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The Business Case for Private Cloud

19 Apr
Private Cloud Posts Should Come in Threes

Over the last year I have returned to the subject of ‘private cloud’ on a number of occasions.  Basically I’m trying to share my confusion as I still don’t really ‘get it’.

First of all I discussed some of the common concerns related to cloud that are used to justify a pursuit of ‘private cloud’ models.  In particular I tried to explain why most of these issues distract us from the actual opportunities; for me cloud has always been a driver to rethink the purpose and scope of your business.  In this context I tried to explain why – as a result – public and private clouds are not even vaguely equivalent.

More recently I mused on whether the whole idea of private clouds could lead to the extinction of many businesses who invest heavily in them.  Again, my interest was on whether losing the ability to cede most of your business capabilities to partners due to over-investment in large scale private infrastructures could be harmful.  Perhaps ‘cloud-in-a-box’ needs a government health warning like tobacco.

In this third post I’d like to consider the business case of private cloud to see whether the concept is sufficiently compelling to overcome my other objections.

A Reiteration of My View of Cloud

Before I start I just wanted to reiterate the way I think about the opportunities of cloud as I’m pretty fed up of conversations about infrastructure, virtualisation and ‘hybrid stuff’.  To be honest I think the increase in pointless dialogue at this level has depressed my blog muse and rendered me mute for a while – while I don’t think hypervisors have anything to do with cloud and don’t believe there’s any long term value in so called ‘cloud bursting’ of infrastructure (as an apparently particularly exciting subject in my circle) I’m currently over-run by weight of numbers.

Essentially its easy to disappear down these technology rat holes but for me they all miss the fundamental point.  Cloud isn’t a technology disruption (although it is certainly disrupting the business models of technology companies) but eventually a powerful business disruption.  The cloud enables – and will eventually force – powerful new business models and business architectures.

As a result cloud isn’t about technology or computing per se for me but rather about the way in which technology is changing the economics of working with others.  Cloud is the latest in a line of related technologies that have been driving down the transaction costs of doing business with 3rd parties.  To me cloud represents the integration, commoditisation and consumerisation of these technologies and a fundamental change in the economics of IT and the businesses that depend on it.  I discussed these issues a few years ago using the picture below.

image

Essentially as collaboration costs move closer and closer to zero so the shape of businesses will change to take advantage of better capabilities and lower costs.  Many of the business capabilities that organisations currently execute will be ceded to others given that doing so will significantly raise the quality and focus of their own capabilities.  At the same time the rest will be scaled massively as they take advantage of the ability to exist in a broader ecosystem.  Business model experimentation will become widespread as the costs of start up (and failure) become tiny and tied to the value created.  Cloud is a key part of enabling these wider shifts by providing the business platforms required to specialise without losing scale and to serve many partners without sacrificing service standardisation.  While we are seeing the start of this process through offerings such as infrastructure-as-a-service and software-as-a-service these are just the tip of the iceberg.  As a very prosaic example many businesses are now working hard to think about how they can extend their reach using business APIs; combine this with improving business architecture practices and the inherent multi-tenancy of the cloud and it is not difficult to imagine a future in which businesses first become a set of internal service providers and then go on to take advantage of the disaggregation opportunity.  In future, businesses will become more specialised, more disaggregated and more connected components within complex value webs.  Essentially every discrete step in a value stream could be fulfilled by a different specialised service provider, with no ‘single organisation’ owning a large percentage of the capabilities being coordinated (as they do today).

As a result of all of these forces my first statement is therefore always that ‘private cloud’ does not really exist; sharing some of the point technologies of early stage cloud platform providers (but at lower scale and without the rapid learning opportunities they have) is not the same as aggressively looking to leverage the fall in transaction costs and availability of new delivery models to radically optimise your business.  Owning your own IT is not really a lever in unlocking the value of a business service based ecosystem but rather represents wasteful expense when the economics of IT have shifted decisively from those based on ownership to those based on access.  IT platforms are now independent economy-of-scale based businesses and not something that needs to be built, managed and supported on a business-by-business basis with all of the waste, diversity, delay and cost that this entails.  Whilst I would never condemn those who have the opportunity to improve their existing estates to generate value I would not accept that investing in internal enhancement would ever truly give you the benefits of cloud.  For this reason I have always disliked the term ‘private cloud’.

In the light of this view of the opportunities of cloud, I would posit that business cases for private cloud could be regarded as lacking some sense even before we look at their merit.  Putting aside the business issues for a moment, however, let’s look at the case from the perspective of technology and how likely it is that you will be able to replicate the above benefits by internal implementation.

What Is a “Cloud”?

One of the confusing issues related to cloud is that it is a broad shift in the value proposition of IT and IT enabled services and not a single thing.  It is a complete realignment of the IT industry and by extension the shape of all industries that use it.  I have a deeper model I don’t want to get into here but essentially we could view cloud as a collection of different kinds of independent businesses, each with their own maturity models:

  • Platforms: Along the platform dimension we see increasing complexity and maturity going –> infrastructure-as-a-service, platform-as-a-service, process-platform-as-a-service through to the kind of holistic service delivery platform I blogged about some time ago.  These are all increasingly mature platform value propositions based on technology commoditisation and economies of scale;
  • Services: Along the services dimension we see increasing complexity and maturity going –> ASP (single tenant applications in IaaS), software-as-a-service, business-processes-as-a-service through to complete business capabilities offered as a service.  While different services may have different economic models, from a cloud perspective they share the trait that they are essentially about codifying, capturing and delivering specialised IP as a multi-tenant cloud service; and
  • Consulting: Along the consulting dimension we see increasing complexity and maturity going –> IT integration and management, cloud application integration and management, business process integration and management through to complex business value web integration and management.  These all exist in the same dimension as they are essentially relationship based services rather than asset based ones.

All of these are independent cloud business types that need to be run and optimised differently.  From a private cloud perspective, however, most people only think about the ‘platform’ case (i.e. only about technology) and think no further than the lowest level of maturity (i.e. IaaS) – even though consulting and integration is actually the most likely business type available for IT departments to transition to (something I alluded to here).  In fact its probably an exaggeration to say that people think about IaaS as most people don’t get beyond virtualisation technology.

Looking at services – which is what businesses are actually interested in, surprisingly – this is probably the biggest of the many elephants in the room with respect to private cloud; if the cloud is about being able to specialise and leverage shared business services from others (whether applications, business process definitions or actual business capabilities) then they – by definition – execute somewhere beyond the walls of the existing organisation (i.e. at the service provider).  So how do these fit with private cloud?  Will you restrict your business to only ever running the old and traditional single-tenant applications you already have?  Will you build a private cloud that has a flavour of every single platform used or operated by specialised service providers?  Will you restrict your business to service providers who are “compatible” with your “platform” irrespective of the business suitability of the service?  Or do you expect every service provider to rewrite their services to run on your superior cloud but still charge you the same for a bespoke service as they charge for their public service?  Whichever one you pick it’s probably going to result in some pain and so you might want to think about it.

Again, for the sake of continuing the journey let’s ignore the issue of services – as it’s an aspect of the business ecosystem problem we’ve already decided we need to ignore to make progress – and concentrate where most people stop thinking.  Let’s have a look at cloud platforms.

Your New Cloud Platform

The first thing to realise is that public cloud platforms are large scale, integrated, automated, optimised and social offerings organised by value to wrap up complex hardware, networks, middleware, development tooling, software, security, provisioning, monetisation, reporting, catalogues, operations, staff, geographies etc etc and deliver them as an apparently simple service.  I’ll say it again – cloud is not just some virtualisation software.  I don’t know why but I just don’t seem able to say that enough.  For some reason people just underestimate all this stuff – they only seem to think about the hypervisor and forget the rest of the complexity that actually takes a hypervisor and a thousand other components and turns them into a well-oiled, automated, highly reliable and cross functional service business operated by trained and motivated staff.

Looking at the companies that have really built and operated such platforms on the internet we can see that there are not a large number due to:

  1. The breadth of cross functional expertise required to package and operate a mass of technologies coherently as a cost-effective and integrated service;
  2. The scarcity of talent with the breadth of vision and understanding required to deliver such an holistic offering; and
  3. The prohibitive capital investment involved in doing so.

Equally importantly these issues all become increasingly pressing as the scope of the value delivered progesses up the platform maturity scale beyond infrastructure and up to the kind of platform required for the realisation and support of complete multi-tenant business capabilities we described at the beginning.

Looking at the companies who are building  public cloud platforms it’s unsurprising that they are not enthusiastically embracing the nightmare of scaling down, repackaging, delivering and then offering support for many on-premise installations of their complex platforms across multiple underfunded IT organisations for no appreciable value.  Rather they are choosing to specialise on delivering these platforms as service offerings to fully optimise the economic model for both themselves and (ironically) their customers.

Whereforeart Thou Private Cloud?

Without the productised expertise of organisations who have delivered a cloud platform, however, who will build your ‘private cloud’?  Ask yourself how they have the knowledge to do so if they haven’t actually implemented and operated all of the complex components as a unified service at high scale and low cost?  Without ‘productised platforms’ built from the ground up to operate with the levels of integration, automation and cost-effectiveness required by the public cloud, most ‘private cloud’ initiatives will just be harried, underfunded and incapable IT organisations trying to build bespoke virtualised infrastructures with old, disparate and disconnected products along with traditional consulting, systems integration and managed services support. Despite enthusiastic ‘cloud washing’ by traditional providers in these spaces such individual combinations of traditional products and practices are not cloud, will probably cost a lot of money to build and support and will likely never be finished before the IT department is marginalised by the business for still delivering uncompetitive services.

Trying to blindly build a ‘cloud’ from the ground up with traditional products, the small number of use cases visible internally and a lack of cross functional expertise and talent – probably with some consulting and systems integration thrown in for good measure to help you on your way – could be considered to sound a little like an expensive, open ended and high risk proposition with the potential to result in a white elephant.  And this is before you concede that it won’t be the only thing you’re doing at the time given that you also have a legacy estate to run and enhance.

Furthermore, go into most IT shops and check out how current most of their hardware and software is and how quickly they are innovating their platforms, processes and roles.  Ask yourself how much time, money and commitment a business invests in enabling its _internal IT department_ to pursue thought leadership, standards efforts and open source projects.  Even once the white elephant lands what’s the likelihood that it will keep pace with specialised cloud platform providers who are constantly improving their shared service as part of their value proposition?

For Whom (does) Your Cloud (set its) Tolls?

Once you have your private cloud budget who will you build it for?  As we discussed at the outset your business will be increasingly ceding business capabilities to specialised partners in order to concentrate on their own differentiating capabilities.  This disaggregation will likely occur along economic lines as I discussed in a previous post, as different business capabilities in your organisation will be looking for different things from their IT provision based on their underlying business model.  Some capabilities will need to be highly adaptable, some highly scalable, some highly secure and some highly cost effective.  While the diversity of the public cloud market will enable different business capabilities within an organisation to choose different platforms and services without sacrificing the benefits of scale, any private cloud will necessarily be conflicted by a wide diversity of needs and therefore probably not be optimal for any.  Most importantly every part of the organisation will probably end up paying for the gold-plated infrastructure required by a subset of the business and which is then forced onto everyone as the ‘standard’ for internal efficiency reasons.

You therefore have to ask yourself:

  1. Is it _really_ true that all of your organisation’s business capabilities _really_ need private hosting given their business model and assets?  I suspect not;
  2. How will you support all of the many individual service levels and costs required to match the economics of your business’s divergent capabilities? I suspect you can’t and will deliver a mostly inappropriate ‘one size fits all’ platform geared to the most demanding use cases; and
  3. How will you make your private infrastructure cost-effective once the majority of capabilities have been outsourced to partners?  The answer is that you probably won’t need to worry about it – I suspect you’ll be out of a job by then after driving the business to bypass your expensive IT provision and go directly to the cloud.
Have We Got Sign-off Yet?

So let’s recap:

  1. Private cloud misses the point of the most important disruption related to cloud – that is the opportunity to specialise and participate more fully in valuable new economic ecosystems;
  2. Private cloud ignores the fundamental fact that cloud is a ‘service-oriented’ phenomenon – that is the benefits are gained by consuming things, uh as a service;
  3. Private cloud implementation represents a distraction from that part of the new IT value chain where IT departments have the most value to add – that is as business-savvy consultants, integrators and managers of services on behalf of their business.

To be fair, however, I will take all of that value destruction off the table given that most people don’t seem to have got there yet.

So let’s recap again just on the platform bit.  It’s certainly the case that internal initiatives targeted at building a ‘private cloud’ are embarking on a hugely complex and multi-disciplinary bespoke platform build wholly unrelated to the core business of the organisation.  Furthermore given that it is an increasing imperative that any business platform supports the secure exposure of an organisation’s business capabilities to the internet they must do this in new ways that are highly secure, standards based, multi-tenant and elastic.  In the context of the above discussion, it could perhaps be suggested that many organisations are therefore attempting to build bespoke ‘clouds’:

  1. Without proven and packaged expertise;
  2. Without the budget focus that public cloud companies need merely to stay in business;
  3. Often lacking both the necessary skills and the capability to recruit them;
  4. Under the constant distraction of wider day to day development and operational demands;
  5. Without support from their business for the activities required to support ongoing innovation and development;
  6. Without a clear strategy for providing multiple levels of service and cost that are aligned to the different business models in play within the company.

In addition whatever you build will be bespoke to you in many technological, operational and business ways as you pick best of breed ‘bits’, integrate them together using your organisations existing standards and create operational procedures that fit into the way your IT organisation works today (as you have to integrate the ‘new ops’ with the ‘old ops’ to be ‘efficient’).  As a result good luck with ever upgrading the whole thing given its patchwork nature and the ‘technical differentiation’ you’ve proudly built in order to realise a worse service than you could have had from a specialised platform provider with no time or cost commitment.

Oh and the costs to operate whatever eventually comes out the other end of the adventure – according to Microsoft at least – could potentially be anywhere between 10 and 80 times higher than those you could get externally right now (and that’s on the tenuous assumption that you get it right first time over the next few years and realise the maximum achievable internal savings – as you usually do no doubt).  To rephrase this we could say that it’s a plan to delay already available benefits for at least three years, possibly for longer if you mess up the first attempt.

I may be in the minority but I’m _still_ not convinced by the business case.

So What Should I Get Sign-off For?

My recommendation would be to just stop already.

And then consider that you are probably not a platform company but rather a consultant and integrator of services that helps your business be better.

So, my advice would be to:

  1. Stop (please) thinking (or at least talking) about hypervisors, virtual machines, ‘hybrid clouds’ and ‘cloud bursting’ and realise that there is inherently no business value in infrastructure in and of itself.  Think of IaaS as a tax on delivering value outcomes and try not to let it distract you as people look to make it more complex for no reason (public/private/hybrid/cross hypervisor/VM management/cloud bursting/etc).  It generates so much mental effort for so little business value;
  2. Optimise what you already have in house with whatever traditional technologies you think will help – including virtualisation – if there is a solid _short return_ business case for it but do not brand this as ‘private cloud’ and use it to attempt to fend off the public cloud;
  3. Model all of your business capabilities and understand the information they manage and the apps that help manage it.  Classify these business capabilities by some appropriate criteria such as criticality, data sensitivity, connectedness etc.  Effectively use Business Architecture to study the structure and characteristics of your business and its capabilities;
  4. Develop a staged roadmap to re-procure (via SaaS), redevelop (on PaaS) or redeploy (to IaaS) 80% of apps within the public cloud.  Do this based on the security and risk characteristics of each capability (or even better replace entire business capabilities with external services provided by specialised partners); and
  5. Pressure cloud providers to address any lingering issues during this period to pave the way for the remaining 20% (with more sensitive characteristics) in a few years.

Once you’ve arrived at 5) it may even be that a viable ‘private cloud’ model has emerged based on small scale and local deployments of ‘shrink wrapped boxes’ managed remotely by the cloud provider at some more reasonable level above infrastructure.  Even if this turns out to be the case at least you won’t have spent a fortune creating an unsupportable white elephant scaled to support the 80% of IT and business that has already left the building.

Whatever you do, though, try to get people to stop telling me that cloud is about infrastructure (and in particular your choice of hypervisor).  I’d be genuinely grateful.

iPad and Cloud Platforms

24 May

As part of my ongoing odyssey within the blogosphere I spent some time catching up on Nick Carr’s blog – someone whose ideas always fascinate me. The most active article over the last few weeks appeared to be one entitled "The iPad Luddites" about the wide range of emotions that this seemingly simple device has evoked.  I wanted to comment on this from three perspectives really: firstly about the notion of computing devices like the iPad in general, secondly about the issues of ‘generativity’ that have been sparked by the release of such a device and then lastly about what the emotions around the iPad might tell us about cloud platforms (or service delivery platforms) in general.

The iPad and The (New) Third Way

At a macro level the amount of discomfort felt by technologists seems to depend in direct proportion on whether you view the iPad as a new kind of window into the web (i.e. primarily a highly specialised, beautifully packaged and superbly usable content delivery mechanism for the mass market) or as a replacement for general purpose computing devices.  To clear that point initially – as the iPad is not the point of this post per se – I am in the former camp and therefore see such devices as a ‘democratisation’ of computing in much the same way as other mobile computing devices.  I think it is interesting and good that people have more choice in how they access content and applications and I feel that such devices – in a general sense – create opportunities for both new consumers (so people who would previously not have been able to confidently access computing services or the web) and producers (so people who can now create content and applications that deliver new services to this newly empowered group).  In this sense such devices can lower the barrier of entry and therefore reach wider groups and this in turn can enable long tail business models to flourish by enabling broad access to hitherto inaccessible niches.  Even for technology literate people like me I can see a perfectly reasonable desire to not be ‘on duty’ 100% of the time and to feel the relief of falling back into a consumer role for a while.  I don’t see tablets as a replacement for general purpose computing devices, therefore, but rather as an alternative way of accessing services and content.   As a concrete – and personal – illustration of this I have an 85 year old grandfather who – about 10 years ago – decided that he should become ‘computer literate’.  He now has three PCs in his house – one connected to an amateur radio set, another that he uses for ‘tinkering and learning’ (so mild "generative" activities) and one that he ring-fences from his mildly ham-fisted experimentation (he once cut a screen off a laptop and connected the base to a monitor in order to use it purely as a desktop).  This third PC is left alone so that he always has simple and secure access to the web and his email.  I can see that this third PC could easily be replaced by a device like the iPad and that this would be both a more pleasurable experience for him and potentially open up more opportunities on the web by simplifying the experience and making it more easily consumed.  In no way would this reduce his desire to dismember and otherwise experiment on more general purpose computing devices, however.  So far so what.

The ‘what’ at this point is the fact that Apple has created not just a new device – which in and of itself is pretty standards compliant from an interoperability perspective – but that they have also created a platform to service it.  The nature of this platform – and its tight packaging with Apple products – leads to “generativity” concerns due to a perceived lack of ‘openness’.

The iPad and "Generativity"

One of the key worries that people have about the iPad relates to  its closed nature – both from a hardware and software perspective – and Apple’s desire to control access to the consumer base in order to ‘manage’ the experience.  There is a perception that controlled platforms like this can have a  negative impact on both "generativity" – through heavy-handed governance – and consumer freedom. 

In general I support open hardware, platforms and business models and each of these perspectives has different ‘contexts’ for "generativity" that need to be separated if we are to get to the bottom of the issue.

Hardware

Whilst many people mourn a past where machines could be opened, modified and enhanced in order to tinker and see what happens (i.e. one form of "generativity") I believe that the increasing internal complexity of devices coupled with their decreasing external complexity – i.e. ensuring simple operation for the majority – is an inevitable marker of the increasing maturity of a product category for three synergistic reasons:

  1. As devices increase in complexity so it becomes both undesirable – and indeed practically impossible – to allow even competent people to open up a device and work on the internals without compromising it;
  2. This same cohesion is also a key enabler for mass market adoption given that the majority of people just want devices that work; as a result those companies who can attractively package technology for consumption are rewarded financially by the broadest market.  This is also understandable from the perspective that once things work well enough and are mature enough messing around with them is more trouble than it’s worth; and
  3. As a device becomes increasingly consumerised in pursuit of this mass market so the need to produce them at scale also kicks in; this in turn promotes tight integration of components for manufacturing optimisation and also reduces the cost of the device – as a result opening up a device and replacing individual components becomes increasingly difficult and decreasingly cost effective at the same time (rapidly to a point at which it starts to become cheaper to replace the whole device from a consumer electronics perspective).

Whilst it is therefore sad that a tradition of hobbyist hardware tinkering has become obsolete  this aspect of ‘generativity’ is probably now the least valuable in any case, as hardware has long since become a way of delivering software rather than an end in itself (i.e. most hardware works sufficiently well and is so complex that the value of “generative” activities has diminished almost to the point of zero; at the same time what can be done with software has increased hugely and hence become the new sweet spot for “generative” activity).  There are emerging ‘open hardware’ models that reflect the work that has been done in the software community but this is still a pretty niche activity; for those who really want to experiment with hardware design the complexity of devices now means that most of their work must be done in software anyway.

What is still a critical aspect of ‘openness’ from a device perspective, however – much like in software – is interoperability (so use of standard ports and connectors to enable the integration of your various gadgets).  Given that most devices these days are bluetooth, wifi, 3g and usb enabled, however, interoperability to allow different devices to play nice together is now generally a hygiene factor.

“Generativity” and Hardware

Looking more broadly at the question of whether closed hardware decreases “generativity” within society overall we can consider the question from two perspectives.  From a strictly IT-centric view we may feel that the increasing penetration of consumer devices means less people who are ‘pc-literate’ and thus able to ‘create’ IT-centric systems (i.e. less people tinkering with hardware or general purpose programming languages to create value through IT).  This is to miss the point in my view.  In reality the majority of people who will pick up devices like the iPad would never have been “generative” through traditional IT in any form at all – if we give them access to new tools and software that are easily consumable, however, they will be able to use these tools to become vastly more “generative” within their own spheres of expertise.  As a result we would have to say that putting better packaged, more accessible and user friendly devices into the hands of the largest number of people increases the overall ability of society to be “generative” in the broadest sense.

Platforms

Given the maturity of the IT industry as a whole, platforms – from mainframes to windows to cloud – are still a major area of contention and competition despite their essentially infrastructural nature.  In much the same way as hardware went through a golden age of tinkering and “generative” activities so the last decade has been the golden age of platforms with everyone wanting to develop a different way of implementing software and controlling hardware; as a result I guess the next level of discomfort people feel with the iPad is the closed nature of the ecosystem in which it exists.

In considering the “openness” of platforms, however, I would look at two key points: how innovation often leads to proprietary platforms in immature markets and whether we should even care about proprietary implementation platforms in a web age.

Innovation and proprietary platforms

From my perspective the rise of proprietary platforms is all part of the natural cycle of any product category that takes a sudden leap into consumerisation and mass market adoption.  For a long time people tinker with various apparently disconnected concepts but then at some point someone decides to take a whole bunch of these innovations and collapse them all together into highly specific offerings that have only the 20% of functionality that is really required to enable 80% of the value (i.e. they create a new and much simplified way of doing things within the context of the problem domain – in this case touch-enabled web applications).  In order to do this they often have to create proprietary data formats, protocols and APIs – or some subset of these to fill gaps in existing standards – and then orchestrate them all together in a consumer centric way; such combinations become a new platform.  At that point they have recognised the needs of their consumers, delivered something ‘new’ that enables them to do things they haven’t been able to do in the past and thereby created a new market via a proprietary platform.  All sorts of other people then decide that they can develop a better platform and join in.  Apple (and others) are still at this stage since their platform is the proprietary integration of the formats, APIs and standards required to build and deliver applications through their ecosystem.  Successful first movers in these spaces often appear ‘magical’ as for the consumer the experience of controlling all that power through simple tools is nothing short of revelationary.

Looking at this process, however, there is nothing specific that impacts “generativity” in the broadest sense; whilst the reach of things that result from “generative” activities might be less because applications and services are tied to a specific platform they do not stifle “generativity” per se.

What is openness in a web age?

Taking this further, in the new business ecosystem do we really care that there are proprietary platforms?  That may sound like a strange question but if we step away from technology and concentrate on outcomes for a moment then we can think about the key points at which openness is really important rather than just use it as a mantra.

At the end of the day we’re all just trying to get something done and IT is mostly a pain in the ass that gets in the way.  With increasingly sophisticated ways of describing the outcomes we need, however, the key elements of any platform become how effectively they can support us in realising our intent rather than on how they work internally.  Two often used measures of ‘openness’ are interoperability and portability; whilst they are not mutually exclusive, preference for interoperability tends to favour implementation diversity and specialisation as a goal whereas preference for portability tends to favour lowest common denominator single implementations and general purpose use cases. 

One of the implications of a wholesale shift to web based platforms is that technology is no longer a) monolithic in its delivery and b) an all or nothing costly purchase decision.  Web architectures encourage the creation of lightweight components and integration, whilst cloud platforms allow easy access and exit.  Given that different kinds of components will be best optimised on different kinds of platforms and with different processes and tooling we can also start to think about the best way to realise them individually; cloud platforms basically allow us to choose the best implementation vehicle whilst still allowing us to integrate the parts back together.  If a proprietary platform – because of the degree to which it is specialised and optimised to realise a specific task as effectively as possible – allows us to deliver value far more quickly and cost effectively than an ‘open’ platform (i.e. one which is optimised for portability and hence more general purpose) then which would we pragmatically choose (especially given that the entry and exit costs for delivering on a platform are much lower than in previous models of IT and so we could realistically redevelop that component rapidly somewhere else in future if necessary)?  In any other industry we see people building around the components of partners whose design and manufacture is specialised (and hence their internals can be considered proprietary) and all we care about is a) how well those components work within our broader use case and b) whether they fit together with the other components we have.  Coming at ‘openness’ from this perspective we see that from a consumers viewpoint (whether that is an end consumer or a partner in a value chain) all that truly matters are that the component in question performs as required, is able to be integrated and has robust processes in use in its creation and maintenance; as a result ‘interoperability’ and measures around process quality become far more important than the technology being used to implement it (and hence portability). 

To bring this back to the discussion of the iPad and whether the lack of portability in the underlying platform impacts “generativity” or “open access”, however, we must step back and consider the platform in the light of the macro level definition of “openness” explored above:

  1. Apple enables anyone to develop an application to execute on their platform subject to certain quality criteria; as a result application providers have access to a huge market of consumers via Apple’s marketplace;
  2. Application providers can integrate with external services not provided by Apple or any of its other partners in order to enrich the experience delivered by the application on the end device;
  3. Consumers have access to many different application providers – as well as web access via a browser – and could hence be argued to have complete freedom of choice. 
  4. Consumers can configure many of the applications to integrate data from other web services that they use and hence are not locked into having all of their data held by Apple or its chosen providers.

As a result of these observations it is fair to say that Apple’s platform is fairly open at a macro level – anyone can consume services, provided by anyone using data and services that are part of other ecosystems. 

“Generativity” and Platform

So looking at the question purely from a platform perspective we would have to say that the Apple platform does not impact “generativity”, only the ability of the application implementer to define the platform they wish to use according to their preference (so to perform tinkering and “generative” activities in the platform space).  For the vast majority of people who just want to deliver services quickly and cheaply to make money or for those who just wish to have a pleasant experience in consuming such services the platform is only of interest in-so-much as it helps or hinders them (as long as they can connect their various services together – so interoperability remains a key requirement).  If we relate platforms, therefore – as a necessary but essentially hygiene related infrastructural capability – to hardware then we could consider that the discomfort people feel with proprietary platforms is not that they limit “generativity” overall (so both Microsoft and Apple platforms have unleashed a huge amount of higher level “generative” activity by removing complexity at the platform level) but that they limit “generativity” within a technical space that technology-literate people have been used to controlling and tinkering within.  In this context one could propose that decreasing choices in how we implement software that actually does useful stuff is merely the consumerisation of software platforms (in this case the consumer being software developers who have good ideas and just want to get stuff done or people who want to easily consume their good work) and hence the next logical step in the commoditisation of technology markets.

Does this mean that we are doomed to a future of competing proprietary platforms?  It is one possible outcome (i.e. the dominance of mega-platform providers) but not the only one.  Given that platforms are infrastructural in nature – and hence tend towards commoditisation – it is feasible that there will be open source alternatives which can compete against the big companies.  Furthermore it is likely that all platforms will tend towards broad functional equivalence over time – as people adopt useful ideas from competitors – and thus the question will be whether open source or proprietary models deliver the ‘killer’ offering that scales into a de-facto standard.  As always the market will decide; the key message, however, is that how we implement the internals of things hardly matters anymore – beyond a few interoperability caveats; what matters is how well we can realise higher level outcomes for people (both economic and social). 

Business

The final level at which we need to examine the impact of the iPad is at the level of business models.  Whilst we have examined the implications for hardware and software platforms as individual elements, we also have to consider the broader question of how these components are integrated into a business proposition.  This is probably the area where most concern justifiable exists, as whilst technologies in the hardware and platform space are neither inherently good or bad, Apple’s current business model is a top-to-bottom walled garden of hardware, platform and delivery channel within a single brand experience.  This model delivers a tight integration between all elements of the offer that prevents other companies competing against Apple for specific components within the overall ecosystem of business types they have assembled.  To know whether this is a problem – and for whom – we need to consider the different kinds of businesses at play and the relationship between them.

The Apple Business Stovepipe

Currently the whole Apple ecosystem is a tightly coupled, single business model stovepipe that you take or leave as a package. 

image

In this context all of Apple’s components live and die as a package and cannot be independently optimised.  On the reverse side consumers cannot choose to only take those elements of the Apple product set that they really want and have to take all elements together (they cannot choose to have an iPad but source applications from elsewhere, for instance, or choose to make use of Apple’s platform on another manufacturer’s device). 

These properties of the Apple business model are far more troubling than the individual technologies themselves – which as we have seen are as open as necessary and clearly supportive of “generativity” – because they limit competition within the layers of the ecosystem and prevent “generativity” in the business model space.  The iron control exerted by Apple on the people who want to live within their top-to-bottom closed ecosystem means that there are no opportunities for “generative tinkering” from a business perspective (different devices, different stores, different payment models, different brand experiences etc. etc.). 

This stifling of competition has some serious consequences for both the consumer – as it limits competition, choice and innovation, allowing Apple to drip feed innovation at their own pace to  maximise their revenue whilst simultaneously keeping prices artificially high – and – perhaps more surprisingly – for Apple themselves.

Apple’s Business Components

In my previous post about divergent forms of differentiation I touched on the fact that there are four broad kinds of businesses – culturally and economically – that need to be optimised in different ways.  To recap these were:

  • Relationship businesses:  These businesses are essentially business capabilities that leverage trust relationships to bring together different parties for mutual gain;
  • Innovation and commercialisation businesses: These businesses are essentially small, innovation focused capabilities who specialise in IP generation and product and service commercialisation;
  • Infrastructure businesses: These businesses are essentially business capabilities that respond to economies of scale; and
  • Portfolio businesses:  These businesses own and manage brands and invest their capital across a range of other business types to maximise asset growth. 

If we look at Apple then we could propose a neat division of the elements of their ecosystem into this categorisation:

  • Relationship business:  App store.  In this business Apple wants to maintain the relationship to the end customer and ‘mediate’ access to  other providers to leverage their brand loyalty and the resulting trust people place in their offers and recommendations.  This is one of the reasons Apple are so keen to ensure the quality of applications distributed through this channel;
  • Innovation and commercialisation business:  e.g. iPad.  Apple does a great job of bringing innovative and beautifully designed products to market and both the iPhone and the iPad are great examples of this.  In this context Apple hold the IP for these products but they do not carry out any of the actual manufacturing etc. themselves.  As a result in the device space Apple are concentrating on IP generation;
  • Infrastructure business:  iPhone OS.  In this context Apple are absolutely a platform business and such platforms are infrastructural in nature.  The value of a platform is in the breadth and depth of its ecosystem and hence the economies of scale it can generate;
  • Portfolio business:  The Apple brand.  Apple itself is clearly a strong global brand which is loved by its many fans and equally obsessed over by its detractors.   This element of the business needs to have a balanced strategy and set of resulting investments across the other business types to deliver growth and ensure the long term health of Apple.
Optimise Apple, Unleash Business “Generativity”, Treat the Consumer Fairly

If we take this view of the components that make up Apple’s ecosystem then we can see that the major elements fall into different business types and hence need to be optimised differently (as per my longer post on this subject generally).  As a result rather than sub-optimising all of the capabilities it holds to maintain end to end control Apple could alternatively hold these components as part of a brand portfolio that gets optimised in different ways.

image In this instance the optimisation would be (starting from the bottom):

  • Infrastructure business (iPhone OS):  Allow other manufacturers to license and use the iPhone OS.  Platform businesses are all about economies of scale and restricting penetration of your platform is a long term bad bet.  Opening up the platform to the broadest market would allow Apple to monetise their IP, create more choice for the consumer and facilitate far greater “generativity” in the business space.  Apple would benefit from this “generativity” at the macro level as the larger its ecosystem the greater the penetration of the platform and hence the greater the revenue for Apple.  There is a direct parallel here to what happened between Macs and PCs in the last major platform wars; Apple tried to retain soup-to-nuts control whilst Microsoft concentrated on getting their platform into as many computers as possible.  Only one of these companies is the largest software vendor on the planet.
  • Innovation and Commercialisation business (e.g. iPad):  There are three separate ways that Apple could monetise the iPad (or other hardware devices); firstly it could take a decision to retain sole control of the iPad as its own brand device for  accessing the broader market that it has enabled through its platform.  This would be a sensible position for them given the quality and desirability of their devices, enabling them to be a top-tier producer of devices for the iPhone OS platform that they have created.  Secondly it could take the IP that it develops and license it to other manufacturers – it is possible that it could make more money from licensing IP to a broader range of device producers than from selling hardware in isolation.  The third way is a combination of both of these approaches, licensing technical IP but also continuing to use this IP themselves to manufacture design-led hardware as they do today.  All of these options would help to enable broader business “generativity” by creating competition in the device market around the core iPhone OS platform; from Apple’s perspective, the additional devices resulting from such “generativity” would legitimise the platform as a de facto standard, encourage people to buy their high-end devices (as they won’t feel ‘trapped’) and enable Apple to gain revenue from its other business lines (e.g. platform and apps sales) from a broader base of users;
  • Relationship business (App Store):  Although Apple would now have to allow other people to deliver applications to devices – as a result of losing absolute control over the platform – an own brand App Store proposition could still hold massive appeal due to the Apple brand and the trust it has amongst consumers (especially those who value simplicity and function).  Apple could continue to position itself as a ‘high end’ App Store that has strong quality constraints for offered applications and which ‘guarantees’ successful execution (as today).  This opening up of the applications ecosystem to other sellers would enable business “generativity” within the relationship space as consumers could choose the level of cost, support and quality they were happy to live with.  Apple could benefit however the market evolved, though, by firstly having a differentiating proposition from a relationship (i.e. app store) perspective based around both their brand and their ease of use (including guarantees).  From a broader perspective more competition in the app store space would encourage greater adoption of the iPhone OS platform and the devices required to access it.
  • Portfolio business (Apple):  There would be a number of implications overall for Apple if they decided to follow an ‘open’ business model, split their capabilities along economic optimisation lines and allow competition into their ecosystem.  The primary implication would be that Apple would now be able to optimise all of their business types independently creating more value overall for the Apple brand.  An obvious example of such an optimisation would be the licensing of their platform to other companies.  More subtly, however , there would be nothing to stop Apple simultaneously pursuing a strategy of openness and individual business optimisation whilst also delivering an integrated end-to-end experience for their consumers as they do today.  Each of their ‘open’ business components could still be wrapped in the next layer of business in order to deliver the same simple and integrated customer experience with the same level of guarantees that they do now; this in itself could be the overall brand proposition even as the individual elements are available to other people to maximise Apple revenue, business “generativity” (and hence secondary revenue) and consumer choice (and hence trust).  As a result the irony is that an open strategy would benefit Apple as much as the other participants.
“Generativity” and Business

Overall, then, we would have to say that the current Apple business model prevents “generativity” in the business spaces around which they have chosen to build their ecosystem (i.e. hardware, platform and service distribution).  This position is probably equally bad for the consumer, for potential Apple partners and – most strangely – for Apple itself.  Google’s foray into the mobile market is far more dynamic at the moment primarily due to the openness of its business model and the resulting number of companies involved; it does, however, suffer from the kinds of fragmentation and lack of trust that Apple has managed to avoid through its tight control over its ecosystem.  Like with platforms, however, it is likely that such a strategy – whilst probably unavoidable initially – will only work for a short period of time – essentially until the market matures sufficiently for people to understand its basic operation; at that point commoditisation of function – coupled with providers who will take on the role of integrators and trusted brands for consumers in the way that Apple has in its closed system – will require companies to optimise the component parts of the value chain as described above in order to remain competitive. 

The iPad and Lessons for Cloud Computing

Given that this post has already extended way beyond my original intention I will keep this last set of observations to a set of bullet points:

  • Cloud platforms are increasingly driving people’s understanding that infrastructure is pointless and (mostly) worthless.  In much the same way as devices are becoming commoditised and hence packaged so traditional infrastructure is disappearing from our purview as it becomes commoditised.  Strangely, however, this doesn’t stop many IT departments and architects continuing to think that infrastructure design and support is a primary and important activity.  These activities represent continued “generative” activities in the hardware space, however, and thus provide minimal value for maximal effort given that software is now the primary medium for value adding, “generative” activities.  Even infrastructure-as-a-service offerings are only postponing the point at which infrastructure disappears completely behind software platforms;
  • Cloud platforms support “generativity” in much the same way as the Apple platform.  They enable much greater and more rapid “generative” activities in delivering applications and services to fulfil higher level functions but you have to accept that you can no longer perform “generative” activities in the platform space itself – these are now inherently the domain of platform providers.  Experience from the angst of the iPad launch suggests that this will not be an easy transition for the hundreds of thousands of geeks whose primary function is to re-create platforms and frameworks over and over again.  In terms of openness, interoperability is now far more important than portability as systems will be constructed from services that potentially span many platforms.  The risks inherent in these services being implemented on proprietary platforms diminishes both as a result of the broader portfolio of platforms in play but also due to the speed at which services can be redeveloped elsewhere if necessary.  Interoperability also enables “generativity” for platform providers, enabling them to innovate far more rapidly and find ways of helping us to realise our own services much more cheaply and quickly than ever.
  • Cloud platforms will operate within the same basic business models as discussed above in the context of Apple; as a result organisations that wish to operate within the IT market of the future will need to decide what ‘type’ of business they are and optimise accordingly.  IT companies may hold a portfolio of individually optimised relationship, platform and innovation businesses but the idea of an ‘integrated’ (i.e. stovepiped) IT service provider is a dangerous fallacy.  Looking specifically at internal IT departments they will increasingly need to play the role of ‘relationship manager’ and integrate many external services together to realise business aims; in this context they should be looking for exit strategies for the majority of the IT systems and platforms they operate today.

Cloud Platforms and Future Middleware

6 May

I’m going to try and break the habit of a lifetime in this ‘second life’ of my blog and post the odd ‘peppy’ comment on things I’ve seen as well as getting sucked into long analyses :-p

In that spirit I thought I’d just comment on a post I saw today by John Rymer at Forrester; essentially John was expressing some mild disappointment at a discussion about future app servers he was involved in and suggesting that the future of these products needs to be radically different in a connected, cloud environment.  I completely agreed with his points about more lightweight, specialised and virtualised ‘containers’ and this reflected the work I discussed in one of my older posts, where I talked about the need to use virtual templates, lightweight product and framework configurations, specific patterns and metadata plus domain specific languages and factories in pursuit of IT industrialisation.  Such lightweight and specialised containers for service realisation help to make developers more productive but also enable much greater agility and efficiency in resource usage by allowing each such service to change and scale according to its purpose and needs independent of the others.  In this sense I understand the feeling of one person who left a comment who described such platforms in terms of a fabric; this is probably an apt description given that you will have independent, specialised services bound to specific lightweight containers, ‘floating’ on a virtual infrastructure and collaborating with others to realise wider intent.  At heart a lot of John’s post was about simplifying, downsizing and specialising containers for different kinds of services and so I heartily agreed with his sentiments on the matter.

Business Enablement as a Key Cloud Element

30 Apr

After finally posting my last update about ‘Industrialised Service Delivery’ yesterday I have been happily catching up with the intervening output of some of my favourite bloggers.

One post that caught my eye was a reference from Phil Wainwright – whilst he was talking about the VMForce announcement – to a post he had written earlier in the year about Microsoft’s partnership with Intuit.  Essentially one of his central statements was related directly to the series of posts I completed yesterday (so part 1, part 2 and part 3):

“the breadth of infrastructure <required for SaaS> extends beyond the development functionality to embrace the entirely new element of service delivery capabilities. This is a platform’s support for all the components that go with the as-a-service business model, including provisioning, pay-as-you-go pricing and billing, service level monitoring and so on. Conventional software platforms have no conception of these types of capability but they’re absolutely fundamental to delivering cloud services and SaaS applications”.

This is one of the key points that I think is still – inexplicably – lost on many people (particularly people who believe that cloud computing is primarily about providing infrastructure as a service).  In reality the whole world is moving to service models because they are simpler to consume, deliver clearer value for more transparent costs and can be shared across organisations to generate economies of scale.  In fact ‘as a service’ models are increasingly not going to be an IT phenomenon but also going to extend to the way in which businesses deal with each other across organisational boundaries.  For the sale and consumption of such services to work, however, we need to be able to ‘deliver’ them; in this context we need to be able to market them, make them easy to subscribe to, manage billing and service levels transparently for both the supplier and consumer and enable rapid change and development over time to meet the evolving needs of service consumers.  As a result anyone who wants to deliver business capabilities in the future – whether these are applications or business process utilities – will need to be able to ensure that their offering exhibits all of these characteristics. 

Interestingly these ‘business enablement’ functions are pretty generic across all kinds of software and services since they essentially cover account management, subscription, business model definition, rating and billing, security, marketplaces etc etc (i.e. all of the capabilities that I defined as being required in a ‘Service Delivery Platform’).  In this context the use of the term ‘Service Delivery Platform’ in place of cloud or PaaS was deliberate; what next generation infrastructures need to do is enable people to deliver business services as quickly and as robustly as possible, with the platforms themselves also helping to ensure trust by brokering between the interests of consumers and suppliers through transparent billing and service management mechanisms.

This belief in service delivery is one of the reasons I believe that the notion of ‘private clouds’ is an oxymoron – I found this hoary subject raised again on a Joe McKendrick post after a discussion on ebizQ – even without the central point about the obvious loss of economies of scale; essentially  the requirement to provide a whole business enablement fabric to facilitate cross organisational service ecosystems – initially for SaaS but increasingly for organisational collaboration and specialisation – is just one of the reasons I believe that ‘Private Clouds’ are really just evolutions of on-premise architecture patterns – with all of the costs and complexity retained – and thus purely marketecture.  When decreasing transaction costs are enabling much greater cross organisational value chains the benefits of a public service delivery platform are immense, enabling organisations to both scale and evolve their operations more easily whilst also providing all of the business support they need to offer and consume business services in extended value chains.  Whilst some people may think that this is a pretty future-oriented reason to not like the notion of private clouds, for completeness I will also say that to me  – in the sense of customer owned infrastructures – they are an anachronism; again this is just an extension of existing models (for good or ill) and nothing to do with ‘cloud’.  It is only the fact that most protagonists of such models are vendors with very low level maturity offerings like packaged infrastructure and/or middleware solutions that makes it viable, since the complexity of delivering true private SDP offerings would be too great (not to mention ridiculously wasteful).  In my view ‘private clouds’ in the sense of end organisation deployment is just building a new internal infrastructure (whether self managed or via a service company) sort of like the one you already already have but with a whole bunch of expensive new hardware and software (so 90% of the expense but only 10% of the benefits). 

To temper this stance I do believe that there is a more subtle, viable version of ‘privacy’ that will be supported by ‘real’ service delivery platforms over time – that of having a logically private area of a public SDP to support an organisational context (so a cohesive collection of branded services, information and partner integrations – or what I’ve always called ‘virtual private platforms’).  This differs greatly from the ‘literally’ private clouds that many organisations are positioning as a mechanism to extend the life of traditional hardware, middleware or managed service offerings – the ability of service delivery platforms to rapidly instantiate ‘virtual’ private platforms will be a core competency and give the appearance and benefits of privacy whilst also maintaining the transformational benefits of leveraging the cloud in the first place.  To me literally ‘private clouds’ on an organisations own infrastructure – with all of their capital expense, complexity of operation, high running costs and ongoing drag on agility – only exist in the minds of software and service companies looking to extend out their traditional businesses for as long as possible. 

Industrialised Service Delivery Redux III

29 Apr

It’s a bit weird editing this more or less complete post 18 months later but this is a follow on to my previous posts here and here.  In those posts I discussed the need for much greater agility to cope with an increasingly unpredictable world and ran through the ways in which we can industrialise IT provision to focus on tangible business value and rapid realisation of business capability.  This story relied upon the core notion that technology is no longer a differentiator in and of itself and thus we just need workable patterns that meet our needs for particular classes of problem – which in turn reduces the design space we need to consider and allows increasing use of specialised platforms, templates and development tools.

In this final post I will discuss the notion that such standardisation calls into question the need to own such technology at all; essentially as platforms and tools become more standardised and available over the network so the importance of technology moves to access rather than ownership.

Future Consolidation

One of the interesting things from my perspective is that once you start to build out an asset-based business – like a service delivery platform – it quickly becomes subject to economies of scale.

It is rapidly becoming plain, therefore, that game changing trends such as:

  • Increasing middleware consolidation around traditional ‘mega platform’ providers;
  • Flexible infrastructure enabled by virtualisation technology;
  • Increasingly powerful abstractions such as service-orientation;
  • The growing influence of open source software and collaborating communities; and
  • The massively increased interconnectivity enabled by the web.

are all going to combine to change not just the shape of the IT industry itself but increasingly all industries; essentially as IT moves to service models so organisations will need to reshape themselves to align with these new realities, both in terms of their use of IT but also in terms of finding their distinctive place within their own disaggregating business ecosystems.

From a technology perspective it is therefore clear that these forces are combinatory and lead to accelerating commoditisation.  The implication of this acceleration is that decreasing differentiation should lead to increased consolidation as organisations no longer need to own and operate their own IT when such IT incurs cost and complexity penalties without delivering differentiation.

Picture1

In a related way such a shift by organisations to shared IT platforms is also likely to be an amplifying trend; as we see greater platform consolidation – and hence decreasing differentiation to organisations owning their own IT – so will laggard organisations become less competitive as a result of their expensive and high drag IT relative to their low cost, fleet of foot competitors.  Such organisations will then also seek to transition, eventually creating a tipping point at which ownership of IT becomes an anachronism.

From the supply perspective we can also see that as platforms become less differentiating and more commoditised they also become subject to increasing economies of scale – from an overall market perspective, therefore, offering platforms as a service becomes a far more effective use of capital than the creation and ownership of an island of IT, since scale technologies drift naturally towards consolidation.  There are some implications to this for the IT industry given the share of overall IT spend that goes on repeated individual installation and consulting for software and hardware but we shall leave that for another post.

As a result of these trends it is highly likely that we will see platform as a service propositions growing in influence fairly rapidly.  Initially these platforms are likely to be infrastructure-oriented and targeted at new SaaS providers or transitioning ISVs to lower the cost of entry but I believe that they will eventually expand to deliver the full business enablement support required by all organisations that need to exist in extended value webs (i.e. eventually everyone).  These latter platforms will need to have all of the capabilities I discussed in the previous post and will be far beyond the technology-centric platforms envisaged by the majority of emerging platform providers today.  Essentially as everybody becomes a service provider (or BPU in other terms) in their particular business ecosystem so they will need to rapidly realise, commercialise, manage and adapt the services they offer to their value webs.  In this latter scenario I believe that organisations will be caught in the jaws of a vise – the unbundling of capability to SaaS or other BPU providers to allow them to specialise and optimise the overall value stream will see their residual IT costs rocket as there are less capabilities to share it around; at the same time economies of scale produced by IT service companies will see the costs of platform as a service offerings plummet and make the transition a no brainer.

So what would a global SDP look like?

Picture2

Well remarkably like the one I showed in my previous posts given that I was leading up to this point, lol.  The first difference is that the main bulk of the platform is now explicitly deployed in the cloud – and it’ll obviously need to scale up and down smoothly and at low cost.  In addition all of the patterns that we discussed in my previous post will need to support multi-tenancy and such patterns will need to be built into the tools and factories that we will use to create systems optimised to run on our Service Delivery Platform.

At the same time the service factory becomes a way of enabling the broadest range of stakeholders to rapidly and reliably create services and applications that can be deployed to our platform – in fact it moves from being “just” an interesting set of tools to support industrialised capability realisation to being one of the main battlegrounds for PaaS providers trying to broaden their subscriber base by increasing the fidelity of realisation and reducing the barrier of entry to the lowest level possible.

Together the cloud platform and associated service factory will be the clear option of choice for most organisations, since it will yield the greatest economies of scale to the people using it.

One last element on this diagram that differentiates it from the earlier one is the on-premise ‘customer service platform’. In this context there is still a belief in many quarters that organisations will not want to physically share space and hardware with other people – they may be less mature, they may not trust sufficiently or they may genuinely have reasons why their data and services are so important that they are willing to pay to host them separately.  In the long term I do not subscribe to this view and to me the notion of ‘private clouds’ – outside of perhaps government and military use cases – is oxymoronic and at best a transitional situation as people learn to trust public infrastructures.  On the other hand whilst this may be playing with semantics I can see the case for ‘virtual private clouds’ (i.e. logically ring fenced areas of public clouds) that give the appearance and majority of benefits of being private through ‘soft’ partitioning (i.e. through logical security mechanisms) whilst allowing the retention of economies of scale through avoidance ‘hard’ partitioning (i.e. through separate physical infrastructure).  Indeed I would state that such mechanisms for making platforms appear private (including whitelabelling capabilities) will be necessary to support the branding requirements of resellers, systems integrators and end organisations.  For the sake of completeness, however, I would position transitional ‘private clouds’ as reduced functionality versions of a Service Delivery Platform that simply package up some hardware but leave the majority of the operational and business support – along with things like backup and failover – back at the main data centres of the provider in order to create an acceptable trade-off in cost.

Summary

So in this final post I have touched on some of the wider changes that are an implication of technology commoditisation and the industrialisation of service realisation.  For completeness I’ll recap the main messages from the three posts:

  • In post one I discussed how businesses are going to be forced to become much more aware of their business capabilities – and their value – by the increasingly networked and global nature of business ecosystems.  As a result they will be driven to concentrate very hard on realising their differentiating capabilities as quickly, flexibly and cost effectively as possible; in addition they will need to deliver these capabilities with stringent metrics.  This has some serious implications for the IT industry as we will need to shift away from a technology focus (where the client has to discover the value as a hit and miss emergent process) to one where we can demonstrate a much more mature, reliable and outcome based proposition. To do this we’ll need to build the platforms to realise capabilities effectively and in the broadest sense.
  • In post two I discussed how industrialisation is the creation and consistent application of known patterns, processes and infrastructures to increase repeatability and reliability. We might sacrifice some flexibility but increasing commoditisation of technology makes this far less important than cost effectiveness and reliability. When industrialising you need to understand your end to end process and then do the nasty bit – bottom up in excruciating detail.
  • Finally in post three I have discussed my belief that increasing standardisation of technology will lead to accelerating platform consolidation.  Essentially as technology becomes less differentiating and subject to economies of scale it’s likely that IT ownership and management will be less attractive. I believe, therefore, that we will see increasing and accelerating activity in the global Service Delivery Platform arena and that IT organisations and their customers need to have serious, robust and viable strategies to transition their business models.