Business Tech

We hear a lot of talk about enterprises moving IT toward a shared-services model. That raises the question: Where do they think they're going?

Roughly speaking, moving to a shared-services model means adopting a centralized, standardized, streamlined approach to IT. Like all idealizations, real enterprises can only imperfectly implement it. Nonetheless, it serves as a useful goal and measuring stick. Common elements and aspirations include:

Service-oriented: IT is thought of as a provider of services to a business--or, in some cases, multiple businesses. Every IT process, asset, and outcome is understood, operated, and judged in terms of services that IT provides, and how they map to business requirements.

Viewing IT as an organization building, maintaining, and operating a collection of business services--rather than one overseeing a collection of equipment and a pile of code--is a radical departure from the historical IT-is-a-cost-center approach.

Shared and consolidated: Many organizations traditionally created IT "silos." Many formed amid line-of-business (LOB) boundaries; each LOB had its own little IT department. Others formed around technology specialties such as servers, storage, networks, mainframes, virtualization, and app development. Financial services organizations have been the most siloed; some have had nearly 100 distinct IT operations.

Unfortunately, silos fragment IT into many little IT shards, introducing gratuitous complexity and variability. One silo does things this way; another does basically the same thing, but in a different way, or with a different product. Silos don't necessarily work together well. Even when they have overlapping responsibilities, silos often work at cross-purposes to "protect" their fiefs. IT as a whole cannot enjoy economies of scale in staffing, training, procurement, and operations. Often, it's hard to even get visibility to see where economies or simplifications might lie.

A shared-services approach consolidates operations, eliminating and minimizing silos, and making them actively cooperate. This consolidation is a prerequisite to globally sharing resources and capabilities.

Standardized and simplified: Consolidation and sharing allows approaches, vendors, strategies, and procedures to be standardized. Vendors can be pared; rather than "one of this, one of that," rational vendor management can be used, such as strategic dual-sourcing. Standardization leads to competition. Less variety also means simpler. Instead of various management approaches (many of them ad hoc), "best practices" can be used. Skills can be shared. External resources, learning, and tools can be brought in, rather than homegrown. And because the systems and interfaces used are regularized, they can be increasingly automated, further simplifying the environment. Standardization and simplification is an iterative process, with each pass enabling further standardization, further simplification. Simplification, in turn, eases scaling, as well as whatever technology or process transitions are required over time.

Agile and effective: Whether you call the desired IT future state agile, flexible, adaptive, dynamic, or whathaveyou, everyone agrees that IT should operate "at the speed of business." IT should be able to wrangle both internal and external resources to design, build, and run the services the business needs.

What the business needs will change over time, given new products, opportunities, mergers and acquisitions, geographic expansion, economic upturns and downturns, and seasonal surges and quiet periods. But whatever that changing mix of needs might be, IT wants to agilely and efficiently satisfy them. That's a tall aspiration, given the relatively static, backroom support orientation of IT of old. But that is the goal of forward-looking IT.

Summing up: A shared-services model seeks to create a virtuous cycle between shared and consolidated, service-oriented, and standardized and simplified approaches in order to establish an agile and effective IT capability.

The shared-services model is a mature conception of what IT is, what it provides, and what it should be. It's not a product, nor a process, nor a methodology. It's an ideal, a target, a desired state. It organizes IT around business outcomes--and, one level down, operationally, around the services that IT provides. It requires a change in thinking, priorities, and operational style--and change is never easy. Nonetheless, we see organizations everywhere adopting large swaths of the shared-services approach--though using varied terminology, and doing so over time, at different paces, depending on their starting points and the urgency of their evolution.

Cloud computing providers have a difficult marketing challenge, in my opinion. Think about it--no matter what service model or deployment model a provider is delivering, they must differentiate their service while meeting the "commodity" needs of as many customers as possible. It would seem these businesses are stuck between providing least common denominator service capabilities and being accused of intentional customer lock-in.

(Credit: Jake Shepherd/Flickr)

From a customer perspective, it is equally challenging when one is "looking for servers and storage" and must choose between a bunch of services that essentially run Linux or Windows and store your files. How does one choose? How do the cloud providers set themselves apart in the customers' eyes?

Unfortunately, I've been inundated of late by an increasing number of cloud service announcements that lack any sense of differentiation. Hosting providers are announcing "on-demand server capacity billed on a pay-as-you-go basis." Platform vendors are simply announcing what language they support, and how much they charge for services. Software-as-a-Service vendors have the easiest job to differentiate service, as they can do so based on functionality alone if they wish, but even there some vendors struggle to differentiate themselves by anything other than the fact they run as a cloud service.

This has to change. Forrester's James Staten is telling us that clients are getting "cloud weary." I believe a lot of this has to do with the ridiculousness of "cloudwashing" that we've seen for some products and services, and the relative monotony of pitches for things are arguably cloud services, especially in the IaaS space.

Below is a list of five key categories of competitive differentiation for cloud computing. It is not a complete list, nor do I think all vendors would look at this question in the same way. However, if you are looking to acquire cloud services, these are the elements I think you start with as you evaluate any service, be it SaaS, PaaS, or IaaS. If you are selling these services, consider this an outline for your next requirements document.

1. Ease of operations. Yeah, I could have kept things simple and just said "ease of use," but "use" in the cloud computing service sense is much more than how humans interact with the system. For instance, how does a company with hundreds of applications in the cloud strewn across a dozen or more vendors monitor and manage those applications to manageable service levels?

   And yes, phenomenal user interfaces will set some providers apart from others, but it will be the "behind the scenes" interfaces--such as APIs, publish and subscribe event streams, transparency and auditability systems, etc.--that will make the most significant differences between providers.

   Will many of the aspects of "ease of operations" be standardized? Sure. The Open Cloud Computing Interface (OCCI) is an example of an attempt to deal with a large part of this challenge. However, differentiation will still be possible through extensions, quality of features and--yes--some custom interfaces.

2. Configurability. One of the things about today's best-known cloud computing environments is that they are essentially infrastructure and software architecture frameworks that dictate a lot about the application architectures that can be built on them. For example, the Amazon Web Services Elastic Compute Cloud (EC2) allows each server to be on one widely shared network. No separation of management traffic from DMZ traffic here (at least not explicitly from the point of view of the OS).

   No, application architects are instead forced to consider how they would build and operate their application in the infrastructure architecture given them. Good books have been written with this in mind, but ultimately the complexity of the problems we wish to solve with information technology will dictate the amount of configurability we require from our infrastructure systems--even if they are delivered as a service by a third party.

   The low-hanging fruit here for IaaS vendors are things like network architectures, data storage options, server options and so on. Also useful here are services that enhance the infrastructure, like security systems, message queueing, and storage tiering.

3. Performance. One public relations contact I got recently was quite interesting. A hosting company sent me an email indicating that they have an increasing number of customers coming to them from AWS, and finding that their applications actually perform better in the former than the latter. I haven't confirmed the truth of that claim, but it is an interesting claim nonetheless.

   Processing speed, memory speed, storage access, read and write speeds, latency, bandwidth--these are all things that are tunable by the cloud provider, either through technology acquisition, or through superior engineering and operations expertise. And, as with servers and storage, the fastest speeds per dollar spent will generally win.

   I would not be surprised if we saw a cloud performance war, similar to the RDBMS benchmark wars, especially in the IaaS category (though it would make sense in the PaaS and SaaS categories as well).

4. Reliability and security. I debated combining these two elements, as they represent different aspects of the same concept. However, that core concept--risk mitigation--is at the heart of so much of the decision over whether public cloud services are better than private data centers, that I think they will often be viewed through the same lens.

   Companies will need time to demonstrate differentiation in both of these categories, but features can be introduced today to increase the transparency of both operations and security in any provider. Redundant distributed data stores, "early warning" DDoS detection events, auditability APIs; these are all features that would "open the kimono" in a controlled fashion and increase customer's ability to trust that their provider has made the protection and availability of their data and functionality a core competency.

5. Customer service. After I wrote my closing post for the "big rethink" series, Kevin Magee, COO of ZeroTouch IT, wrote a post in which he noted several additional predictions for the effect of cloud computing on IT. Most notably, he pointed out that cloud will change "[h]ow Vendor Relationship Management will become a key discipline in IT organizations." Amen, brother, and I completely agree.

   In a tongue-in-cheek post from early 2008, I noted that system administrators should "get good at waiting on hold for customer service representatives." In reality, there is truth to that, but the providers have a lot of room to craft that experience.

   One thing they can do is advance the technical leading edge in terms of customer self-service and operations transparency. (Hmm. Has anyone else noted how often 'transparancy' comes up in this discussion.) I noted some ideas about this in a previous post. Smart providers will find others.

Cloud computing is one of those truly disruptive market opportunities that makes or breaks companies. The winners will find ways to differntiate. Those that don't almost certainly can't win. So, please, no more press releases that fail to differentiate in any meaningful way.

Dell announced on Tuesday that it has completed its $3.9 billion offer to buy Perot Systems. By accepting Perot's stock at $30 per share, Dell will own more than 90 percent of the company.

Dell's takeover of Perot has created a new business unit called Dell Services, which will provide IT services to customers. Dell's reach will now extend into technology hosting, consulting, and application outsourcing, among other segments.

Former Perot Chief Executive Officer Peter Altabef will become president of Dell Services, reporting directly to Dell Chairman and CEO Michael Dell. Altabef has steered Perot for the past five years as the company expanded its operations into more than 25 countries and captured sales of $2.8 billion in 2008.

"Dell Services will be a powerful organization with the extensive capabilities and global reach to address the needs of organizations of all types," said Altabef in a statement. "The Dell and Perot Systems integration teams have been extremely productive in their planning, and we are ready to work on behalf of all our customers."

Dell is looking at Perot to expand its niche in technology consulting and other services, combining its own large customer base with Perot's vast IT services. Also appealing is Perot's huge market in hospitals and medical facilities, a growing segment driven by the need to streamline and modernize the health care industry.

Dell revealed its intent to buy Perot Systems on September 21. No date was announced for completion of the acquisition, but Dell said it expects it to be done promptly.

Expanding its cloud-computing storage services to a higher level, Amazon.com unveiled a new option called Amazon RDS for companies that want to store information in a database on the other side of the Internet.

The suite of Amazon Web Services (AWS) already included a database option called SimpleDB, a basic database with its own interface standard for storing data and retrieving it. The Amazon Relational Database Service, in contrast, uses a more standard database interface, embodied in this case in an online implementation of the open-source MySQL software, the company said Monday.

"With Amazon RDS, you get full native access to a MySQL database," specifically, version 5.1 of the Sun Microsystems technology, the company said on its Amazon RDS site. "This means Amazon RDS works with your existing tools, applications, and drivers. You can port an existing database to Amazon RDS without changing a line of code--just point your tools or applications at your Amazon RDS DB instance, and you are ready to go."

Amazon raised minimized hassle and increased flexibility as reasons to use the service, which is currently in beta testing.

"Every hour that you don't spend fiddling with hardware, tracing cables, installing operating systems, or managing databases is an hour that you can spend on the unique and value-added aspects of your application," Jeff Barr, the company's Web services evangelist, said in a blog post. "I should point out that RDS enables a lot of really enticing development and test scenarios. You can set up a separate database instance for each developer on a project without making a big investment in hardware."

With its years-long effort, the Net retailer has built Amazon Web Services into a formidable presence in the information technology world. Competitors include Google App Engine, a computing foundation that can run Java or Python programs on Google's own BigTable database technology, and Microsoft's Azure, which is set to offer access to Windows servers in the cloud when it formally launches in November.

One potentially interesting rival is Oracle, already a giant in the database market and, if it can overcome European regulatory concerns, the future owner of MySQL assets. Because MySQL is open-source software, though, anyone may use and modify it, even without its copyright holders' permission.

The biggest competitor to this model is doing things the old way, with companies running their own computing infrastructure. Cloud computing poses security and trust issues for many companies considering whether to put their data and business applications on somebody else's computer systems. But researchers such as Gartner, an influential but not radical analyst firm, now recommend that companies look seriously at cloud computing.

Amazon is working on greater robustness for Amazon RDS. It offers automated backup, and it later plans to offer a "high-availability" option at no extra charge, with which customers can create a separate instance of a database in a different geographic region.

As with all services on AWS, Amazon RDS is priced on an as-used basis--with per-hour charges according to the server memory requirements of the database: 11 cents per hour for a small database of 1.7GB of RAM; 44 cents for large, or 7.5GB; 88 cents for extra-large, or 15GB; $1.55 for double extra-large, or 34GB; and $3.10 for quadruple extra-large, or 68GB. There also are charges for the size of data stored, the number of input-output requests, the amount of data written to the database, and the amount of data read from the database.

For years, Red Hat sat unopposed at the top of the CIO Insight Vendor Value study. In 2008, however, Google pushed Red Hat aside with its low-cost, easy-to-use enterprise applications. This year, Red Hat has come roaring back to share the top ranking with Google.

Could this be a sign of CIOs' restive relationships with traditional vendors and an increasingly insatiable appetite for the cost and ease-of-use advantages of open source and software as a service/cloud computing?

The answer is almost certainly "Yes." It is telling that old-school vendors like IBM (ranked 20th overall), Microsoft (25th), Novell (29th), and Oracle (35th) are so far down the CIOs' list.

It is equally telling, however, that it is with these apparently less-preferred vendors that CIOs spend the vast majority of their IT budgets. Or perhaps that's the point? In other words, CIOs spend with such vendors today because they have to, but given their druthers, they're going to invest more money in Red Hat and Google going forward.

Red Hat and Google are still rounding errors in the overall IT spending picture, but CIOs seem to be signaling an appetite for more. It's not about reducing lock-in and other colorful marketing phrases, either: it's about great, easy-to-use software at a compelling price.

You know, the very thing that Microsoft used to win CIO plaudits for delivering.

From the report:

CIOs are more likely to try software as a service (than traditional, packaged software), which is better understood and simpler to use and requires no upfront investment in hardware or software.

This is the heart of the CIO uprising. And it's why low-cost, high-value companies like Intel (ranked first overall), Cisco/WebEx (ranked sixth and 11th, respectively), and Sun (sixth) are climbing the charts.

For now, however, Google and Red Hat rule the roost in the Software category of CIO Insight's annual study:

Top 11 ISVs for Value in Software Category

(Credit: CIO Insight)

Both Red Hat and Google essentially offer the same thing: great software on a subscription basis. While this model often offers lower prices than competitors, it's important to note that "free" is not the value proposition here. (If it were, for example, Red Hat customers would be leaving in droves for Red Hat Enterprise Linux clone, CentOS. They aren't.)

No, the value proposition is customer control via the subscription model that enables less costly ways to buy into the software, and to turn off maintenance costs, if desired.

It's a winning formula, one that more vendors should consider adopting. Today IBM, Microsoft, and Oracle command the majority of IT dollars, but this survey suggests a rebellion is underway. Inertia can only support the traditional vendors for so long.

Amazon Payments today launched a new service that brings the company's payment processing tools to mobile devices. Amazon Mobile Payments Service (MPS) includes a set of APIs (application programming interfaces) that allow mobile developers and merchants to provide payment options to their customers within mobile Web sites and applications--including the convenience of Amazon's 1-Click checkout system.

There are already a number of mobile payment providers, but Amazon is the big dog of the e-commerce world with an enormous amount of customer accounts already in use. This could be an excellent option for companies that offer mass-market mobile applications and are looking for ways to easily accept payments.

The service will automatically detect the request origin, meaning a Web or mobile browser, or a mobile application so that developers don't need to re-work their applications.

Microsoft has released a free trial of its cloud-based relational database.

The community technology preview (CTP) of SQL Azure Database was made available Tuesday, along with a preview of an SQL Server driver for building PHP applications for the Azure platform.

The Azure Services Platform, first announced at a developer conference last year, is Microsoft's move into the rapidly growing cloud-computing market. As with all cloud platforms, the idea is to provide scalable, hosted services on a pay-per-use basis, running remotely in Microsoft's data centers.

(Credit: Microsoft)

SQL Azure Database, a key component of the platform, is a rival to Amazon.com's SimpleDB. Unlike that service, however, it is a relational database.

Other components of the Azure Services Platform include Windows Azure for running applications and storing data, .Net services for linking the applications to the distributed infrastructure, and Live services for linking Azure to Microsoft's Live web applications.

"With SQL Azure, developers building Web 2.0, ASP.Net and PHP applications can use familiar tools and data models to develop on a pay-as-you-grow, secure, scalable and highly available database service at minimal infrastructure cost," Microsoft senior program manager David Robinson wrote in a blog post Tuesday, adding that "there are really no comparable solutions available today."

SQL Azure's relational data model supports Microsoft and Sybase's proprietary extension to the SQL database language, Transact-SQL. Robinson said there is a high degree of compatibility with SQL Server, allowing for easy migration of business and Web applications to the cloud.

The free trial of SQL Azure Database will last until November, when the service is fully launched. There will be two editions, a Web Edition that stores up to 1GB of data for $9.99 per month, and a Business Edition that stores up to 10GB at $99.99 per month.

David Meyer of ZDNet UK reported from London.

Amazon.com is blaming the latest outage to hit its Elastic Compute Cloud service on a lightning strike at one of its data centers.

In a statement on the Amazon Web Services "health dashboard," the online retailer and cloud-computing provider addressed concerns from some U.S. customers whose EC2 service had been disrupted around 6:20 p.m. Pacific Daylight Time on Wednesday.

"A lightning storm caused damage to a single Power Distribution Unit (PDU) in a single Availability Zone. While most instances were unaffected, a set of racks does not currently have power, so the instances on those racks are down," the company said initially on the health dashboard.

The disruption lasted about seven hours, during which time Amazon asked any affected customers to use alternative parts of the network. "Users with affected instances can launch replacement instances in any of the U.S. Region Availability Zones or wait until their instance(s) are restored," Amazon said.

The company later attributed the outage to a problem on one "availability zone" and that the outage was localized. "We would like to reconfirm that this issue was limited to the single Availability Zone where this power issue occurred, and that a very small percentage of instances in that AZ were affected; this was not a generalized service issue," Amazon said.

Despite acknowledging that Amazon had dealt with the issue fairly efficiently, one user was concerned that a single lightning strike was able to bring down the service, if only in a limited way.

"I was under the impression that your architecture had more resiliency built into it. Yes we can use multiple availability zones to help with a single point of failure, but I thought that even within a single availability zone there was not a single point of failure for hardware/power," the user posted to an Amazon forum on the issue.

The EC2 service provides customers with virtual access to Amazon's computing infrastructure, using virtual machines that can be created using the Xen virtualization platform. First launched in a limited beta in August 2006, the EC2 service went fully live in October 2008.

Not including the latest issue, the service has suffered two major disruptions during that time in February 2008 and October 2007. In June 2008, Amazon's main retail site suffered an outage that the company blamed on the complexity of its own systems.

A series of outages that have hit other online or cloud computing services including Google's Gmail and other applications over recent months have led some critics to question whether the cloud approach to computing is really capable of providing the resilience required by enterprise users.

In mid-May, Google services were hit by an outage which apparently affected one in 10 of its users. In January, software-as-a-service pioneer Salesforce.com experienced an outage that disrupted all its customers for about an hour.

Here is the string of messages from Amazon about this week's outage.

(Credit: Amazon.com)

Andrew Donoghue of ZDNet UK reported from London.

AT&T is expanding its cloud-computing efforts with its new Synaptic Storage as a Service offering for enterprise customers, announced Monday. The service will let business users save and access their data via laptops, smartphones, and other Web-enabled devices.

With cloud-based storage, businesses can tap into their data as a service without having to set up their own equipment. They pay a monthly fee for storage as they use it. AT&T plans to offer the service on a limited basis starting this month, with its eye on a larger rollout to its U.S. Internet data centers by the third quarter. Eventually the company plans to offer the service at its data centers in other parts of the globe.

"The demand for data storage continues to grow at a staggering rate, driven by companies' need for 24x7 access to business critical data," Roman Pacewicz, senior vice president of strategy and application services, AT&T Business Solutions, said in a statement. "AT&T Synaptic Storage helps enterprises get a handle on these increasingly complex storage environments, while controlling costs and improving service levels."

Enterprise storage giant EMC will provide the technology for AT&T Synaptic Storage, though both companies have agreed to co-develop and market the service. EMC will employ its Atmos technology, which uses policy-based management to control the data. Offsite business users can connect to the cloud through virtual private networks for secure access.

The cloud service is part of AT&T's effort to dive into new growth markets. The company recently announced lower earnings and sales for the first quarter of 2009, though results were higher than expected thanks to strong performance in its wireless segment with booming business from Apple iPhone subscribers.