November 2010: A Note from Jeff Mack
Bottom Line - Race to the Cloud

I wrote an article back in August entitled "Is There a Cloud in Your Future?" The purpose of that article was to begin demystifying the cloud a bit in terms of form factors and deployment methods. I also pointed out the enormous forecasted growth potential of the cloud, potential benefits and risks to users, and who the early adopters are likely to be.

A lot has happened in the last 3 months and chief amongst them is the fact that the race to the cloud is clearly on. There is so much money, people resources, communication, and hype being thrown at the cloud that the buzz is almost deafening. In many cases, the race course has not even been laid out yet, but we are racing anyway. Needless to say, it is simultaneously very exciting and very scary.

The Promise
The vision for the cloud is that it will enable deployment and access to trouble-free robust applications, infrastructure, data storage and protection, and integrated web services, all for a low monthly usage fee. And the dream calls for accessing this powerful mix of technology and services from virtually anywhere and via virtually any device. Upgrades will be transparent as they will occur seamlessly and continuously, perhaps even without your knowledge.

Think of your electric utility and how easy it is to access electrical service in your business or home. Essentially all you have to do is open an account and pay for the amount of electricity used during the billing cycle. You don't have to build power generators, power distribution networks or regulating devices in order to tap into the service. You don't have to pay extra when a service person is dispatched to replace a transformer hit by lightening. Nope — just sign up and pay your monthly usage bill, because everything is already factored or bundled into the electric utility service.

Now think about accessing all of your technology needs for business and personal use from the cloud in much the same way you access your electric utility service today. Do away with the large capital investments for servers, workstations, software applications, data backup and protection, and professional services. Since the infrastructure is in the cloud instead of on your premises, feel free to go anywhere and access the services from your workstation, laptop, iPad, Windows 7 phone, or your automobile's dashboard. Just sign up, plug in, meter your usage as needed, and pay your usage bill each month. That is the promise for the consumer!

The Challenge
The technological complexity of delivering the promise of the cloud is enormous. Many of the software applications need to be re-written and optimized for cloud deployment versus traditional on-premise deployment. Legitimate bullet-proof flexible data protection and restore technologies and strategies need to be made available. Broadband needs to ratchet up and become ubiquitous.

For a provider of technology and cloud services, the challenge of creating the optimum business model and associated economics to enable long term viability is equally daunting. It will require great creativity, smarts, and access to capital to invest in the necessary infrastructure, software licenses, systems integration, security, sales and marketing, and administration to make it all run successfully. The potential may be enormous, but so is the task. The voice Ray Kinsella kept hearing in Field of Dreams comes to mind.

In addition to the investment described above, for local service providers like ourselves, there is the fact that the existing business model needs to be reexamined, and likely stood on its head. The way we generate opportunities, sell infrastructure hardware and software, sell application software, package and sell services, manage deliverables, and perform contract administration and billing will all change dramatically. It is not clear where and when the payback occurs. That is the challenge and the scary part for the provider.

The Excitement
In any competitive race, there is great hope and promise, great challenge, and great excitement. The race to the cloud embodies all of that and then some. The excitement for the consumer is obvious – who wouldn't jump at an opportunity to have what is touted to be the best of all worlds, requires little or no capital investment, allows you to have as much or as little as you want, and only requires a small monthly fee for your actual usage?

There is excitement from the perspective of the publishing provider as well. Certainly organizations such as SalesForce.com and NetSuite have pioneered the way for cloud-based application software offerings. Microsoft has seen the light and is now “all in” as they are making multi-billion dollar investments in cloud components including strategically located data centers, Microsoft CRM Online, Office 365 (formerly BPOS), Windows Intune, and Windows Azure.

As a local and regional service provider, I am excited by the potential of the cloud to open up new opportunities for us, to lower the barriers of entry for more customers, to transition from a big sales pop and one-off difficult project methodology to a utility/annuity model that embraces bundled offerings and more repetitive cookie-cutter type projects. Theoretically, the utility-based cookie-cutter offering coupled with the annuity-based billing engine represents a much easier business model to forecast and manage once all the pieces are in place.

The Reality
I have shared the promise, the challenge, and the excitement of the cloud from my perspective. What remains of course is a discussion around the reality of the cloud. That of course, as always, is the Bottom Line. As we gain real life experience with the cloud roll out, stay tuned for the next chapter in this evolving story. And as always, I would welcome your feedback and perspective on the cloud and what it means for you. Just drop me a note at jeff@ics-support.com.

 

The vision for the cloud is that it will enable deployment and access to trouble-free robust applications, infrastructure, data storage and protection, and integrated web services, all for a low monthly usage fee.