Tag: cloud

Amazon Web Services and the new rules of business

Amazon Web Service CTO Werner Vogels lists the lessons from a decade of AWS operations. These could be the new rules of business.

The one company that has driven both the adoption of cloud computing and the current tech startup mania is Amazon Web Services.

Later this week AWS celebrates its tenth birthday and Werner Vogels, the company’s Chief Technical Officer, has listed the ten most important things he’s learned over the last decade.

The article is a useful roadmap for almost any business, not just a tech organisation, particularly in the importance of building systems that can evolve and understanding that things will inevitably break.

Importantly Vogels flags that encryption and security have to be built into technology, today they are key parts of a product and no longer features to be added later.

Most contentious though is Vogels’ view that “APIs are forever”, that breaking a data connection causes so much trouble for customers that it’s best to leave them alone.

Few companies are going to take that advice, particularly in a world where changing business needs mean APIs have to evolve.

There’s also the real risk for businesses that their vendors will depreciate or abandon APIs leaving key operational functions stranded, this could cause major problems for organisations in a world that’s increasingly automated.

Vogel’s commitment to maintaining APIs may well prove to be a competitive advantage for Amazon Web Services in their competition with Microsoft Azure, Google and an army of smaller vendors.

Werner Vogel’s lessons are worth a read by all c-level executives as well as startup founders looking to build a long term venture, in many ways they could define the new rules of business.

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Telcos shifting up the stack

For the world’s telecommunications companies it’s a matter of diversify or shrink.

One of the Twentieth Century’s great rivers of gold was the telecommunications industry. As the world became connected, first by telegraph, then telephone and finally mobile networks, owning a telco licence became a path to riches.

Late in the century, the mobile phone was a spectacularly profitable device for telcos in the 1990s as consumers flocked to buy them and pay dearly for services, particularly SMS which was practically free to provide.

Just as the century was coming to a close things changed dramatically as the Internet became accessible to the general public and while data was still profitable, telco revenues started to fall dramatically. Then, early in the new century, the arrival of the smartphone disrupted the entire industry.

Becoming a dumb pipe

Twenty years later and the arrival of smartphones using data services has changed the economics of cellular networks, leaving the incumbents worried they are going to merely become ‘dumb pipes’ offering just a low margin utility.

Around the world incumbent telcos and mobile network operators have responded by moving up the value chain into managed services and cloud computing and one particularly interesting company in this respect is India’s Reliance Telecom.

Reliance has responded to the changes in its market, something made more problematic by India’s arcane and complex cellular licensing system, by strategically selling off various parts of its infrastructure and focusing on where it sees opportunity.

At a lunch in Sydney yesterday CEO Bill Barney of Reliance’s global network division was showcasing their cloud services for Australian customers and showed how the quest for profits is moving telcos into areas like data centres and managed services.

Emerging markets corridor

Barney argues that Reliance’s network, which spans South Asia, the Middle East and into Eastern Europe, gives the company a strong position in the “emerging markets corridor”. He also boasts the product the company offers allows easier development of smart services.

In this respect, the Reliance Global Cloud Exchange differs from similar plays like Telstra’s PacNet network across East Asia – which Barney previously headed – in that it offers services higher ‘up the stack’ making it easier for companies to deploy smart applications, something Barney sees as being particularly attractive to the media and financial industries.

While Reliance’s claims are yet to be tested in the market, the company’s shift to higher level services illustrates a struggle facing all telecommunications operators. To do this, Reliance and Telstra look to global networks and data services, Singapore’s Singtel tries its hand at media content in a similar way to Britain’s BT and Vodafone makes a strong Internet of Things play.

For each of these companies, diversifying into other fields makes sense however each strategy brings its own risks – in Reliance and Telstra’s cases this means competing with cloud services vendors like Amazon and Microsoft – that telcos haven’t been exposed to in their core markets.

Those core markets though are being disrupted and will never be as profitable as they were twenty years ago. For the world’s telecommunications companies it’s a matter of diversify or shrink.

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Profiting from the industrial internet

How will companies make profits from industries being shifted to lower cost structures?

Opening the first official day of Oracle Open World, CEO Mark Hurd spoke with James Fowler, the Chief Information Officer of General Electric about the company’s digital transformation.

Fowler described how the company intends to be driving $15 billion in revenues from its digital operation in the face of stagnant industrial spending.

Earlier in the presentation Hurd had described the problem of stagnant spending facing all major industrial companies, whether they are enterprise software providers like Oracle or engineering organisations like GE, where companies are ‘sweating the assets’ ruthlessly.

For GE, making a compelling argument for companies to reinvest in new capital equipment is essential while Oracle is facing an industry wide decline in revenues and a structural shift to cloud technologies which Hurd described in stark tones.

Last year, he claims, the major tech companies saw a gross decline of $16.4 billion in revenues while cloud services only picked up by billion meaning the market shrank by fifteen billion dollars.

That decline would deeply worry a salesperson like Hurd given the declining market means smaller commissions and fewer sales so it’s unsurprising the company is pivoting as hard as it can into the cloud.

GE on the other hand is making a huge bet on the future of its market by proactively shifting onto digital and cloud services.

The challenge though for all these companies is making money from these new business models those who figure it out will be the industrial giants of the next century. There’s no guarantee any of today’s will be among them.

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Splunk and the marathon to make IT sexy again

Can Splunk use data analytics to make IT sexy again?

“We’re early in the marathon but making good progress”, opened Godfrey Sullivan, the CEO of Splunk, as he opened the company’s annual conference in Las Vegas today.

Helping businesses understand their data has proved lucrative for Splunk with the analytics company seeing a 46% increase in year on year revenue to $148 million for the last quarter with the organisation narrowing its losses over the same period.

As with all tech conferences, the focus in the opening keynote is on new product announcements. For Splunk, the main release is its latest enterprise version of Splunk Enterprise 6.3 billed as delivering faster results, better analytics and tying into the masses of machine data being collected from the Internet of Things.

Machine data as a cornerstone

That IoT data is a key part of Sullivan’s strategy of “making machine data more accessible usable and valuable to everyone.” The company also highlights their alliances with IoT data consolidator services such as Xively and Octoblu.

Security is another focus of Splunk with the launch of  Splunk User Behavior Analytics (UBA) that analyses usage patterns on networks to identify risky or suspicious activity and a version upgrade of their their Enterprise Security.

The original business of Splunk was to monitor server log files and that IT focus remains with their new IT Service Intelligence (ITSI), an improved IT monitoring and analytics service.

Sullivan’s key message was that IT departments can be offering ‘operational intelligence’ as they gather and analyse data from all aspects of a business. “IT departments have to earn a seat at the table”, as Splunk’s CTO Snehal Antani says and providing rich data analytics, in his view, enable this.

Surprising a bank

Antani cited one of his previous clients, a bank which would ordinarily would deal with ten million dollars of deposits a day so an alarm had been set for when less than half of that had been received by midday.

One day that alarm sounded, and the IT department assumed there was a problem with the bank’s systems. After checking, they found everything was running normally so flagged deposits were unusually low to senior management.

It turned out to be a competitor had launched a successful campaign to open new accounts which had caught the bank by surprise. “The CMO acted as if he’d been hacked,” Antani recalls.

Antani’s anecdote illustrates how business data is no longer just the concern of the IT department and a small group of geeky business analysts, with real time information every part of an organisation can improve its performance.

For Splunk, using data to improve all aspects of business its key message to the market and one it hopes to drive its business forward although it’s highly unlikely they’ll achieve Antani’s hopes of “making IT sexy again.” That would take much more than a marathon.

Paul travelled to the Splunk.conf in Las Vegas as a guest of Splunk

 

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Xero and the US cloud accounting challenge

Xero starts its serious push into the US cloud accounting market

Last month I wrote a piece for Business Spectator on how competition in the Australian cloud accounting market was hotting up with the re-entry of Intuit and Sage.

One of the divides between vendors was whether online accounting services scale globally with one group – including MYOB and Reckon – saying that deploying services in different jurisdictions added complexity while others believed a global product was necessary to achieve scale.

The most obvious member of the global scale camp was Xero, the company that has pioneered the growth of cloud accounting software. Two years ago we interviewed the company’s founder Rod Drury about his ambitions for the company and the direction of the cloud accounting market.

For Xero though, growing globally isn’t easy. While its most successful market has been in Australia, that country has many similarities with Xero’s native New Zealand and the company has found the UK and US markets tougher.

Renewing Xero’s US push

To deal with a much bigger and diverse market, the company appointed Russ Fujioka, a veteran of Dell, Abode and the various venture capital companies, to lead its revamped operations in the United States and Decoding the New Economy caught up with Russ recently at Xero’s San Francisco office.

For Fujioka, the key to growth in the United States market is the small business sector with the US recording nearly half a million new business registrations across the nation each year.

“You see the M in ‘SMB’? We don’t want to be playing to that market,” says Fujioka in emphasising the Xero’s focus on the small business sector.

Fujioka also sees opportunity in what he calls the ‘pre-accounting’ sector, the roughly 18 million self employed contractors and freelancers who don’t need a full fledged accounting service but need access to basic bookkeeping, invoicing and expense tracking.

Dealing with diversity

While the 28 million US small businesses represent a huge opportunity to Xero, the market also presents challenges with, unlike the New Zealand, Australian and UK markets, hundreds of banks and thousands of different state and local tax regimes.

To deal with the complexity of local tax and employment rules, Xero announced a partnership with Avalara to provide the data feeds for calculating sales taxes and payroll obligations, something that is essential to Xero’s business plans, “payroll is fundamental to our offerings.” Fujioka says.

Also fundamental are accountants and book-keepers where co-opting them as sellers of the service has been part of Xero’s success in Australia and New Zealand with Fujioka seeing a fifty-fifty split between those businesses signing up directly and those going through advisers.

The changing accounting industry

Like the rest of the world, the accounting profession is going through major changes as much of the transactional work becomes automated, Fujioka sees this as an opportunity for companies like Xero to add value to the industry and help individual firms become more akin to system integrators and technology advisers to their clients.

The ultimate aim for Fujioka is to make Xero the site, or app, that every small business starts and ends their day with, “we really want to be that single pane of glass for small business – you start your day with us, you end your day with us and during the day you check your status on your Apple Watch.”

For Xero, the key to global success is cracking the US market. The challenge for them is to capture a new generation of business owners and accountants.

Paul travelled to San Francisco as a guest of Salesforce and Splunk

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Reinventing Microsoft in the age of cloud computing

Microsoft’s CEO Satya Nadella seems genuine in his push for cloud services and alliances, but there’s still a lot of marketing speak wrapped up

“Why does Microsoft exist?” Asked the company’s founder Satya Nadella at the Dreamforce 2015 conference.

Nadella has asked this question before and his answer at the San Francisco event was that Microsoft exists to empower people through technology, something that Bill Gates and Paul Allen envisaged in the mid 1970s when they founded new startup.

To show how he sees Microsoft’s position in the modern workplace, Nadella gave a not completely flawless demonstration of Microsoft’s integration with Salesforce.

The products Nadella pushed were Windows Phone and Windows 10, which he claims to be part of a major change in businesses with data transforming the way we work.

Interestingly, he framed the Windows 10 IoT strategy around endpoint security. While there are millions of vulnerable devices, it’s not clear shipping them with Microsoft’s firmware will resolve the problem.

“What’s the big technology shift? It’s how we use the data.” Nadella proclaimed in laying out how he sees a data culture transforming the places we work.

A Grand Pivot

Microsoft itself is dealing with a cultural transformation with the company shifting across to cloud based subscription services. “The thing that it’s done for us is it’s not a one-for-one move. It’s not like we’re just moving Exchange on premise to Exchange as a Service, it changes the value proposition for the customers.”

Nadella sees those cloud services as an opportunity to sell more products – and add more value – to customers, particularly small businesses.

The CEO’s role

A business’ success relies upon its culture and Nadella sees the role of the CEO as being about curating that culture, “I always ask what it is that defines us.”

Part of that culture is about becoming customer focused which involves thinking outside of one company’s products or silos, “how is our industry going to succeed? It’s going to succeed if we can add value our customers. Our customers are going to make choices that aren’t homogenous.”

Those varied choices are what’s driving Microsoft’s current push into alliances.  “If we are going to realise the power of technology, then these partnerships will amplify that,” says Nadella.

While there were nuggets of truth in Nadella’s presentation, there was also a lot of truisms and somewhat meaningless slogans. While Microsoft’s push onto the cloud and into alliances that were once considered unholy might be genuine, it’s hard not to think there’s still a lot of marketing speak wrapped around it.

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Mimecast and the future of email

Email continues to the key computer business application says Mimecast’s CEO Peter Bauer

Email remains the biggest business app in the world says Peter Bauer, the CEO and co-founder of mail management service Mimecast.

Boston based, South African born Bauer founded his company to “make email safer for business” and after launching in his home country and attracting 14,000 customers and spoke in Sydney about his company and how email is changing in the world of the cloud.

In many respects email is one of those applications – like SMS – that happened by accident. In it’s early days no-one intended or expected those messaging systems to become key communications services.

“I started my IT career in the mid-1990s as an e-mail systems engineer and if you think back to the mid 90s no business cared much about email at all,” says Bauer who believes the experience gave him a unique perspective to how the service evolved into a key business application.

Over the next ten years Bauer saw how email became the personal filing systems for most workers and put systems under pressure as companies had to manage large file stores with the associated compliance and discovery risks.

The security risks too were huge as email became the preferred malware delivery system as virus and spyware writers used infected messages to get onto users’ systems, a problem that has become worse as ransomware and phishing attacks have become common.

“Because business operations and process became dependent upon email, it became necessary to make the service highly available,” says Bauer in emphasising how important it has become to most large and small enterprises.

Even with the shift to the cloud, most companies have remained with email with companies moving to Microsoft’s Office365 – Bauer claims the take up has doubled in the last twelve months. Google’s Apps are gaining traction in the small end of the industry but the enterprises are really wedded to the Microsoft platform.

Bauer sees that shift to cloud based services as changing the risk profile for businesses and this is another opportunity for his business.

Email faces a number of challenges as social media and instant messaging apps become preferred communications tools for younger groups while some businesses are banning email.

For the moment though, it looks like the service is safe as companies remain wedded to email as the preferred form of business communication.

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