Who trapped VMWare in the innovators dilemma …and how do they get out

A great post on techcrunch by Ben Kepes highlighted just how trapped by their business model incumbents can become.

Who trapped VMWare? To me the answer is 3 fold.

  • Bad buyers

IT departments within large organization – are, generally speaking, paying little more than lip-service to the growing calls of a new generation of technology

Buyers, traditionally the IT department are rewarded to maintain the status quo, particularly with Cloud computing – a form of outsourcing.  This response is due to cludge of drivers….Reliability demands – any change pretty much leads to outages, having kit means having a job, arrogance – we know better than you, and fear or comfort with a current technology set, there is also some pretty nefarious stuff that goes on.  People with specific technology skills have made a lifelong career in being the only person who can make an app work…

The problem with lagard IT, is it reinforces to vendors not to change, and in some instances they will actively come out and sell against the new paradigm (Oracle anyone?). HT to Simon Wardley on the above adoption cycle

Unfortunately this leaves gaps in the market for new entrants…and this leads to disruption.

  • Bad management

Listening blindly to your customer, using dated strategy or financial models to new situations or simply telling your bosses what they want to hear, not what they need to hear all lead to reinforcing the incumbent business model.  Listening to the customer, particularly the ones above creates a false sense of security.  Eventually even the IT dept will adopt the new, with cloud its because they will eventually end up at a financial disadvantage, and then you are stuffed… and in the mean time, your mid-level managers have been vetting out any ‘radical’ new business idea, so by the time you need them, well its too late.  If you look at your bench-strength and its full of MBA’s…you are screwed. They are indoctrinated with the same playbook as everyone else (there is no differentiation when its the same)…. instead you should look for outliers, rogue elements because they are the ones who will create something truely new

Senior management is also guilty of not being true stewards of their companies.

“CEO’s are doing the best they can under the circumstances, but there are units in their organization that need to be protected, prices that need to be supported, sacred cows that can’t be touched …….Which is great, unless your competition doesn’t agree. …. When you are competing against someone who doesn’t have to worry about an existing business, they will almost always defeat you.” Seth Godin

Taking a short term view, protecting the old… taking the overt or covert approach of ‘walking back slowly’ you are ceding the future market and opening yourself to disruption…. true leaders stand up, make hard calls and do the right thing for the company long term….

Apple CEO, Tablets will canabalise PC‘s

SAP has said the same, Amazon has done it.    Get the point, great companies bite the bullet

  • The sharemarket

The incessant demands of the sharemarket to protect or grow existing revenues is idiotic.  The analysts community can’t deal with new business lines … “hard to value that new thing, not used to it”.  Shares slide on news that companies are investing in non-core business.  You guys need to take a look at yourself,  the GFC (which I hold shareholders at least partially culpable) proved the point that incessant demands for more drives bad behavior… and then if you don’t like what the CEO is doing, you agitate to reinforce the status quo… numpties.

  • How can they get out?
  1. Start planning for the future – look for the areas that are commoditising and build an ecosystem on top of it.  Get a lot of developers to innovate on top of that (cos you DO NOT have the skills to build the new thing) and watch for the winners. Cloudfoundry looks like a winner to me
  2. Stop listening to your customers…. start WATCHING your non-customers. They are likely already using precursor’s of the thing that will be your death nell
  3. Get an innovation program in place – agree to the incremental risk and potentially spend (not always), and distribute your effort across core, adjacent and transformational innovations
  4. Get different people with different skills working on this different initiatives. Your rogue elements are probably already leading the way, just give them direction and focus
  5. Capture ideas from the source, and get them unvetted.  This is normally the front line helpdesk.
  6. Allocate resources to innovation, stay the course – its a long game,  and don’t compromise. If it is annoying people you are on the right track
  7. Get to grips with canabalisation, internally and externally. The alternative is extinction.
  8. Be prepared to fail, don’t encourage it but do not penalize it either.  When you do, get another group of smart folks to look at the remnants, dollars to doughnuts there is something there, maybe they can make it work



PaaS moves on with Cloud Foundry

Yesterday, VMware announced the launch of Cloud Foundry. This is a big step in the evolution of Platform as a Service.

What is profound, is that this allows you to build applications in a private (your data centre), public (Amazon’s or Rackspace’s cloud) or hybrid environment (a combination of both). It scales from your laptop, to the hundreds of servers in the data centre.

Finally Cloud foundry is Open source. This is important to you guys out there because this should in theory allow you federate (or connect) clouds together. The theory being that as you have a known code base and API set, you can readily do this task.

In the cloud space, this is big news. PaaS is going to be the most critical enabler of Cloud applications going forward, but todate the execution on this vision by potential leaders like Microsoft (Azure) and Salesforce.com (force.com) has not quite been there…

For some more coverage of this move check out

Krishnan at Cloudave.com http://www.cloudave.com/11714/vmware-disrupts-paas-space-with-cloud-foundry/

PaaS – the game is on

Back in December I wrote a piece about how Cisco, through its partial acquisition of VMWare could make some very serious inroads into the PaaS market. Then in January the NYT leaked a story about how Cisco was getting into the server market, which in my view supported my hypothesis.

Today my RSS reader is loaded with bits about how IBM with its network partner (and arch Cisco rival), Juniper is extending its Blue Cloud construct.

Techchuck does a great job of describing it here, stating that the

“[technology will allow] businesses to install hybrid public-private cloud capabilities across IBM’s 13 "Cloud Labs" spread across the world. The companies have created technology that would allows enterprises to extend their private clouds to remote servers in a secure public cloud at the click of a button. Once the technology is installed in the Cloud Labs, businesses can easily switch clients workloads when resources become constrained...” My emphasis added.

 This is a great leap forward toward much more widespread adoption of Cloud computing as it addresses several issues for corporates (not SMEs) .

These being security and control. Juniper (and Cisco) are key players in Telco private network constructs, if you could extend your private network into the Virtual data Centre (VDC), then a major performance and security hurdle is overcome. After all you want the servers performance to feel like it would if it were in your LAN / WAN. It also addresses security because all that stuff is encrypted.

The second thing is control, read this from Mercury News

While many companies say they can deliver computing power on demand, most are using relatively old technology, analysts say. They aren't able to move software programs around the planet, dialing up a data center in Dublin, Ireland, when a server farm in San Jose reaches full capacity.

IBM demonstrated it can do exactly that at an event at its Silicon Valley Lab on Monday morning, as Rahul Jain, IBM's cloud architect, clicked on a box representing a computer in San Jose and dragged it over to a panel representing a data center in Dublin.

Notice how the CUSTOMER does this, not the service provider!!  This is gold because the customer feels like they are in control (which they are) and the service provider doesn’t have to have personnel doing it.

To me this is PaaS at a level of maturity that will significantly improve adoption. This is true convergence (network, IT, and services) in action. Most importantly it targets a segment (corporates) with money (banking excluded), who experience genuine costs and are willing to pay… wow an initiative with a viable business model!

PaaS just got a new poster child, Cisco

What do Cisco, EMC and VMWare all have in common?  Virtualisation. Up until fairly recently they’ve all been playing in their own sandpits, but that’s is all changing. Cisco recently bought a chunk of VMWare from… EMC. So now you have  (arguably) the three leading vendors in virtualisation playing together. Not only in it, but tightly integrating.

Imagine one orchestration framework that could dynamically allocate you network, server and storage. That’s powerful… very very powerful. Think about why virtualisation hasn’t gotten 100% penetration? You’ve never been able to seamlessly link network bandwidth to server I/O or SAN space. Now you can, this is IaaS. 

Then extrapolate out what VMWare is doing with their View product. (Virtual Desktop Technology) and suddenly this triumvirate can deliver SaaS AS you WANT IT, and not just through a browser.  This is immensely powerful for an enterprise, it would be even more powerful for a MSP.

This isn’t just vapour ware either, reportedly Terremark are already doing this. Definitely watch this space .