Cloud computing and boring innovation

Cloud computing and boring innovation

Summary: Last Friday, Ben Kepes at CloudAve got a something of a kicking from Dave Turner of CODA [Disclosure: CODA is a current client and is building financial apps on the Force.com platform] and Microsoft's Gary Turner.

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Last Friday, Ben Kepes at CloudAve got a something of a kicking from Dave Turner of CODA [Disclosure: CODA is a current client and is building financial apps on the Force.com platform] and Microsoft's Gary Turner. [I've known Gary more years than both of us would likely admit but Microsoft is not a current client.] Ben takes the religious high road for cloud computing, having a general swipe at the (un-named) incumbent vendors. Dave storms back with:

Come on guys. Do you really think that the big software companies of today have not had to cope with radical technology changes before...

...We aren’t alone. SAP, Microsoft, Oracle have all been around for many years and have survived and thrived as technology and business paradigms (aargh… that overused word!) have changed...

...I’m not saying that adopting SaaS doesn’t represent a challenge and a change of mindset - it certainly does. But just because a couple of ISVs have had hiccups in entering the SaaS world, don’t write off the whole established software industry.

Gary is a little more philosophical:

There's an innate characteristic of the technology industry upon which it has propellled itself down the years; improvement.

This quest for improvement exists, primarily, to serve the needs of the intended user of the tool or product who, presumably, has a business, process or need for improvment in some way.

However, a natural consequence of this endeavour to bring improvement is that some of it gets reflected back into the industry, most commonly witnessed when a once new and groundbreaking product is rendered redundant by its successor.

This in turn provides vendors with great scope for competition and differentiation; these being the key principles of selling. And it's easy to get excited by differentiation in a world which has become, frankly, quite vanilla in the last ten years.

But as David says, this isn't some new dynamic that will render every technology business that's been trading for more than five years obsolete. It IS the software business...

...Passion and enthusiasm for our products/service/companies is great. And some arrogance, ambition and determination are mandatory for success.

but with a sting in the tail:

But sometimes I sense an unhealthy dogma when I read and hear about some of the coverage and opinions in support of SaaS.

Fighting talk from two different angles but then I read Andy Mulholland's interpretation of how much Amazon's market cap can be attributed to the Kindle and its use of cloud style services:

The stock market apparently understands the ‘iPod’ effect in creating an entire new market funded by device sales for huge amounts of reoccurring high margin service revenue. As a regular book reader and Kindle user I can only agree with the assessment! But it’s not just the device, it’s the always in place link and relationship with Amazon too, they use it to constantly update with text based matters that their great CRM systems says I will like, and they are right.

Spinning back, Ben might have fared better if he'd concentrated on the business model aspect because that's the part that hurts software license based vendors much more than the technology shift. We all know technology is an issue in on-demand computing but if the model is right - as Amazon's market makers think - then things start to look very different. Which brings me to the boring bit.

In the same article, Mulholland also talks about GE's telemetrics business:

The launch was fairly low key, but from this has grown a vast services business based on GE Veriwise division acquiring all the monitoring information from an ever growing fleet of truck/trailer units travelling across North America, and then cutting and dicing the information to be able to reuse it, or resell it to a wide range of transport operators. Once again the key is that the customers pay for the equipping of their trucks with Veriwise so market entry and creation is directly funded by customers...

...Once again this is an always connected system, this time by satellite as far as the sensors are concerned, though the other way round information can be passed back to the driver by wireless.

It's a bit of a stretch to argue the second example as one that fully embraces cloud computing (and please let's not go down that rat hole) but the principle of owning data that can be used in multiple ways holds just as good for this seemingly boring technology (it's used in transportation and logistics) as it does for the much more sexy 'cloud.' Let's put it this way, it's not too boring for the ever cost conscious Wal-Mart.

As I've argued in the past, on-demand, cloud enabled software could - and I say could - go down to ZERO in direct use cost to the end user. The data that's harvested, especially by the multi-tenant purists, is way more valuable. So why is that we don't see the enterprise players in the on-demand space diving in with both feet? I hear the reasons given but they ring hollow in the face of the mounting evidence.

Topics: Cloud, Amazon, CXO, Data Centers, Emerging Tech, Software, IT Employment

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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4 comments
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  • Amazon is the....

    Amazon is the leader of Cloud Computing. It has
    got the grip of the market now.

    As cloud computing has become hot these days,
    one should have clear cut goals to be a leader
    in that space.

    Cheers,
    Kathiravan Manoharan
    http://kathyravan.blogspot.com
    http://paisamechanic.blogspot.com
    mkathiravan
  • RE: Cloud computing and boring innovation

    The statement that the price of cloud services (to end
    users) could go to zero is theoretically correct as I have
    blogged about at http://tmccune.blogspot.com (april 2008) but the
    thing missing from that
    argument is that the software provides a service function
    in many cases that replaces a current software or human
    service function. The commoditized price will eventually
    fall to the lowest price that service function can bear. If
    the service can command some "brick and mortar" price,
    the online service will have a comparable valuation.
    Chalkboy
  • RE: Cloud computing and boring innovation

    I still haven't seen any innovation in Data Ownership.

    O.K. all of you financial types raise your hands if you would like the Obama administration unlimited access to your data with out being told or the government getting a pesky warrant. After all most of the cloud vendors out there would give out your data if ask by the government. They may not tell you they have do this but they would be most gracious in helping our government out.

    Any takers???

    The services are very attractive but nobody has yet addressed the basic question of data ownership. Right now the current state of affairs is you sign over any right to your data and privacy when you agree to End User License Agreement or the Terms of Service Agreements.

    I have heard the arguments that "Nobody has enforeced the EULA" but realistically Verizon, AT&T all gave out private data to the USA government with out warrents. Why would Google, Amazon, or Yahoo be any different???

    I have been hoping the free market would solve this problem but so far companies have ignored it.

    What we would need would be the equivalent of "renter's rights" for the cloud to attract a responsible company to the cloud.

    There has been a lot of bright lights highlighting the pros of cloud computing but nobody has seemed to focus on the most basic problem with the system. Why give someone else the rights to your data???
    mr1972
  • RE: Cloud computing and boring innovation

    Dennis - I think if you read my original post you'll find that I was talking about business model rather than technological issues.

    Of course from a technical perspective traditional vendors can shift to SaaS - however it is the imperatives that shareholders, existing revenue streams, channel partners and the like bring that make t a difficult move.
    benkepes