Friday, June 27, 2008

Gang up now before the *aaS cloud gets you.

I've just been invited to speak at London Cloud Camp. Naturally I enjoy the opportunity of speaking however web 2.0, utility computing and enterprise 2.0 are all becoming mainstream topics these days and are losing their lustre.

So I thought I'd give a summary of my talks from E-Tech, OSCon, FOWA and Web 2.0 last year. However, after writing up the synopsis it occurred to me that this stuff is really becoming old hat. Hence I've put up the synopsis here in the hope of getting some feedback.

Title: Gang up now before the *aaS cloud gets you.

Synopsis [draft]:
Cloud computing is a hot marketing topic at the moment, as can be seen by the plethora of *aaS terms being touted. Despite protestations about *aaS from many quarters of the IT industry, we will adopt it in much the same way that many well know brands have embraced the outsourcing of manufacturing to service providers.

Outsourcing to service providers should, and can, be successfully applied to commodity-like activities which are well defined and ubiquitous. The benefits of adopting a service approach and using service providers are achieved through componentisation (higher velocity in product release), economies of scale (lower price for the same quality of service) and the balancing of supply and demand (dealing with capacity planning and bursty demand).

The commoditisation of IT is at the heart of cloud computing. As with any commodity, substitutability between providers is a key strategic concern. For software services this means portability (and interoperability) between service providers which in turn requires that the core technology be provided as open sourced standards.

From an economic point of view such an approach mirrors the shift of IT from a product to a service economy with competition based upon price and quality of service rather than product differentiation. Unfortunately many vendor offerings are little more than our product "as a service"

Without substitutability between service providers, any consumer is facing a strategically weak position in terms of competitive pricing, security and the risks of monopoly. However not using *aaS can equally create a competitive disadvantage due to the Red Queen Effect.

What is a business consumer to do?

Business consumers need to push vendors towards open sourcing their technology. Whilst it might be possible to do this by forming consumer organisations (hence ganging up), the more likely route is the long wait for government regulation. This probably won't happen until after we experience a couple of high profile reruns of the lessons of second sourcing. Despite the best efforts of vendors, there will be a black swan in the *aaS world and a catastrophic systems collapse due to some form of systemic failure (i.e. the *aaS cloud gets you).

Whilst a few enlightened vendors (for example Google, FaceBook and Bungeelabs) seem to have realised that open source is the way forward, many more vendors remain stuck in a product mindset. Except for those lucky few who find a role in a niche product area, some vendors will find themselves ill equipped to cope with a world where reputation and service become the source of competitive advantage.

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