So – How much does it really cost?

Utility Computing is a nice idea … and it certainly gives you more time to focus on your core business, along with taking away the administrative burden of making sure your technology is working the right way … but how much does it cost?

Everyone will tell you that Utility Computing saves you money (especially considering you don’t have to buy server hardware) … but how much? Really?

In this rare, self-promotional blog post, I wanted to point you to a Utility Computing cost calculator that we have just added to the Hoolipot web site. Just click on the benefits tab to access it. You don’t have to sign in, register, provide your email address or promise us your first-born … just fill in three boxes and see what sort of money you could be saving.

Huge thanks to my amazing web-design master (mistress?), Maggie – for creating this calculator – and the rest of the site. She’s amazing!!

Top 10 Reasons Why Utility Computing Would Work In Your Business

This is a post that I currently have on the Hoolipot website. I wanted to repost it here for a couple of reasons … firstly, with the help of a wonderful web designer (more on that later) I’m planning to replace the old version of the Hoolipot site with a vastly improved one … and secondly, because I figured that this list could come in useful to people who visit the blog but not the website!

So, in reverse Letterman style, here are the top 10 reasons that you should consider Utility Computing in your business today:

1. These are tough economic times – and you need to be sure that you are focusing on growing your business and reducing costs. You don’t waste customer-facing time worrying about electricity, gas, water or the telephone … don’t do it for your business applications either. Grow your business instead!
2. You want to save money – and you can do that by increasing the productivity of your key resources. Don’t under-utilize your staff having them do things they’re not trained to do. Instead, let them focus on the ways they add real value to your business. You wouldn’t cancel courier services and ask your assistant to deliver all your packages …
3. You want flexibility – and you thought that having your own IT equipment would provide that. But you soon find that the highest IT costs aren’t component costs but labor costs, maintenance costs, electricity costs, and other secondary expenses – and that owning your own equipment ends up reducing your flexibility rather than increasing it
4. You want to focus on your core business – and not spend time away from your customers fixing IT problems. How much time do you currently spend working on your computer equipment/applications/backups? Wouldn’t that time be better spent with your customers?
5. Your business data is critical to your business – and you need to know its safe and secure. How often do you backup your data? Where are those backups kept? When was the last time you tried to “restart” your business using those backups? If your business premises were destroyed in a fire, how long would it take you to recover?
6. Your business data is critical to your business – and you want it in the hands of a professional. Just like you wouldn’t ask your receptionist to fix the brakes on your car (unless he/she was also a licensed mechanic), your business data/applications should be maintained by an expert. It’s just that important!
7. You want to be able to access your applications from anywhere – how convenient it would be to be able to connect to your business applications from the office, from home, from a customer site or from on the road. Just like Gmail or Hotmail, your applications and data are available anywhere at anytime
8. Your business isn’t IT – so why are you doing it? When you get your tax prepared; your car repaired; your dry-cleaning done; your documents couriered; your office cleaned; or your dinner delivered, you are outsourcing. Spend more time focusing on your core business – and less time worrying about the tools
9. You want to reduce capital spending – there’s no need for you to spend money on expensive servers. “Back-end” computer hardware is an investment that no longer needs to burden your business. And if you don’t need it, now is not the time to sink capital into it
10. You run one of California’s small businesses – and like the other 637,737 business owners in the same boat, you know that there are real financial benefits (cost reductions between 12% – 17% annually according to Forrester Research) to IT outsourcing, but its only been available to big corporations … until now

What do you think? Is this something that you have done … are considering … or would never do?

Microsoft thinks cloud is bad … and they would know!

To be honest, this is an “angry” piece of writing. A rant … a diatribe … whatever you might like to call it. But I just couldn’t let this go!

Microsoft (yep, the same company that recently demonstrated that they are unable to manage other people’s data) have come out with a “white paper” outlining their concerns about cloud computing. Here’s an article about that release from a leading Australian Newspaper. Take a few moments to read it, and I DEFY you not to be flabbergasted at the astounding combination of arrogance and ignorance they they are displaying.

… just breathe … in and out … in and out … ok …

The funny thing is – the point they were making about security is a good one – they were just the wrong company to make it, on so many levels! Its like a lion lecturing a herd of gazelles on the virtues of not becoming food. Let me count the ways:

1. Microsoft themselves are notoriously bad at looking after other people’s data
2. The cloud model is in direct competition with the current MSFT business model (no matter how much they talk about their half-hearted efforts in this direction)
3. Let’s remember that this is the company that used to tell us that the internet was a passing fad (until they realized how much money Netscape were making and engaged in some dodgy behaviour to force consumers to use their own product)
4. Their spokesman makes no sense. What does this mean –> “We want to take the initiative in regard to our position on privacy in the cloud” <– that’s a nonsense statement. It means nothing at all!
5. Oh, and what about “Companies should know where their data is sitting in the cloud”? Huh? The whole IDEA of the cloud is that applications and/or data could run anywhere. How would it be beneficial to a company to know where its data is residing? Wouldn’t that actually negate one of the major security benefits of the cloud?

Hard as it may be to believe, I’m NOT a Microsoft-hater … at all! They have been a revolutionary company in the history of computing, and have been almost solely responsible for bringing computing to the masses. But you see, that’s what upsets me most of all – here is a company that many consumers look to for leadership – and it’s disturbing that they see fit to abuse that position by spreading fear, uncertainty and doubt about a market where it just hasn’t tried hard enough.

Sure, you have to watch who has access to your data – there’s nothing new there – just don’t paint the cloud as the bogeyman!

So really … Why ISN’T Everyone Doing It?

In an earlier post on this site, I introduced the idea that Utility Computing was such a great idea that everyone should be doing it. A nice postulation … but one that is not being reflected in the real world. Why? I stand by my praise of Utility Computing in my earlier post – and there’s even a good chance that YOU agree with me (seeing as you are a reader of this blog) – but we are not seeing the adoption of Utility Computing that we would hope for. I would suggest that this is due to a number of factors:

1. Utility Computing is relatively new – and people don’t really know about it. There is a mindshift that needs to take place amongst people who USE technology, and this will take time. Getting people to understand that they DON’T need to have a server in their back room in order to run a business means that they have to rethink their approach to technology.
2. Fear of Change – related to the above point is the fact that because people don’t understand how this works, they (naturally) find it hard to trust it. Surely if they give their applications and data to someone else, they will lose control of them? How will they be able to be flexible when they don’t have their own applications on site? Business people will come to learn that they actually GAIN flexibility and control in a Utility Computing model – but this will take time and education.
3. No one else is doing it – this is a common objection – and its just not true. Google Premier Applications (a great example of Utility Computing) has over 1.75 million businesses using their service! We advocates of Utility Computing need to be more vocal about successes like this – this one is entirely OUR fault, and shows that we need to get better at telling the story, and getting the message out to prospective customers.
4. Traditional technology advisors are against it – The technology advisors for many businesses are hardware and software vendors – and many of them (quite correctly) see Utility Computing as something that will be detrimental to their business. As such, its not a high priority for these vendors to educate their customers on the virtues of Utility Computing
5. Security Concerns – Its strange that the same people who keep their server in the back of their office and perform the occasional untested backup are concerned about the security of their data – but I hear this one a LOT. In a Utility Computing infrastructure, data is encrypted along with being physically and digitally protected. Data is replicated to multiple servers (unless you’re Microsoft) in real time – meaning that you (and only you) ALWAYS have access to your data, no matter what disaster may befall one data center
6. We use specialized software – In fact, most people do. And while this may not be as straightforward as replacing your MS-Exchange with Google Applications, it can definitely be done, and there are plenty of great Utility Computing companies out there (like Hoolipot) who can help customers get their non-hosted software into a Utility Computing infrastructure. Technology has caught up with the “dream” of Utility Computing – and its now something we can ALL do.

So, working on the assumption that readers of this blog are fans of Utility Computing, what should we do? I would suggest that our course of action needs to start with Education. We need to teach people what Utility Computing is all about – to counter the propaganda they are hearing from their hardware salespeople – and to demonstrate to them that this is the safest, most economical route for their business. We need to become “evangelists” for Utility Computing (minus the robes) and infect others (minus the H1N1) with our enthusiasm for it.

Any other ideas? Comment below!!

What Does The Sidekick Failure Mean to Utility Computing?

Another week, another scare … and it seems that this is yet another case of people trusting their data to the wrong people … and those people doing a lousy job of protecting it. For those that haven’t heard about the Sidekick fail, check out articles here, here and here. This recent failure should teach us a number of lessons – but a distrust of Utility or Cloud Computing shouldn’t be amongst them. The two lessons that I would suggest we learn are:

1. Architect your solutions properly – Part of the reason why everything fell in a heap was the very strange design that the Sidekick operating system used. In the event that a Sidekick was powered down/reset, it would reload all its data from the server – with a rule in place that meant that the server would “win” any conflicts. So, when Microsoft lost all the customers’ data, the devices compared their internally stored data to the blank space on the server, assumed the server was right, and overwrote the data with blank space. Nice, huh?
2. Work with the right providers – If you are looking for a Utility Computing or Cloud Computing provider, seek out professional organizations. Whether you love or hate Microsoft, you have to admit that they aren’t a player in this space – and the only reason that they are even involved is because of an acquisition they conducted early last year. Also, you have to remember that Microsoft have their own competing mobile operating system – and some commentators are even suggesting that they may have done this on purpose (of course there is no evidence of that, but you can see the conspiracy theorists going there, can’t you?).

So – what does this mean for Utility Computing? Just that – architect your solutions well, work with the right business partners and keep believing in Utility Computing.

Uh Oh … Password Scam! That means Utility Computing Won’t Work!

I’m being facetious. Let me just point that out from the start.

Earlier this week, a news article came out about Google and Hotmail (amongst others) email account information being posted online. Not exactly the news you want to hear if you are considering a switch to Utility Computing, right? I mean, if ALL your business applications (not just your email) were online, could people really access them this easily? Possibly.

The account information that was posted was obtained through phishing attacks. People who “phish” pretend to be someone else in order to get access to your information. It’s a classic confidence scam, and would be like someone turning up at your office, telling you they were there to fix the computers, and then walking out the door with them. Unfortunately, that sort of thing happens all the time. In other words, there’s really nothing new about phishing, its just a new word (and some new tools) for something that has been going on since the dawn of time.

But here’s the problem – the internet is the great multiplier. Instead of the bad guy turning up at a single office under the guise of being a computer repairman, he can sit at home and send emails to tens of millions of people with just a few clicks. Even if only a fraction of a percent of the people who get the email “fall for it”, the bad guy now has thousands of pieces of data that he can use to commit further fraud. So, instead of hitting 3 offices a day, he can hit millions of people with less effort, and probably less risk. Its the same multiplier that the spam emailers use – even if only 0.001% of people they email actually decide they need a little Viagra, they have been successful. And they have done all this at virtually no cost. The internet has made life easier for all of us – INCLUDING the bad guys.

So – does this mean that Utility Computing applications are unsafe? Well, it depends on whether you would let someone into your office without checking their ID. It depends on whether your colleagues would give out confidential information without being sure of who was getting it. In other words, this COULD happen to you … and that’s why you need to be careful. Follow all the standard security advice – change your passwords regularly, don’t use passwords that are easy to guess, ensure that you are accessing secure sites … and (unfortunately) be less trusting. Technology alone won’t prevent these con-artists from continuing their efforts – threat models can reinvent themselves in less than a month while technology standards can take up to 10 years to catch up.

But to answer the question posed by the title of this post – does this mean that Utility Computing won’t work? No. This is not a reflection on Utility Computing – it is a reflection on the fact that the bad guys can now reach more people than ever before, and we all have to be more careful – and less trusting – than even before.

Why Change?

I was talking to someone this morning about online financial applications. They made a comment that online versions of financial management software tend to have fewer “bells and whistles” than locally-installed versions … and that the only reason that people would consider an online version would be if they had multiple locations that all needed to access common information. I’m sure that this is a pretty common perspective when it comes to online applications – after all, why would you NOT have something as important as your financial data installed where you could control it best – in your own office? Let me answer that – in two parts:

Fewer Bells and Whistles
I worked for a software company for over 12 years. For most of that time, I worked in Product Management and Strategy – determining future direction of the software products, and deciding which features would be included in the upcoming releases. We always said that product features were determined by studying the market and listening to our customers’ requests … but in reality, that’s not what happened at all. In most cases, WE would (internally) come up with the features that we thought would work in the product, and THEN look for customer requests that supported our decisions. We put in features that WE thought would be cool, or the Engineering team thought would be cool, or the VP of Engineering thought would be cool … and sometimes, that would match customer demand too. After working in this environment for so many years, I would estimate that the average user of our software regularly used about 20% of the functionality that was actually there – because that was all he/she needed. More often than not, the bells and whistles included in a software product are not really there for any good reason at all – its just more code that can contain bugs and more configuration options that can confuse users. So why not keep it simple?

Install Locally as Default
Up until recently, there really was no option. Network bandwidth limitations, security concerns and data storage were all good reasons why local installs were the only way that software was implemented. But let’s look at the facts/fallacies associated with this now:

• Fallacy: Your data is more secure if its on your own computer equipment. Actually, the big data leaks that have made the news recently have happened when people have “lost” laptops containing sensitive data. Companies providing hosting services understand the importance of data security, and spend a lot of money and time making sure that they have the best protection systems in place – after all, its their business. Compare that to the server you have sitting under a desk in the back of your office – which do you think is more safe?
• Fact: The bandwidth limitations of yesterday are gone – network bandwidth is now far cheaper, and more available than it has ever been in the past. This means that applications can now run across the internet at similar speeds to locally installed applications. Look at Amazon.com, Travelocity.com or Hotmail.com as examples.
• Fallacy: You will lose control of your applications if they are hosted . Actually, you will have more ability to control your applications if they are hosted because you are not concerned with software and hardware upgrades, backups and the like. Nicholas Carr¹ made the point that “Ironically, even as many smaller companies are embracing hardware hosting, software-as-aservice, and other forms of utility computing, many others are currently building up their IT assets, drawn by low component costs. I think those companies are going to end up regretting a lot of the investments they’re making. They’ll soon find that the highest IT costs aren’t component costs but labor costs, maintenance costs, electricity costs, and other secondary expenses – and that owning your own gear ends up reducing your flexibility rather than increasing it”.
• Fact: Hosted applications are much cheaper to operate than locally installed ones. Even just considering the basic “office” applications, Forrester Research has estimated that these applications cost the average business $300 per user per year. Once you include labor costs, that estimate becomes even worse – in fact, for a 10 person company, the cost per employee per year for Microsoft Exhange 2007 is in excess of $4500! Compare this to $426 per employee per year (including all labor costs) for a better online solution! That’s a 90% cost saving!
• Fallacy: Your backups will work for you in the case of a disaster. Have you ever tried restoring from a backup and operating your business from it?In around 95% of cases, it doesn’t work. Applications and configurations change over time, and backups are rarely reconfigured to keep up with these changes. Online applications have backup built in – data is automatically replicated so that even if a meteor took out a whole data center, another one containing the same information would be instantly online – without even a blip.

So I guess, my response to the person I was talking to was predictable. Keep applications simple … and use hosted applications wherever possible … especially in small businesses!

¹ “An IT Sea Change for Smaller Companies” – http://www.roughtype.com/archives/2006/09/an_it_sea_chang.php

The Metaphor … continued

The cable TV metaphor I introduced a couple of weeks back (in this post) has been extremely helpful in explaining the benefits of Utility Computing – along with the cost and support structures. As such, I thought it would be worthwhile to explore this a little further – with some more concrete examples. For these examples, I will use the offerings from Hoolipot to illustrate how this works:

Cable Television	Package	Utility Computing
Basic Cable Limited Basic Starter	Basic Business	Email Word processing Spreadsheets Presentation Calendaring Webpage creation Instant messaging Video sharing Web and message security
Expanded Basic Digital Preferred Premium Channels	Enhanced Business	Basic Business plus: Small business accounting capabilities Online payment (credit/debit card capabilities) Online Payroll
Sports Package Movie Channels Cable Latino	Specialized	Either Basic or Enhanced Business plus your own specialized business applications. These applications might be specific to your vertical or they may be custom built applications that you use to run your business.
Pay-per-view	On Demand	Applications required for short-term use only. This may include marketing, design or CRM tools

As you can see, the offerings line up extremely well – and you can even include the use of “pay-per-view” applications which may only be required on a temporary basis.You can even use this metaphor to answer a question I saw posed during the week about the software vendors, and where they will fit in this new model. The software vendors will be the “TV networks” in this model. They will continue to produce content (in the same way that ABC, CBS and HBO do) which will be “broadcast” to customers who have “subscribed” to their “channels”. Some software vendors will refuse to make this transition – possibly to their detriment.

Is this description in line with how you view Utility Computing? I would love to hear your thoughts on this!

Utility Computing SLAs

When comparing Utility Computing to “traditional computing” (for want of a better term), a question that often comes up is around service level agreements, and service level management in general. ITIL (and other IT process guidelines) have ensured that most IT professionals have understood the value of Service Levels, and have used them as a way to broker an agreement between themselves and the rest of the business. The cynical observer would see this just as a way for IT to cover it’s ass, but the smart organizations with SLAs in place actually use them to the benefit of both the business (they know what to expect) and the IT department (they know what is expected of them). SLAs are usually performance and/or availability based (although there are plenty of other ways that service levels can be measured). A performance-based SLA will often state something like:

“A priority one call placed to the Service Desk between the hours of 8am and 6pm will be acknowledged within 5 minutes, and will have a support engineer working on it within 15 minutes”

… while an availability-based SLA might look like this:

“The Oracle Financials application will be available 99% of the time during normal business hours and 99.99% of the time during the end-of-quarter period”

So, when you move to a UC model, what are the SLAs? Who maintains them? What are the consequences of them not being met? If many different businesses are all getting their computing utility from the one resource, how are different SLAs maintained? So many questions … but the answer is pretty simple.

Since a UC provider is just about providing business applications as a utility, there can only be one real measurement – application availability. No other measurement matters. The business (consumer) of a UC service doesn’t care about servers, databases or networks … they just need their business application available when they need it. They don’t even care about how long it takes someone to respond to their call or provide a workaround – because they are just determining factors of application availability. If the application is available as it should be, then everything else will fall into place.

So, if there’s only one measurement … what should it be? As one of the pioneers in the Utility Computing space, Google obviously would have put a lot of thought into this … and they came up with 99.9% availability as their SLA commitment. This means that their applications can be unavailable for 8.7 hours per year – just over one business day in a whole year. If they exceed that, they start giving free service (as defined here) to each of their 1.75 million business customers! 99.9% (often called “three-nines”) seems like a pretty realistic expectation for a UC customer … considering this is probably FAR less downtime than they experience with their self-maintained applications.

So there’s one more thing that UC makes easier for it’s consumers. No complex SLAs to wade through; no IT department trying to use those SLAs to defend itself from the business it is supposed to be supporting; just a simple, measurable, actionable number that actually means something to the business.

Bulletproof Utilities

One of the most common arguments used against Utility Computing is one that states “because my IT is mission critical to my business, it needs to be bulletproof … and I can’t rely on a third-party to provide that level of service”. When using this argument, people even cite examples like the recent GMail outage (which some wags called “GFail”) as an example of why Utility Computing won’t work.

But in reality, how different is this to the expensive corporate email systems many companies use? According to Osterman Research, corporate e-mail systems in mid-size and large organizations have a mean of 53 minutes of unplanned downtime in a typical month. That works out to almost 11 hours a year … and that’s just the UNPLANNED downtime. Also, don’t forget that those corporate email systems are maintained by expensive corporate IT staff. Compare that to GMail – who have just had just a few outages this year (all of which they fixed quickly) on a system that is free for the majority of its users, and very affordable for those businesses who pay for it. Its not hard to see which side of the argument makes the most sense.

Its also interesting to observe the reactions of people after this incident. Most of the comments on the articles written about “GFail” were sharply divided into the two camps of “Business” and “Technical”. The technical guys were indignant that they had lost their email, and threw about suggestions that fellow geeks should “maintain an IMAP client” or “enable POP access” and there were some genuinely worried people out there … “Words and phrases like “apocalypse” and “digital terrorism” really did come to mind when I realized the #gfail” … perhaps a little dramatic? The business perspective was much more level-headed, with people commenting that while the outage was inconvenient, Google’s response was quick and professional. It was the business people making comments like “We use Google Apps for our small consulting business. The outage affected us, but not critically. The question for a business has to be – what do you get in return for the money you pay?” … and this is the crux of the matter. Email – like other Utility Computing applications – is a business tool. It does not exist for the gratification of the “techies”, and it is not about them that we should be worried when an outage is experienced. On the contrary, it’s their job to get things back up and running so that business is impacted as little as possible.

So – if you want to talk about Utility Computing, don’t talk to a techie (at least, not at first) … talk to a business person who understands why these applications exist in the first place. They will tell you that they don’t need bulletproof, just reliable … and there’s a big, and expensive, difference!