Taking a SWAG at “The Cloud”

On re-reading the last post I wrote, I was wondering if it was a little over the top? Was I spending too much time inside Workday drinking a little too much of our own kool aid? believing too much in our own hype? (as you can see, this sentence could go for ever).

Annrai O’Toole December 16, 2008
Image placeholder

I thought it would be fun, with my tongue firmly planted in my cheek, to work through some “thought experiments” about what the Cloud could mean for real businesses.

First off, I began to think a little about how, if given a green field situation, you would build the IT systems for a company of 1,000s of workers. I think it would be fair to say that nearly everyone would agree (with a fewnotable exceptions ) that you build this IT system solely out of On-Demand applications and technology. It certainly stretches my imagination to believe that someone would be rushing into a traditional, on premise, ERP implementation!

So what would the On-Demand collection of technologies look like? Is there a Cloud Stack? Is there a Cloud Operating System? In the Open Source world we talk a lot about the LAMP stack (Linux, Apache, MySQL, PHP). Before that we talked about Wintel. So, it is not unreasonable to think that there is a collection of On-Demand entities that fit together to form the basis of a Cloud alternative to traditional on premise offerings — particularly for the needs of enterprise customers.

So, one attempt to define this Cloud Alternative is:

  • Salesforce – For enterprise CRM and hosted application development
  • Workday – For On Demand ERP
  • Amazon – For utility computing and storage
  • Google – For productivity applications

Now, I′m sure there would be many who would take issue with this particular grouping of companies—and clearly, there is a self serving element to it. However, I do think that the concept has merit. In particular, it points to 3 crucial elements of how the Cloud Computing world is shaping up.

  1. The importance of applications as a force in how we think about the evolution of development paradigms. For almost the entire history of the software business there has been a bright line dividing the development tools and platforms used to create applications from the applications themselves. However, in the Cloud Computing world applications and tools are firmly married together. Salesforce, for example, announced partnerships with Amazon and Facebook to help accelerate the morphing together of their respective tools. Even the recent Cloud initiative from Microsoft ties their new Azure development platform closely to the Office suite.Increasingly, development can focus on the assembly and reassembly of existing Cloud functionality, rather than the creation of new application functionality (though of course that will continue too). It is means that traditional development tools (or operating system platforms) aren′t really center stage anymore—Cloud applications are the new development language.
  2. It highlights that we are now at a place where it is possible to run the entire IT system for a 1,000+ person company using Cloud Computing. All the essential aspects of running a business that traditionally used on-premise software can now run on a SWAG stack.
  3. All of these companies have, in different ways, upset the economics of IT. The traditional IT business model of upfront investment followed by endless maintenance and upgrade fees (with a developer lock-in to a specific toolset and operating system) is being jettisoned. Salesforce pioneered the transformation to a subscription model that fuels Cloud Computing′s disruption. AndCloud Computing changes to IT are as much about new business models as they are about technologies : Amazon is creating an open marketplace for 3rd parties, reinforcing its utility platform. Google is not charging for the base versions of its productivity apps on the basis that the extra content and page-views drive value for 3rd party advertisers.

How are these changes taking hold in business? I′ll take a real Workday customer as an example. This customer is a company of more than 25,000 people and has been in business for more than 35 years. It has the usual collection of IT systems that have grown up over that period. These IT systems are a collection of packaged and custom built applications. The CIO is committed to moving to an On-Demand model, with as many major applications areas as possible—and the integrations between them—supported in the Cloud. Why? Cost-efficiency, the ability to scale up or down, the opportunity to leverage best-of-breed solutions and the opportunity to focus IT resources on projects that are strategic to the company.

And I expect eventually, thru SOA, this company will have the opportunity to move or re-implement even their custom code in the Cloud.

In the end, SWAG is a little arbitrary. In conversation with my colleagues and customers at Workday there are several other candidates that could be added in. e2open has a very dynamic and innovative On-Demand approach to Supply Chain Management. Xactly has a fantastic take on Sales Performance Management. But I think you see the point here: there is a rapidly growing network of related On-Demand applications that all communicate with one another to provide an alternative, not just for green field start-ups but for well established enterprises. Whether or not you totally agree with the list of companies above, there is no doubt that this SWAG has the potential to change both the technology and economics of enterprise IT.

More Reading