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:
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.
If any class of financial-services firm should have become extinct in 2008, it's the hedge fund. Hedge funds bled $154 billion in 2008, according to Lipper Hedgeworld, with 1,500 hedge funds closing shop, as reported by The New York Times.
Amazingly, however, 659 new hedge funds launched amid this financial bloodbath, and these new hedge funds are looking to build high-performance trading platforms on the cheap, a trend that bodes well for Marketcetera.
Hedge funds need to save money. Who knew?
It's important to remember that today's aren't yesterday's spendthrift hedge funds. I spent the morning with a friend who left a large financial-services firm to join a small, $250 million hedge fund in June. He represents a new demographic in the hedge fund world, one that cares about fund performance and cutting fund costs.
A lot of hedge funds still in business saw their top traders leave when the economy imploded, only to set up new funds. These new independents couldn't make money at the old firms because their performance was so underwater, it would take years to get back enough in positive gains to start cashing in on performance fees. Meanwhile, fund sizes under management began shrinking, with redemptions and fees getting slashed in the process.
This means a new breed of leaner hedge fund is rising, hedge funds that arguably could spend lavish sums on trading platforms but learned enough from the market implosion to save money wherever possible.
Marketcetera fills this need, particularly now, with its hosted offering. I've covered the company before but continue to be impressed by its speed of innovation.
The company launched Marketcetera 1.0 in January 2009, then hit version 1.5 in April 2009 (adding support for multiple traders and some key data feeds and real-time analytics), and now, in June 2009, the company's open-source trading platform is sitting on the NYSE's high-performance cloud.
Pretty impressive.
Equally impressive is where the company expects to take open source next, as can be seen in this YouTube video. The proprietary-software industry serving hedge funds and other financial services companies just got a wake-up call.
Follow me on Twitter @mjasay. Perhaps if enough people follow me, I'll be able to afford to lose an investment in a hedge fund.
For all the hype around cloud computing, two big issues continue to keep CIOs from feeling safe participating: security and interoperability. Red Hat, by announcing its Premier Cloud Provider Certification and Partner Program and Amazon's entry in that program, hopes to allay these concerns and claim for itself a significant percentage of the money set to pour into the cloud-computing gold rush.
For the past five years, CIOs have given Red Hat top ranking for value. A significant part of this value, as Red Hat CEO Jim Whitehurst revealed on Red Hat's first-quarter earnings call, is the company's ability to corral a complex array of third-party software vendor certifications and package them into the Red Hat Enterprise Linux platform, giving the CIO peace of mind that whatever the application, it will "just work" on RHEL.
Now Red Hat wants to bring that peace of mind to the cloud, effectively giving CIOs a way to follow the Red Hat brand well beyond the four walls of their data center into public cloud offerings like Amazon Web Services, and then back to their own private clouds, if they so choose.
With over 3,500 applications certified to work with RHEL, and likely thousands of others that haven't sought formal certification, Red Hat is offering CIOs a safe way to extend their computing to the cloud. Intriguingly, it's likely that only Microsoft can make similarly potent claims, given its own application ecosystem and core infrastructure that can be used to power cloud computing.
Red Hat and Microsoft, duking it out to be the center of the cloud.
The two companies bring a very different mindset to cloud computing, not the least reason being that Microsoft's cloud offering, Azure, also competes with the very cloud providers it hopes to enable. Red Hat is not competing with its partners.
Red Hat's strategy is founded in choice, as I discovered in a call with Mike Evans, Red Hat's vice president of Corporate Development, who has been heading up Red Hat's cloud-computing efforts.
Mike Evans, VP of corporate development, Red Hat
Q. Red Hat isn't one to try to hang out with "the cool kids," just because they're cool. Why is Red Hat getting into cloud computing now? What do you hope to accomplish?
Evans: Some may not remember, but Red Hat has actually been involved with cloud computing since at least 2007, when we announced we were offering RHEL in Amazon's Elastic Computing Cloud (EC2) service. During that time we were fine-tuning our cloud offering, not only technologically but also from a support and business model perspective. Cloud computing is a fundamental shift in how software gets delivered, and it took roughly 18 months of largely beta testing to get to a point where we felt we had an offering that could live up to Red Hat's reputation for quality and service.
During that beta period, we spent a lot of time talking with CIOs, trying to understand their concerns with cloud computing and how Red Hat could overcome them. CIOs have two primary concerns with cloud computing--security and interoperability--but also worry around SLAs [service-level agreements], compliance, and more. The area where Red Hat felt like it could have the biggest immediate impact is on interoperability.
There are three levels of interoperability: data formats, management and measurement, and applications.
Data-format interoperability is the lowest level, and basically means, "Once I'm running my application with Cloud Provider X, can I get my data out and move my application to Cloud Provider Y?" This turns out to be non-trivial to overcome if different cloud providers run on different "substrates," or infrastructure components like operating system, application servers, etc.
Then there is the management and measurement piece. Once IT starts working with a given set of tools like Hyperic for managing its cloud assets on, for example, its Rightscale cloud, will it be able to continue using these same tools if it moves to a private cloud or Amazon cloud? A CIO needs to know that its tools investment will follow it from cloud to cloud. Again, this is difficult when switching between disparate cloud "substrates."
Finally, interoperability is a question of application portability. How can a CIO be sure that an application written for a Google cloud will work with Salesforce, Amazon, or another cloud?
At the macro level, Red Hat and open source can break down these interoperability barriers. We can't hide behind proprietary APIs. It's in our DNA to be interoperable.
It's also in cloud computing's DNA. Today, virtually every cloud-computing service, with the exception of Microsoft's, is built using open-source software. This works to Red Hat's advantage, because the world is already building cloud computing on Linux, for example.
For its part, Microsoft, too, will need to eventually capitulate to open source because it simply won't be able to keep up. Imagine having to rewrite all of the great open-source cloud software like Hadoop. How can Microsoft do that and remain competitive?
Why Red Hat? What role does your certification program play in all this?
Evans: Red Hat is firmly positioned to take on CIOs' core concerns with security and interoperability. With JBoss, RHEL, and our virtualization offerings, Red Hat already provides the trusted low-level infrastructure, or "substrate" as I've called it, upon which many CIOs depend. Given that we believe most cloud-computing involvement, at least initially, will be in private clouds, it's important that CIOs feel they can trust their cloud infrastructure. Red Hat delivers that trust.
We want, however, for CIOs to feel that they can move to public clouds like Amazon Web Services with confidence, so this certification program offers cloud-computing vendors a way to tell reluctant CIOs, "This cloud is safe for you." Our business model is founded in choice, as CIOs know. We're looking to make clouds safe, not a new way to lock them in. This new certification program is a significant step toward making cloud computing a reality for many CIOs that would otherwise be too nervous.
We're also offering a great way to bring confidence to ISVs that don't want to have to rewrite their applications for all the different cloud-computing providers. One aim of this certification program is to provide a certified, common substrate to which ISVs can write their applications. Many ISVs will find that the work they've already done to certify to RHEL will work just fine with RHEL in the cloud. JBoss, for example, worked "out of the box" when we ran it in the cloud for the first time.
Finally, CIOs are concerned about getting support and security updates for their applications and workloads, whether running on private clouds or public clouds. CIOs aren't dumping their private computing infrastructure in a mad rush to public clouds. They want good ways to leverage both. This Red Hat program certifies select cloud providers that have a strong support, technical, and business partnership with Red Hat, giving CIOs confidence to move into the public cloud.
In these ways, Red Hat is taking the complexity and risk out of cloud computing for end customers, ISVs, and cloud providers. We spent 18 months making the cloud work for Red Hat, and now want to make those efforts available to others through this certification program.
Follow me on Twitter @mjasay.
Microsoft CEO Steve Ballmer had some provocative prophecies to share with the Cannes Lions International Advertising Festival in France, declaring that within 10 years all content will be online.
There won't be newspapers, magazines and TV programs. There won't be personal, social communications offline and separate.
But will there be Windows?
After all, the trend Ballmer spots in the media world is almost exactly the same thing that is roiling the software markets as software shifts to subscription-based cloud computing, a weak area for Microsoft but a strong one for Google.
Yes, Microsoft has Azure, an attempt to blend cloud services with on-premise software. But its cloud story remains a bit complex and the company doesn't seem overjoyed to be telling it.
After all, it has billions of dollars of revenue tied up in the old world of on-premise software installations. Who can blame it for dragging its feet on the way to the cloud?
Ballmer correctly noted at the conference that media companies have yet to figure out how to make money online. I guess it takes one to know one.
However painful it might be, Microsoft, like the print media that Ballmer eulogizes, must change. Microsoft must get online, and much faster than is comfortable. Otherwise it stands to lose to Google which has no built-in dependency on on-premise deployments.
Follow me on Twitter @mjasay.
Open source has long flourished on Wall Street as financial services firms have sought competitive differentiation by tweaking open-source software for enhanced performance and functionality. Wall Street was the first sector to buy heavily into Linux, and it has also welcomed a host of other open-source infrastructure projects.
Indeed, Wall Street adoption has reached the point, in the words of senior Accenture executive Lloyd Altman, that open source has become a mandate for cash-strapped financial services firms tasked with doing more with less.
I've seen this in my own business: open-source applications are suddenly the less risky choice, given the need to get more for less.
But the more dramatic shift for Wall Street right now is that it is considering open-source alternatives for fundamental, industry-specific applications, applications like Marketcetera's open-source trading platform, which I've called "a lifeline to the hedge fund industry" because it enables the industry to become more efficient and more productive. REvolution Computing, Esper, and others are also benefiting from this shift.
Cost may be a primary driver for the shift to open source, but as the managing director of Technology Risk Management at Bank of New York Mellon told me, open-source software has become the innovation platform of choice for financial services companies.
Marketcetera's Graham Miller explains this concept as it relates to his company's trading platform:
We've built out a platform product that provides out-of-the-box components for market data, signal analysis engines, market connectivity and user interface capabilities to exchanges, ECNs, brokers and lots of different destinations.
The key differentiator with a proprietary platform is you're limited to the kind of usage and the kind of customization that the vendor has forethought. If the vendor lets you change the fonts and colors on the EMS, then that's the limits of the flexibility on the systems, whereas an open source offering is really unlimited on what you might integrate with it and what features you might be able to add.
In other words, open-source tools like Marketcetera's put the customer in the driver's seat, and charge a lot less for the privilege. This is a recipe for success in any economy, and particularly in this recessionary economy.
Wall Street was an early adopter of technologies like Linux, JBoss, and more infrastructure software, and has been a key constituency for open-source applications. As it signals a move to replacing core, industry-specific business applications with open-source alternatives, is it also foretelling a macro move by other industries to vertically focused, open-source solutions?
I suspect the answer is "Yes."
Follow me on Twitter @mjasay.
Please see the response from Wolfram|Alpha at the bottom of this post.
One thing has become clear: to succeed on the Web and in the next generation of software, you need to invite, not dissuade, outside participation. Tim O'Reilly calls it an "architecture of participation," but whatever you call it, the best software strategies are those that encourage outside contributions, rather than discourage it.
This makes Wolfram Alpha's terms of service mind-boggingly backward at best, and troubling at worst. Some have pointed to the quasi-search engine's sometimes weird results as a reason to give the service a pass, but there's a far more fundamental reason to reject Wolfram Alpha , as Groklaw suggests.
Wolfram Alpha demands citation when using the results of its "searches," which is a distinct departure from Google's "use pretty much as you please" attitude, and will almost certainly curb the appeal of Wolfram Alpha, no matter how good its output becomes. Groklaw writes:
Wolfram's Terms of Use are not at all what I would expect from a search engine, probably because that isn't exactly what Wolfram Alpha is providing. It's a computational service, at least in some cases providing computational output from various sources of data that perhaps never existed until you asked your question. So, they claim copyright on the results and require attribution. That's fine with me, so long as the information provided really is uniquely theirs and not just the answer to what is meaning of life and everything, but it is different from what I'm used to from Google and other search engines, so it is counter-intuitive, something to be aware of before I include Wolfram Alpha output in a presentation on Groklaw or in a book.
In other words, Wolfram Alpha requires: "If you make results from Wolfram Alpha available to anyone else, or incorporate those results into your own documents or presentations, you must include attribution indicating that the results and/or the presentation of the results came from Wolfram Alpha." It's a fair request, but it may not be a reasonable request. Not if Wolfram Alpha wants people to actually make widespread use of the service.
Groklaw concludes that this requirement "means Wolfram Alpha will never replace Google," which is absolutely correct. Even if Wolfram Alpha delivers better "search" results, the burden of figuring out and delivering proper citation is going to keep people using Google, which doesn't make the same fetish of proclaiming its ownership of search results.
Wolfram Alpha may well prove to be the best computational search engine on the planet. But until it learns to lose the heavy hand of enforced citation, it's going to struggle to become a first-choice search tool.
UPDATE @ 12:48 PT. Wolfram|Alpha's Theodore Gray contacted me with the following commentary on my post above.
Hi, I'm the person who wrote most of the language in the Wolfram|Alpha terms of use, and I want to correct a couple of things you got from Groklaw.... There are two basic confusions they have perpetrated: First, Google does copyright its results pages just like we do in all comparable cases (e.g. images.google.com, news.google.com, etc).
And second, Wolfram|Alpha is not a search engine: We don't return "search results", we generate original content including plots and graphs. A more comparable situation would be Google Maps, which Google claims copyright on just like any other map provider. Similar, look at pretty much any site that generated financial trend charts, weather charts, you name it, they are always copyrighted. We are not doing anything more aggressive or grabby than Google or other widely used websites: Groklaw simply got it wrong.
I would be happy to answer any further questions you might have, but please, if you're going to criticize my beautiful terms of use language, please at least read it carefully first, and understand that it's not talking about search results. I'm happy to entertain criticism, but not if the starting point is that we're more restrictive than Google, because that's simply not the case.
My response? This misses the point of my post. As I wrote back to Theodore:
Thanks, Theodore. I quoted your terms of use directly - not sure how I can do more than that? Reading Groklaw's take and your note below, I stand by what I said. I absolutely think you have the *right* to require attribution, and I understand the reasons for doing so....
My argument is that by insisting on this, or at least not making it brain-dead easy for your users, you're going to a) make it difficult to enforce because you'll spend all your time chasing infringers and b) induce people to try to use an imperfect replacement for your service (like Google or other) because citation becomes too cumbersome.
You can resolve a and b by simply making citation automated in some way. I would be absolutely for that: I'd love to use results from Wolfram|Alpha in my work, but I doubt I'm going to want to chase down the citation every time. I don't think you want to burden "distribution" of your results: I think you therefore need to find a way to make it easy for users to show that the results came from your service, without making them do all the legwork. I'm not smart enough to know how to do that, but I think you/your team probably are/is.
The point, in short, is not whether Wolfram|Alpha has the right to do this, but simply that doing so may negatively impact adoption of its service. It's similar to copyright assignment in open source: David Neary recently made the compelling argument that copyright assignation can hurt community adoption of open-source software, but that companies may need to do it, anyway.
It's a trade-off, but in Wolfram|Alpha's case, I believe there are ways for it to make this trade-off less burdensome on users, thereby inviting participation and not unduly hampering it.
Follow me on Twitter @mjasay.
Given the ungainly hand that has held the rudder of Facebook's privacy policies--most recently with its alleged landgrab on user data--it's welcome to now see Facebook letting its users have considerable say in how the company handles their privacy.
In a bold move, Facebook has "open sourced" its terms of service to allow users to help define them for the social-networking service.
Facebook has proposed a new set of Facebook Principles, as well as a Statement of Rights and Responsibilities, and is inviting users to comment upon them and thereby help to shape them.
Facebook CEO Mark Zuckerberg called the move "fairly unprecedented," and he's right. It's also a welcome departure from the company's ill-fated attempts in the past to foist things like Beacon on the world with little public input.
Given the amount of personal data Facebook holds, it's critical that the processes governing collection and use of that data be somewhat open. A little transparency should go a long way toward making Facebook's privacy policies palatable.
In the face of mounting criticism over its change to its terms of service, Facebook has reverted to its original terms of service, and CEO Mark Zuckerberg issued an apology. It's a nice about-face, but it also misses the point.
The point, as Techdirt intimates, is transparency.
It's hard to think that nobody at Facebook anticipated it and took some proactive steps to address the changes and attempt to allay concerns and preclude the overreaction.
Instead, Zuckerberg responds only after the fuss has been kicked up, and his explanation comes off as damage control, regardless of the motivations behind it or the TOS change...The point isn't that Facebook or any other company shouldn't change their TOS to better reflect their businesses and technology, but that in this day and age, any "minor" change is going to attract lots of scrutiny, and, in all likelihood, will be misunderstood and misinterpreted. This makes the handling of the change much more important than the change itself.
In the Internet Age, companies need to assume that any changes they make to policies, procedures, etc. will become public, and act accordingly. It's no longer a matter of what is legally required to be divulged, but what is socially responsible to divulge.
Transparency, for example, would have served IBM and Novell well in their recent layoffs. Legally, neither was required to publicly announce the layoffs because the number of employees affected wasn't material to the business. But "material" is in the eye of the beholder, and by not talking openly (inside or outside the companies) about the layoffs, both Novell and IBM ended up fanning the flames of rumor. It's unrealistic to expect such events to happen quietly: the Internet is too noisy.
The point is transparency--doing more than the law requires one to do. The alternative is perpetual damage control, which seems to be Facebook's modus operandi. This reminds me of a comment from The Misfit in Flannery O'Connor's Good Country People who, commenting on a self-righteous but flawed woman, says, "She would of been a good woman, if it had been somebody there to shoot her every minute of her life."
I've read reports that only the media and privacy advocates care; that the terms-of-service change didn't matter to the rank-and-file users of Facebook.
This may be true, but that's equally true for just about any important (and many unimportant) issue. We rely on the media and interest groups to ferret out those things that "don't feel quite right" in politics and business.
Companies need to be more transparent. The Internet will force them to be so, but as with Facebook, transparency looks much better when it's voluntary rather than forced.
Follow me on Twitter at mjasay.
While most of the activities on Facebook count as spam or worse ("super poke," anyone?), it's likely that such friending and poking was intended to be private. Recently, however, Facebook changed its terms of service to ensure it has perpetual rights on personal content, including content deleted by its users, as The Consumerist reports:
You hereby grant Facebook an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to (a) use, copy, publish, stream, store, retain, publicly perform or display, transmit, scan, reformat, modify, edit, frame, translate, excerpt, adapt, create derivative works and distribute (through multiple tiers), any User Content you (i) Post on or in connection with the Facebook Service or the promotion thereof subject only to your privacy settings....
You may remove your User Content from the Site at any time. If you choose to remove your User Content, the license granted above will automatically expire, however you acknowledge that the Company may retain archived copies of your User Content.
Facebook has always retained the rights to profit from its users' content, but now it retains the right to use old content that its users may have deleted.
Google has had its own problems with user privacy, but this Facebook move calls into question the wisdom of clouds or, rather, storing one's data in others' Web services like Facebook. We need to come up with new licenses or new mandates for open data in the cloud. Facebook shouldn't own our data.
Follow me on Twitter at mjasay.
Embedded in the news that Hewlett-Packard plans to cut 24,600 jobs from its roster in an effort to make its EDS acquisition work, was this interesting tidbit from its call with analysts, as ZDNet captured:
One of the things HP says it wants to offer with its portfolio of offerings--across the board in hardware, software and now services--is flexibility in meeting the customer's demand. CIOs today are dealing with...big issues (like) needing to flip that spending ratio to less on maintenance and more on innovation...And there are choices on how to do it: buy it from HP or let HP do it for you, executives said.
Very cheeky. Though HP makes quite a bit of money from software, its real business going forward is hardware and services. In HP's mind, this means "innovation," and the more of that innovation bought from HP, the better.
In the mind of the CTO and CIO, however, innovation may actually mean open source.
I agree that enterprises should spend less money on licensing and more on tailoring software to specific enterprise needs. Where perhaps I disagree with HP, however, is on the most efficient route to get there. Open source is tailor-made for this sort of value proposition, but HP has traditionally paid more lip service to open source (beyond Linux) than it has actually done anything.
If HP is truly interested in enterprise innovation, let it commit its significant resources to deploying services and hardware around open-source software. No more licensing waste with ever-increasing maintenance fees born of lock-in to a proprietary platform. Just pure value to the customer.
How about that, HP?
