Private and Public Clouds - Why Semantics Matter

In an earlier post entitled ‘Private Cloud – An Oxymoron’, I wrote about how the term, private cloud offers little value and is arguably a term that is used by legacy IT suppliers to exploit concerns about their customers migrating computing resources to the (public) cloud. Is the private cloud simply a datacenter with lipstick? In other words, is it a virtualized datacenter that has many of the characteristics of a (public) cloud?

Many people in the industry believe that arguing about public and private cloud definitions offers little value and fails to focus on the huge changes that are taking place in the way people implement, operate and use technology.
I disagree. If people are expected to invest millions of dollars in new products and services, it is important that we, in the industry, share common definitions. How can businesses plan when there is no clear understanding of the ways in which they are using technology? As an analyst, it is impossible to size a market if the definition of that market is not clear. So, to all those that say, stop arguing about semantics, I say, rubbish. We need to constantly challenge the marketing spin that comes out of our industry if we are to make sense of it. And step one requires clear definitions. I talked about definitions in previous posts and I made it clear that, in my view, there is only one type of cloud and that is what is commonly known as the public cloud.

Most people in the IT industry understand what is meant by the public cloud and could instantly give you examples of suppliers of public cloud services. Few share a common understanding of the so called private cloud.
This confusion inhibits our ability to focus on the real issues that organisations face today and how they can best ensure that on-premise technology meets their current and future needs, while increasingly using (public) cloud computing services.

Large companies typically have huge amounts of on-premise technologies in which they have invested large amounts over the years. It often doesn’t make sense to throw all of this technology out. Indeed, there are activities that are not suited to the (public) cloud. The reality is that many organisations wish to keep significant chunks of their technology on-premise for a whole host of reasons, some real and some imaginary. For those IT resources that remain on-site, it makes perfect sense to invest in making that technology more efficient and effective. This may involve investing in fabric computing, some new development platforms such as Microsoft’s Azure, virtualization, and datacenter optimization. Rather than describing these investments as private clouds, why not just describe them as they are? There is a huge opportunity here for the large systems integrators and hardware suppliers as well as leading suppliers of infrastructure software.

Inevitably, these same companies will purchase (public) cloud services at an increasing rate over the next decade and can be expected to use these services where it is at all possible, given the huge benefits offered. These companies will be looking to partner with technology companies that can optimize their internal IT architectures and integrate these technologies with the (public) cloud services that are being used. I’ve heard people use the term hybrid cloud to describe these environments. This creates even more confusion. As far as I can gather, a hybrid cloud means everything. It means all of your on-site technology plus all of the resources that you source from (public) cloud providers. It is a term that offers little value. In fact, just about all IT infrastructures could be called hybrid.
So, companies are seeking ways in which their internal IT resources can share some of the characteristics of (public) clouds, given that this is becoming increasingly feasible and cost effective.

Organizations are also looking at migrating an increasing proportion of their resources into the (public) cloud. The integration of (public) cloud resources with internal resources is a key challenge and opportunity for organizations. Cloud-related discussions should indeed focus on these issues.

But, in order to do this, it helps us enormously if we communicate more clearly and call a cloud, a cloud and we call internal resources what they are. There is plenty of terminology that can help us to do this. The term private cloud continues to create a lot of confusion and a lot of debate. I am sure that this nonsensical term will eventually be dumped. I hope that this happens soon.

Restricting Access to Social Media can Seriously Damage your Business

In the past year or so, it has been amazing to witness organisations finding ways of using social media to engender innovation and creativity. By offering employees full access to these tools, innovative use of applications like Twitter and Facebook can come from all parts of the organisation.  Restricting  access to social media risks placing an organisation at a competitive disadvantage.

These tools can be used in an enormous variety of ways. They can support and enable common business processes such as sales, marketing, customer services and recruitment. In addition, they can even support industry specialists that seek to improve the ways in which they do things. Specialists in industries from aeronautical engineering to zoology are finding ways of using social media to support, enhance and transform their business activities.

I recently met up with an ex colleague who now works for Carnival Australia, a cruise company. To most people, it is not obvious how Carnival might use social media for business purposes. But, some creative and innovative individuals within the company have found ways of using Facebook to enhance customer service and improve customer experience. In addition, to setting up pages that are used broadly for marketing purposes, Carnival also sets up Facebook pages for each cruise. Customers of the cruise are then invited to ‘like’ the group for their cruise. On the page, they can share information with other customers and with Carnival employees. Discussions commence in which customers can gain information, relating to their cruise, from peers in addition to corporate information from Carnival. So far, Carnival has found that this feature is popular with their customers and the company believes that it improves customer experience significantly.

Given that there is clear evidence of social media tools, including Facebook, being used for innovation and to increase productivity, why do some companies continue to use web filtering tools to restrict employee access to social media? The short and polite answer is that the people who make these decisions often have very little understanding of the relationship between business and technology. In the 1980s, when spreadsheets were first widely used, some myopic employers were concerned that their employees would spend too much time using spreadsheets for personal use such as creating shopping lists. A similar argument was used if we go further back to the widespread introduction of the telephone in the work place.

Today’s managers should not spend time worrying about employee use of social media. Instead, they should view these new tools as opportunities to gain a competitive advantage. They should be encouraging employees to find ways of using social media to improve their performance as well as the performance of their organisations.

Rather than using cumbersome software to restrict Web access and introducing new management processes to determine which sites can be accessed and which sites cannot, organizations need simply introduce policies and guidelines that require employees to use social media in a responsible manner and to use their tools primarily for business purposes when using business assets and business time. Sure, they will sometimes use these tools for personal use. But this is no big deal considering that most employers are happy to allow employees to use business telephones for personal use, within reason. Besides, if an employee is performing, the time that they spend using social media should not be a cause for concern.

A much greater concern should be the extent to which the organisation is leveraging social media. Failure to offer employees full access to social media seriously threatens an organisation’s competitiveness.

The Role of the CxO in Cloud Computing

Choosing cloud computing solutions and deciding how these solutions might be used, are now key strategic issues for organisations. The benefits offered by cloud computing can lead to competitive advantages. For this reason, cloud computing is not only on the agenda of CIOs but also other executives within organisations (or CxOs).

The major benefit that is typically associated with cloud computing is cost. Studies show that cloud computing can offer massive cost benefits when compared to on-premise alternatives. A Frost & Sullivan study shows that for many organisations, IT costs can be halved when cloud computing alternatives are selected.

But cloud computing offers very significant additional benefits, not least in terms of its ability to make business more agile. In a cloud computing environment, organisations can increase and decrease the number of users of computing resources instantly. They can provision new resources instantly and stop using them instantly. This provisioning is typically automated, further increasing business agility.

In this type of environment, focus is shifted away from IT and towards business services. IT becomes less of a cumbersome weight around the neck of parts of the business and more of a business enabler. Organisations can, for example, decide that they want a service for leave management or sales management and simply provision it instantly rather than having to deal with implementation and the complexities around it.

So why haven’t more organisations chosen to adopt cloud computing alternatives? Well, the first concern expressed by CxOs typically relates to security and privacy. This should not be their major concern. Cloud computing is, in many ways, a much more secure environment than on-premise alternatives. In cloud environments, computing resources reside in datacenters that typically adopt security best practices. In on-premise environments, data is distributed across heterogeneous environments exposing the organisation to many more security risks. Indeed, employees often travel to work and to meetings with laptops. These laptops usually contain valuable data. They can easily be lost, stolen or compromised when not under corporate control. In a cloud environment, much less data is exposed to this risk.

The real issues around which CxOs should focus relate more to performance. For example, if data resides on a different continent, CxOs must consider issues like latency and asymmetry in upload and download speeds. Cloud options need to be evaluated and CxOs need to ensure that they meet performance requirements for specific business processes. If the data is hosted nearby, then, many of these challenges can be addressed.
So, in summary, cloud computing can enable CxOs to arm their employees with tools to undertake their jobs in a much more straightforward manner than before. The resources used can be increased and decreased instantly in line with business requirements. In a cloud centered environment, IT will become commoditised and the role of the CIO with diminish.

In theory, cloud computing is expected to deliver us computing resources in the same way as today’s utilities deliver us power and water. For this reason, organisations will not need to employ the same number of IT professionals. Instead, most IT professionals will work for organisations that deliver computing resources from the cloud.

A Cloudy Future for Microsoft

At the turn of the 21st century, Microsoft’s position as the world’s largest, most dominant, and most influential IT vendor seemed unassailable. Today, the firm’s position is not so strong and its positioning in the cloud computing, tablet and smart phone markets is not yet clear.

In recent years, there have been seismic shifts in the IT industry, much of which has been driven by two companies, Google and Apple. Both are massively disrupting Microsoft’s traditional business model.

Google generates revenues from advertising so has been in a position to offer software that competes directly with Microsoft products, free of charge, while driving the cloud computing model.

Apple has been leading the development of smart phones and tablet computers which are undermining the dominance of PCs and further driving the cloud computing model.

These developments are being compounded by a shift away from Microsoft’s operating systems towards Open Source alternatives.

The shift towards the cloud model is now taking place at breakneck speed, and is threatening to choke revenue streams that are dependent on selling software licenses.

In the short term, we will be working within hybrid computing environments, consisting of both cloud computing and traditional models of computing, but the cloud model will dominate in the next few years. Soon, managers will need to present very strong business cases to justify the expense of keeping computing resources on-premise.

Microsoft’s two key competitors have cloud-based business models and lots of cash.

Google has only ever had a cloud-based business model. Apple, on the other hand, has brilliantly made the transition from an ailing desktop-oriented IT supplier to a cash generating machine, by fully capitalizing on technology shifts. Its iTunes business is a cloud business and its iPhones and iPads have driven the development of a huge number of cloud-based applications. The tablet computing market that Apple has pioneered, will speed up the demise of PCs. Where is Microsoft in this market?

Right now, the market is dominated by Apple and Google. A rapidly growing number of Android devices are appearing on the market and taking on Apple’s iPhone and iPad products. It is reminiscent of the battle between Apple and Microsoft in the early days of the PC. Apple had a ‘walled garden’ strategy. Its software ran only on its hardware. Microsoft, on the other hand, licensed its software to run on PCs produced by anyone. Microsoft’s Windows Phone 7 is expected to provide competition but, the market is growing very fast without Microsoft’s product having been released. Has Microsoft been too slow this time? Will Windows Phone 7 be well received or will it be considered to be a sluggish and unreliable product? Does the product name suggest that Microsoft has not recognised or anticipated the growth in tablet computing? Is Microsoft designing its mobile/tablet products specifically for these new environments or is it merely re-coding its existing PC oriented products?

To be fair, Microsoft now offers cloud products. Its applications can now be offered over the cloud and its price competitive, platform as a service (PaaS) product, Azure, creates a development environment that is simple to get to grips with for those that are used to working with Microsoft products. This, of course, represents most developers. Microsoft seems to be banking on developers believing that it is simpler to stick with Microsoft, with whom they are familiar, as they move into the cloud, rather than using products from cloud, pure play, suppliers of PaaS products like Amazon, Google and Salesforce.com.

Microsoft’s current approach is to ensure that it can offer cloud services to its customers if customers seek these solutions. In doing so, it is shifting substantial numbers of its customers into the cloud and it has been working closely with its partners to support these efforts. But, is it working hard enough to move its customers into the cloud? Has it anticipated the huge growth of cloud computing? Has it created sufficiently attractive sales incentives to encourage sales teams and partners to sell cloud services instead of on-premise alternatives? In order to enjoy success, Microsoft must proactively ensure that its cloud offerings become embedded within the world’s leading corporations before its competitors, as it did in the PC-oriented world. If it does not do this, it risks losing its very strong, but no longer dominant position in the IT industry.

Microsoft needs to improve its speed to market with new products. It needs to act faster than it has ever acted before and it needs to do this now.

Notes from a Large Region

I recently attended a briefing detailing APJ results for a major US-based cloud services provider. By the way, APJ is an abbreviation for Asia Pacific, Japan which means Asia Pacific plus Japan. To many, Asia Pacific includes Japan anyway and the letter J does not need to be specified. But sometimes, the letter J is used to signify the importance of Japan which until recently accounted for more than half of the aggregate GDP of Asia.

I was presented with APJ revenue numbers and revenue growth numbers, and was informed that these growth figures are higher than for anywhere else in the world. I then attempted to interpret this information and came to the conclusion that it was meaningless. Telling me that APJ growth is x%, and that this is the highest in the world, is like telling me that there is a storm in the Pacific Ocean. I want to know about specific parts of the APJ region. In fact, like many, I am particularly interested in what is going on in China. I believe that the vendor in question, like many US services companies, does very little business in China and will struggle to penetrate the Chinese market. Talking about APJ disguises this fact and may lead some to assume that business is strong in China. Right now, the Chinese government is probably creating several Chinese versions of this company. Of course, when I asked if the vendor in question could share its revenue numbers for specific parts of APJ, I was told that this was not possible.


The notion of placing many, very diverse countries into one region has always seemed very strange to me and not very rational. It seems as though large corporations split the world up in a way that satisfies their own, internal and often myopic view of the world.

Asia Pacific is a huge area and is made up of an incredibly diverse set of countries.

From an outsourcing/IT services perspective, it is important to understand the diversity of the region.

Australia and New Zealand are mature IT markets and the propensity to outsource is high. From an outsourcing perspective, these countries share more characteristics with the UK than with any country in the Asia Pacific region. The combined ANZ economy is becoming smaller relative to other Asia Pacific economies and hence is receiving less focus. Nevertheless, many US-based services companies continue to generate the bulk of their Asia Pacific revenues from ANZ.

Japan and Korea are also mature IT markets but the propensity to outsource to third parties is relatively low. Japanese and Korean organizations are much more likely to operate captive facilities than to engage a third party to manage business or IT processes.

India is an enormous offshore destination with a rapidly emerging domestic outsourcing market. Economically and politically, India behaves more like a Western economy than other large economies in Asia Pacific, like China and Japan. Large Indian companies and government organizations have a comparatively high propensity to purchase outsourcing services from third parties.

The Philippines is the second largest offshore destination in the region but has a disproportionately small domestic market. Most ASEAN countries, including The Philippines, face challenges in maintaining economic and political stability. Furthermore, some ASEAN countries such as Cambodia are among the poorest nations on earth while Singapore is one of the richest on a GDP per capita basis.

Of course, China is the market that attracts the most interest given its phenomenal economic growth and the size of the economy. In recent years, China has emerged as a nearshore destination for Japanese and Korean captives. However, the government is investing heavily in encouraging foreign and Chinese companies to establish themselves as providers of offshore outsourcing services within China aimed at US and European companies. The establishment of this infrastructure is not driven by current demand but instead by anticipated future demand for services delivered from China. Perhaps of more interest is the domestic market in China. This could potentially be huge. But, it will take time for a sizeable domestic market to emerge for many reasons. One of the main reasons for this is cultural. China is not yet a services-oriented economy and by and large, China simply does not do services well today. There is a sense that you buy products that should work and if they don’t, then you should be able to fix them using your own resources. It is hard to find high quality services in China should you be unable to address a problem with products using your own resources. The other issue that holds back domestic outsourcing is the same as in many other parts of Asia Pacific and that is the relatively low cost of labour.

So, Asia Pacific has massive variety. It houses two of the world’s three largest economies as well as some of the world’s poorest. It has countries where the propensity to outsource is among the highest in the world and where it is among the lowest. It has the most centrally planned economies in the world as well as some of the most market-oriented economies. In other words, it doesn’t make much sense for these economies to be included in the same category.


As parts of the region become more influential globally, managers within the region are changing the geographic categories that these use. Powerful country offices within the region are beginning to refuse to report into regional headquarters and insisting that they should report into global headquarters. If you are running the Chinese operation for a large US-based corporation, you are probably operating a critical part of the business for future growth. So, you will most likely want to report directly into global headquarters rather than regional headquarters in Singapore.

In a few years time, the way some large corporations segment the globe will change, Asia Pacific will no longer be a useful geographic category. It is likely to break up into several areas. India and its neighbours will make up one area, South Asia, Greater China another, ASEAN another and Japan and Korea will be the other. As mentioned earlier, ANZ will continue to become proportionately a smaller part of Asia Pacific so will probably be thrown in uncomfortably with ASEAN.

Cloud Security - A Pleonasm?

The IT industry successfully generates billions of dollars each year by selling us security products and services. Security always plays a major role in any corporate IT purchasing decision. But, we are still a very long way from securing our IT environments.

Most security breaches are caused internally by employees or other authorized users of corporate systems such as contractors. It is these groups that are most likely to compromise the integrity of our systems, not external hackers. In spite of this, much more focus tends to be placed on external threats. Each time I work on a client’s site, I am struck by how easy it would be for me to compromise their systems. All I would need to do is insert a thumb drive with malicious code into a USB port and, hey presto, I’ve undermined hugely expensive security investments.

It is reckless to allow employees and contractors to carry highly sensitive data around with little consideration of the consequences of losing the laptops and smart phones that house the data. Amazingly little focus is placed on addressing this particular security threat.

Indeed, enterprises do not sufficiently focus on changing the behavior of their users by making them aware of security policies and the reasons for those policies. Few ensure adequate control of basic access to their physical premises and to end points that form part of their network. As mentioned earlier, it also seems as though few enterprises track the location of sensitive data that physically moves around with employees and contractors.

Ensuring that everybody who accesses enterprise networks is trained to follow appropriate security policies is an extremely challenging task. For this reason, it is necessary to consider other ways of mitigating the risk of an employee or contractor from compromising security.
One way of doing this is to source as much of the enterprise’s computing resources from the cloud as possible. Managing the security of heterogeneous on-premise IT environments is a highly complex and almost impossible task. Minimising the amount of on-premise resources that a corporation manages mitigates risk associated with security breaches enormously. Ensuring that data is stored in a secure environment (in the cloud) rather than on portable devices such as laptops and smart phones also enables corporations to reduce risk.

Cloud computing, and I mean public cloud computing, allows us to mitigate risk and in many cases offer greater security that can be provided by spending millions of dollars in an attempt to secure on-premise resources.

Multitenancy and virtualization do indeed add a lot of complexity to providing levels of security that many enterprises require. However, public cloud services providers such as Google, Amazon, Microsoft and Salesforce.com focus heavily on ensuring that their datacenters follow best practice security policies and are using the most up to date security tools. Security can also be tied into service levels.

So, using public cloud services can offer more security than keeping data and other computing resources on-premise. These services can also reduce the amount spent on security massively. Perhaps this is the reason why many in the IT industry are keen to dissuade us from using cloud computing.

Security is always a challenge. But, there is little evidence to suggest that using the public cloud is less secure than the traditional on-premise form of computing. In fact, there is more evidence to suggest that using public cloud services can, in many cases, eliminate security risks that exist with on- premise computing alternatives.

The cloud model of computing is much better positioned to address today’s security challenges and concerns than alternative models. So, will the term cloud security soon be considered to be a pleonasm? In other words, will the cloud soon become synonymous with security?

The Myth of Enterprise Social Networking

One of the most attractive concepts I have ever come across is that of crowdsourcing. At no time in history have ordinary individuals possessed the tools that enable them to engage with such a huge variety of people and to tap such a vast amount of knowledge. Many of today’s emerging business titans such as Facebook have used ‘the crowd’ to build their businesses and to build fortunes for their founders.

For knowledge based workers, the use of these tools can increase their productivity enormously and engender innovation at a more rapid rate than would be the case for smaller, selected, teams and individuals.

In a traditional corporate environment, knowledge workers predominantly access corporate resources alone. Admittedly, in certain environments such as academic institutions, knowledge sharing and collaboration beyond a single institution has been the norm for centuries. However, today, knowledge workers within corporations as well as within academia have access to infinitely more resources than ever before by using social networking tools.

The massive benefit offered by social networking tools is obvious in some corporate functions such as human resources, marketing and customer care. But, for other activities, the benefits are also huge. For example, a specialist such as an engineer can potentially source best practices or solutions to challenges using social networking tools. These professionals can use these tools to ensure that they are fully aware of the latest developments in their profession and they can do this anywhere in the world. Clearly, these tools can offer huge benefits to professionals ranging from aerospace engineers to zoologists. In fact, those that do not use social networking tools will soon find themselves isolated from the rest of their profession and risk coming across as having a seriously outdated approach to work, a bit like refusing to use word processing software and preferring to write by hand.

Horses for Sources has used social networking to build a business and to engage with a large community of professionals that share an interest in outsourcing. There are no restrictions on who can read the blog or follow Horses on Twitter. Provided, external content does not offend Phil Fersht, it can be added to the blog. But, the main point is that it is open to anybody, anywhere, who wishes to engage.

So what is enterprise social networking? Well, it is collaboration within the enterprise and with selected external stakeholders. To me, this is not social networking given that if I use these tools, the people with whom I can interact and the content with which I can engage are restricted by the enterprise. For example, it is much easier for an IBM employee that I have never met to connect with me using Twitter than using Yammer. Enterprise social networking tools are the next generation of collaboration tools that are designed to overcome the thorny issue of insufficient collaboration within most enterprises. Intranets were, and in many cases, still are used to engender greater collaboration within the enterprise.

In order to improve performance within many functions within their organisations, management must embrace open, public social networking tools such as Twitter, Linkedin and yes, Facebook. They should not seek to use enterprise social networking tools as more secure or manageable substitutes of the open, public tools. They have very different benefits. Instead, they should use enterprise social networking to help them to address that on-going challenge that they face, namely getting people, within different teams (or within the same team), to work together more closely.