Paul Wallbank – Brilliant Communications

Tag: cloud computing

  • Channel blues

    Channel blues

    “We do the pre-sales work then they come along and steal the customers. It’s wrong, just wrong” growled the sales manager of an IT integrator while talking about one of the leading cloud computing services.

    The business model of systems integrators is to be a company’s, or home’s, trusted advisor on IT and make money from charging for their services and the profit in selling software and equipment.

    In the last few years that model has become tough – the collapsing price of hardware has made the profits on selling systems leaner while the increased life of systems has meant the big lucrative upgrades have become scarcer.

    At the same time services have become less lucrative as more participants have entered the market, many using offshored cheap labour to provide remote support. It hasn’t helped that computers have become vastly more reliable, particularly since Microsoft have largely solved Windows’ gaping security holes.

    The icing on the cake has been the end of boxed software and corporate licenses. These were extremely profitable for the systems integrator – a big sale of Microsoft Office or Oracle licenses to a government department could see an IT salesperson pay for a holiday home or cover the kids’ school and college fees.

    Cloud computing has largely been the driver of all of these factors’ decline and now it is really hurting those integrators and their salesfolk who were used to a very profitable existence.

    While that’s good news for computer consumers – and even better news for hapless shareholder and taxpayers who’ve been largely dudded by big IT sales pitches to gullible directors and ministers – it does beg the question of how customers now get advice and support.

    Largely cloud based services rely upon customer self service and many of the providers would struggle to include user support in their list of core competencies.

    There’s a business model there for systems integrators, but it’s difficult to see how many those used to fat profits in the past can, or will, adapt to the new environment.

    An interesting side effect of this change is how it affects companies like Microsoft where their channel partners – largely those big and small systems integrators – are one of the most important distribution networks for their products and probably their best defense against competitors like Google and Apple. That strength is being steadily eroded.

    It’s tempting to think that change affects just “old” industries like retail, publishing or car manufacturing; in reality it affects all sectors and sometimes the most modern might be hurt more than the established players.

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  • Software’s mini revolutions

    Software’s mini revolutions

    The CIA’s ‘revolutionary’ announcement of their changes to the way they buy software shows just how the relationship between software vendors and businesses is evolving as cloud computing methods become widely adopted.

    For businesses it means more flexibility and efficiency while for software companies the new marketplace is requiring them to be more flexible and responsive. Those changes will challenge some vendors.

    What’s driving these changes is ‘big data’ – the explosion of data being collected and stored – and the move to cloud based computer systems.

    The CIA, like most businesses or home computer users, used to buy software by the license. For small businesses and homes this was by buying a box of disks from the local computer shop while for big organisations there were volume licenses where they bought the right to use tens of thousands of copies of the one program.

    Box licensing was never satisfactory, it was difficult for users to know what exactly they bought and customers were always a year or more behind the trend.

    Keeping up with Technology

    One of the big pluses with cloud based systems is you don’t have to wait a year or two for a new release incorporating the latest technology. It’s rolled out as it becomes available without any work by the user.

    With the old box software model you had to wait for the latest release and even then the features you were waiting for could still be missing.

    As technology is moving fast online, organisations like the CIA can’t afford to wait.

    Pay as you go

    Another problem with the old software model was that big and small organisations found they were buying things they didn’t need.

    This is particularly true with licensing agreements where a company might have 100,000 licenses when they only needed 15,000.

    Pay as you go billing, which is the standard model for cloud computing services, means a lot more flexibility and a much more efficient way of managing software spend.

    Closer relationships

    In his speech describing the changes, the CIA’s top technology officer Ira Hunt said the agency is prepared to give vendors a “peek under the covers”.

    This sort of closer relationship between suppliers and customers is one of the biggest attractions of the cloud computing model. It means both users and suppliers are more closely aligned.

    For software vendors that close alignment is where the opportunities lie; the old days of flogging fat, expensive licenses are over and the successful sellers of computer programs will be quicker and nimbler.

    The CIA has been accused of formenting many revolutions around the world, this is one most business owners should be happy about them leading.

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  • On becoming a Captive Business

    On becoming a Captive Business

    I’ve been writing a lot recently about the risks of businesses aligning their interests too closely with one or another platform, last weekend The China Law Blog discussed the opposite – being a captive customer.

    The term “captive customer” is new to me but it’s a familiar concept; in the IT industry most of us found ourselves hostage to Microsoft’s whims at one time or another and it wasn’t a good place to be.

    Many smaller businesses and consultants fall for the trap of having just one big customer which their income becomes dependent upon.

    While Dan’s point on The China Law Blog is about manufacturing, this risk is becoming even more pressing on the web where there’s a tendency to be captured by one platform or another.

    Sometimes entire industries are captured – the Search Engine Optimisation sector is wholly dependent upon whatever Google chooses to with their search algorithm. To make things worse, no SEO expert knows exactly how Google’s equations actually work.

    We’re seeing the mass media being captured in a number of ways – by granting licenses to Facebook, one suspects unwittingly, or developing content for Apple’s iPad.

    For startups depending upon cloud services or single payment platforms like PayPal there are serious risks as we saw with the co-ordinated takedown of Wikileaks.

    In nature, the animal or plant that depends on one source of food or habitat is at risk from even small changes in their environment. Be careful you aren’t a business dodo.

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  • The Internet Kool-Aide Machine

    The Internet Kool-Aide Machine

    Every few months, the web lights up with hype about the latest technology or website. For a few weeks, every tech conversation mentions this hot new product.

    Almost always this hype is driven by the company in question duchessing a few key “opinion leaders” in the tech, social media or other circles. These folk start writing up this product and, if they are lucky, the stories get picked up by the broader media and the product becomes “hot.”

    The aim is to find the greater fools, for the investors and founders of these business they want to cash out by selling the operation to a bigger entity.

    When you read the hype about the latest user generated, online sharing social media service that’s growing at a remarkable rate be aware you’re actually seeing a pitch to a big company being framed along the lines that “you can’t afford to miss out.”

    By all means sign up to the service to have a look but don’t buy the hype and remember you’re not the customer – the gullible big business manager looking for the next big thing is.

    Image courtesy of Blary54 through sxh.hu

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  • Confidence in the cloud

    Confidence in the cloud

    Will the cloud ‘hit the wall’ without good integration? asks Ross Mason in GigaOm – that question is a good one.

    In many ways we’re no better than we were twenty years ago with some business – particularly big corporations like banks or telcos – plugging the same information into four or five different databases or software packages with all the subsequent mistakes, lost data and double handling.

    The old business model for software companies was to lock customers into a proprietary format and and make it as difficult as possible to move the information to a competitor. Those days are now over.

    Business – and increasingly consumers – expect their data to open, accessible and easily moved between different programs, if somebody wants to connect their customer database to their accounting package, or project management software to their word processor they don’t see why they shouldn’t be able to.

    Confidence is also the greatest key to success in cloud computing; customers need to know that if a service fails or they decide to take their business elsewhere then their data will be able to move with them. The prospect of losing years of customer records or accounting records is untenable.

    A few years back the early cloud based accounting programs tried to tie people onto their platforms by making data almost impossible to retrieve, those businesses failed badly.

    One of the promises of business technology is that it will increase productivity and reduce errors; sharing one set of data across the organisation goes a long way towards delivering on that promise.

    Today software has to compete on features, not vendor lock-in. Trying to trap customers into using your products is an old business model that no longer works.

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