From the Enterprise perspective, now has never been a better time to invest in cloud services. Enterprises are broadly adopting all types of cloud services at multiple levels in the organization. Initial predictions were for the enterprise to favor private and community clouds over public services, but the hottest trends in Cloud adoption has been Software as a Service (SaaS) and cloud-based business applications which are projected to grow from $13.4 billion in 2011 to $32.2 billion in 2016, a 19.1% five-year CAGR! The rapid adoption of SaaS applications of all flavors by the enterprise has been a surprise to many, but the vastly reduced costs due to the pay as you go pricing models, and high degree of service delivery flexibility has overcome any perceptions of needing to trade price for reduced feature sets. Unsurprisingly, the most often added cloud-based application services are Customer Relationship Management (CRM), Supply Chain Management (SCM) and Enterprise Content Management (ECM), with Web Conferencing, teaming platforms and social software suites nipping at their heels.

Infrastructure as a Service (IaaS) continues to appeal to companies that want to replace in-house and traditional data center models for the cloud hardware abstraction approach. Gartner is predicting Infrastructure-as-a-Service (IaaS), cloud management & security devices, and Platform-as-a-Service (PaaS) are growing from $7.6B in 2011 to $35.5B in 2016, a CAGR of 36%. A word of warning for companies that think just because the Amazon cloud is easy to use, it is easy to build and manage. Building a private cloud still requires a degree of expertise that few enterprises have in-house. In the next year or so expect more companies to see the value of using the services of cloud consultants to avoid painful and expensive mistakes when building private clouds; or alternatively using emerging enterprise focused public cloud services such as Bluelock or Terremark.
Platform as a Service (PaaS) which still does not quite know what it wants to be when it grows up, is lagging with only about $1B in revenue in 2012, but as the market matures, expect to see rapid uptake as companies recognize the value of standardized tools that can ease the pain of Cloud application deployments. Some of the newer PaaS tools like the ServiceMesh Agility Platform combine the features of a SDLC workflow engine, production support and orchestration across different cloud platforms.

New Cloud Technology Directions

Ultimately, innovation is the marriage of technology and organization change. The dilemma is how to pull innovation into IT core functionality without disrupting the flow of new ideas, when the modern enterprise understanding of IT is focused on operational excellence and cost control. The CIO should be leading the cultural change to the new flat organization by leveraging cloud and mobile application in new and interesting ways. The trick is to create tools for people to quickly test and validate their ideas so they can implement new ideas that work within the enterprise framework. Cloud tools can be used to deliver on that promise, but is the enterprise up to that challenge?

This is not the first time wrenching technology innovation has changed how companies do business, and it certainly will not be the last. Companies able to use disruptive technologies, such as cloud computing, effectively will leave companies who do not have that ability in the dust. By recognizing the seeds of change and embracing them, the smart company can leverage cloud services by using the efficiencies of pooled IT resources at the same time allowing greater flexibility to meet the challenges of the global economy. This combination of combining commodity utilities with innovation allows companies to compete effectively using the efficiency and flexibility strategies simultaneously.

Challenges, Always Challenges…

Consumers intuitively get cloud and have been more than willing to embrace it warts and all as it has matured. They are highly price sensitive and will easily sacrifice features in exchange for low cost. On the other side of the market spectrum, the more conservative enterprise market is still struggling with the basic model. Some companies worry that the emerging cloud companies are too small to do business with, while others are concerned with how to incorporate new technologies into existing technology portfolio investments. To address their concerns, at the same time as Cloud technology continues to mature and standards develop , innovation around service delivery and breakthroughs in storage technologies are making it ever more enterprise ready. The pace of cloud vendor consolidation has already picked up as the traditional enterprise vendors such as HP and IBM has rushed to add enterprise ready cloud services to their portfolios. This should alleviate the fears of even the most technology adverse companies.

A final word for any remaining cloud technology skeptics, as with any innovative force, the cloud is just a tool to drive change, not an embodiment of change itself. Enterprise cloud consulting leaders, have firsthand experience with how companies willing to ride the Cloud revolution will not only survive in today’s hyper-competitive world, but thrive. I cannot wait to see where the next wave takes us!

About the Author
Beth Cohen, Beth Cohen is a senior cloud architect for Cloud Technology Partners, Inc., focused on delivering solutions to help enterprises leverage the efficiencies of cloud architectures and technologies. Previously, Ms. Cohen was the director of engineering IT for BBN Corporation, where she was involved with the initial development of the Internet, working on some of the hottest networking and web technology protocols in their infancy.

Enterprise SaaS takes off – With $14.5 billion in SaaS sales (an increase of 17.9% from 2011), lots of providers are getting it right. The biggest news is the boom in enterprise SaaS application adoption. Originally touted as the great leveler, allowing small businesses to take advantage of sophisticated systems hereto only affordable by big companies, the enterprise is rapidly dumping their high maintenance in-house systems and deploying a variety of SaaS services instead. Salesforce of course has long been a big player in this space, but the Workday’s spectacular IPO in October indicates a bright future. Look for lots of interest in Microsoft cloud products such as Office 365 and Azure as companies realize that these are cheaper and more flexible alternatives to traditional desktop tools. The rapid adoption of mobile devices in the workplace and its demand for more business customized apps is only going to accelerate this trend.

OpenStack grows up – While it remains to be seen if OpenStack wins the cloud infrastructure wars against VMware, CloudStack and Eucalyptus, given the number of cloud service providers lining up behind HP and Rackspace to roll out Openstack commercial services, it is not difficult to predict that 2013 will be another banner year for OpenStack. Practically the every major tech company in the world with the notable exception of Amazon is throwing their support behind OpenStack. On the technology side, more tools and functionality than ever makes the future of the largest cloud Open Source project ever definitely rosy.

Cloud Hardware Architectures get real – Over the last year or so, several vendors including VCE, the uneasy coalition of EMC, Cisco and VMware, Dell, and NetApp, have announced prepackaged cloud hardware stacks. On the surface the idea is appealing to enterprise IT infrastructure teams unprepared for the cloud revolution. However, as companies quickly found out, there is a big difference between dropping in a rack of hardware and building a productive enterprise cloud infrastructure. Since a primary cloud objective is hardware and software abstraction, more vendors will be developing infrastructure architectures tolerant of commodity hardware and supportive of transparent upgrades.

VMware Cloud gets it right – All indications are that 2013 will be the year that VMware finally gets it right after years of passing virtualization off as cloud. Enterprises that have been patiently waiting for a full suite of cloud features and tools will be rewarded with a system that will be expensive (what else is new), but actually delivers the goods.

Cloud Tools mature – With more offerings than ever from startups and mature companies alike, the market for sophisticated tools will be heating up as companies realize that they need orchestration, brokering, PaaS and cloud management suites. There will be lots of activity, new offerings, acquisitions, and of course, the inevitable hype.

About the Author
Beth Cohen is a senior cloud architect for Cloud Technology Partners, Inc., focused on delivering solutions to help enterprises leverage the efficiencies of cloud architectures and technologies. Previously, Ms. Cohen was the director of engineering IT for BBN Corporation, where she was involved with the initial development of the Internet, working on some of the hottest networking and web technology protocols in their infancy.

Making employees buy their own IT tools sounds like a crazy idea.  Thirty years ago, IT systems were so expensive that most access was through a dumb terminal, which was essentially nothing more than a session screen that allowed you to type in commands that were sent to the computer.   The computer was of course housed in some data center attended by tens of administrators day and night.  Then the PC – remember it is not called the Personal Computer for nothing — revolution of the 1990’s shifted the paradigm again, so that each user had their own software on their own system.  The corporate systems were still accessed through special terminal emulation software, but Microsoft got fat on selling millions of Windows and Office licenses to their enterprise customers.

Over the past 40 years nobody has questioned the wisdom of having a company purchase and control the hardware and software that employees use to do their jobs.  The wide availability and acceptance of consumer devices is opening up the opportunity of resetting the equation again.  It is not only possible, but there are many benefits from taking this approach.  There are precedents in the construction industry.  Most construction workers are expected to bring their own tools.  It makes perfect sense when working with dangerous equipment.  You want to be completely comfortable with the tools so you can focus on doing your job well.  This even extends into the engineering and architectural professions; I have a complete set of drafting tools from my years as a Registered Architect.

From the enterprise perspective, support costs can be substantially reduced.  Keeping track of thousands of devices is a known exercise in futility.  A major broadcasting organization finally paid for an inventory of their workers’ systems a few years ago and found an extra 3000 undocumented systems in the organization.  Another company had a “don’t ask, don’t tell” policy about employee owned devices and now has to semi-support about 11,000 of them.

From the employees’ perspective, using a single device that is used for both home and work, means eliminating nerd belt syndrome – two or more devices hanging from their waist or taking up space in carrying bags.  There is nothing worse than hearing a ring from one of the devices and trying to figure out which one needs to be answered!

Rather than attempting to halt the demand, the smarter path is to embrace BYOD’s by providing a safe and secure framework for their use.  This framework should have two complementary components: a BYOD policy and the technology framework and administration software to enforce it.  An official corporate BYOD policy would not be dissimilar to the corporate security policy.  To make it easier, some companies just incorporate their BYOD device policies directly into their standard security policy that all employees are expected to adhere to.  The key to successful enforcement is the implementation of the proper MDM software.

About the Author

Beth Cohen, Cloud Technology Partners, Inc.  Transforming Businesses with Cloud Solutions

You would think that cloud technology would have standardized long time ago.  While network standards that shape the Internet have been widely accepted throughout the industry, cloud standards have had a much slower adoption path.  Sadly the current state of cloud standards is, after 15 years, still far less mature than it ought to be.  As cloud infrastructure technology matures, increased interest by the enterprise and emerging vendors is driving a renewed effort to create viable standards that will benefit everyone.

For companies looking for integration and the capability to build hybrid clouds, various standards and proprietary and open APIs have been proposed to provide interoperability up and down the three layers of the cloud stack.  The first and so far only, cloud-oriented standard that has been ratified is the Open Virtualization Format (OVF), which was approved in September 2010 after three years of processing by the DMTF.  OVF’s open packaging and distribution format offers some platform independence by allowing migration between some platforms, but it does not provide all the tools needed for full cloud interoperability.

I think we can all agree that everyone benefits from technology standards in the long-term – the operative word is long-term.  You would think that everyone would agree that cloud infrastructure technology standards should be given high priority, but creating compelling proprietary systems and discouraging standards gives early adopter companies competitive advantage in the short-term.  Think about Amazon and VMware’s vast technology and market leads in the cloud services and enterprise infrastructure systems respectively.  They have little motivation to support any standards that have the potential to undercut their monopoly market positions.

Users of cloud are asking when will cloud computing standards mature enough so that more companies will feel comfortable implementing cloud architectures and using cloud services without feeling locked in.  Ironically, while the commercial cloud offerings have been growing, built on the very standards that created the Internet itself, Amazon and others have been reluctant to publish their architectures.  Application Programming Interfaces (API), which hide the underlying architecture, are all well and good, but they do not guaranty true interoperability.  Downstream vendors quickly find that they need to build API interfaces for all the different services they need to support; adding significantly to the development and maintenance costs.  To address this and transparently transfer workloads among the different vendor based on predefined business rules, there needs to be much more comprehensive standards.

One obvious question to ask is if there is an opportunity for the commercial cloud systems to become standards.  After all, there have been precedents where formerly proprietary formats, such as VMDK (Virtual Machine Disk) which was developed by VMware, have become de facto standards simply by being widely adopted by the industry.  One could even argue that platforms such as Amazon’s AWS are already standards.  However, as many companies have found to their chagrin, while it has a vast variety of services, easy to use tools, and a significant technological head start on the competition, it is more of a cloud world roach motel.  Lots of companies have found it easy to get applications running quickly, but changing providers or taking the applications back in-house as requirements change is fraught with unexpected perils.  Amazon’s backing of Eucalyptus does not address that problem directly, but it does offer a viable option for companies that want to build what Amazon euphemistically calls, on-premise services.

In conclusion, the good news is that the cloud industry is finally reaching consensus that the time to build cloud interoperability standards is long overdue.   The biggest need remains for interoperability standards to allow virtual machines to be migrated between clouds transparently and for more robust hybrid cloud solutions.  For the moment companies that want to use multiple platforms or a mix of public and private options are stuck with complex architectures and emerging orchestration tools such as enStratus and Rightscale to bridge the gap.

About the Author

Beth Cohen, Cloud Technology Partners, Inc.  Transforming Businesses with Cloud Solutions

IT services have turned into commodities.  Hardware platforms are close to completely interchangeable, operating systems are virtual, ubiquitous networking insures that we can connect from anywhere and at anytime and data exchange standards are moving closer to the day that we can move information effortlessly between applications without worrying about expensive conversions and integration.  This vision might not be completely true yet, but this reality is close enough to see where IT services are heading for the next few years; they are rapidly turning into utilities, reliable, invisible and cheap.

Moving IT services to the nebulous cloud means business owners no longer need to worry about IT support for costly data centers and expensive systems.  The services are available only when they are needed.  From a business perspective, outsourcing all IT services and infrastructure to cloud vendors who have specialized expertise in their domains makes eminent sense.  IT has always been the largest unrecoverable expense in the average company’s balance sheet anyway, so moving it entirely to the expense side is going to make the bean counters happy.  It is clear that in the not too distant future, companies will pay for their IT service like they pay their electric or gas bills.

Most people see this trend as something good, but there is a catch.  While I generally support this trend, I am also somewhat nervous about its implication for continued IT innovation.  Nobody cares about where their gas and electricity comes from.  Nobody has a burning desire to improve or question the current system.  There was a time when people were looking at other options for generating and delivering electricity, but the semi-monopoly enjoyed by the utility companies has effectively cut off any serious interest in developing distributed alternatives.  I fear the same thing will start happening in the IT services arena.  As IT becomes a ubiquitous commodity, the services will be delivered by a few large semi-monopoly vendors.  Since the vendors are more interested in maintaining the status quo, there will be a steep drop off of interest in developing non-standard IT systems, which ultimately starves all IT innovation.  If this scenario becomes a reality, it will be a sad day for the IT business.

About the Author

Beth Cohen, Luth Computer Specialists, Inc.

Unlike what happened in the aftermath of the dotcom bust in 2002-2005 where there was tremendous investment and development of new technology from the entrepreneurial community, this downturn has not been as technologically fruitful. For the last year or so, the IT market has been coasting on previous technology breakthroughs for systems and storage virtualization, WAN optimization, wireless networking and the increased availability of SaaS (Software as a Service) offerings of all stripes. Those technologies are all innovations that came out of the telecom and technology downturn in 2001 that followed the dotcom boom of the late 1990’s. In the early parts of this decade, underemployed startup engineers were taking the half baked ideas from the dotcom era and turning them into practical products. The translation of the ASP (Application Service Provider) concept to SaaS is the perfect example of this process. Sadly, with the major innovations in these areas behind us, most of the recent product offerings are focused on incremental improvements rather than technologies that turn the status quo on its head.

Is there any hope that the growth of innovation will pick up again soon? I hope so, but the reasons for the slowdown are not for lack of new ideas. The meltdown of the financial markets a year ago which has meant reduced access to capital for new enterprises has in the short-term translated into entrepreneurs focusing on more potentially lucrative markets such as the growing medical and consumer areas. This does not mean to say that there has been no innovation at all, but from what I have seen the smart engineers are not spending much time devoted to developing the next killer business application. Why should they when the enterprise isn’t particularly inclined to be buying these days?

So what are the newly underemployed engineers working on these days? There is no doubt that smarter mobile devices are the next big thing. The level of innovation in this area matches the heady days of the early Internet gold rush. It seems like every other day there is an announcement of a new device, new application or a new service available to capitalize on the seemly insatiable market for pocket sized mobile systems that do more. Mobile email, texting, twittering and other rapid communication delivery systems are becoming the norm outside of the business community and are poised to sweep through the enterprise as well. The continued development of smaller or pocket devices that do more on a smaller footprint is ultimately going to transform business, but while many companies have not gotten much past Blackberries for their executives and road warriors, the new generation is using them for everything from romance to job hunting.

About the Author

Beth Cohen, Luth Computer Specialists, Inc.

Somehow I am getting a sense of déjà vu on cloud security.  Don’t get me wrong folks, but the cow is already out of the barn.  After all, more than 69% of all consumer Internet users have used at least one cloud service in the past year and that doesn’t include the nearly 100% of all consumers who are using web mail services such as Gmail, Yahoo and others of their ilk.

On the other hand, businesses and enterprises are not rushing to jump on the cloud computing band wagon in the same kinds of numbers.  So what is holding companies back from taking the very real advantages that cloud offers?  We can argue that business requires a higher level of security and validation than the average consumer, but the simple answer is really a large dose of inertia, fear and doubt.  That is, all the usual reasons that businesses use as excuses to wait for the consumer products and service to prove their worth before committing precious corporate IT resources.

In a survey conducted by IDC in August 2008 and June 2009, concerns about security topped the list of challenges for 88.5% of the respondents, followed closely by performance (88.1%) and availability (84.8%).   Clearly security is a major impediment to a cloud architecture implementation for many organizations.  It will need to be properly addressed before cloud architectures will be fully embraced by the business community.

Cloud security issues can be divided into three major categories, business, regulatory and technical.  Business issues generally can be quantified as risks to the business in whatever form.  Major business concerns for the enterprise include:

• Legal issues related to the control and protection of intellectual property and sensitive business information
• The difficulty of establishing end to end business data validation
• Regulatory issues related to data ownership and proper handling procedures
• A perception of increased potential for data and business loss
• Risk of reduced data or systems availability
• Proper integration of the mix of secured data residing both in the cloud and on the internal corporate networks

The major global regulatory issues that influence technical and business decisions around cloud computing architectures include:

• Rising consumer data protection laws around the world
• PCI Compliance and the need to ensure end to end data protection
• Banking regulations

It is clear that many of the business and regulatory issues can be addressed with properly secured cloud architectures, applications, networks and systems, but cloud and network security is quite complex.  It encompasses such diverse disciples such as networking, application development, database architectures and designs, hardware architectures, and systems design.  Many standard network security best practices developed for the enterprise are inadequate to handle the new cloud architectures.  However, by taking a network services approach to the architecture of cloud services, there are many advanced methods that can be used to address cloud security issues and allay most if not all of the business owners concerns.

About the Author

Beth Cohen, Luth Computer Specialists, Inc.

Unless you have been buried under a rock for the past few years, the answer to this question should be obvious.  Practically all of the revolutionary products and hot services that everyone is talking about are being developed directly for the consumer sector.  Yes, business has been happy to cautiously adopt innovations; only after they have proven themselves in the brutal crucible of the fickle mass market.  Think about all the great new products that have come out in the last eight years, wireless LAN, Instant Messaging, Web 2.0, social networking, MP3 players, PDA technology, flash drives, and cloud computing, (yes even cloud computing, which is mostly a means for Google and Amazon to recoup some of their investment in excess capacity) are all examples of technologies that originated as products designed for the consumer market that have since been adopted by the enterprise.  The truth is that there has been essentially NO IT innovation created directly for the business market for many years.  Unless you count virtualization and mass storage hardware, which I would argue are mostly reinventions of the very old ideas of the service bureau and the mainframe respectively, on faster hardware.

Looking deeper into the economics of emerging technology, it becomes obvious why innovation is coming mostly from the consumer sector.  Follow the money.  While the risks for venturing into the consumer market are extremely high, — ask Apple about the notorious Newton, a product clearly far before its time.  The rewards for catching the fancy of the consumer cannot be matched by anything in the enterprise market.  Apple’s iPhone, a far more sophisticated Newton successor, is a good example.

My crystal ball says the next big thing will be developed for and marketed to consumers first.  Small and mid-sized business customers, for better or worse, are now lumped with consumers.  Since the fragmented and notoriously cheap SMB market has always been a hard nut to crack, it is easy to see why it makes logical sense for vendors to build consumer grade products and assume small companies are willing take whatever they are given.  With the current tight economic environment, permanent transfer of corporate R&D to the startup model, and limited resources available for innovation, I expect to see this trend not only continuing but accelerating for the foreseeable future.

Beth Cohen, Luth Computer Specialists, Inc.  IT infrastructure consulting services.