Cloud computing: Value is assumed, cost matters
In a down economy, customers expect value. Disaster recovery, compliance, and enterprisey features are where the growth is in the near term. And cost still weighs heavily.
Over the last 10 years, IT has moved further and further outside the firewall. Starting with ASP (application service providers) and moving to multitenant SaaS (software as a service) on-demand applications, and now into cloud-computing environments, the status of on-premise IT has shifted from being a necessity to an option.
An interesting factor in this shift is the customer assumption that SaaS, like open source, has an assumed value, but ultimately, the fact that it's cheaper to run and manage is what will continue to drive adoption.
I had a good conversation at the SaaS Summit on Thursday with Treb Ryan and John Rowell, respectively CEO and CTO of OpSource, a provider of SaaS and Web applications for companies offering on-demand services.
The big question for me was, what is SaaS when cloud is all the rage? Is it a subset or just another classification for the same thing?
Ryan told me that "SaaS is the business version of cloud computing," meaning that cloud services such as Amazon.com's EC2 (Elastic Compute Cloud) offer great value but lack features required in the enterprise. Service-level agreements and compliance are simple examples.
Cloud versus SaaS in the enterprise
According to Ryan, the multitude of big vendor announcements of cloud services haven't filled the enterprise gaps. In the last six months, vendors such as IBM, Microsoft, and Sun Microsystems have announced private or on-premise clouds, but you can't actually buy cloud services from any of them.
This isn't just about being cheaper and faster. It's about the way people interact with technology. User expectations are dramatically different for cloud services:
- Immediacy
- Ubiquitous access on any platform
- API--if you can access data on the human level, you need to be able to access it via API
- The ability to collaborate on data
So how does this change over time?
According to Ryan, "we're still talking about stuff at the hardware level--its much more about data and integration of applications. The underlying infrastructure shouldn't matter, as long as there is a programmatic and human way to get to the data."
Disaster recovery, compliance, and enterprisey features are where the growth is in the near term. You have to have an SLA and support for true enterprise-class applications. Amazon will probably do this over time, but right now, you have no real option. Rowell pointed out that for Amazon to offer these services would add significantly overhead and likely cause the price point to rise significantly.
More mature enterprise applications will all move to the cloud eventually, but the process will take time. Developers will get better about developing around the limitations of cloud computing.
As Web companies get decimated by the economy, developers who have the cloud-scale experience will end up with "real jobs" and connect with more formally trained software developers. The enterprise will become empowered as developers become better trained.
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