Does cloud computing affect innovation?

Update: Paul Albright's title was incorrectly stated as CEO. He is GM and CMO.

Earlier this summer, Jonathan Zittrain wrote a New York Times OpEd piece that discussed his concerns with the cloud computing paradigm. Zittrain stated that, while it may seem on the surface that cloud adoption is as "inevitable as the move from answering machines to voice mail," he sees some real dangers.

(Credit: SuccessFactors)

Zittrain covered the usual concerns about data ownership, privacy, and the access that data placed in the cloud gives governments all over the world--a concern I certainly share. He went on to point out that these problems are solvable "with a little effort and political will," a view that I also adhere to.

To Zittrain, however, the biggest threat the cloud posed to computing wasn't privacy, but innovation--or a lack thereof:

This freedom is at risk in the cloud, where the vendor of a platform has much more control over whether and how to let others write new software. Facebook allows outsiders to add functionality to the site but reserves the right to change that policy at any time, to charge a fee for applications, or to de-emphasize or eliminate apps that court controversy or that they simply don't like. The iPhone's outside apps act much more as if they're in the cloud than on your phone: Apple can decide who gets to write code for your phone and which of those offerings will be allowed to run. The company has used this power in ways that Bill Gates never dreamed of when he was the king of Windows: Apple is reported to have censored e-book apps that contain controversial content, eliminated games with political overtones, and blocked uses for the phone that compete with the company's products.

When I first read Zittrain's words, I was concerned that he had a point--that the future of software would be a few big platform owners controlling user experience and functionality much the same way that Apple has for both the Mac and the iPhone. Where would the next radical disruption come from if none of the platforms would allow disruption?

However, my eyes were opened a little bit last week when I met with Paul Albright and Tom Fischer, CMO and CTO respectively of a business productivity software vendor called SuccessFactors. I went to the meeting expecting to talk cloud, hearing something about how SuccessFactors was going to change the cloud landscape. I'm not a business process guy (anymore), and I thought I was going to be bored to tears by Albright's explanation.

Instead, SuccessFactors wanted to talk to me about what they claimed was a new class of business software--one that would greatly improve business productivity. They called it "business execution software."

My eyes rolled.

To my surprise, however, what I found appeared to be a very innovative way of dealing with organizations, their goals, and their measurement. Unobtrusive, the new SuccessFactors business execution software and its related SuccessCloud SaaS (software as a service) offering aim to leverage the company's extensive experience in business performance measurement and create a real-time monitor of business execution against goals.

Sounds innovative to me.

(It is important to note that SuccessFactors isn't a "pure" SaaS play, but the SuccessCloud services are critical to the business execution story, so it qualifies as a SaaS cloud to me.)

So the question arises: why would one of the most successful SaaS offerings--if not the most successful--work so hard to disrupt the way performance measurement was done? And are there any guarantees that this innovation will continue if cloud computing becomes a dominant paradigm?

The answer came to me this weekend as I contemplated how to measure the SuccessFactors story against Zittrain's prediction. Innovation in SaaS, and probably in PaaS (platform as a service) and IaaS (infrastructure as a service) as well, is driven by competition--the same competition that drove shrink wrap vendors to innovate in the past. However, SaaS has an advantage: upgrades are easier, and all customers are guaranteed to upgrade at the same time, enabling rapid, iterative development and deployment.

Think the barrier to build and release an alternative is insurmountable? Think again. If an entrepreneur thinks they can beat SuccessFactors at their own game, they can build their alternative on Amazon Web Services, or Google App Engine, or Microsoft Azure, or any of a number of cloud platforms and infrastructures. They can build their own SaaS business against that software, or they can simply make the image/code available to be replicated by whoever wants their own instance. The important thing is: the fact that SuccessFactors owns their own data center gives them little advantage.

In the end, it is the ability to deliver application functionality that makes a cloud desirable, not simply the technology used to deliver functionality. So, in the enterprise SaaS category at least, innovation remains alive and well.

[t8]

I am not sure if innovation will suffer compared with innovating on a proprietary computer OS such as Windows. Remember Netscape. The owner of the Windows platform put them out of business. At least the Web as a platform gives everyone a fair go.

[glamourati]

Innovation, closed/limited API's, programming languages, data ownership, vendor-lock in, privacy, etc. are no longer an issue with the advent of Open Platform as a Service: http://www.openplatformasaservice.com

[enovikoff]

One way to look at Cloud Computing is that it democratizes computing, or at least the access to it. On face value, this should spur innovation by reducing barriers to providing solutions to customers on a computing platform. That's why I was surprised to see this discussion, but I chalk it up to potential confusion about the definition of Cloud Computing.

As we saw today in Vivek Kundra's speech about federal cloud computing initiatives, most people think of cloud computing first and foremost as applications delivered across the web - in fact, they confuse cloud and SaaS. If you look at cloud this way, then you can come to the conclusion that the closed "cloud" SaaS platforms from the largest vendors (SalesForce, Google, etc.) have a stifling effect on innovation because they have a price and scale advantage that smaller companies can't match.

On the other hand, if Cloud Computing is viewed as scalable, pay-as-you-go computing delivered over the web from shared infrastructure, irrespective of the level of abstraction at which it is delivered (Infrastructure, Platform, or Application), then you can realize that an innovative company can leverage infrastructure services from the cloud together with their own software to deliver a "Cloud" product that has the same characteristics of "cloudiness" as Google or Salesforce offer. And they can do it without injuring themselves with the economics and risk of creating their own datacenter, which is a competitive advantage for them. At a minimum, it makes it easier for a new company to compete with the cloud "old guard." So in this sense, Cloud Computing encourages innovation.

I think the key to leveraging cloud computing for prospective (and current) SaaS vendors is to choose a platform that doesn't stifle their innovation. The broader the scope of a product and the greater the control over the platform that is necessary to deliver the end service, the lower in the application delivery stack you should go to deploy your application. But it no longer requires going all the way to the point where you effectively drop a server onto your foot (ouch!) in the process of rolling out your service. In particular, there are cloud providers that deliver cloud infrastructure within the paradigm of a virtual private datacenter, so that you can enjoy many of the benefits of a purpose-designed physical datacenter while still leveraging the advantages of cloud computing.

-Eric Novikoff
www.primacloud.com

[john_mjhm]

Though provoking ideas. What came up for me was the parallels between old Apple vs PC/Windows market. Companies that bundle IaaS and PaaS (e.g. Google) are like Apple which sell the hardware and OS as a unit, while separately purchased IaaS and PaaS (e.g. Amazon with VMware) parallels the PC/Windows model. Depending on how apt this analogy is and how far we want to carry it it we can hypothesize that: 1) There is room for a few stable configurations. 2) The unbundled model will dominate with one key PaaS vendor. 3) There will be antitrust issues with this vendor. 4) IaaS will become a commodity business. 5) Open source PaaS will appeal to many companies that want or need highly customized systems.

Some of these are better guesses than others, but I think the analogy is worth expressing as a way to help sort out who the players are, and how they may ultimately fit.

[wattersjames]

Thanks for keeping this important issue alive.

Jonathan is a really bright guy. I'm actually talking to him about doing a follow on discussion sometime it would be great to have you join in. I really think he was most alarmed by walled garden style application development environments like Facebook...but let's see how his assessment has changed since that piece.

I think applications will definitely continue to innovate, and while they may get more niche and specific--something John Furrier called the 'colonization of the web'. Where I get more curious is what server/storage/network HW will do in the cloud world. As the pressure to adhere to strict standardized stacks and volume increases will that kill differentiated value ad? I know in servers it did outside of Intel..no answers just watching that carefully, esp storage which has the most margin to loose and the threat seems to be more immanent.

[Millo_Avissar]

Cloud services are shortening the path for innovative individuals.

for that only, I expect that cloud services will boost innovation.