Takeaways from the Goldman Sachs and Rutberg Conferences

I recently attended the Goldman Sachs Datacenter Techtonics and the Rutberg Wireless Influencers conferences.  Cloud computing and SaaS figured prominently in both events.  This was not a surprise for the first conference but it was for the second.  I have consolidated my takeways in the following categories:

• Reasons for adopting cloud computing and SaaS.  Corporations continue to aggressively adopt cloud computing because it provides them with:
  • Elastic scalable infrastructure at the point of need, leading to business agility.
  • Improved user experience through a more web-based user interface, accelerating the consumerization of the enterprise.
  • Ease of deployment since business users want to simplify their IT structures and use computing more effectively
  • Integration with social and collaboration tools, again contributing to the consumerization of the enterprise
  • Cost reduction.  For example, in the Goldman event it was reported that IaaS may be leading to 20% in cost reductions.
  • Measurability that enables benchmarking and analytics-driven decision-making.  Due to the Internet’s measurability, analytics on the data generated through the use of SaaS applications provides unprecedented insights around business benchmarking (see my post on Insight-as-a-Service), user engagement that can help the application developer to constantly improve various aspects of the user experience, as well as improve customer Lifetime Value (LTV) and reduce customer churn.
• Cloud computing adoption metrics.  Enterprise adoption will occur in stages.  It has started with private cloud deployments and some experimentation of the public cloud particularly around application development and testing.  Hybrid clouds in the enterprise will continue for the foreseeable future.  Virtualization is the key technology for private clouds and participating enterprise IT executives stated that (a) 50% of their servers are virtualized along with 60-70% of desktops, (b) all new application deployments are on virtualized servers, and (c) within 5 years 30-50% of enterprise applications will be cloud-based.  It should be noted that within the same period 100% of the companies with less than 100 employees will only use SaaS applications and cloud-based IT infrastructure. Corporate IT is investing on ways to increase server and storage utilization (backup storage is aggressively moving to the cloud explaining again 3PAR’s high acquisition price), improve service (computing and storage) provisioning with the ultimate goal of getting to self-provisioning, and manage private clouds. 
• Issues preventing broader adoption of cloud computing:
  • Data and application integration has emerged as the primary issue. Information Logistics as the process of moving data among the various cloud-based and on-premise applications being used by an enterprise.  We are shifting from worrying about how a single SaaS application ingests data to how a set of on-premise and cloud-based applications work together to automate a business process. 
  • Security is an inhibitor but it is no longer the top issue as it was as late as a year ago. 
  • Customizability of SaaS applications is still an issue for the larger enterprises but the SaaS vendors are providing additional application controls allowing for greater configuration of each application while they continue to focus on having all their customers run under a single application version. 
  • SLAs (defining them and adhering to them). 

• Social computing. Social computing functionality is starting to aggressively be incorporated into enterprise applications, raising the bar on what the corporate business user should expect as baseline functionality of any enterprise application.  SaaS applications have the upper hand in this area.  Compared to on-premise applications, SaaS applications can both interface easily with external social networks and applications, but can also more easily integrate and embed social functionality.  Despite these characteristics it is not clear yet whether enterprise social computing applications will be offered as standalone system or as components of other SaaS applications, e.g., Chatter.  It is also not clear whether standalone enterprise social computing applications will be easily monetizable.  Finally, Taleo, that is now starting to aggressively focus on analytics, views the data generated by enterprise social applications as very valuable.
• Mobility and cloud computing.  By 2014 the number of users accessing the internet through a mobile device and the bandwidth requirements associated with that will surpass the PC ecosystem’s, as a whole.  This will lead vendors to build applications with an eye to mobile first, which is accomplished more easily under a SaaS model.  Business users are starting to view mobile and SaaS interchangeably.  Smartphones and tablets are becoming additional catalysts for moving applications and data to the cloud.  Small business owners want to run their entire business on a tablet or a smartphone.  HTML5 will be used to deliver the right user interface experience in these devices.
• Application granularity.  Mini apps, of the type found today in mobile phones and tablets, will provide the next-generation enterprise application development model replacing the large scale applications being developed by corporate IT to date.
• Enterprise IT.  Several business executives in both conferences stated that enterprise IT organizations are:
  • No longer in the position to address corporate user needs.  Corporations need new, cloud-based application deployment models.  In another sign of the impact of mobile in corporate IT and of the consumerization of the enterprise, I heard that application stores are being carefully considered in order provide one such alternative deployment model.  By the way, this is the reason we invested in PocketGear.
  • Becoming the controllers of data, i.e., they control the data that is being served to cloud-based applications, rather than the developers of new applications.  Application development is rapidly shifting to vendors.

I recently attended the Goldman Sachs Datacenter Techtonics and the Rutberg Wireless Influencers conferences.  Cloud computing and SaaS figured prominently in both events.  This was not a surprise for the first conference but it was for the second.  I have consolidated my takeways in the following categories:

• Reasons for adopting cloud computing and SaaS.  Corporations continue to aggressively adopt cloud computing because it provides them with:
  • Elastic scalable infrastructure at the point of need, leading to business agility.
  • Improved user experience through a more web-based user interface, accelerating the consumerization of the enterprise.
  • Ease of deployment since business users want to simplify their IT structures and use computing more effectively
  • Integration with social and collaboration tools, again contributing to the consumerization of the enterprise
  • Cost reduction.  For example, in the Goldman event it was reported that IaaS may be leading to 20% in cost reductions.
  • Measurability that enables benchmarking and analytics-driven decision-making.  Due to the Internet’s measurability, analytics on the data generated through the use of SaaS applications provides unprecedented insights around business benchmarking (see my post on Insight-as-a-Service), user engagement that can help the application developer to constantly improve various aspects of the user experience, as well as improve customer Lifetime Value (LTV) and reduce customer churn.
• Cloud computing adoption metrics.  Enterprise adoption will occur in stages.  It has started with private cloud deployments and some experimentation of the public cloud particularly around application development and testing.  Hybrid clouds in the enterprise will continue for the foreseeable future.  Virtualization is the key technology for private clouds and participating enterprise IT executives stated that (a) 50% of their servers are virtualized along with 60-70% of desktops, (b) all new application deployments are on virtualized servers, and (c) within 5 years 30-50% of enterprise applications will be cloud-based.  It should be noted that within the same period 100% of the companies with less than 100 employees will only use SaaS applications and cloud-based IT infrastructure. Corporate IT is investing on ways to increase server and storage utilization (backup storage is aggressively moving to the cloud explaining again 3PAR’s high acquisition price), improve service (computing and storage) provisioning with the ultimate goal of getting to self-provisioning, and manage private clouds. 
• Issues preventing broader adoption of cloud computing:
  • Data and application integration has emerged as the primary issue. Information Logistics as the process of moving data among the various cloud-based and on-premise applications being used by an enterprise.  We are shifting from worrying about how a single SaaS application ingests data to how a set of on-premise and cloud-based applications work together to automate a business process. 
  • Security is an inhibitor but it is no longer the top issue as it was as late as a year ago. 
  • Customizability of SaaS applications is still an issue for the larger enterprises but the SaaS vendors are providing additional application controls allowing for greater configuration of each application while they continue to focus on having all their customers run under a single application version. 
  • SLAs (defining them and adhering to them). 

• Social computing. Social computing functionality is starting to aggressively be incorporated into enterprise applications, raising the bar on what the corporate business user should expect as baseline functionality of any enterprise application.  SaaS applications have the upper hand in this area.  Compared to on-premise applications, SaaS applications can both interface easily with external social networks and applications, but can also more easily integrate and embed social functionality.  Despite these characteristics it is not clear yet whether enterprise social computing applications will be offered as standalone system or as components of other SaaS applications, e.g., Chatter.  It is also not clear whether standalone enterprise social computing applications will be easily monetizable.  Finally, Taleo, that is now starting to aggressively focus on analytics, views the data generated by enterprise social applications as very valuable.
• Mobility and the cloud computing.  By 2014 the number of users accessing the internet through a mobile device and the bandwidth requirements associated with that will surpass the PC ecosystem’s, as a whole.  This will lead vendors to build applications with an eye to mobile first, which is accomplished more easily under a SaaS model.  Business users are starting to view mobile and SaaS interchangeably.  Smartphones and tablets are becoming additional catalysts for moving applications and data to the cloud.  Small business owners want to run their entire business on a tablet or a smartphone.  HTML5 will be used to deliver the right user interface experience in these devices.
• Application granularity.  Mini apps, of the type found today in mobile phones and tablets, will provide the next-generation enterprise application development model replacing the large scale applications being developed by corporate IT to date.
• Enterprise IT.  Several business executives in both conferences stated that enterprise IT organizations are:
  • No longer in the position to address corporate user needs.  Corporations need new, cloud-based application deployment models.  In another sign of the impact of mobile in corporate IT and of the consumerization of the enterprise, I heard that application stores are being carefully considered in order provide one such alternative deployment model.  By the way, this is the reason we invested in PocketGear.
  • Becoming the controllers of data, i.e., they control the data that is being served to cloud-based applications, rather than the developers of applications.  Application development is rapidly shifting to vendors.