The New World Order

Industry trends come and go. The ones that stay with us and have lasting impact are those that fundamentally change the cost equation. Public clouds clearly pass this test. The potential savings approach 10x and, in cost sensitive industries, those that move to the cloud fastest will have a substantial cost advantage over those that don’t.

And, as much as I like saving money, the much more important game changer is speed of execution. Those companies depending upon public clouds will noticeably more nimble. Project approval to delivery times fall dramatically when there is no capital expense to be approved. When the financial risk of new projects is small, riskier projects can be tried. The pace of innovation increases. Companies where innovation is tied the financial approval cycle and the hardware ordering to install lag are at a fundamental disadvantage.

Clouds change companies for the better, clouds drive down costs, and clouds change the competitive landscape in industries. We have started what will be an exciting decade.

Earlier today I ran across a good article by Rodrigo Flores, CTO of newScale. In this article, Rodrigo says;

First, give up the fight: Enable the safe, controlled use of public clouds. There’s plenty of anecdotal and survey data indicating the use of public clouds by developers is large. A newScale informal poll in April found that about 40% of enterprises are using clouds – rogue, uncontrolled, under the covers, maybe. But they are using public clouds.

The move to the cloud is happening now. He also predicts:

IT operations groups are going to be increasingly evaluated against the service and customer satisfaction levels provided by public clouds. One day soon, the CFO may walk into the data center and ask, “What is the cost per hour for internal infrastructure, how do IT operations costs compare to public clouds, and which service levels do IT operations provide?” That day will happen this year.

This is a super important point. It was previously nearly impossible to know what it would cost to bring an application up and host it for its operational life. There was no credible alternative to hosting the application internally. Now, with care and some work, a comparison is possible and I expect that comparison to be made many times this year. This comparison won’t always be made accurately but the question will be asked and every company now has access to the data to be able to credibly make the comparison.

I particularly like his point that self service is much better than “good service”. Folks really don’t want to waste time calling service personal no matter how well trained those folks are. Customers just want to get their jobs done with as little friction as possible. Less phone calls are good.

Think like an ATM: Embrace self-service immediately. Bank tellers may be lovely people, but most consumers prefer ATMs for standard transactions. The same applies to clouds. The ability by the customer to get his or her own resources without an onerous process is critical.

Self service is cheaper, faster, and less frustrating for all involved. I’ve seen considerable confusion on this point. Many people tell me that customers want to be called on by sales representatives and they want the human interaction from the customer service team. To me, it just sounds like living in the past. These are old, slow, and inefficient models.

Public clouds are the new world order. Read the full article at: The Competitive Threat of Public Clouds.

James Hamilton

e: jrh@mvdirona.com

w: http://www.mvdirona.com

b: http://blog.mvdirona.com / http://perspectives.mvdirona.com

6 comments on “The New World Order
  1. Great article Rodrigo and, yes, you are right, it is a culture shift. But, one worth making.

    –jrh
    jrh@mvdirona.com

  2. James,
    Thanks for the shout out and kind words.

    I still see a lot of fear of public clouds in the large IT shops we work with (at newScale). When I dig a little deeper, I find it’s mostly lack of knowledge about what is available.

    Btw, we use AWS for all our trials, proof-of-concept, and various Test / Dev functions. And we use our own service catalog tools to manage. Despite that, it still took person-by-person effort to get my own people comfortable. And I’m the founder of the company. So yes, it’s a culture shift.

    Anyway, look forward to a face to face meeting at some conference.

  3. Dave, as you likely know, the solution you called "traditional big-SAN-Oracle" model is not my favorites. EC2 actually does support some fairly disk intensive application using Elastic Block Store. But, I agree more is possible.

    You should have a look at EBS: http://aws.amazon.com/ebs/. It is successfully hosting a broad range of database applications today. Not all but an amazingly broad cross section.

    –jrh
    jrh@mvdirona.com

  4. Dave T says:

    I think cloud computing (thinking of EC2 here) still needs to improve for disk-intensive applications *or* application development needs to move to a less traditional big-SAN big-Oracle model.

  5. Cloud computing isn’t centralization. A cloud provider has 10s of data centers spread all over the world and most enterprises have a tiny fraction of that. Cloud computing is less centralized.

    I do agree that "the worst will happen" and we should be designing systems top operate through rate catastrophic events. Cloud computing makes this far easier by offering many availability zones in a region and many regions as well.

    By the way, we also have lower case characters available on this site if desired :-).

    –jrh
    jrh@mvdirona.com

  6. gaitdoctor says:

    I THINK THAT THE TITLE OF YOUR ARTICLE IS APPROPRIATE " THE NEW WORLD ORDER " IF YOU DO NOT GET WHY THIS IS NOT A GOOD THING, I WILL NOT BE ABLE TO CHANGE YOUR MIND. ANYTIME A NEW IDEA COMES ALONG, WE SHOULD ASK THE QUESTION,"WHAT IS THE
    WORST THAT CAN HAPPEN??????" BECAUSE THE WORST WILL HAPPEN. JUST LOOK AT THE OIL SPILL IN THE GULF. I AM SURE ALL
    THE SCIENTIST WERE ALSO SAYING GREAT THINGS ABOUT NUCLEAR POWER. AND THE REALLY TERRIFYING ONE, "CENTRALIZATION" THESE ARE CONCEPTS BASED ON YOUR ARTICLE, YOU JUST DO NOT GET.

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