has also driven new standards and efficiencies as we shift from servers and switches being the products to uptime and bandwidth.
2. For PaaS, there is a lot of historic precedent for the perspective that owning the most popular development platform is a strategic goal in and of itself. (For those of you old enough to remember it is worth recalling the Steve Ballmer “develper, developer rant“). You can argue whether Cloud Computing itself is the new platform, or just the infrastructure for PaaS providers.
3. In the world of domain specific applications, connectivity has become table stakes. (Salesforce talks to facebook talks to LinkedIn talks to Workday). Not only it is imperative for these applications to expose APIs and to provide excellent tools for people to manipulate them, the connectivity between applications and services is rapidly moving to point-and-click. Integrations that used to take a busload of consultants are now delivered more like a google mashup (albeit with enterprise-class security and availability).

Each of these models and approaches is fundamentally dependent on the existence of the Cloud. I firmly believe that the most important part of Cloud Computing is around the new business models it engenders. In the same way that Google and others have broken the mold in terms of business models for the Internet, I think that Cloud Computing is going to fundamentally change the rules in the Enterprise Application space—and i think we′re only beginning to understand the changes that are possible. However, it stands to reason (at least to me), that when you tear down the walls that surround Enterprise Applications and you start making them interoperable and massively extensible, then new and unplanned things are going to happen.

And the encore…

Here at Workday, we are working on some very specific problems we want to solve with Cloud Computing, focused on what our customers need to run their businesses. Right now, we are making it easy for key third parties such as Healthcare providers and Payroll providers to plug into our applications. This enables us to create specific business value for our customers—our HR systems just work with their existing payroll and benefits providers. No big integrations, no patches, no upgrades. The connection is part of the service.

Over time, our strategy is to expose more and more of our application functionality as Web Services, and we are only just beginning to imagine what a true Cloud-based Enterprise Application can mean in terms of the new business model opportunities it will create. What′s potentially most exciting, is that as we connect to more applications and expose more of our functionality, the community contributing ideas will expand well beyond our current ecosystem. That may be the most important new business model of all.