Sunday, September 27, 2009

The Cloud and You (Cont.)

Last week I wrote about how Google and "the cloud" seem to be synonymous due to the bevy of highly visible applications available by the company that are typically free for non-business use. I wanted to explore the topic a bit further, so I had an e-chat with Gabrielle Smith, VP of Enterprise Sales at LTech, a Google Applications Premier Edition (GAPE) reseller.

Me: Cloud computing has always been a term that, in my opinion, has never had a concrete definition. Can you provide a definition?

Gabrielle: I'm stealing this from NIST who defines it in the following way:

"Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three delivery models, and four deployment models."

Me: I realize that I'm greatly simplifying it but that definition essentially says that cloud computing is the ability to run your application on a bunch of computers without having to own a bunch of computers first. This isn't an Earth-shattering concept, nor is it new. Larry Ellison proposed proposed something similar with the Network Computer in 1999 and Marc Andreessen had LoudCloud in 2001. So what makes cloud computing now, as a reality, different?

Gabrielle: I think the biggest driver today for the adoption of SaaS and cloud strategy is evolution of hardware. We have gotten to a point where the processing power of hardware and data storage capability can scale with limited disruption. Ten years ago, the same was not true.

The concept of the cloud has been around for many years, even prior to 1999, but the technology that was necessary to support its success was not available yet. In my opinion, the adoption of cloud computing is truly being driven by cost due to the struggling economy. Companies are being forced to rethink current policies and strategies. Every company is under scrutiny to be cutting costs and reducing expenditures. Leveraging the economies of scale in the cloud for basic functionality and enhanced features is a win for these companies.

Currently, this is a perfect storm of sorts. The economy is driving for lower cost options; big name providers like Amazon, Google, IBM and Microsoft have built out secure infrastructures and tested them for long periods of time; and the technology and processing power has caught up to the market demand.

Me: You mentioned Cloud Computing and SaaS there. Would you say that the two are synonymous?

Gabrielle: No. SaaS can mean various things. I have seen hosting vendors market as a SaaS organization. I think to truly consider something as cloud based it needs to be leveraging large scalable infrastructure. Although both offerings in essence provide users the ability to access applications, I think the definitions are still too loosely defined to agree they are one in the same.

Me: Does the fact that the software runs in the cloud limit what functionality it can provide since it has to run in a web browser?

Gabrielle: Quite the opposite. Software running in the cloud gives the user a greater amount of efficiency and flexibility. For example, John Smith CEO of ABC Company is traveling to India for a meeting with a large investor. His laptop crashes on the trip over. Under a traditional software model, John is out of luck and would require a new preloaded/configured machine shipped to him. Under the SaaS model, all of John's information is located on any computer that can afford him access to the internet.

From a functionality standpoint, many users are going to see increased functionality as cloud based technology allows for instantaneous upgrades to be rolled out with little disruption. Google Apps adds features to its solution roughly every 2 weeks. Since all of the information is accessed through a web browser, users also have the ability to collaborate in real time and maintain various versions of documents.

Me: What about the competitive landscape with “traditional” software companies (ISVs)? One would think that either they have to lower their prices, offer “lite” versions of their products, or try to differentiate themselves based on features and functionality in order to win deals vs. a cloud computing-based offering.

Gabrielle: I would agree with this. Niche software will most likely remain as premise based or traditional for a while still, but contextual applications like e-mail, office systems and collaboration tools will most likely all have to be available in a "lite" or cloud version in order to be competitive. The cost comparison currently for cloud based applications vs. traditional software apps is over 60% lower.

Me: Won't there be challenges doing that? For example, I’ve seen companies who already had “traditional” software consider converting to the functional equivalents in the cloud. Yet, time and time again, there seems to be a large degree of inertia due to the data migration effort, fear that some feature(s) will not be supported, etc.

Gabrielle: The decision of companies to migrate over to cloud based technology is becoming more and more the norm. Although there are still areas within most organizations where high-end functionality is necessary - finance for example that requires use of pivot tables and linked data sources - 95% of end users within an organization are fully supported by cloud based applications such as Google Apps.

In looking at the most common migration path of enterprise customers, they will leverage the cloud computing utility model for applications like e-mail and collaboration first. As they become more comfortable with the security of the cloud and what the other applications have to offer, they slowly move off traditional software.

For example, a large enterprise that is looking to leverage the cloud yet still have offline document functionality and high-end use of applications can utilize Open Office (free) and Google Apps. This gives them the cost savings thy are looking for and no loss in functionality. Many of the cloud technologies are "open" format which allows them to play nicely with all applications, premise based or otherwise. The data migration when done correctly becomes a seamless transition and then allows users to choose how they want to work and which platform suits them best for the task at hand.

Me: So this seems to be a win-win, but I can hardly believe that the benefits of cloud computing are ubiquitous. Are there areas is which cloud computing not applicable? I can imagine areas like High Performance Computing (HPC) wouldn’t benefit. Are there other, more highly visible swaths of the market place where cloud computing will not have any penetration?

Gabrielle: As cloud computing becomes more and more mature, I don't think there are any organizations that will not benefit from this to some extent. Based on the specific requirements of business, some organizations may be able to leverage the cloud more than others. For example, some more regulated areas like healthcare and finance may choose to have a split model. They would leverage cloud technology for e-mail and collaboration, but may choose to handle document storage on-site for records protection purposes.

Although many of the cloud providers today offer SAS 70 Type II compliance and multiple levels of data and privacy protection within their contracts, certain industries with more stringent requirments on data storage may opt out for the short term. In the long run, however, I feel that we will see the cloud as the wave of the technological future. It allows for low cost alternative and full fail-over as well as truly operating within the world of "business anywhere."

Me: Thanks for taking the time to help me understand this topic better.

Gabrielle: You're welcome.

Sunday, September 20, 2009

The Cloud and You

In college I worked for the collegiate computer department, chaperoning any of the various labs that peppered the campus several times a week. I would arrive for "work," collect Student ID cards in exchange for a 5 1/4" DOS floppy, and then do my homework or play Ultima III. (Yes, I'm dating myself.)

One evening I was working in the lab that was located in the Finance building, when one young gentleman gave me his card and dutifully took his floppy disk to a computer a few rows back. Inserting the disk, he pressed the button on the computer monitor and waited.

And he waited some more.

And he waited even more, occasionally checking his surroundings to act like he knew what he was doing.

After 20 minutes, I felt sorry for this person who was obviously a Mac user and went over to show him that you also had to turn on the power for the computer.

Apple has consistently shown itself to be an innovator in design, whether in the grandiose things (iPod anyone?) or the tiny things (like having a single power button). And ask a result, the value of its vision has risen exponentially faster than that of its stock or any other measure of the company. It has always been considered the vanguard of "humanly designed" products, and it should be revered as a result.

Lately, and I use this term loosely since this isn't something that's happened during the past week or two, Cloud Computing has been all the rage. And at the forefront of this charge is Google with a stable of products that "run in the cloud" that are somehow amazingly easy to use.

Gmail? When this was first in beta as a "by invitation only" product, people scrambled to get invited to it. Now, it's the fourth largest email service.

Google Maps? The Blackberry version of this application has saved my skin on several occasions. And the seamless integration with your smart phone's GPS doesn't hurt either.

Google Documents? With the exception of a few bugs (such as the one that is currently preventing LinkedIn users to use the Presentations application) this handy replacement to commonly-used office productivity applications does much of what you need for free.

Google Voice?

What? You've never heard of it? You better start listening then. Google Voice is a new product that is finally bringing to reality the vision that I've had for several years: being able to use one number as a central contact point regardless of what phone you are using. Yes, call forwarding has allowed this for decades, and other, commercial services offer similar services. But this is Google doing it, and therefore it will be sexy.

Currently available by invite (at the time of this writing), it allows you to have a single number that will ring on your home, office, cell, and any other lines. This is ideal for small business owner that works out of their home who wants to be able to give out one number only instead of having to 1) give out their personal cell number and 2) make their customers have to guess as to which number they should call. Of course, there are several other features like automatic transcription of voice mail messages to email (tolerably accurate, I've been told...I'm still waiting for my invitation from "my connections"), etc. but the single number access is the only one that matters to me.

How does Google plan to pay for this service? I asked Alan Warren (who is officially listed as a Director of Engineering at Google but is someone I refer to as my "big cheese" there) about Google's propensity to develop amazing applications that Specifically, I have always secretly wondered if Google would be doing such altruistic things for the general public if it didn't have the advertising revenue that it gets (USD$21B dollars in 2008, according to its Investor Relations group). His response was simple: "there is a starter consumer version that we give away, yes. But the [business] productivity apps market is huge. And we don't give that away."

In other words: "who cares?" If Google makes money with these applications and I am legally able to use them without paying a cent then that is the ultimate definition of "win-win" in my opinion. Next week we will continue to look at Cloud Computing as it pertains to businesses and the opportunities it presents to them.

Sunday, September 13, 2009

Out of place; out of (my) mind

One of these things is not like the others,
One of these things just doesn't belong,
Can you tell which thing is not like the others
By the time I finish my song?

The song above, from Sesame Street, was a catchy one. And it ended up in the strangest places too. My brother was harassed with this song by his sergeant during Air Force boot camp when his dresser drawer wasn't organized properly.

Lately, I've been noticing things in the strangest places too:

- A sign on the wall of a Victoria's Secret that is under construction. "Reopening Fall 2009. Visit us at our temporary location next to The Disney Store." (Women's lingerie next to a children's toy store?)

- A Chinese er hu (a two-stringed "violin") playing the melody to Dave Brubeck's famous anthem Take Five. (Paul Desmond be damned!)

In the business world, we're in the midst of one of the largest acts of "out of place" ever witnessed. Specifically, a lot of companies are more worried about the short-term reaction of Wall St. instead of their longer term viability. As a result, there is a notable lack of investment in the nurturing and development of their staff or worse they are laying off people en masse to save a few dollars.

Last year when it became apparent that the economy was tanking, ZDNet reported on a study by IBM and the Human Capital Institute (HCI) that linked this nurturing activity with financial results. Specifically, they said:

"Last spring, researchers from IBM and HCI surveyed 1,900 professionals in over 1,000 public- and private-sector companies, from a range of industries, geographies and organizational sizes. Respondents scored their companies in 30 specific competencies, which fell into six key practices of talent management: strategy development, attracting and retaining, motivating and developing, deploying and managing, connecting and enabling, and transforming and sustaining.

Companies with high scores across the board were more likely to have strong financial performance, based on reported change in operating profits between 2003 and 2006. 'It's not the first research to show a correlation between talent management and financial results,' admits Allan Schweyer, executive director of HCI and one of the authors of the report, 'but it's one in a handful, and I think it really adds to that body of evidence that is helping organizations to build a solid business case for investments in talent management.' "

Regardless of the correlation between internal development and financial performance, many companies are instead more focused on their stock price than anything else. And when the economy is causing top line revenue numbers to shrink, the next target in the quest to increase bottom line results is operational cost. To you and me, this means the cost of paying salaries, benefits, etc. of the employees that make the company run. And the easiest way to reduce this cost is to lay people off regardless of whether it makes sense or not.

Yet this makes no sense. I know plenty of intelligent people via LinkedIn who are struggling to find work in spite of the fact that they were great contributors in previous positions. Even I am a member of this crowd (as of the time I write this, August 8, 2009). Yet because of shortsightedness (or, worse, financial astigmatism where the balance sheet for the next quarter has been distorted to appear far more important than it really is) companies are sacrificing their ability to operate efficiently in order to meet artificial targets like "whisper numbers."

The cost to replace talent that has been lost is very real too. Using calculators such as the Cost of Employee Turnover Calculator, you can plug in your own numbers to get a resulting cost. The numbers may surprise you. I used the following:

  • $150k for the salary of the person lost;
  • $100k for the cost of the HR and training person;
  • 90 days (1 quarter) that the position was vacant;
  • 20 hours for resume screening;
  • 10 hours for interviewing;
  • 20 training days; and
  • 180 days (1 half year) before 100% productivity is reached
The total cost of one position using these (somewhat conservative) numbers? $109k. Yet the intangible cost is far greater, especially if you consider the knowledge loss that occurs.

"But isn't that covered by the 'days until 100% productivity' number?" you ask. Perhaps. But consider the synergistic relationships that can occur between sales teams as an example. One team may be responsible for one product line, yet if a different product line will satisfy the need of the customer a Sales Manager with some tenure at the company will be able to make the appropriate referral. A new person may lose the business instead and the company's bottom line suffers as a result.

The cost of human capital is far greater than the dollars that are reflected in the bottom line when people are let go. Although current economic conditions dictate that money should be saved wherever possible, some thought about the long term effects of decisions made today should be given. Otherwise, the recoveries of individual companies that do not will take longer than necessary in addition to the detrimental effect their decisions have on the lives of those affected. This is a lose-lose situation that is only made worse by the fact that it is avoidable.

Sunday, September 6, 2009

Learning hard stuff the easy way

My 9 year old daughter told me recently that she wants to "do something." When I asked her to clarify she said, "I want to get a job." Now that was interesting. I stifled the urge to laugh (because I can hear her as an adult saying how she wishes she didn't have a job, but I digress) and discussed it with her in a serious fashion. We decided that she could put her great imagination to use and start a "clothing line" that she would sell through or a similar site.

I will proudly state that my 9 year old is extremely intelligent and has the vocabulary of a 15 year old, but even that doesn't mean she would automatically "get it." So, for several nights after she expressed her desire, we spent some time each night talking about concepts like product design, marketing, and sales. What I found was that I had to put an extraordinary effort into internalizing the functions of business so that I can synthesize new ways to describe them to a 9 year old.

In other words, the KISS principle applies here in spades.

Guy Kawasaki, a well-known venture capitalist, has a concept he calls the 10/20/30 Rule of Powerpoint. In short, he states that a Powerpoint presentation should be no more than 10 slides, last no longer than 20 minutes, and contain no fonts less than 30 points in size. While I won't debate the merits or flaws in the concept (I will state unequivically that I love it, however), I do want to point out that it encourages the same, simplified thinking through deconstruction of complex topics.

Can you put together a 10/20/30-compliant presentation that describes your work experience and skillset? You better turn off the Autofit feature before beginning, because I suspect you'll have trouble doing so. In fact, I'll claim that if you don't have trouble doing so then you aren't doing it correctly.

Is this just an exercise of futility? Absolutely not. By forcing yourself to distill what you do and have done into a succinct, summarized format, you really learn to throw out the irrelevant crap and polish up the stuff that helps you to shine. Extrapolate this exercise into other areas of your professional life, and you'll quickly begin to see what's important to you as a salesperson, a market strategist, a technologist, etc.

Esther Schindler
wrote in a recent article on the topic of "getting resumes past HR" (geared toward technologists), "That is, [the recruiter told me], 'Create a resume that a layperson will understand. Yes, include the technologies used and maybe a bit about your methodology, but make sure it's readable to the point that a non-techie friend can get the gist of what you've accomplished in each job. Keep that tech-oriented résumé for the hiring manager to review.' "

So if we're to boil down our backgrounds to just the bare essence, what do we do with the rest of it? It belongs in the magical circular file cabinet underneath your desk that gets emptied every night.