Startling Cloud Cost Data
February 10, 2010
The story “Cloud Shrinks IT Costs by 90%” contains the type of data I like to use in my public lectures. First, it is a blockbuster number—taking $1.00 in costs and chopping them down to one thin dime. Second, the statistical foundation of the number is rarely challenged as long as I can point to an “authoritative source” like ComputerWeekly.com.
For me, the key point in the write up was:
Companies that are using cloud computing are paying as little as one-tenth for the same processing power as they would for equivalent in-house facilities. This emerged from a floor debate at the Powered by Cloud conference in London this week. Asked what return on investment they had achieved from their cloud experiments, representatives from mobile network operator Vodafone and TV broadcaster Channel 4 said the cost of their cloud-based processing was a tenth of traditional in-house computing. A speaker for Verizon, which offers cloud computing, said its customers were saving between 25% and 75% of the traditional costs.
Let’s assume that this type of savings is accurate. What’s the future of on premises software? Well, grim, I suppose. What happens to traditional enterprise software companies? Well, grim, I suppose. What happens to the rationalized IT executives who no longer have a job? Well, grim, I suppose. What about on premises search and content processing systems? Well, grim, I suppose.
The good news is a return to the type of computing environment that characterized some of my early experiences: industry dislocation, limited choice, high costs, and reduced control. Do you see something different?
Stephen E Arnold, February 10-, 2010
No one paid me to write this article. I will alert the facilities manager of the new executive office building, where cost controls are paramount.
Microsoft Study Discloses Cost Savings from Avoidance of On Premises Software
February 6, 2010
Talk about a weird study. Read, please, “Microsoft Study Reveals Small and Midsize Businesses Using Hosted Services Have Better Financial Performance.” The idea behind this research is to make a case for cloud computing. For me, the most interesting passage in the write up was:
The SMB IT and Hosted IT Index 2010 commissioned by Microsoft researched 3,193 SMBs in a cross section of private industries in 15 countries. Overall, the findings show greater awareness of the benefits of IT among SMBs and a high reliance on IT across all industries and geographies. The findings indicate a clear path toward better financial performance than for those not currently taking advantage of IT advances such as hosted services.
I concluded that anyone in a small or mid sized business with on premises installations of Microsoft’s ubiquitous software would be better off getting this stuff via the cloud. Great conclusion because this suggests to me that Microsoft’s software is dragging down the financial performance of its customers. What?
Stephen E Arnold, February 6, 2010
Nope, no pay for this write up. I will report this sad situation to the Pew crowd, an outfit familiar with outstanding research.
Mark Logic Taps Amazon
January 25, 2010
Cloud Computing “Mark Logic Leverages Amazon” reported that MarkLogic Server offers a cloud option. According to the write up said:
The move will obviously let customers use its widgetry on a pay-by-the-hour basis. A native XML database that implements the W3C-standard XML Query (XQuery) language, the server includes full-text and structured (XML) search. The AWS version consists of an Amazon Machine Image (AMI) with the MarkLogic Server pre-installed.
Mark Logic’s technology has demonstrated its versatility in a number of information-centric environments. With a client’s information within the MarkLogic Server environment, repurposing is a snap. In the last year, Mark Logic has emerged as an information infrastructure company that makes big boys like Oracle quite nervous. With the move to the cloud option, Mark Logic is poised for new services. Mark Logic’s technology exerts pressures on companies in business intelligence, enterprise publishing, and information portal services, among others.
When Larry Ellison worries, I take notice. Important step from Mark Logic.
Stephen E Arnold, January 25, 2010
Yes, I was given a free admission to the Mark Logic user conference in Washington, DC. No, I was not paid to point to this write up about the Sys-Con story. Yes, I will beg Mark Logic to throw large sums of money at me and the goslings the next time I see one of the firm’s senior managers or investors. I will report this intent to the FCC via this footnote. Wow, I feel so much better explaining that I am a shameless marketer.
Startling Fact: Size of Cloud Computing Market
January 23, 2010
Tucked into a story about IBM landing Panasonic as a customer for Lotus Notes was a startling fact. “The global cloud computing market is expected to grow at a compounded annual rate of 28 percent from $47 billion in 2008 to $126 billion by 2012, according to IBM based on various market estimates.” You can see this gem in context at “Panasonic Ushers in the Cloud Computing Era with IBM LotusLive”. That’s a heck of a number.
Stephen E Arnold, January 23, 2010
A freebie. I don’t know what federal agency is in charge of numbers without back up. Maybe OMB?
SAP Does an About Face on Some Fees
January 16, 2010
I think SAP provides the same type of information a long range scout does. The scout goes out, checks out the territory, and then comes back and reports. The scout’s bosses listen to what the scout says and then decides what to do. The whole set up of an organization mode with scouts and bosses “in the rear with the gear” is fascinating to me. Vendors of complex, time consuming, resource intensive old fashioned software are trying to change. With revenue slipping and the economic crisis lingering, SAP provides useful information. Read “Price Hike Ditched as SAP’s Enterprise Support Makes a Comeback” and you can catch a glimpse of what other enterprise software vendors may be pondering; namely, a price cut and cooing to make peace with customers. Losing a customer is an expensive proposition because it is a one two hit. The company loses the revenue and then has to spend dough to find more customers to take up the slack. In my opinion, the most interesting comment in the write up was:
This move shows that SAP is listening to user groups, and therefore its customers, taking on board our feedback and making changes to meet the needs of all SAP users,” he said in a statement.
My thought is that this is a placeholder move. SAP will be under more price pressure, not less. Once the company blinks, the customers know that SAP must cave. Lower prices mean bad news for enterprise software vendors and resellers. Lower prices may force cloud alternatives to lower their rates. In short, am I seeing a phase change in enterprise software? Yep.
Stephen E Arnold, January 16, 2010
No one paid me to write this. I may fly over the SAP headquarters next week, but I don’t think I will visit. Do I report this to the FAA or to the DOT?
Microsoft and a New Cloud Formation
January 15, 2010
A few days ago we tried to access one of the small and mid sized business download sites operated by Microsoft. It seemed to be on holiday. Today I read the CNet report about Web market share. The article “Google Rules Search in December, Bing Drops” provided some numbers showing Google widened its lead in Web search. One comment that struck me was:
Google accommodated almost 6.7 billion queries, capturing a 67.3 percent share of the month’s searches.
I don’t believe these data for one Kentucky Wildcat minute. What I do believe is that the decision engine, a cloud service, is drifting off. But the interesting cloud news was the tie up between HP and Microsoft. I know that Microsoft was not too keen on other vendors’ hardware, particularly when it ships with Linux. I also heard that Microsoft’s data centers have some HP hardware. Now the companies are, according to “HP’s Hurd Calls $250m Microsoft Agreement ‘Breakthrough Stuff,” teaming for a cloud computing play. Allegedly $250 million will be invested to “better integrate corporate software and hardware.”
Simplifying life for corporate information technology professionals is one objective. And the money:
will be spent across a range of areas — including email servers, database management, and cloud computing — to make HP’s hardware work smoothly with Microsoft’s software in a wider variety of settings.
My view is that cloud computing can simplify * some * IT challenges. But the complexities of SharePoint and Microsoft Fast Search won’t really go away. In the cloud, these will be hidden and someone has to pay for the engineers who have to keep these puppies from misbehaving. An investment on this scale suggests that Microsoft knows it has some gaps to fill in cloud computing, but I don’t think HP type engineering will resolve these. Some of those former Alta Vista guys would probably be able to make a contribution in my opinion.
Stephen E Arnold, January 15, 2010
Full disclosure: I am sitting with Tess and Tyson. Both are asleep. No one paid me to point out that putting complex systems in the cloud does not resolve their complexity nor the cost of dealing with that complexity. “Cloud”, you say. I am under the thumb of NOAA.
Netflix Jumps to Amazon
January 2, 2010
Want to enrage a giant, Oracular bull?
Bad news for Oracle, IBM as reported by Computerworld.com: Netflix is transferring its datacenter from Oracle on IBM hardware to Amazon Web Services’ (AWS) Elastic Compute Cloud (EC2) in an effort to save capital. The switch comes as Netflix’s customer count is headed through the roof, and thus the cost and un-reliability of maintaining or expanding the existing data centers is becoming too great a burden.
Netflix was already patronizing AWS for other less critical applications like customer interfacing and even announced last May its intention to expand this relationship. They weren’t kidding around. The decision is prompted by three major cost points. First, Oracle on IBM is inherently “very expensive”. Second, it would have required long hours and great effort for Netflix to build their own data center when systems are added to AWS’s cloud with ease. And finally, “EC2’s pay-as-you-go model means costs are elastic,” so no more paying for unused resources stranded on service contract.
Besides those direct cost reductions, this transition will free up other engineering resources required to baby-sit the existing infrastructure to be re-tasked in other areas.
Netflix makes some compelling arguments here; it doesn’t take long for the dominoes to fall. Wonder if other companies will realize the same thing and follow suit. It would be prudent for Oracle, IBM to investigate what upgrade options exist to be more competitive with AWS and to prevent further customer turnover.
Sarah Rogers, January 2, 2011
Freebie
A Google Cheerleader Gently Disses MSFT
December 31, 2009
Short honk: A few years ago, I had difficulty finding examples of Google technology “in the wild.” In fact, I telephoned a Google reseller to ask a question. The reseller would not speak with me until the reseller coordinated with Google. I can’t reveal the details of why I called, but let us say that the call was not an unfriendly one.
Flash forward to December 22, 2009, and the blog post by a boss / janitor: “How Google and the Cloud Changed My Company.” The write up has plenty of gory details: executive resistance at the idea of using Google Apps. The best part was this comment:
Oh, did I mention the price? I estimate we will have saved almost $1,000 per employee between hardware and software costs — not to mention the deployment and maintenance savings that we reap over time. Woah. I just took a moment to re-read what I have written. Sounds like I work for Google. I don’t. But this blog is about what works for business and I feel that Google made a bold move to make businesses work better. I actually am not a Microsoft Hater anymore. Outgrew that when I put away the code. I just think they are an old and overpriced model. It will be interesting to see how good their response to Google Docs is: Office Web Apps. I bet MSFT isn’t used to playing catch-up on one of their core businesses!
How times have changed. Google’s burgeoning PR team could not have crafted a better testimonial. Oh, I found this using Google Blogsearch too. Indexed right smartly as well.
Stephen E. Arnold, December 30, 2009
I wish to report to the National Institutes of Health that Google’s grassroots PR is doing fine, thank you. And, because I am not PhD, I was not paid for my write up, attention, or scrutiny of the patient.
Cloud Performance
December 5, 2009
After the endnote session at the International Online Show, Charlie Hull, Lemur Consulting, and I were talking about various aspects of open source technology. Mr. Hull has a positive view of open source, and I try to be disputatious whenever possible. Since Mr. Hull purchased my hot chocolate (small hot chocolate, in point of fact), I pushed back a bit. I focused on the issue of performance of certain open source software. Committee built gizmos may lack the trim tummies found in some commercial software solutions. I recalled seeing a performance comparison of some open source and commercial cloud solutions, and I said that I would dig up the article and post a comment.
The write up was “VPS Performance Comparison” in the Journal of Eivind Uggedal. You can see what fun it is to have a hot chocolate with a Lemur and a goose! The guts of this quite interesting piece of research are spilled in several charts. The systems put through their paces via scripts and some test data included:
The results, thoughtfully accompanies by some useful fee metrics, were interesting. The data revealed that both Mr. Hull (the modest lemur) and I (the addled goose) were both correct. He and I also like Banksy, the street artist, and we have several other areas of agreement in common as well. Quite depressing I might add.
I want to urge you to read Mr. Uggedal’s essay, so I will point out one chart that I found illuminating:
I know the lines are difficult to see but the point is that Amazon is predictable if pokey. Several vendors consistently lag others and the top performers in this test which is close to a Web application’s load are zipping right along. The speediest, are summed up by Mr. Uggedal this way:
Linode. 32-bit gave the best results on the Unixbench runs while 64-bit was fastest on the Django and database tests.
Quite a nice piece of work. Lemurs and geese agree that analyses like Mr. Uggedal can shed light on certain technical issues. Nevertheless, I assert that a wet goose is more sleek than the average dry lemur.
Stephen Arnold, December 5, 2009
Oyez, oyez, I wish to disclose that I wrote this essay and referenced Lemur Consulting because I was paid off with a cup of hot chocolate. Small cup, mind you. To whom do I report this commercial transaction. I think the US Federal Aviation Administration has jurisdiction over addled geese. Must comply, of course.
Cloud Math from Merrill Lynch
November 27, 2009
I read “Merrill Lynch: Cloud Computing Market Will Reach $160 Billion…Really?”. Crazy forecasts once were the core competency of 20 year old consultants at down market research firms and crazed MBAs looking for a big win. In my experience, the wacky stuff from the research folks at large, diversified investment firms have some math and some data to ingest to obtain maximum spreadsheet fever. I followed the links in the ReadWriteWeb.com article and reached three conclusions for myself, not you, gentle reader.
First, any thought that the financial meltdown trimmed the sales of the wacky MBAs is out the window. The forecast for cloud computing to hit $160 billion in 13 months is crazier than anything this addled goose has been able to concoct in recent memory. The data available are fuzzy, but I suppose it is possible to did through a college math book, find a method, and stuff in variables until a magic number plops out like an egg from a steroid stuffed squab. Will government oversight address wacky speculation about market size? Government what?
Second, one would think that companies engaged in cloud computing would might offer some anchor points. Last time I checked, none of thee outfits defines what cloud computing is in the hopes of making their products and services part of the next big thing—no matter what it turns out to be. I think the vendors throw gasoline on the fires of greed that burn in the analysts’ empty inner furnaces. They are, in my view, “hollow men” and hollow women.
Third, what about customers? Do customers know whether a particular computer is doing something in the machine itself or somewhere else? The customer who reads the number $160 billion is likely to ask, “So what?” Yes, exactly. So what. As devices connect and run local software, the notion of dividing the elements of computing into distinct components means zero to the user.
To sum up, Merrill Lynch’s $160 billion number for 2011 says to me, “We’re back. Let’s pump those stocks, baby. Churn is good.”
Stephen Arnold, November 27, 2009
I wish to disclose to the Securities & Exchange Commission, a top notch watchdog if there ever was one, that I was not paid to point out that wacky MBAs are making up numbers. Just like in the good old days. Bernie Madoff is probably doing some rough numbers right now.
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