Cloud computing evangelists are high on the fumes of their own vitriol

Warning, this is a deliberately provocative post. 

I take exception to some of the self perpetuating myths that the cloud bloggers are continuing to expound. Things like this from Krishnan on cloud ave.

“If internet connectivity is the issue, we should focus on making existing technologies to solve the problem , like Gears, better. We should strive to force our ISPs upgrade the network to meet the demand. Using software is not a solution”

What a lot of trot. Statements like this show how fundamentally divorced from reality these bloggers are.   Here’s why;

1)    Cloud services are not new. Get over yourselves. Dennis Byron describes this very well  here

“Cloud computing is not "the next big thing." It is "the first big thing" finally done right in the sense that all the stars are now aligned to deliver on the promises of the 1960s.”

    I would also add that network providers like Juniper, Alcatel and Cisco have been doing this virtualisation ‘stuff’ for 20 years.  The wake up call to the cloud computing industry is that they  can help you a lot in sorting this out because they’ve already been on this journey.  They also look at the complexity of offering IaaS and see it as quite trivial compared to what they already do.

2)    All these cloud services are based on software, it’s the thing you connect to at the end of the network.Be it fixed or mobile, there is still software there!

3)    You cloud / SaaS guys have no chance of “forcing’ ISP’s” to do anything because you are economically irrelevant. That’s right irrelevant. IDC believes the total market for cloud computing in 2008 is $12bn, if you are lucky you might be $42bn in 2013. That compared to the $1trillion of global Telco revenue is inconsequential, its barely a day’s spend for the US bail out fund.

4)    Cloud computing, as Krishnan and his peers envisage it is a parasite on the networks of these Telco’s.  Krishnan to his credit at least recognises that there needs to be a network, many don’t. But what they don’t realise is that their current business model exist solely at the benevolence of these Telco’s.  Google is exactly the same. The technology has existed for years that means the Telco’s, if they so wished, could block Adwords content.  Google for all its talk of net  neutrality knows this very well, for that reason they are diversifying their business as well as adding network capability themselves. There is also strong rumour within the Telco community that Google has financial arrangements in place to ensure that such blocking doesn’t occur. (no source, just rumor).  This is the case for a very real reason.  The internet (and all other networks) cost loads of money to run. The average Telco spends 10-15% of the revenue on capital.  That’s $100-150bn spent per annum to provide this network. Spends of this nature need to be recouped, & cloud computing companies better understand this because they are going to be asked to pay their way, guaranteed!

5)    My final point is that the internet cloud brigade seem to fundamentally misunderstand customer requirements. For cloud to become truly mainstream, the providers need to be able offer SLA’s. Not uptime guarantees, but end to end SLA’s.  While the cloud pundits have forgotten this, customers certainly haven’t. This simply isn’t possible with the internet, it’s a massive shared pool and anything goes. But cloud computing delivered over private connections enables this to occur. This is a fundamental shift in cloud computing that simply must occur. It will have major implications too. It will shift the business model to service providers as the aggregators. It will enable hybrid internal – external clouds to happen. It will also regionalise the provision of services to accommodate local security laws.

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This diagram shows my view of how IT will be segmented over the medium term. This segmentation reflects my points above. There will be folks that are ok with an internet model for a few services, but this will become a small subset of the cloud computing user base. In my opinion most will be in private and hybrid cloud space due to the enhanced security, SLA’s and control it offers. There are also strong economic benefits. Some things will never shift out of the firewall.
 

Would you bank with your mobile phone company?

 If you look at the basics of what a card scheme or bank does and what a mobile operator do, there are some striking similarities. I contend that Mobile operators are in fact issuers, they set up accounts, issue chip cards (SIMS), have pre and post paid options (ie deal with debt, credit and float) and send out statements monthly.

Sure they don’t, hold debit accounts, undertake credit risk assessments and generally speaking aren’t PCI compliant, but its not a big step to think that they might. Certainly de-coupled debit presents a real opportunity for them.Think this through:

Which are you more likely to make a return trip home for? Your mobile or your credit card? 

Technology is making this a very real possibility. Now that most debit and credit transactions are secured by PIN, you don’t need signature, the card is only present for the chip or magnetic strip. Near Field Communications makes this process even easier, educating us that plastic cards aren’t required.  Mobiles could be even more secure as many banks already use SMS as the second factor in some transactions. There is no doubt that the mobile phone  is much more versatility than a card. You can have multiple ‘cards’ on one  mobile, you can take pictures, play music & games, get email, tweet, even make calls. If you could use it as your payment instrument wouldn’t you jump at the opportunity?

 

What is your strategy?

To most folks, a strategy is a pie in the sky document that someone with no accountabilities created that gets a procedural tick and is then filed away (for 6 months, a year or forever).

But is it really? Try this on for size. Your strategy is what you actually do!  It’s the sum total of the output of the company, how you touch your customers, staff and shareholders. To that end its very very real.

Think about that for a minute. For those of you who work for a company that has a written strategy, does what you are actually doing in the market reflect that document? I’ll go out on a limb and say that for the majority of you, it won’t even be close. Is that good or bad? Is the written strategy incorrect or are you just not executing on it? By not executing on it what long term damage are you doing? Do you even think beyond next quarter? Are you paid to do so?

There are some major incongruities appearing everywhere.  Some examples

“we’re about putting customers first” and then you offshore your channels (cost reduction strategy), invest in core infrastructure as opposed to the contact centre (what the?)

“we will build new wave revenues” but then under fund it capital wise (so its at best a marketing game), fail to address remuneration so that old wave revenues block its growth (in which you’re your strategy is protecting legacy revenues) or you look to outsource the deliver to a 3rd party (hardly building)

“We will grow but enter xyz market” then fail to buy or build a business in that market

You get the idea.

So take a bit of time to think this through, what is your strategy based on the actions that your organisation are actually engaged in. Then think about whether or not that is actually the best thing to be doing.