Five Reasons SaaS doesn't suck

Sending your company's critical applications into the cloud is not for the faint of heart. The risk and rewards used to choose on premises software in the past are greatly exaggerated when choosing a SaaS application. As with any business decision, if you understand the risks and can take advantage of the rewards then cloud computing is for you. The article below addresses the concerns of consumers of cloud applications who did not understand the risks.

Here's the Facetious CIO's response to each of the Five Reasons SaaS sucks:

1. "My Internet connection sucks!" Not understanding that your connection to the Internet becomes a critical extension of your core network is dangerous. When entering into cloud computing your environment changes. Analyze what it takes to deliver that application and secure the underlying technologies (some you still own even in a SaaS world) to match or exceed your applications' SLAs.

2. "I don't trust the Internet..." And rightly so. Given recent high profile security breeches you should be wary of the information placed on the Internet, who has access to it, and most importantly what you are using to authorize access to it. Security breeches so far have been due to poor password management. Your application and data are now available on the Internet instead of behind your firewall. Please use something more restrictive than a username and password.

3. "I always forget to hit the 'save' button." I fail to see how this is any different from on premises solutions. Sorry, but if your users couldn't figure this out with local applications than it won't be any easier with an application hosted elsewhere.

4. "I don't understand why (insert SaaS app here) can't just (insert desirable feature here)" Again, this is does not change between the on premise and cloud worlds. If you do not correctly set expectations up front your implementation will fail. This holds true if you buy a product off the shelf, develop it in house, or rent it from the cloud.

5. "What do you mean ten years from now I'll still be paying for this thing?" Yup, it's true. Unless you plan on keeping your current on premise system for the next ten years, it's less expensive and hassle free to just rent it. Software, even mission critical software, can barely be considered an asset to your company. Buy a building and add it to your company assets, rent the software.

How to go from buying records to renting MP3s

Rhapsody has a great business model. They offer unlimited (yet restricted) use of their entire music catalog for a monthly fee lower than the price of a single printed CD. They also sell unrestricted music at market prices. You may stream as much music as you like using their web site or using a recommended portable device. The trick is that once you discontinue service, any music that you did not purchase becomes unavailable to you. My guess is the record distribution companies that own the content get a flat fee for each user regardless of how much that user does or does not use. As most subscription service business models work, they account for a significant number of subscribers to be lazy and not use the full capabilities of their membership.

This is the progression of the music industry's retail model:

1. selling singles
2. selling record albums
3. selling albums on tapes and CDs
4. selling singles on the Internet
5. renting catalogs of music

The marketing of tapes and CDs is significantly different from albums because of the loss of control record companies had with the technical capabilities widely available at the time to produce near or exact duplicates. Pricing models began to compensate for this loss. Most online sites are using model number 4 with iTunes being the most popular. Rhapsody and a handful of others have reached model 5. Not only is this the "future of music", as Fortune magazine referred to Rhapsody , but it is the future of software.

This is the progression of the software industry's retail model:

1. Selling platforms to create custom applications
2. Selling generic applications
3. Selling applications plus support
4. Selling applications plus implementation and support
5. Selling applications plus implementation, support, and annual licensing
   
6. Renting platforms to create custom applications
7. Renting cloud applications and selling implementation services

Looks familiar doesn't it. Software companies used to press and release records and now they want to be in the business of renting MP3s. Just as the music industry has experienced, this is not easy but necessary. This model for music would not have existed if it wasn't for Napster showing that the customer base for this distribution model existed. The music industry just had to figure out a way to monetize it. The single most important thing for software companies that are looking to leap from traditional distribution to SaaS is how to correctly charge for their service. The next most important thing is how to get customers to stick with them long enough to collect that all important recurring revenue. Rhapsody figured out what to charge (less than a CD) and how to lock customers in (loss of music they enjoy listening to).

Why MSFT's strategy isn't working?

The Facetious CIO's response to "Why Isn't Microsoft's Strategy Working Anymore?" can be found here.

English to Snacklish translator

English to Snacklish translator

Give it a try. The Facetious CIO's name translates to Tasteious Chief Infeasting Officer.

This is NOT the Knowledge Age

In 1966, Peter Drucker described the knowledge worker in contrast to the manual worker. The knowledge worker is one who works primarily with information or one who develops and uses knowledge in the workplace. This type of worker is a product of the Knowledge Age described by Savage in 1995 as "the third wave of human socio-economic development". The first two being, the Agricultural Age and the Industrial Age. This third wave points to a time when the majority of workers will deal in information. They will work with their minds more than their hands. In the Agricultural Age land meant power and in the Industrial Age, factories meant power. In the Knowledge Age, knowledge is power.

The fact is, the United States has been in the Knowledge Age since the 1950s. At this time the number of white collar workers began to exceed the number of blue collars workers. The Information Age (as it was known then) began. This is the decade that brought us the mainframe and many other business technologies that are still in some form used today.

If knowledge equals power in the Knowledge Age, how do the powerful give away knowledge to get more powerful? Many of the blogs that I read and the twits I follow freely give away the knowledge they have. When they do, they are considered experts and grow more powerful as their standing in the community is raised and their demand increased. We have grown beyond the Knowledge Age. Thanks to web 2.0, all knowledge is shared. Wether it is a blog, a tweet, or just a posting I can google, it's shared. Having the knowledge is no longer powerful. How to aggregate the data and use it to create new ideas is powerful. We are now entering the Creation Age. In the Creation Age, creativity is power.

If you are a knowledge worker, there are two things to do to reach the next level of career evolution.

1. Recognize that you may not be a knowledge worker: Just because you work with data does not automatically make you a knowledge worker. You may be acting as a manual laborer pushing paper instead of operating a wrench. Anybody can be taught to use a wrench, if what you do doesn't have a value add then you are the 21st century equvilant of a manual laborer. You too will be replaced by automation, just as factory workers were replaced at the end of the Industrial Age. Avoid this fate by differentiating your work from what other people can offer.
2. Give away the knowledge: Since knowledge is not power, give it away. The more you share the information, the more indispensable you become. It sounds counter-intuitive, but it's worked for many already. Giving away the knowledge lets people know you are the expert. Now instead of maintaining knowledge and educating each individual about pieces of your expertise, you can concentrate on growing your abilities and creating something new.
   

2008 was all about the mash-up. Writing the music is good. Combining it is genius.

The same wave will transcend art and be adopted by business and education in 2010.

Welcome to the Creation Age.

The world's fastest data network is ...

This information week article on how Amazon Web Services suggests using snail mail as an initial upload to their S3 service reminded me of this NY Times article from 2002. Both spell out a reality that FedEx, UPS, and the USPS transfer more data than all Internet providers combined. When you take into consideration the massive number of DVDs netflix sends out to people's houses with next day delivery the bandwidth of your local mail carrier is staggering even when pitted against your home broadband.

Since the 2002 article, Netflix has offered more and more content on their watch it instantly section. Recently, netflix moved to using Microsoft's silverlight compression to stream full DVD quality to your computer. So, does this mean that Internet is winning the bandwidth race? Not by a longshot. Although the quality of video has improved, the data transfer rate has remained the same. Today's desktop computers have the ability to uncompress at amazing speeds and new compression technologies are taking advantage of that.

Those people in shorts being chased by neighborhood dogs are still speedy data carriers with low packet loss I might add. So the next time you need to send four or more gigs of data somewhere, please consider a padded mailing envelope to be your best protocol.

You know this, but your Mom doesn't

What's great about Twitter..
I've been using Twitter for a few months now and I like it. To me, twitter is like a crowd of people all talking around me. The crowd is always exactly the right mix of information and humor because I invited all of them. I hear snippets of conversations from all around me and I pick out the most relevant ones I wish to hear more about. It's also a great way to keep up with the most recent news about a new subject like cloud computing. The personal marketing opportunities are still great as twitter is still on a growing curve.

Twediquette:
Everyone I follow has been invited to my party. There is a certain etiquette that I expect of people who are in or can be invited to my party. Here's a quick list:

1. Don't tweet hello. I know who you are. I know you are out there. Tell me something useful.
2. Tell me something useful. You just got back from lunch is not useful to me. You just got back from lunch and would like to recommend your favorite dish is useful.
3. Don't tweet too often. Filling up my screen with messages forces me to sift for the good stuff. Less is more.
4. No Bodily functions. Nothing more to say about that.
   

Twitter improvements:
There are a few things I don't like about twitter. Please cache my address book and alert me when my contacts join twitter. I do this every couple of weeks to see who on my contact list has joined in, but LinkedIn does it for me automatically. Oh, and how about an auto-refresh option. Sometimes I leave Twitter open on a tab and realize, "What for?" I have to refresh the page anyway, might as well kill it and go back later.

Twitter cloud application:
If you've ever seen the 2D image of the sculpture above, then you know the fail whale. The fail whale appears when too many tweets overcome the twitter environment and the servers have difficulty keeping up with requests. I haven't seen it too often, but when it does appear hitting the refresh key usually provides immediate results. It did cause me to read the status bar and pay attention to where the hold-up was taking place. I was surprised to see AWS was the last request. So, twitter is using the power of elastic cloud computing to run this social network. Little or no capital investment in hardware necessary to run this popular service. Here's the kicker though, you don't care. All these terms (cloud, elastic, utility computing, etc..) are marketing terms that businesses use to speak to other businesses about IT. The end user (in or out of a business setting) just doesn't care how the service is delivered, they just want it to work. Speaking to most users about the cloud is like explaining how the electrical grid works. It's a utility and most people only care that when they hit the switch, the light comes on and who to call if it doesn't. Does the power you are using right now to read this come from hydro, coal, or nuclear? Can you even find out?