Why cloud computing will grow

cloud computingAn article in the Economist in 2014 noted that the expenditure on cloud applications was small compared to the huge amount business spent on IT as a whole. However, it pointed out that corporate reluctance to cloud computing was starting to be overcome.

Since April when I started my new role at Flowgear, I have become increasingly aware how strong, convincing and valuable it can be for business to embrace the cloud rather than resist it. I also attended the Gartner Application Architecture, Development and Integration Summit in London to help promote Flowgear, and heard senior Gartner analyst Andy Kyte speak on how old applications, i.e., on-premise systems, are being relegated, and even decommissioned, in favour of newer applications, which are increasingly cloud-based. His comment to me about the rate at which cloud computing was replacing some major on-premise systems was startling.

A major reason in my case for my previous ignorance and dismissal of cloud computing came from my work and background. As a baby boomer working in the ERP industry, my whole work experience was around on-premise applications, and I now realise that it was very difficult to see outside that envelope. I think it is also the perspective of many IT people of similar age and experience, and it may mean therefore that until the next generation become the decision makers, cloud computing won’t really take off. This may apply more in large businesses – in smaller ones and start-ups the Generation Xers and Millennials are already in charge.

Two recent articles on the ZDNet site have covered the topic of innovation and why cloud computing will grow. One article discussed how the enterprise technology incumbents were not seen as enabling innovation, and published survey results that showed cloud computing was the main platform for innovation.

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The other article reviewed the drivers that would make businesses move to the cloud. It will boil down to competing in a new world of business. This will mean that companies will be running:

mostly off-the-shelf enterprise software with a handful of custom-developed applications, probably containing core IP.

It’s going to take some time, but:

Enterprises will make increasing use of platform as a service, enabling developers to create web and mobile apps for any platform that integrates easily with software as a service and on-premises applications. Cloud technologies will be pervasive, with all corporate data managed using a cloud-based business model, underpinned by a hybrid cloud infrastructure.

I am now starting to wonder – I got my first experience of the enterprise software industry in the late 1990s, when ERP was beginning to come of age; within five years it was booming. I am now doing a similar thing with enterprise cloud computing; where that will be in 2020?

Is Microsoft like the renewed IBM?

In 2007 I wrote a blog that posed the question whether Microsoft was becoming like the old IBM. I used a number of cases that made Microsoft look like the IBM of the late 1980s and early 1990s – before IBM’s near demise and subsequent revival.

Now I see a blog post by James Governor who reckons Microsoft’s new CEO Satya Nadella is like IBM’s saviour Lou Gertner.

CEO Satya Nadella is increasingly looking like Microsoft’s Louis Gerstner – that is, an executive who can look at things from the customer perspective, with a truly outside-in view, and drive the cultural change needed to revitalise a company from the ground up. Nadella has a relaxed, confident demeanor that makes you want to lean in and engage, and now by extension, so does Microsoft. In terms of its corporate evolution Microsoft currently looks like IBM in the late 1990s, supporting whatever environments customers choose, but with Azure playing the role of Global Services, and the key customer being the modern software developer rather than the CIO. In other news Microsoft’s timing is pretty much perfect.

In the end time will tell, but I do believe Governor might be right.

 

Should ERP vendors enter adjacencies?

strategyThere is a tendency these days to advise that people and companies ‘focus’, and not try to do too much. Should companies stay with one set of products, or broaden out into other related areas or ‘adjacencies’?

Recently an analyst I follow on Twitter commented that SAP has spend $50billion over the years to acquire innovative products the company could not build. I can’t remember whether it was Vinnie Mirchandani or Ray Wang, but there is a Wikipedia link that shows the SAP acquisition list. The money for those acquisitions came from the annual license fees that SAP customers pay, an issue that Vinnie has said before is a concern to customers, for example here.

SAP is not alone, Oracle has also spent billions on acquisitions over the last 10 years to broaden its footprint from a database and finance applications player, to one that has its own complete technology stack.

In an era when ‘focus’ is often evoked, the question is how do executives of a company identify opportunities and prioritise goals when they move from specialising in one area of technology to a huge range of technology products? An article in 2014 raised the issue of the dangers of adjacencies. When growth begins to decline, the reaction is for companies to enter other related areas of business, and this seems to have become almost an addiction. When it comes to SAP and Oracle, their acquisitions appear to be driven by a need to continue an aggressive growth strategy.

The basis of the article is that adjacency moves distract the company leaders from finding new ways to grow the business they are already in, and so the core business grows slower. This reduces the focus on the core area, what makes this area unique and valuable, and the business loses the advantages it used to have. Again, SAP’s core ERP area has not recorded strong growth in recent years.

Interestingly, the writer of the 2014 article published another one in 2015 that discussed how diversification into adjacencies could work. What needs to be done to succeed is to:

think about focus in terms of how much your businesses materially benefit from the distinctive capabilities that make your company better than any other at its way of creating value.

According to the new hypothesis, you don’t diversify just to enter more attractive growth markets, you do it for these two reasons.

To use your company’s way of creating value and its distinctive capabilities to generate new avenues for profitable growth.

To strengthen your company’s current business, by enhancing either its capabilities or its value proposition.

The adjacency strategy for a business therefore is not to diversify away from your base, but to diversify for your base.

Looking at SAP, Oracle, and also IBM, the question seems to be, what did they diversify for?

Leaving the ERP world

changingAfter over 15 years, I will soon be leaving the world of ERP and enterprise software.

It’s been a great time to work in the ERP software field, especially as small- and mid-size (SME) companies started seeing the value and justification for ERP in their businesses. For ERP vendors like my nearly former employer SYSPRO, the growth in the SME market has been wonderful.

For me it’s been a great experience working for a South African software company that is truly global. Having been in the SYSPRO corporate office I have had exposure to how an international software company does strategy and development planning, and been able to interact directly with some of the best developers around. I also got to engage with colleagues in other countries, and learnt a lot about how those countries can be both the same and very different. I could not have done any of that at any other enterprise software company in South Africa.

Now I am moving on, up into the cloud, so to speak. I will be joining a Johannesburg-based software company called Flowgear as head of marketing. This company was founded in 2010 and has been one of  Microsoft’s local stars in the startup space. It has also got onto the Gartner magic quadrant in the sector where it plays – Enterprise Integration Platform as a Service.

I am impressed by what I’ve seen and heard of the company – especially at a recent seminar held at Microsoft. I am also really looking forward to my new role: helping to promote the company and grow the business, not just in this country, but also internationally.

I will keep on blogging here, but I’ve realised I may have to change the top tag line, I will have to drop the “enterprise” part off.

Device death and human-centred technology

DevicesWhy do we sometimes occasionally see articles on “the death of”, referring to tablets or PCs? If you look at the data from the KPCB Internet Trends slides about sales of devices, sales of laptops and PCs aren’t doing well, and tablet ownership is still low compared to smartphones. But why do some people think such articles should be written?

A story in TechCentral about PCs noted that modern users:

switch seamlessly between work mode on a laptop, to social mode on a smartphone, without ever slowing to adapt to a different device or operating system between tasks.
Life has more than one mode and technology should, too.

What we are now starting to do is use different devices for different purposes and in different contexts. That is what the “death of” writers seem to miss; just because a device isn’t growing significantly does not mean it is dying.

Unless all you do is read documents, no one would suggest it is easier to write and edit a document, or code a program, on a tablet compared to a PC. PCs are just better suited to some activities, especially for work.

It seems we are in a period of changing form factors and usage models. No one wants an old-fashioned PC in their home, or think that it should control and monitor their home. But people are quite prepared to have a specialized device to do that – as long as it’s connected to their smartphone, of course.

In 1999 a book forecasted that computers would move from being technology-centred to human-centred. One reason that tablets and smartphones have become popular is that they are usable by the average person – you are not expected to be tech savvy to use them. In the old PC days, it was a sign of proficiency that you could use a PC.

The book points out that tech companies tried to make the PC generic, and thus it became not specific for anything. When Microsoft wanted to to turn the PC into the home entertainment controller, the Windows Media Centre, it failed because it was trying to make the ‘reluctant masses’ adopt the attitudes of engineers and early adopters.

What Steve Jobs realized, and the engineering brains at Microsoft didn’t, was that for a technology device to be adopted by the majority of society, you have to understand two things, as a review of the book discusses:

  1. The user needs to educate or inform the design process from the beginning.
  2. The designers must ensure that the technology is not part of the difficulty.

Essentially, a technology device needs to become an appliance before general society will use it. That means the task, and learning to use it, have to be the same. As an appliance is designed for one thing, expect to see more devices as specialization increases.

Currently, Google, and recently Microsoft, are investing in different technologies for different applications, not trying to shoehorn one technology into a variety of roles.

I wonder what next device will have it’s death written about?

Windows Phone rant

Just a quick rant about Microsoft’s Windows Phone.

phoneI have a Nokia (now Microsoft) Lumia smartphone running Windows Phone 8.1. There is a function called Internet Sharing, which allows you to use your phone as a Wifi hotspot for other devices, and it has been working fine for me – that is until I came back from the USA (see previous post).

Now, when I switch on Internet Sharing to allow my Windows laptop to have Internet access, the browser shows that it can’t connect to the DNS server.
When I checked the Windowsphone.com site for queries on Internet Sharing,  it seems that Windows Phone caches DNS settings, so somehow I reckon my phone has US DNS data still on it.

Here’s the rant – you cannot reset or clear the DNS cache on Windows Phone. The only way to do it is to reset the entire phone! Microsoft, really, that’s your solution?

Why the US is different to other countries

I have just spent 10 days in the USA, split between a week just south of Los Angeles in Costa Mesa, and several days in Lawrence, Kansas. Although I have been to the US several times before, this time it was different, for reasons I explain below. But also because I may have figured out the essence of what makes the US different to other countries when it comes to business and technology.

My previous visits were either as a pure tourist, or as an overseas employee of a US company coming to get an update on future plans and directions. For those work-related visits, I was a passive recipient. This time it was different. I went to the US to attend a sales conference organized by my employer in South Africa. This time I was one of the people helping to set future plans and directions. This time I had to actively engage – mainly, though not exclusively, with people who work in our North American offices about their concerns and issues.

One of the ongoing issues is that we, i.e. South Africans, don’t understand the US. In the past, I have always supported the view that while the US may start earlier with certain things, there’s not that much difference when it comes to business. But at the end of the sales conference, I had a strong feeling that things were much more different than I had been able to understand.

On my previous working visits, I received direction from US head office people, and used to consider them rather ignorant of the world outside the USA. Now the roles were somewhat reversed: I was the head office person, and they were saying people like me were ignorant of their world.

It took a few days after the intensity of the sales conference, staying with family in Lawrence, and talkininside Dillonsg with my South African brother-in-law who works at the University of Kansas, to distill what I think is the essence of the difference. It was after a visit to a local supermarket, Dillons, that it occurred to me.

It’s what is considered basic.

For each product category, e.g. bread, the range at Dillons was two or three times more than I have seen in South African, or UK, supermarkets. Moreover, the products in Dillons exploited every single consumer niche you could imagine, no matter how specialized the niche. In others words, the choice and competition was greater than I had experienced. I surmise that this makes US consumers more demanding than consumers elsewhere, and makes what they would consider basic different.

When hearing the North American sales people talk about their market and competition, the same kind of impression arose:
product category range + exploitation of niches = high degree of expectation from business

Perhaps it’s because the US economy is so highly competitive that the basics are different – in supermarkets, in business, in IT (and if you watch any reality TV, in relationships).basic differences

It’s something for both sides to consider. If you enter the US market to do business, be aware of how the needs and requirements will differ and be at a higher level. On the other hand, for US companies operating internationally, don’t expect the same issues to be of concern, and don’t assume US concepts are universal.

When it comes to business software, the requirements of a US business are likely to be greater or more detailed than business in other countries because what is considered basic fo US business is different. The same duopoly then applies – overseas software companies must get really immersed in the US to learn what is needed, US software companies may not find the same functional requirements from businesses in other countries.