Change hurts. But, it shouldn't be painful.

One of the major issues faced by organizations with respect to the adoption of cloud computing is how to change in order to be able to take advantage of all the benefits. This challenge is not insurmountable. In fact, we've overcome such challenges at least twice before, and even more often than that if you're an IT or telecom lifer.

If you're reading this, it's probably because you've purchased something online in the past few years. It wasn't always this easy to buy from Amazon or eBay and there was a time that online transactions were viewed with suspicion. Of course, that has been replaced with a wildly positive approach to e-commerce; some analysts are calling a record volume of transactions for this coming Black Friday.

What we're talking about here is the introduction of game changing business models and technologies: distributed computing; e-commerce; virtualization; security; outsourcing. Each of these has caused major upheaval among the brightest stars in business and on the Internet and organizations that have adopted these models and technologies all undergone a period of adjustment. And yet they all came through on top.

Cloud computing is no different. It's one of those things that scare companies because of the unknowns. Security almost always tops the list of concerns and barriers to adoption in surveys. Of course, security and governance is personal to an organization--there is no one-size-fits-all--which seems to intimidate potential adopters. Early adopters are learning that security is manageable and is improving steadily (rapidly) much as security improved in the early days of the web and e-commerce.

And, regardless of what the top dog in IT is called--CIO, CTO, VP, CEO--management is facing these same challenges today when it comes to adapting the organization to a new way of consuming IT resources. Eventually, if not already, this will become a competitive advantage; the flexibility and agility afforded by cloud computing will make leaner and meaner competitors. As with all competitive advantages, though, organizations that make the move earlier will reap the greatest benefits.

Don't cut, innovate!

The Royal Bank of Canada (RBC) has been in the news lately because of a planned layoff of a number of its IT staff. The kicker is that, before they leave, they have to train their replacements and their replacements are supposedly "temporary foreign workers" who will eventually leave Canada and go back to their country of origin (I'm not being coy; I want to keep this post a bit more general than what's been reported in the media). This, of course, has caused an uproar.

I teach a course on E-Business/Managing e-Commerce at McGill University and one of the topics we discuss in class is outsourcing and its relative advantages/disadvantages, costs/savings, etc. I've worked for an outsourcer before. I also advocate it under the right circumstances. Maybe there is a part of your operations that is not core to your business. An example of this might be server management, or some other aspect of your business for which you have no expertise such as security, or a new regulatory requirement that can be addressed by a highly specialized firm.

So, why am I on this soapbox? Because this is going to eventually become an issue for organisations who are taking or will take advantage of cloud computing and their service providers. At some point, a CIO, CFO, or VP of Finance will realise that there are cost savings associated with cloud computing and decide, "Well, we don't need an IT department of [insert number of IT staff here] people anymore, let's cut [insert number of employees to lay off here]."

This is, without a doubt, a knee jerk reaction (albeit a difficult one according to those doing the cutting) and absolutely the wrong decision. Yes, some organisations justify the cuts based on the bottom line and revenue promises to futures markets, and sometimes this is justified, but it should not be the first choice by any stretch of the imagination.

Those employees, who know your core business, have been trained by you, and are more than likely competent individuals, should be retasked. That's right, not only should you find them comparable work, but give them a goal to help create value for your customers and your organisation; these individuals no doubt have some idea(s) how to improve some aspect of your business.

[Aside: Incidentally, RBC has backpedaled and announced publicly that they would offer comparable work to the individuals affected by this latest round of outsourcing.]

The US and Canada are suffering from a drain on jobs that are leaving for cheaper climes. How do we continue to maintain living standards when decent paying jobs are being cut? The answer is to promote innovation.

The 'O' word is greatly feared by employees. It is humiliating, upsetting, and demoralizing to be 'let go', or to be told that 'the business has decided to go in a different direction' and that 'your services are no longer required'. Before getting to that point, ask them: what can you do to help the organisation; do you have any ideas that can improve our business; are our processes as efficient as they can be; can you take on an innovative new project? I think you'd be surprised by the answer.

Don't cut, innovate!

TDWI Cloud BI Solution Summit Roundup

Last week, I attended the TDWI Cloud BI Solution Summit as a speaker. I was fortunate enough to sit through some of the other presentations and I learned something interesting about the market place for Big Data and Cloud: not everyone is ready for it. This may sound like a given; American organisations are way ahead of Canadian organisations, but I found that there are still some fairly big fish out there that are still grappling with these concepts in the US.

Initially, I figured that the audience, composed mainly of senior IT people, middle managers, and executives, was up to speed with cloud computing and that its use was a forgone conclusion. This was clearly not the case.

There were questions from attendees such as:

"What is cloud BI?"
"Where is the data?"

And, a response to informal polls showed that:

• The majority of organisations represented did not have a "cloud BI solution".
• Few were considering moving their BI to the cloud.
• Licensing is still a concern.
• Performance is a concern.
• Data lifecycle management in the cloud is a concern.

So, it would seem that, while Cloud Computing (well, at least IaaS and SaaS; PaaS is coming into its own) has entered the vernacular of IT departments and some executive level suites, Big Data is still not there. Gartner has Big Data *just* entering the phase they call the "Peak of Inflated Expectations" which means that we are now looking to Big Data as a means of increasing our competitiveness without necessarily having the skills and knowledge of how to do so.

This leaves us in an interesting situation: if we can't do it ourselves, we have to subcontract to those who can. What are the costs? How is this agreement governed? If there are no stellar insights, whose fault is it? Is it even someone's fault? The fact that these questions exist is interesting because we're at the same stage we were at when the web came to prominence, when e-commerce was new, when the concept of outsourcing caught on, and more recently, as Cloud Computing became a new IT service delivery model.

The evolution of Big Data and its adoption will be interesting to follow. But one thing is for sure: look for Big Data to leverage public, low cost, commodity compute resources, and for more and more public cloud service providers to offer such services. After all, AWS has already launched such a service...

Open Letter to the Cloud Community

Over the past few years, there have been many advances in cloud computing and much effort is being made by consumers and vendors alike to make the best of what is widely considered to be the next step in e-business. However, like with every good thing, there are challenges to advancing the general knowledge and confusion largely due to misconceptions about cloud computing in Canada in general. 

There is a growing number of organizations that make use of the general lack of knowledge about cloud computing in Canada in an effort to enter the cloud computing market. The term cloudwashing has been bandied about to describe what these organizations do in their efforts to gain a share of mind with Canadian consumers. Some organizations have even taken the moniker "cloud provider" in order to describe the products and services they provide as being cloud computing; they typically offer some sort of product “as a service”. The litmus test here is whether these products and services adhere to the basic characteristics of cloud computing such as those published by the NIST. Making data available to citizens or allowing them to use that data to write an app under an open government initiative is a great idea. But those two things in and of themselves do not constitute cloud computing. Part of the blame lies with the industry at large. That said, we should concede that there are such things as "cloud based services" that have cloud computing-like properties but are not, strictly speaking, IaaS, PaaS, or SaaS. 

One thing to note, is that much of the content generated by these organizations borrows from cloud computing to justify how their offering really is cloud computing (hence the cloudwashing). This is not a problem, in and of itself, but when competing vendors approach the same customer with different definitions of cloud computing, there can be confusion resulting in a delay in the adoption of cloud computing. This, I submit is one reason (maybe low on the list behind security, GRC, vendor lock-in, and standards concerns) why adoption has lagged in Canada, economic issues notwithstanding.

Everyone is trying to move cloud computing forward in Canada. There is little doubt about its benefits, at this point. However, cloudwashing does not help the cause and results in confusion in the minds of consumers. It is this confusion that is causing the hesitation in the marketplace and hindering educational efforts. There has to be some consensus in the market about what cloud computing is, what a cloud based service is, and what is simply not within the realm.

Update on SKYY ETF: a few months in

Now that we've got a few months of trading of the SKYY ETF in under our metaphorical belt, it's interesting to see that it has dropped in price from a high of $20.58 to a low of just over $15 a share. It's currently trading at $16.97 (as of approximately 11:30AM Eastern time on Nov. 25, 2011).

The market for cloud based services doesn't seem to be slowing down. Google insight shows that searches for IaaS and PaaS still appear to be growing though those for SaaS may be waning a bit as it is a more mature market than either of the other two.

Maybe it's related to overall global market conditions, to the state of US government finances, or the performance of the tracked stocks but,ether way, it's not looking good for SKYY or its initial investors if they held it in their portfolio beyond the first week.

More on Cloud and the Environment

Obviously I've been on hiatus for a little while, mainly due to work obligations (I was Sessional Lecturer at McGill University and taught Managing e-Business to BComm and MBA students this fall in addition to my regular responsibilities). So, without further ado, I'll get on with my post.

This past fall, Jirka Danek, CTO of Public Works and Government Services Canada (PWGSC) addressed an audience regarding cloud computing, the environment, and how Canada can be a leader in this space. I've had several discussions around these points and I'm happy to see that they've been heard and are being promoted.

Essentially, Danek discussed several factors that could contribute to Canada's leadership in the cloud computing space, including:

• Cheap, green energy--Quebec has an extensive hydro-electric power generation infrastructure
• Favorable climate--by virtue of the cooler environmental temperatures, cooling costs would be lower
• Government is moving towards cloud adoption as a means of reducing its costs
• The US, one of the largest global markets, is geographically adjacent to Canada

One benefit that he neglected to mention is the trickle down effect that such an investment would have on Canada's economy; the jobs created and taxes collected would help give Canada an economic boost.

This merits the industry's attention. The cloud market will grow* to $40.5 billion by 2014 (IDC) and $121.1 billion (MarketsandMarkets) and, since the technology is evolving rapidly and doesn't seem to be a huge competitive differentiator at this time, the larger future economic profits will go to those who have leveraged the cost reducing advantages.

* There doesn't seem to be any consensus on the market size and growth among industry analysts. Evaluation is done using various estimating methods and include or exclude various segments.

Organizational Governance and Cloud Based Services

InformationWeek published a story on their site about how IT departments are 'losing ground' on cloud computing. The premise is that individuals in the organization are adopting cloud services with or without IT's knowledge and/or approval.

The article suggests that this is a security issue which, at the end of the day, it is. But, security is a part of information and organizational governance and, as such, this should be treated as a governance issue. If IT can't control usage of cloud services by the organization, is this a failure of IT or the organization? I can understand why someone would just use a credit card to get what they needed done sooner than later. However, this is no excuse for ignoring organizational business practice and compliance policies. In some organizations this would be grounds for dismissal.

Granted, IT departments can be slow. How, then, can IT help resolve this problem? How can IT be part of the solution? Clearly, employees need to be sensitized to the risks and issues surrounding their use of cloud based services in the organization and who better to do so than IT? Of course, this should not be taken to mean that IT should scare the bejeesus about of them, rather this should be an ooprtunity for IT to move closer to the employees and the business by seriously considering cloud based services and their impact on the organization, good or bad.

A great quote from the article: "Hello: it's 2010 and do you know where your data resides?"

Cloud Computing: Nomenclature Issues

The nomenclature for cloud computing, or the model for services consumed on a utility basis, has drawn much criticism and caused much confusion.

For those of you who are not aware, cloud computing draws its name from the fact that IT resources are "in the cloud", meaning that they are somewhere on the Internet, off your network. (A stylized cloud is often used to represent the Internet in architecture diagrams.) The most common term for cloud computing is the "as-a-Service" suffix: infrastructure (IaaS), platform (PaaS), software (SaaS), and storage (such as Amazon's S3). Clearly, IaaS and PaaS are derived directly from the hardware and development platforms and provide users with instances of the underlying resources on demand while storage is the use of storage media as a resource. SaaS, however, poses a problem: is software "cloud computing"? SaaS splits the community into two distinct camps: yes, SaaS is cloud computing because it is available in the cloud; no, SaaS is not cloud computing because you are subscribing to software on a monthly basis (unlike the utility model for IaaS and PaaS).

The NIST defines cloud computing as follows:
"Cloud computing is a model for enabling convenient, on demand network access to a shared pool of configurable computing resources (e.g., networks, servers, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models."

This definition leaves a bit of room for interpretation. Because of this, I propose alternate terms: "Cloud Based Services", "Services in the Cloud", or "Cloud Services". Each of these terms indicate that the services are consumed (be they IaaS, PaaS, SaaS, or storage) are located or based in the cloud and do not confuse the issue of SaaS being a compute resource per se.

While the terms "Cloud Based Services", "Services in the Cloud", and "Cloud Services" are not revolutionary, they clarify the concept and are inclusive of the various forms of cloud computing.