Tune Into The Cloud: The Billionaire Boys Club

The Billionaire Boys Club
Not too long ago, it took even the most successful entrepreneurs several centuries or at least decades to reach a valuation of a billion and thus become a member of the exclusive Billionaire Boys Club*. Families like the Rothschild’s, the Walton’s or the Brenninkmeijer’s have indeed built up impressive capital wealth, but because it took them several generations, it often became quite diluted among brothers, sons, daughters, nieces, and even third-degree-nephews.

With the advent of first: IT; then the Internet and now the cloud, that timeframe has rapidly shrunk. Today companies with as little as 50 or even 13 employees reached valuations where reputable companies and world-renowned artists can only dream of. This acceleration is even more poignant when we look at applications in the heart the nexus of Social, Mobile, Cloud and Analytics (SMAC), such as Instagram , Tumbler and recently WhatsApp. And just like in the music industry there is a lot of interest in the tip parade: the list of runner ups; ideas and products getting ready to become the next mega hit.

Companies such as Spotify, Deezer and SnapChat are on the radar of many corporate investors and internal M&A teams, but predicting a SMAC hit is proving to be as difficult as picking the next number 1 album. Even industry experts often have no science that goes beyond general wisdom such as: " Good things arrive fast" or "You'll recognize a hit when you see it (it will smac you in the face)". For large companies this type of randomness is often not acceptable, which is why they try to institutionalize their success though more formal strategies.

One of those strategies is "Lean StartUp" (after the book: The Lean Start-up). Essence of this approach is to launch a “minimal viable product” fast and then rapidly evolve from there to a more complete or even to a completely new product. All in an extremely short amount of time. Other companies choose to create so-called " Digital Skunk Works", by setting up their own start-up, preferably as far away from the headquarters as possible, in which they - often in collaboration with partners from all walks of life - try to create a hit. The mantra in both cases is "Fail Fast". After all, if 99 out of 100 ideas fail, then it is better to have them fail quickly - before they have cost tons of money. And ironically that is something the agility and scalability characteristics of the cloud can help with.

This "Need for Speed" is however not just important only to technology companies. We are on the dawn of what we call the Digital Industrial Economy (DIE). An era in which more and more companies and organizations (in media, entertainment , finance, health and government ) will add value through digital moments. Moments where instant analysis of vast amounts of (often social and mobile) information is used to rapidly launch new digital services through and from the cloud. Hopefully services with enough potential to become an instant hit and move straight to the top of the charts and generate lots of "Software Defined Business".

* An artist who knows all about how difficult it is to create a hit is Pharrell Williams, the man behind the "Billionaire Boys Club" album tape and clothing line of the same name. An album which by the way did not include a single hit. It is not that Pharrel has no hit potential. Thanks to its distinctive voice and musicality that artists like Mika, Daft Punk, Britney Spears , Snoop Dogg and many others - often for the first time since many years – moved right to the top of the charts . Pharrels contribution to Blurred Lines (a song the record company did not even want to release at first, so much for corporate insight) enabled Robin Thicke to put “the summer hit of 2013” to his name (and thus, again not to Pharrell 's name). But there is justice, with the song Happy from the movie Despicable Me 2 Pharrels has now scored what some already call the biggest hit single of all time. And Pharrel's reaction? In various interviews Pharrel has expressed his surprise about the success of this song, he had not seen it coming.


Dutch version at cloudworks.nu

http://open.spotify.com/track/5b88tNINg4Q4nrRbrCXUmg

Tune into the Cloud: Locked out of Heaven

Locked out of Heaven

In the cloud lock-in is often a greater concern than lock-out*, but both should be top of mind for organizations looking to deploy cloud seriously, or better said, for organizations that want to deploy cloud for serious business

Lock-in is the phenomenon that it is often difficult (lengthy and expensive) for user organizations to switch suppliers, often because after some time the software becomes so closely linked with the way the organization works that saying goodbye to the vendor becomes virtualy impossible. It is no coincidence that there are only two industries (IT vendors and drug dealers) that routinely refer to their customers as "users".

As long as the supplier still has his sights set on expanding its market share, lock-in is often not a problem. But by the time the revenue from the installed base becomes more important than winning new customers, customers often start to encounter regular price increases, increasingly stringent terms of use and less responsiveness from its vendor. With cloud computing that tipping point is still far away (currently the cloud market makes up only about 3 to 5 % of total IT market spend), but it is also an industry where lock-in has a lot more impact that in traditional IT. In the cloud customers are - for the whole service stack (application, middleware and underlying hardware) dependent on their supplier. Unless when the application they use is also offered as a cloud service by other providers, but that is not a very common model for SaaS offerings. Today SaaS offerings can typically only be bought directly from the authoring organization.

But also in the cloud lockout must be avoided. Just imagine a scenario of a typical cloud provider, who controls the entire stack from application to hardware, unexpectedly going out of business (like a Nirvanix, that had a relatively soft landing and was able to give two weeks notice to its customers) or if that provider decides it does not want to serve a certain company or country anymore. Like how several cloud providers locked out Wikileaks after the first press leaks, or a vendor like Mega Upload, where regular customers lost all access to their data after a judge ordered them to shut down completely based on media industry accusations. But same can happen if a reputable large provider decides some of its products are no longer strategic. The big difference between the cloud and traditional in-house hardware and software is that as soon as the provider stops it service, the customer is immediately out of business. This is very different form traditional IT where resources could often still be used for years, even if the hardware is out of warranty and the software out of support.

Having a plan B and an up to date and easy to execute exit strategy is therefore much more important in the cloud than it was in the past. Agreeing upfront what parties will be allowed and enabled to continue the services if the original provider no longer can (or no longer wants to do so). At this moment this is only pragmatically possible for open source solutions that are already offered by multiple parties, but in some countries hosting providers are putting standard rules and arrangements in place ≈to move customers from one hosting provider to another, in case the need arises, including any commercially licensed standard software. But for traditional SaaS there is still a distinct risk f being “Locked out of Heaven”. So for now the advice from one of my first bogs ever, still stands: Any good cloud strategy must start and end with an exit strategy”.

* Locked Out of Heaven is an album by Bruno Mars, an artist whose popularity grew even faster than the popularity of cloud computing. But this album is not a collection of different songs. It is a compilation of several remixes of the same number, allowing the customer to choose the delivery method that he likes best for his situation.

Tune Into the Cloud: Blow

Blow 
Once in a while there is a powerhouse that gives an entire industry a huge blow. An example of such a move is how Beyoncé released her latest album in what observers called a fan-oriented instead of an industry-oriented way. In the cloud such a role has been attributed to Amazon Web Services , who against logic and existing wisdom began selling IT compute infrastructure by the hour (as a service).

Amazon Web Services likes to talk about its customer-first strategy. According to Amazon they prefer focusing on providing what makes most sense for their customers, instead of on trying to achieve the most strategic position for their own company. All under the expectation that this will in the end also work out best for the company.

This may seem an obvious strategy , but unfortunately we often see the opposite. Just a few years ago a U.S. mobile operator decided to replace its popular $10 bundle of a 1000 text messages with a bundle of 2000 for $20. Not because customers had asked for this, but simply because their models indicated this would increase their revenue and margins. The end result of these and other ill conceived telco actions was the current evaporation of the text message market - until recently one of the most profitable communication segments. Customers were levying en masse for free or cheaper (cloud) alternatives.

Many SaaS ( software as a service ) providers also seem to have something different than meeting the needs of customers as their first priority. Many SaaS providers only offer three year contracts that in many cases can only be adjust upward, not downwards - even if there are no technical reasons, such as the necessity of putting up a dedicated server farm for each customer, for this. A way of doing business that is appreciated by investors, venture capitalists and shareholders, as it leads to predictable and stable revenue streams, but typically not by customers.

Forbes described the Go To Market approach of Beyonce with her ​​new album , as "denying the logic that the music industry is based on” and sees it as "an approach that might work for powerhouses like Beyonce but not for most artists". An opinion not un-similar to how many traditional minds in IT still think about buying Infrastructure by the hour: “Desirable for services like Netflix , DropBox and Flickr, but not for mainstream enterprises" .

But also Amazon sometimes takes a less customers oriented apprach. For example, in response to the decision of Beyoncé to launch her new album for the first week exclusively on iTunes, Amazon decided- together with retail chain Target to - not to offer Beyonce's album at all. Which in turn inspired Beyoncé to organize several impromptu visits to challenger Wallmart. If these types of actions are indicative of what we can expect in the cloud industry, we have some interesting times ahead.

Blow was (incorrectly) predicted to become the first single from the album that Beyoncé launched in one go, including all the video’s and without any upfront promotion or publicity and surrounded by the type of secrecy that we normally see from companies such as Apple and Amazon Web Services.

Tune into the Cloud: Alors on Dance

Alors On Dance
The name Stromae is a verlan (a rehash) of the word Maestro, Stromea’s naïve language is French, and that makes it- as for many French speaking cloud providers – harder to become an international success. Across Europe consumers and businesses still look first for national and second for Anglo-American providers. And that's a shame, because despite the language barrier - which is magnified by the very fast pronunciation in southern Europe - there are some very interesting developments and products coming from those parts of the European Community.

For example the French OVH - named after the nickname of its Polish- French founders but also the acronym for "On Vous hébergé " (We Host You) – has become one of the largest providers of hosted servers in Europe . With over one hundred forty thousand servers they come pretty close to American web giants. Long before Facebook started this, the engineers of the French start-up OVH designed their own servers and (often airco free ) data centers . But until recently – just like for Stromea – virtually nobody had heard of this French pioneer . In addition to private initiatives France of course also has several government-related cloud projects , such as CloudWatt and Numergy, who both arose from project Andromede . One of these suppliers recently announced a partnership for the Belgian market with Belgacom , which is also the country where Stromea comes out . His roots make its French a lot more accessible to northerners, although the spelling of a number as Papaoutai still requires some background knowledge (in school we would have written this as "Papa , Ou Est Tu").

The creative approach of Stromae , which he during performances - such as during TED Brussels – often shares with the public, is similar to the approach of modern cloud providers . In most cases he starts (obviously at the computer) his songs with a few simple primitives, which he automates. Next he adds more complex themes and variations (for an example see youtube : Stromae - Alors on Dance / How it was made), an approach also followed by various cloud providers.

Smart cloud providers start their offer with a simple storage or compute service. This is then - including the API programming interface – made available to both the market and to private developers so that both simultaneously can expand on these primitives. The advantage of this approach is that both the lower services can prove themselves in the market ( and can be improved where necessary ) while the various development departments of the cloud provider can build new services on tp of the primitives . Recent research shows cloud providers can add new services three times faster than traditional providers . The approach of Stromae is however a lot more transparent than that of many cloud providers. In his performances he shows in detail how the number is created. Unfortunately, many cloud providers treat the way their cloud services are created as a kind of black magic.

A recurring theme for both is showing two faces. In Stromea these faces often have an androgen male / female theme Video , while cloud providers will show a consumer and a business face . The first side - also called commodity cloud - presents itself as a platform for public services specially designed to reach millions of consumers while the other side focuses mainly on supporting existing applications that were in most cases never designed to run on cloud computing. Question is who is more convincing in performing this somewhat schizophrenic task.

Stromae is a French speaking singer-songwriter and video performer of Belgian-Rwandan origin . With the very danceable “Alors on Dance” (2009 ) , he reached the top of several European radio and dance charts. In more recent songs like Papaoutai and Formidable - a song in the tradition of the great French chansons - he shows a very different side of himself.

Tune into the Cloud: ...And then there were three...

Last year I was asked to start as a regular columnist for the Dutch publication Cloudworks (cloudworks.nu). From now on the English versions of these Album themed columns (including links to the featured albums) are published here (english text included below).

...And Then There Were Three...I did hesitate to start my first column with the title of a 1979 album. But he who does not understand his genesis (hint), will have difficulty understanding the future. That “third” out of the …and then there were three… is in the context of cloud computing of course the network. Thanks to Software Defined Networking (SDN , an acronym to remember) network capacity can – over time – just as cloud compute and cloud storage capacity be consumed, allocated and even paid for on-demand and as-a-service.

SDN was by far one of the most hyped concepts of 2013. With all network providers busy building and / or acquiring technology. The largest acquisition to date (more than a billion dollars) was made ​​by a virtualization platform provider (who saw the power of taking software defined beyond compute).

A major reason for the interest in SDN is that networking and communication costs a relatively large percentage of the total global IT spending. Of the total 3.7 trillion dollars IT spending about 46 % is spent on Telecom Services ( other categories are software 8%, hardware 22% and IT services 25%) .Any development that influences such a large part of the total IT spend can count on great interest from vendors.

Incidentally, 13 of the largest telecommunications companies announced at the 2013 SDN World Congress in Darmstadt a joint initiative around ” Network Function Virtualization “. This initiative encourages suppliers of network technology to increasingly enable their networking solutions to run on (clouds of) industry standard servers.

The big advantage of a “software defined” network – just like any other type of “software defined” infrastructure – is that it no longer consists of dedicated and proprietary hardware boxes with names such as firewall, load balancer, router, etc. If an organization tomorrow suddenly needs twice firewals then load balancers ( or vice versa ) , they can do such through software. And as everything that is controlled by software, it can be fully automated. For end-users , this can have major advantages, for example by reducing the time needed for the network to be (re) configured can be reduced from several days to a few hours, or even shorter.

Infrastructure as a Service ( IaaS ) today allows smart applications already today to allocate the required storage and compute capacity in a flexible and elastic manner. As we described in our early 2012 research note SDN promised to make this also possible for network capacity. And indeed we now see approaches such a Network Centric Application development become more popular.

Ironically for many organizations the transition to “as a Service” IT started with giving up their traditional – fixed line based – Wide Area Networks, and replacing them with shared packet-switched networks . Networks that were based on X.25, a technology first described in the Orange Book from 1976, three years before this classic Genesis album came out.

…And then there were three… (1978) was the ninth studioalbum of the English band Genesis. The title refers to the three remaining band members. The melodical “Follow You Follow me” is one of the more well know tracks.