cloud computing | Paul Wallbank - Communications Professional

Driving the hybrids — VMWare and the case for hybrid cloud computing

VM Ware is pivoting its business to a mix of cloud and onsite technologies for its long term survival

A decade ago VM Ware disrupted the corporate IT world with its virtualisation software that changed the way big organisations used their servers. Today the company is facing up to the challenge of dealing with its own business being disrupted.

In the late 1990s when a big business wanted a new server it had to get someone to physically install one, VM Ware’s founders came up with the idea of ‘virtualisation’ with their software creating a virtual server that looked to the network like it was a discrete, real computer.

Naturally this was quicker and cheaper than buying and setting up a whole new server and VM Ware was an immediate success that upended the ‘big iron’ end of the computer industry.

Today VM Ware is valued at $42 billion on the stock market and is one of the IT industry’s giants.

However the virtualisation market itself is being disrupted by cloud computing. For many businesses, it’s even cheaper to pay Amazon, Microsoft or another cloud service to provide the servers for you.

So VM Ware is reinventing itself with a range of services to meet the challenge from the cloud providers. One of it’s key strategies is to provide a ‘hybrid’ cloud where customers run some IT services on their own servers and others on the cloud, the idea is this offers the best of both worlds.

This is almost the same challenge that Microsoft faces as both companies see their core business models being threatened by internet based technologies, something that VM Ware CEO Pat Gelsinger concedes.

“We think of Microsoft having a strategy much like ours, given they have on premise and in the cloud,” says Gelsinger. “We sort of agree on the shape of the market. We would say that Amazon and Google see a different shape in the market.”

Amazon and Google’s view is a ‘pure cloud’ model where companies and consumers run all their IT on web based services. In that world, purists like Xero’s Rod Drury are openly disdainful of the hybrid model believing it to be cumbersome and adding complexity to a simple business solution.

For companies like VM Ware and Microsoft their future lies upon the hybrid model being adopted by business. This is a high stakes industry battle which will define the careers of many IT workers and the shape of the businesses they work for.

Paul travelled to the VM World conference in San Francisco as a guest of VM Ware.

Fear in the cloud – the loss of trust in online business

Should online businesses, particularly cloud services and social media platforms, begin to worry they’ve lost the trust of the community?

Today I spoke about online safety to the Australian Seniors’ Computer Clubs Association about staying safe online.

Hopefully I’ll have a copy of the presentation up tomorrow but what was notable about the morning was the concern among the audience about security and safety of cloud services.

The ASCCA membership are a computer savvy bunch – anyone who disparages older peoples’ technology nous would be quickly put in their place by these folk – but it was notable just how concerned they are about online privacy. They are not happy.

Another troubling aspect were my answers to the questions, invariably I had to fall back on the lines “only do what you’re comfortable with” and “it all comes down to a question of trust.”

The problem with the latter line is that it’s difficult to trust many online companies, particularly when their business models relies upon trading users’ data.

Resolving this trust issue is going to be difficult and it’s hard to see how some social media platforms and online businesses can survive should users flee or governments enact stringent privacy laws.

It may well be we’re seeing another transition effect happening in the online economy.

A bot named Willy and the risk of trusting data

Allegations of Bitcoin market manipulation are a reminder of the risks in blindly trusting data.

For two years we were captivated by spectacular rise of the Bitcoin virtual currency. Allegations those gains were a result of market fixing raise important questions about the integrity of our data networks.

The Coin Desk website discusses how the Mt Gox Bitcoin exchange was being ramped by computer bot network nicknamed Willy.

Rampant market ramping – where stock prices are pushed up to attract suckers before those in know sell at a profit – has a proud financial market history; during the 1920s US stock boom, fortunes were made by inside players before the crash and its subsequent banning in 1934.

So it wouldn’t be a surprise that some smart players would try to ramp the Bitcoin market to make a buck and using a botnet – a network of infected computers – to run the trades is a good technological twist.

Blindly trusting data

The Willy botnet though is a worry for those of us watching the connected economy as it shows a number of weaknesses in a world where data is blindly trusted.

As Quinn Norton writes on Medium, everything in the software industry is broken and blindly trusting the data pouring into servers could be a risky move.

The internet of things is based upon the idea of sensors gathering data for smart services to make decisions – one of those decisions is buying and selling securities.

Feeding false information

It’s not too hard to see a scenario where a compromised service feeds false data such as steel shipments, pork belly consumption or energy usage to manipulate market prices or to damage a competitor’s business.

Real world ramifications of bad data could see not only honest investors out of pocket but also steel workers out work, abattoirs sitting on onsold stocks of pig carcasses or blackouts as energy companies miscalculate demand.

The latter has happened before, with Enron manipulating the Californian electricity market in the late 1990s.

When your supply chain depends upon connected devices reporting accurate information then the integrity of data becomes critical.

Like much in the computer world, the world of big data and the internet of things is based up trust, the Mt Gox Bitcoin manipulation reminds us that we can’t always trust the data we receive.

Trusting technology and eliminating risk

All the technology in the world can never eliminate risk

As the search for missing Malaysian Airlines flight MH370 heads into its third week, a great deal of nonsense continues to be written about the flight and how its disappearance could have been prevented.

One good example of the tosh that’s being written is this piece in The Conversation where UK Open University lecturer Yijun Yu declares that cloud based technologies would have helped us solve the mystery.

While this may be true, Yijun’s article shows a deep trust in technology to solve all of our problems; in this case, insanely complex verification systems to ensure no-one is doing anything untoward.

Yijun is correct that better inflight technology could have told us much about MH370s location, however he also illustrates how we’ve become a society that doesn’t understand risk as we look to our gadgets to save us when a problem happens.

A cloud connected Boeing 777 probably wouldn’t have saved the souls on MH370 and ultimately it may prove that the technology wouldn’t have helped the searchers either.

We simply don’t know until the plane is found and, hopefully, the flight data information analyzed.

Despite the loss of MH370 air travel is safer than any other form of mass transportation and much of that is due to technology being cleverly applied.

There’s no doubt there’s much to be learned from the current search, we can expect rules on inflight communications to be tightened substantially as a consequence, but we’ll never eliminate risk.

In the meantime, we should join the families in praying for those lost aboard the aircraft and quit the silly theories.

Image of Malaysian Airlines Boeing 777 by Aldo Bidini via Wikimedia

Technology One and cloud computing’s gold rush

Technology One’s Adrian DiMarco has strong views about the outsourcing industry as he steers his company onto the cloud.

“Consulting companies are a blight on our industry” declares Adrian DiMarco, CEO of Technology One.

A quick way to rile DiMarco is by asking him about IT outsourcing as I learned during an interview at Technology One’s annual Evolve conference on the Gold Coast last month.

The 1600 enterprise clients attending this year’s Evolve conference illustrate Technology One’s growth since it was founded in 1987 out of DiMarco’s frustration with the multinational outsourcing companies.

“I used to work for multinational technology companies and as a young person I really used to want to work for them, I found it very attractive and I expected they’d be very attractive and cutting edge.”

The reality DiMarco found was very different; “I worked for them for years and found the opposite, just how bad and inefficient they were.”

“I really didn’t like what I was working with, the software we were using and stuff and I thought we can do it much better here in Australia. The idea was to build enterprise software.”

Moving to the cloud

Having built that enterprise software company DiMarco now sees his Technology One’s future lying in cloud services and empahises the importance of learning from the industry’s leaders.

“We looked at companies like Google, Salesforce, Facebook and Dropbox. These companies are the undisputed leaders in the cloud.

“One thing that we noticed was that you can’t get Google, Salesforce, Facebook from a hosted provider; you can’t get it from IBM or Accenture.

“The leaders in the cloud build it themselves so they are deeply committed to it, they run the software for their customers and they invest millions of dollars each year in making the experience better.”

“It is clearly what the cloud has always meant to be.”

DiMarco though sees problems ahead as vendors look to rebrand their products and warns businesses need to be careful about cloud services.

“It is the next big goldrush in the IT industry. IT companies, particularly service companies have over the last few years seen revenues decline so in order to find new sources of growth they are all targeting the cloud.”

Accountability and the cloud

The lesson DiMarco learned in the early days of cloud computing was that accountability is necessary when you’re trusting services to other providers.

“We had early customers that went to the cloud; we said ‘look, it’s a great idea and we think it’s the future’. They wanted to go with hosting providers and we thought it was a sensible decision and we saw a train smash, it was a train smash of epic proportions”

“They were running data centres overseas in Europe that had latency issues, performance issues and the customers were paying money after money after money.”

“The customer was getting a terrible performance and there was no accountability.”

“We couldn’t fix it because we had lost control over the customers.”

This lack of accountability is one of the reason why so many IT projects fail DiMarco believes, citing the notorious Queensland Health payroll project.

“Queensland Health again used this fragmented model; the party that built the software, which is SAP, used a third party which was IBM to implement it which meant no accountablity.

:That would never have happened If SAP had signed the contract, if SAP had implemented the software, which they won’t do, they would have known the risks that were being taken and they would have stopped that project and fixed it up.??“That’s the difference between our model and the competitors model.”

“They take no responsibility, they implement these systems, they charge a fee-for-service and they have open ended contracts – that’s how they get to be a billion dollars – and do you know who suffers? It’s the customers.”

Shifting away from consultants

DiMarco sees governments moving away from the consultant driven model that’s proved so disappointing for agencies like Queensland Health which creates opportunities for Technology One and other Australian companies.

“For the last fifteen years we’ve not been able to sell software to the state government. It’s just changing, we’re getting in there now, but it was a terrible problem for us.”

The shift from big consultants is a view endorsed by Sugar CRM co-founder Clint Oram who described how the software business is changing when he spoke to Decoding the New Economy last week.

Oram sees the software market challenging established giants like SAP, Oracle and Microsoft; “in the past it was ‘here’s my software, goodbye and good luck. Maybe we’ll see you next year.”

“If you look at those names, the competitors we see on a day-to-day basis, several of them are very much challenged in making the shift from perpetual software licensing.” Oram says, “it’s been a challenge that I don’t think all of them will work their way through, their business models are too entrenched.”

“Software companies really have to stay focused on continuous innovation to their customers.”

DiMarco agrees with this view, citing the constant investment cloud computing companies make in their products as being one of the advantages in the business model.

Building the Australian software industry

For Australia to succeed in the software industry, DiMarco believes the nation has to encourage and celebrate the industry’s successes.

“It’s about getting people to believe in Australian software. I think the Aussie tech industry needs a lot more successes we can point to,” DiMarco observes. “I think that will create enthusiasm, excitement and a hub for the rest of the community to get around.”

“We gotta get some big scale companies with some high visibility and get them successful.”

For the future of Technology One, DiMarco sees international expansion as offering the best prospects with the company having recently announced a UK management team as part of its push into the British local government market.

Hopefully DiMarco’s UK management team won’t have to deal with the local management and IT consultants as they try to sell into British councils.

Tell me something I didn’t know

Co-founder and CTO of Sugar CRM, Clint Oram, sees software changing in the way it delivers value to users and customers.

“Tell me something I didn’t know about my customer;” is what Clint Oram demands of his software.

“If you think about legacy of Customer Relationship Management tools it’s really been about entering something I already knew about by customer so my manager can keep track of me.”

Oram sees that changing with Sugar CRM, the open source Customer Relationship Management software company he co-founded in 2004 at a time when the software industry was coming out of the post dot com bust depression.

“There was a huge backlash by customers to the enterprise software market,” Oram remembers. “There were a lot of hopes and promises made of all this fantastic software that would change the world. The reality was a lot of it didn’t do anything.”

Foundations for the cloud

In Oram’s view, that disillusionment formed the basis of today’s cloud based software businesses with the market’s demand that software be delivered as a service, reducing up front commitments to any one product, commercial open source that gave customers a stake in development and annual subscription licensing.

That last factor – a radical change to the traditional software model that saw small businesses buy boxed programs and larger enterprises negotiate complex agreements with expensive implementation projects – is the biggest change to the modern software industry.

Oram sees that as challenging those established giants like SAP, Oracle and Microsoft; “in the past it was ‘here’s my software, goodbye and good luck. Maybe we’ll see you next year.”

“If you look at those names, the competitors we see on a day-to-day basis, several of them are very much challenged in making the shift from perpetual software licensing. It’s been a challenge that I don’t think all of them will work their way through, their business models are too entrenched.”

“Software companies really have to stay focused on continuous innovation to their customers.”

Freemium challenges

From his ten years in business, Oram learned the freemium model is a difficult way to run a business, “we learned that the freemium model is challenging and you gotta really focus on differentiation across your software editions and deliver clear value to each customer segment.”

While the Freemium business model remains a challenge, Oram sees mobile and the cloud as driving the CRM industry with the sector focusing on delivering more customer insights as software increasingly goes mobile and gets better at predicting behaviour.

“We’re taking these cloud, mobile based platforms that can be delivered anywhere and anytime,” says Clint “and now work on collecting that data about your customers and telling you what you should do next.”

“How do you help your customer to get the fullest value out of working with you.”

Delivering value to customers is a challenge not just for the software industry; in an era where business is far more competitive, it’s a question facing all industries.

Going to the cloud is not for the faint hearted

Technology One CEO Adrian Di Marco has strong advice for businesses that are looking at moving onto the cloud

“The cloud is not for the faint hearted,” warns Technology One CEO Adrian Di Marco in describing his company’s evolution into a software as service provider.

“We thought that this was five to ten years away, I’d like to say we got that wrong and this phenomena is happening now.” Di Marco said at the company’s 2014 Evolve conference on the Gold Coast today, “we’ve seen huge uptake in companies going to the cloud.”

A virtuous circle

Responding to that demand meant that Technology One had to redesign their software and update it to the meet the very different requirements of cloud services.

What Di Marco found in moving Technology One’s software onto the cloud was it became easier to identify problems and inefficiencies in his product, creating what he calls a “virtuous circle”.

It’s not just Di Marco’s customers who’ve been through that process, Technology One itself has gone all cloud internally with the company using services like Google Docs and Salesforce.

The aim of moving online is to make organisations more flexible with Di Marco citing the newly reformed Noosa Council in Queensland as being able to get up and running in four months by using cloud services.

Problems with the cloud

Despite being an enthusiast for cloud computing, Di Marco does sees some problems with the cloud, the first being that the term is overused and ill-defined which results in services being mis-sold.

A bigger problem in Di Marco’s view is a ‘gold rush’ has developed around the concept with revenue hungry vendors looking at making money

“IT companies, particularly consultancy firms, have over the last few years seen their revenues decline so to find new sources of growth they are all targeting the cloud.”

“Everybody wants to become a cloud provider, everyone wants to provide strategic services to do with the cloud.”

“There’s a lot of people offering very mediocre ideas, concepts and services.”

The key takeaway for businesses from Di Marco’s presentation was businesses need to be careful about their choices of cloud services providers.

Di Marco’s other point is that cloud services work best when there aren’t intermediaries such as resellers and integrators involved that reduce efficiencies and add costs.

“The cloud is a platform for the future of business,” sums up Di Marco. “Businesses that move to the cloud have an enormous strategic advantage, they can move at a pace that normal business can’t. They can move fast and innovate quickly.”

Hitting the eighty percent of needs

Cloud computing has changed the way we expect software to work and changed the entire industry’s philosophy.

“I don’t use ninety percent of what’s in Microsoft Word” has been the complaint of computer users for years as they struggled through the myriad features of box software products.

In the days of floppy disks and CDs, software developers tried to deliver as many features as they could; despite the fact that the ordinary user only needed a core set of functions and that most items on the menus went untouched.

The result was bloated, difficult to use software. The cloud computing model changes this, particularly in business fields like accounting software.

Last week saw a blitz of releases from cloud accounting services with Xero, Intuit and MYOB all making big announcements.

MYOB announced a wide ranging product refresh, Intuit their mobile service and Xero its new board directors that point the direction for its US expansion.

A key part of all the announcement was how the services are all boasting of their partner ecosystems developing add ons that improve users’ functionality.

Once consequence of having an army of developers plugging into the product means that companies don’t have to ship bloated packages that have dozens of features that are irrelevant to each users’ needs.

Xero’s Australian CEO, Chris Ridd, put this well during the week by observing that company aims to “address the basic eighty percent of needs”.

This is the exact opposite of the box software model of the past where vendors would try to pack more features into their products which gave rise to the term bloatware.

Microsoft’s Office package was probably the best example of this massive growth in the product size, with the installation files eventually taking up a full 4.3Gb DVD to deliver something that most people were happy with when WordPerfect 2.0 shipped on three floppy disks.

That change to the software model is a good example of how business practices and methods change as technology evolves; it also illustrates just one of the fundamental changes older software companies are having to deal with as cloud services change their industry.

We can still have all the features we want in a software package, but we’ll just have to connect – and probably pay for the add ons.

Today, we’re more likely to be scrambling to find an add-on rather than complaining about features we don’t need.

Passion and LinkedIn – how Connect2field went global

Connect2field founder Steve Oronstein tells how a combination of passion, smart investors and LinkedIn helped his business grow.

Passion is the key to building a successful startup business believes Connect2Field‘s Steve Oronstein.

Running an IT support service is a tough game and it was the lessons Steve learned in running a PC service business during his teens gave him the passion to solve some of the industry’s problems and the idea to launch what’s become part of a global business.

“My very first business when I was nineteen was an IT support business,” Steve says. “During that business I saw it was an absolute nightmare being able to manage all those field workers, managing job sheets and invoicing customers.

“I did that for four or five years and then decided I didn’t want to do that all,” remembers Steve. “I started seeing some opportunities to do some work in job management. From the knowledge I had from the problems in the previous business, I could see there was an opportunity for a product.”

Finding international investors

Steve quickly realised there was an international market for that business and Connect To Field quickly caught the attention of global investors, “I would constantly receive emails from VCs about investing the business.”

One day Steve received a LinkedIn connection and the path to being acquired by a larger company started.

“At the time Fleetmatics came along there were two businesses that were looking to acquire the business. That happened through a LinkedIn connection.”

“A request one morning from someone from Fleetmatics wanting to connect with me and wanting to talk about a partnership. That happened very quickly and we were acquired.”

The importance of smart investors

Steve thinks investors have been a critical part of the business’ growth and not just for the capital they bring in, but also for their expertise.

“The key thing in the very beginning was to raise investment from people who could also be mentors,” says Steve.

“I formed a board with five of people with skills in different parts of the business – legal, marketing, sales, technology”

“When we went through the acquisition space it was invaluable having a board we could bounce ideas off and strategise with.”

For Steve, his advice to other entrepreneurs is to be find a problem and be passionate about solving it.

“I was very passionate about being able to provide a solution for my customers and I knew that what we were delivering would add real value to those business.”

“Finding something that you’re passionate is the number one thing and the rest of it will follow,” says Steve.