Cloud Computing – Hype or Reality?

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Last week I spoke about this theme at the CON.ECT conference in Vienna with the same title. I found it a pretty representative sample of the present perception and market situation. Here are a few highlights.

There is a very live interest in Cloud Computing. This event managed to convince some 40 C level and Team Managers to spend most of a day learning more and getting acquainted with this topic.

Most of the effective projects are essentially hosting of traditional applications in a virtual hosting environment, driven essentially by cost savings and a measure of on-demand infrastructure features.

Google, Amazon and Microsoft were perceived by the audience as the key players in the foggy space of Cloud Computing. My presentation of effective Cloud based core applications and implementation examples, and the technical architecture required for such, raised a lot of interest and surprised many attendees. I was in turn surprised by the almost total unawareness of the architectural/technical issues related to the deployment of Cloud applications (as opposed to Cloud Infrastructure).

Another intriguing and highly demanded topic was the legal angle. Data Protection and Privacy legislation impose quite specific responsibilities and liabilities on IT operators and providers, and the multi-tier settings of data storage in the Cloud create potential liability exposures that must be assessed and dealt with before a business implements such a solution.

My conclusion – there’s still quite a lot of fog and hype surrounding Cloud Computing, and the industry must continue to educate and communicate in order to enable the potential it holds.

I’m keen to have more opinions on this.

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How to make more with BPM, Mashups and Integration combined

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I had many discussions recently about composite applications, process management and integration. A couple of years ago it looked like It would all be subsumed into a big BPM cloud. Well, it had not.

BPM Suites reinforced substantially the “high-end”, intelligent layer of their stack (processBig payload on a slim base optimization, complex event processing, process performance …). But they did little about integration and composition of information assets that were not designed to be integrated (about 80% or more of enterprise assets). It reminds me of a chicken – big payload on a rather slim base. That explains, at least partially, why BPM has not yet made it to the IT Mainstream.

What went somewhat unnoticed was the brief mushrooming of Mashup technology – which was targeted at power users, enabling them to recompose those existing information assets into new applications. That did not work because it still required skills that were beyond those possessed by the target audience (see A reality check on “citizen development”). Yet Mashup platforms (such as Convertigo) offer a very cost effective and compelling way to enhance BPM suites by extending their information base. The ability to interact with a key application without having to re-engineer it can make the difference in deciding upon the implementation of a BPM initiative.

Application Integration has also regained in importance, in particular when it comes to integration between Cloud and On-Premise applications. That is yet another facet of the orchestration of business processes, which is championed by BPM. Here I also see an increasing number of productive alliances, such as the recent partnership between Pallas-Athena and Magic Software.

All this leads me to expect that the next wave of consolidation in the BPM space would happen at the lower level of the stack, adding a rich set of easy integration and composition technologies to really enable the incredible potential of a full-fledged BPM system.

Tips about (Cloud) Service Culture and Contingencies

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A recent discussion at the ebizQ forum is “How Should Companies Prepare for When the Cloud Goes Down?”. It triggered this post.

What do companies do when the electricity goes down or the phone is out? I am not familiar with outage statistics of the Internet at large or specific Cloud Services providers, but I venture to guess that their track record is not worse than that of the major utilities – probably even better. What is often missing is feedback from those service providers when they experience problems. I rarely saw providers that acknowledged a service interruption while that interruption took place. This is the most frustrating part – you do not know if the fault is within your sphere or if it is external.

A very recent example is Orange in Switzerland – following the announcement of iPhone 4, their web site became overloaded and registered users could not access their account – unrelated to their interest in the iPhone offering. Yet, the only message you got when trying to log on was that it cannot present you a personal iPhone offer due to the high demand – and no word about the general login problem. It took about a week until you could log-in again. I expect providers to follow the example of Salesforce.com and be transparent about their on-going service level.

Then comes the contingency aspect. Those who need constant electrical power install UPS systems. Those who need constant communications use multiple alternative networks. And those who need constant computing have DRP and facilities and processes in relation to their service tolerance. Why should using the Cloud be different?

Now let me get back to the popular apprehension about the Cloud going down – and while we’re at it what about the risk of your Cloud Provider going under? One of the most popular SaaS integration applications at Magic Software is the replication of Cloud based data – simply providing an integration link between a Cloud application (such as Salesforce.com) and a local DBMS hosted on the company premises. I consider this as some kind of life insurance policy – not too expensive, not a perfect solution, but something that would help you survive in case of the ultimate disaster.

And putting things in proportion, data is probably safer and more available at Salesforce.com systems than in most companies’ data centres…

My recommendation? Do your due diligence when choosing a Cloud service, require transparency from your Cloud provider in particular on the service state, and set up a contingency to cover your disaster tolerance.

Applying RIA and Web to the Extended Supply Chain

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Enterprise RIA adoption is growing. It helps businesses become more efficient and grow. It helps entire business ecosystems to work better together by applying modern information technology. Isn’t this what Business Technology is about?

I had in recent days further interaction with Extendas, in relation with their Flower Office project (mentioned in my post The Extended Enterprise – from vision to reality with Rich Internet Application technology). I was able to get additional details about the solution and its reach – all the way from the horn of Africa to the heart of Europe.

This is a great illustration of what can be accomplished with modern business technology and how it brings its benefits also to the developing economies.

FlowerOffice Portal  implements an Enterprise RIA solution from a joint venture of Extendas  (ISV specializing in ecommerce solutions and Dutch market leader in Petrol ERP) and Van Delft International (one of the leading suppliers of cut flowers in the Netherlands and award winning early adopter of mobile software technology).

The FlowerOffice Portal application spans the entire supply chain from flower growers from all over the world to the FloraHolland exchange through the flower trader (such as Van Delft) and finally to wholesalers or even flower shops.

This is an Enterprise Class application, requiring a rich user interaction and transactional capability that is beyond browser based applications. Implemented with uniPaaS, the application is available simply via a URL and login credentials.

The flower supply chain starts with Flower Growers. These supply their flowers to brokers who trade on the flower exchange. Flower wholesalers buy those flowers from the brokers, resell them to retailers and Flowers Shops.

So far, the Flower Exchange was computerized and accessible to ERP systems used by the brokers, and the trade with Growers and Shops was mostly done over the phone.

Flowersoffice has such an ERP system at its core, which is now extended with an Enterprise RIA applications targeted at the edges of the supply chain – the Flower Growers and Flower Shops. These access the application via a portal and can directly enter their data, which is updated in real time. It actually enables a flower shop to get a quote of the current price for a specific flower lot and place an order directly, without further human intervention. This reduces several steps in the process, adding value across the chain, all the way to the end-consumer.

The present beta test focuses on the rose trade, and involves a dozen farmers from Kenya and Ethiopia, FJ Zandbergen (Dutch flower broker) , Delft International (Dutch flower broker and wholeseller) and a few flowers shops.  Once released, it is expected to be used by some 1500 flower shops, streamlining the short-lived flower trade, accelerating logistics and reducing overhead.

Your thoughts? I’m also interested to know about similar experiences.

How to survive the dark side of Cloud Computing

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The last couple of weeks were rich with meetings and discussions about SOA, RIA and Cloud, in between the Forrester IT Forum in the US and the SOA Forum in Switzerland. What strikes me is the “lemming behavior” of a lot of software vendors who decorate their offering with Cloud and XaaS feathers, oblivious of the revenue precipice that aTransition to a Cloud related revenue modelwaits them right ahead.

I have touched upon this subject in my article on RIA and Cloud Computing Apps, as well as in a blog post last year (The coming out of the hybrid SaaS model). It’s ripe for an update.

What we have seen in the last couple of years is an increasing offer of Infrastructure As A Service (IaaS) providing quite elastic on-demand pricing, and an increasing number of software vendors using such infrastructure to offer Cloud hosted applications. The evolution of IaaS technologies facilitates the deployment of traditional on-premise applications over the Cloud, and tempts their vendors to slap on those “Cloud Feathers”. What seems to be put aside are the business model implications.

What the pure SaaS vendors (such as Salesforce.com) experience is a growing pressure of SaaS users towards more granular pricing – real pay per use and not only flat subscriptions. And sooner or later we will see this becoming more and more available. The consequence is a further reduction of software usage costs for customers, and by implication lower revenue per user for the vendor. Vendors will try to compensate by looking for cost reductions – both in developing and maintaining the software and in deploying it. So how can software vendors make money and increase shareholder value in such conditions? They would have to look for more productive and cost efficient software platforms, and implement new business models that tap into the entire ecosystem for shared revenue. And they should be prepared for a very tough transition, which might become fatal.

I recently came across a comment by a Magic Software shareholder that “the licensing model is difficult to understand and costly compared to other tools many of which do not even have licensing models. (this makes MGIC less attractive to potential new developers)”. What is perceived by the commentator as a limitation is in fact one of the bright spots which gives this company a much better position in the growing Cloud market. Magic software already creates most of its revenue using a shared revenue model – tapping into its ecosystem for shared revenues with its customers and partners. It gives the company a very robust outlook and resilience to the upcoming shift in the software business model.

I’m looking forward for your opinions.

Cloud semantics and Ground-Level observations

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I am commenting every once and a while on SOA and Cloud discussions at ebizQ forums. Recently I noticed a growing sensitivity to semantics – Private vs. Public Cloud, Web vs. Cloud, Web 3.0…

This prompted me to post here a couple of recent comments I made on the Cloud Computing forum

How much “Cloud” are “Private Clouds”?

I do not think that Cloud is about semantics, but rather about practice and reality within a concept. My personal experience shows that Enterprises are indeed implementing “Cloud Architecture” solutions which are substituting fat Client-Server implementations, but mostly using the traditional business model (perpetual ownership and in-house or hosted location) – when it concerns core and customized solutions. Cloud based infrastructure and applications delivered as a service and on-demand are indeed still limited to “commodity solutions” – collaboration, CRM, etc…

I described a couple of cases in The Extended Enterprise – from vision to reality with Rich Internet Application technology, and I find a consensus with many industry analysts that these types of implementations are well part of what they observe as Cloud implementations. I do not care much about how it is named, and if people prefer to reserve “Cloud” for a more restrictive checklisted definition that’s fine with me – but what I describe above is a very tangible reality of an application architecture that leverages internet based technologies – hosting resources, communications and clients.

Is “Web” distinct from “Cloud”?

I must admit that I do not understand very well the distinction between Web and Cloud. For me, Cloud is an integral part of the Web, relating to several aspects of it – in particular architecture and ubiquitous access to hardware and software resources. So they are converged already.

I perceive the Cloud “phenomenon” as firming up the business nature of the Web on the IT side, paving the way for Enterprises to exploit the Web not only for communication related aspects (from email to ecommerce and marketing) but also for the deployment of core applications. I am presently involved in such a project that brings the notion of “play list” to a composite application for financial brokers and portfolio managers in a global financial institution, incorporating most of the “bells and whistles” of Web2.0 user experience and a hybrid Cloud and Legacy backend. That is what I consider as Convergence – but the main converging domains here are Web and traditional Enterprise IT.

In my opinion, semantics are necessary for a meaningful communication, but let’s not overdo it. And how do you see it?

A reality check on “citizen development”

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The topic of Citizen Development recently received a lot of attention – the latest coming from new Gartner report and from ebizQ forums. So I’d like to revisit it.

The temptation of “citizen” application development dates back to the prehistory of the PC – the introduction of micro computers and products such as Framework and dBase. That was the time when we entered the market with Magic Software, and I supported the thesis that 4GL’s enable line of business experts to directly implement business applications shortcutting much of the traditional development and programming process. Reality proved otherwise, showing that such easy to use tools actually amplify lack of IT skills, which sometimes led to very unhappy endings. We revised our approach very fast to target system analysts rather than LOB professionals, and observed amazing results – very small teams providing very rich and comprehensive applications (an example in More about Enterprise RIA in practice).

Nowadays, I believe that citizen development can be effective provided the following combination: easy and intuitive assembly and composition tools with adequately enforced governance, and a professionally developed collection of services (building blocks). A good example of such a mix is Convertigo.com, which evolved from Programmatic Integration to Enterprise Mashup’s and now to SOA backend enablement (targeted at IT professionals via an Eclipse based studio) and Front-End composition (targeted at citizen developers with Convertigo’s own Composer as well as other popular composition tools).

What do you think about Citizen Development?