Roman Stanek

Archive for the ‘cloud’ Category

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With friends like Forrester and Gartner, IBM and SAP don’t need enemies…

In BI, Work, cloud on February 15, 2010 at 7:21 pm


The Innovator’s Dilemma by Clayton M. Christensen is my favorite business book – its main idea (disruptive technologies serve new customer groups and “low-end” markets first) was the guiding principle of all my startups. The best part is that even though everybody can read about the power of disruptive technologies, there is no defense against them. Vendors can’t help themselves. They study The Innovator’s Dilemma, pay Christensen to speak to their managers, but their existing customer base and “brand promise” prevent them from releasing products that are limited, incomplete or outright “crappy.” That’s what makes them disruptive. And industry analysts seem to be the only hi-tech constituency that has either never read Christensen, or is still in absolute denial about it. It makes sense: a book claiming that “technology supply may not equal market demand” is heresy for people who spend their lives focused primarily on the technology supply side.

Christensen argues that vendors no longer develop features to satisfy their users, but just to maintain the price points and maintenance charges (can you name a new Excel feature?). But in many cases the vendor decisions are driven more by industry analysts and their longer and longer feature-list questionnaires. The criteria for inclusion into the Gartner Magic Quadrants and Forrester Waves seem to be copied straight from Christensen’s chapter: “Performance oversupply and the evolution of product competition”. Analysts are the best supporters that startups can have: they are being paid by the incumbents to keep them on a path of “performance oversupply”, making them so vulnerable to young vendors “not approved” by the same analysts!

Forester BI analyst Boris Evelson gives us a great example of this point in his blog about “Bottom Up And Top Down Approaches To Estimating Costs For A Single BI Report”. While Boris is a super smart BI analyst, he somehow failed to observe that his price point of $2,000 to $20,000 per report opens a huge space for economic disruption of the BI market. Anybody interested in power of disruptive technology in BI should listen to a recent GoodData webinar with Tina Babbi (VP of Sales and Services Operations at TriNet). Tina described how the economics of Cloud BI enabled her to shift TriNet’s sales organization “from anecdotal to analytical”. This would not be possible in the luxury-good version of BI, where each report costs thousands. Fortunately, Tina is paying less for a year for a “sales pipeline analytics” service delivered by GoodData than the established vendors would charge for a single report.

I hope Boris’ blog post will appear in one of the future editions of The Innovators Dilemma as a textbook example of how leading analysts failed to recognize that established products are being pushed aside by newer and cheaper products that, over time, get better and become a serious threat. And with friends like Forrester and Gartner, the incumbents don’t really need young and nimble enemies…

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Will Moore’s law find it’s way to the cloud?

In cloud on October 27, 2009 at 9:28 am

Moore’s Law states that computer system performance/price ratio will double every two years. And that was very much my expectation when GoodData started using Amazon Web Services almost 2 years ago. But I had to wait until today to see Moore’s Law at work: Amazon announced 15% drop of EC2 prices. The price of the small Linux instance was constant at $0.10 per hour for the last two years – now it will be $0.085.

15% in 2 years – not exactly the exponential growth in the performance/price curve that I expected. And I started to wonder why. Here are my two explanations – I believe the second one is more likely:

  1. AWS prices were set way too low to attract developers two years ago. Moore’s Law helped the price to catch up with the real cost of running the cloud.
  2. AWS is a monopoly and Moore’s Law does not apply.

What? Cloud and monopoly? Isn’t utility computing a perfect example of fiercely competitive commodity where the price curve is shaped only by demand/supply? What would Nick Carr say? Unfortunately not. As much as we read about different cloud providers, AWS is the only real provider of “infrastructure as a service” in town. If you don’t want to be locked-in to proprietary Python or .Net libraries there is not that much choice.

Until we will see performance/price of AWS double every two years, we should still wonder about monopolistic pricing.

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Please Don’t Let the Cloud Ruin SaaS

In BI, SaaS, cloud on October 1, 2009 at 2:49 pm

Back in the old good days of enterprise software, we did not need to worry about our customers. We delivered bits on DVDs – it was up to the customers to struggle with installation, integration, management, customization and other aspects of software operations. We collected all the cash upfront, took another 25% in annual maintenance. Throwing software over the wall … that’s how we did it. Sometimes almost literally…

I now live in the SaaS world. My customers only pay us if we deliver a service level consistent with our SLAs. We are responsible for deployment, security, upgrades and so on. We operate software for our customers and we deliver it as service.

But there now seems to be a new way how to “throw software over the wall” again. Many software companies have repackaged their software as Amazon Machine Image (AMI) and relabeled them as SaaS or Cloud Computing. It’s so simple, it’s so clever: Dear customer, here is the image of our database, server, analytical engine, ETL tool, integration bus, dashboard etc. All you need it is go to AWS, get an account and start those AMIs. Scaling, integration, upgrades is your worry again. Welcome back to the world of enterprise software…

AMI is the new DVD and this approach to cloud computing is the worst thing that could happen to SaaS. And SaaS in my vocabulary is still Software as a Service…

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Bad economics are difficult to shake off

In BI, cloud on September 24, 2009 at 9:12 am

Terry Pratchett once wrote that “Gravity is a habit that is hard to shake off”. We could make a similar comment about the financials of SaaS BI companies. As much as startups in this field would like to shake off their bad economics, reality always catches up. We’re seeing one after another SaaS BI startup to go out of business. Back in June it was LucidEra and earlier this week Blink Logic ceased operations. But anybody who only briefly looked at Blink Logic’s finances (it was a public company) shouldn’t be surprised by this event.

Why do so many of the attempts to marry BI and SaaS fail? The problem is that Saas BI sounds simple … simple enough to take an existing BI asset (integration engine, open source analytical engine, columnar database, dashboarding, even domain expertise & consulting) and just host it! All it takes is VMware or an AWS account, web server and Flash or JavaScript. Some people call this a paradigm shift, I call it window dressing. LucidEra was essentially restarted Broadbase, BlinkLogic was once called DataJungle, PivotLink recently changed their name from SeaTab, Cloud9 Analytics has a secret history as Certive, Success Metrics morphed into Birst. I could go on…

Why do SaaS BI companies have bad economics? It’s an attractive market – one of the last few open spaces in software. BI requires dealing with lots of data, lots of compute power and many users. SaaS + BI seems obvious. But truthfully, it’s such a difficult opportunity that it requires a new approach, yet everybody is taking shortcuts. SaaS BI isn’t just hosted BI just as email is not just better faxing, wikis are not just simplified Microsoft Word. Some time ago I wrote a case study on how my former company, NetBeans, was able to successfully compete against giants like Symantec, Borland or IBM, this case study is very relevant to our SaaS BI discussion.

The SaaS BI paradigm shift needs to be truly transformational in order to be successful – something that will get BI above the 9% adoption flatline it’s been at for years. Not everybody gets this. One of the best analysts in this space Boris Evelson wrote a blog post earlier this week where he focuses on differentiation of SaaS BI startups. His first question is: VC backing. Is the firm backed by a VC with good track record in information management space? But LucidEra was very well funded by leading VCs. The correct question that Boris should have asked is: Are the backers of the company funding innovation? Do they understand that it takes three years to become an overnight success?

At the end of the day, it’s about economics. At Good Data, our economics are simple – cloud computing, multitenancy and adherence to customer development. We’ve spent two years investing in innovation. That is what I tell my investors every day. And that is how we are going to avoid the startup death spiral.

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Small Pieces Tightly Joined: Open Source in the Cloud

In cloud on July 9, 2009 at 12:58 am

It’s not a shock to state that cloud computing will disrupt the business model of commercial software. But how it will affect the open source movement?

The rise of open source is clearly linked to the rise of the web. Buy a commodity piece of hardware, download source code of any of the thousands of open source projects and start to “scratch your own itch”. My Linux box will communicate with your Linux box as long as we stick to some minimal set of protocols. The web is loosely coupled and software can be developed independently in a bazaar style.

It’s not quite as straightforward in the cloud. Clouds are also composed of thousands of commodity PCs, but the cloud operator manages the overall architecture and deployment – power supply, cooling, hypervisors, security, networks and so on. We don’t rely on minimal set of protocols in the cloud. On the contrary the cloud is defined by fairly complex, high level APIs. Even though the actual cloud OS may come from the open source domain, the tightly coupled nature of the cloud prevents users from modifying the cloud software.

There’s a lot of talk today about setting up private clouds with an Open Source Cloud OS, but the idea of private clouds is simply a delusion. Since the owner of private cloud has to purchase all required HW upfront, private clouds don’t provide the main benefit of cloud computing: elasticity. Other people will claim that clouds are not compatible with the open source movement or call it outright ‘stupidity’.

I see two possible solutions to this problem:

Benevolent dictator: Leading cloud providers (Amazon, Google, MSFT) will open-source their complete stack. This means that they would let the community to inspect the code, fix bugs, suggest improvements and define a clear roadmap similar to the Linux roadmap. This will also require a role of benevolent dictator to manage the evolution of the cloud. Given the level of investment required to build and operate the cloud I don’t believe that this is likely scenario.
The new PC: The open source community accepts the cloud as the new HW/OS platform. Instead of building apps on top of x86 platforms (Wintel, Mac…), open source applications would be built on top of Amazon Web Services or Google AppEngine APIs. And these apps would handle the portability of data so that data doesn’t get locked in the cloud.

At the end of the day, cloud computing equals utility and utility creates stability. And a stable set of APIs, protocols and standards is a great place for open source to flourish. The best open source projects grew on top of stable standards: MySQL/SQL, Linux/x86, Firefox/http/HTML. I wonder what will be the most important OSS that will grow on top of the cloud…

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Cloud Expo Europe keynote: Building Great Companies on the Cloud

In cloud on May 19, 2009 at 8:38 pm

Yesterday I spoke at the first Cloud Computing Expo Europe and I enjoyed the conference very much. Here is my presentation:

PS. This presentation was featured today as one of the Top Presentations of the Day by Slideshare…

Looking for SOA in All the Wrong Places?

In SOA, cloud on February 5, 2009 at 4:02 pm

Systinet’s founding CTO and my friend Anne Thomas Manes pronounced the demise of SOA a few weeks ago. Honestly, SOA lost its meaning for me on the day when good, old Solaris became the “SOA operating system”. But is SOA dead or not? I don’t believe so but I think that Anne and others are looking for SOA in the wrong places. Here is why:

Part of our Systinet SOA pitch was this truism: “SOA is not something you can buy”. We believed that SOA didn’t come in a box and companies have to invest time and money to build it. And maybe this is the crux of the problem. What if the act of building internal service blueprint is beyond the capabilities and budgets of the individual customers? Go to the SOA mailing list and try to understand how to build your own SOA and you can spend the rest of your life reading the discussions and related blogs and comments.

Systinet SOA

My point is that IT departments will always spend most of their budgets keeping the lights on and there is not enough money left for a complete architectural redesign. And even if they decide to throw more money at it they will still not get it right because of lack of internal expertise, lack of vision and simply because it is too hard to rebuild systems that somehow “work”. Every company seems to have a set of requirements that none of the commercial products can ever satisfy and as a result the existing internal architectures are usually completely proprietary. And sediments of bad architectural decisions are nearly impossible to peel off…

Maybe it’s time to forget about this SOA delusion and look someplace else. For companies like Google, Amazon, Workday and others (including my company – Good Data) SOA is not only “yet another IT initiative” but the key differentiator that allows them to deliver a flexible and extensible set of services. And the only way IT departments will be able to “buy SOA” is to use services from the companies in the cloud. The role of proprietary internal architectures will diminish over time as companies move to an increasing number of on-demand services – and that is probably what Anne wanted to say when she declared SOA dead…

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Can Cloud IP Address Be Damaged Goods?

In cloud on December 6, 2008 at 4:01 am

Elasticity of the cloud computing is a wonderful idea. You can get an instance of networked computer exactly when you need it and you only pay for the time when you actually use it. But while the virtual memory and hard disk is a “clean slate” created specifically for you, the IP address assigned to your instance may have been previously used by a spammer and it could be already on a “spam blacklist”. In an extreme case the whole IP address range can be marked as a source of spam. And this is exactly what happened to Amazon’s EC2: “Go Daddy blocks links to EC2 “.

The problem is the scarcity of IP addresses — Amazon.com doesn’t have enough addresses to give every user a fresh new IP address with the new instance. And the solution to this problem is called Internet Protocol version 6/IPv6:

The very large IPv6 address space supports 2128 (about 3.4×1038) addresses, or approximately 5×1028 (roughly 295) addresses for each of the roughly 6.5 billion (6.5×109) people alive today. In a different perspective, this is 252 addresses for every observable star in the known universe – more than seventy nine billion billion billion times as many addresses as IPv4 (232) supports.

This means that there will be enough IP addresses not only for the elastic clouds but also PDAs, cell phones and other IP based clients. On the other hand it will make the “spam blacklists’ irrelevant since every piece of spam can come from a different IP address: “If the earth were made entirely out of 1 cubic millimeter grains of sand, then you could give a unique IPv6 address to each grain in 300 million planets the size of the earth” .