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SaaS growing fast in Asia/Pacific

Dmitry Sotnikov — Wed, 01 Jul 2009 13:38:38 +0000

You’d think that after all the news of China blocking Google and other web sites Software-as-a-Service and cloud computing would be the worst software delivery model you would imagine?

Customer survey on SaaS Gartner conducted in November 2008 has shown that Asia/Pacific region is getting ahead of North America and Europe in SaaS adoption. Their respondents were evenly distributed across the globe with a third being in North America, third – in Europe, and third in Asia/Pacific (year, I know that there are other places on Earth too.) However, in terms of companies who have adopted SaaS about 50% of respondents turned out to be from Asia/Pacific.

Moreover, in this region more than 50% of respondents are in the process of replacing some on-premise systems with SaaS (in India this number is even higher – 70%).

Recent IDC report goes into some detail on the SaaS adoption in Asia/Pacific, and not only they also show significant growth in the market and the shift from on-premise systems, but specifically China turned out to the leader in SaaS adoption (more than 80% of respondents use or plan to use SaaS), and Australia to be a relative laggard (with slightly less that 50%).

My guess is that there are a few factors contributing to this higher SaaS growth in the region:

Some countries such as India are currently investing a lot in the internet infrastructure, with many other such as Korea already the broadband a lot of us envy.
In other countries, such as China, SaaS just makes more sense economically because it lets you collect money for your services more effectively than you can for packaged software. Packaged software sales are not that good in there due to high rates of piracy and so on. Subscription-based pay-as-you-go services might do better.

And yes, in some countries there will always be political risks, but these seem to be there in general and not really making SaaS business more risky than any other business there.

Would you agree with these conclusions? Thoughts/comments?

A VM running in EC2 is not SaaS

Dmitry Sotnikov — Tue, 23 Jun 2009 09:31:45 +0000

Just because you have software packaged as a virtual machine and running in Amazon EC2 does not mean you have a “cloud” offering.

As easy as it sounds in most cases when a vendor claims they have their software available as a service/cloud offering – it is just that: a virtual machine image (such as Amazon Machine Image – AMI) and maybe a hosting partner eager to host this virtual machine for you.

The latest report from Gartner’s Lydia Leong “Software on Amazon’s Elastic Compute Cloud: How to Tell Hype From Reality” talks about dealing with vendors who hype their solutions as “cloud” offerings when in reality they are not. She points out all the additional things you need to consider in these cases, such a:

Whether the application is capable of scaling up horizontally (by adding more instances) – tip: in such pseudo-cloud offerings in most cases the answer is no, or at least not automatically.
Whether the application got re-architected to deal with internet-level delays when working with storage – if not you are getting a very unreliable service.
Whether you have to deal with Amazon bills, projecting the load/consumption, selecting proper instance size and other options and changing these over time, and so on – all these items add up to your total cost of ownership (TCO) fast.

I personally would say – just avoid these solutions. If the “cloud” offering does not abstract all the scaling, machine management, and resource consumption tasks from you – this is not a real SaaS offering, and most likely it will turn out to be more expensive rather than less expensive.

You will probably save on hardware maintanance (depends on the period of time and whether you have hardware in excess already) but you will spend far more worrying about all the new “cloud” administration tasks which you have never done before. These are new issues, new challenges and they introduce additional risks and costs which you will find hard to predict.

A real cloud offering:

Charges you for what you get (e.g. number of your users accessing the system, number of mailboxes in the cloud, the period for which your backups are kept, and so on) – which makes your costs predictable and not relying on the underlying implementation,
Handles all the underlying infrastructure (scalability, security, configuration, and so on) for you – you just get the service and don’t know or care how many virtual machines are running somewhere to make this happen.

These are definitely the principals we have for our Quest OnDemand solutions, and the ones every “cloud” solutions should implement. Good to finally get a Gartner report articulating the cloud hype misconceptions. Get it here.

Government adoption of cloud growing

Dmitry Sotnikov — Wed, 17 Jun 2009 22:51:55 +0000

That’s what Gartner’s Andrea Di Maiofound in his recent report: “Government in the Cloud: Much More Than Computing“.

This might surprise initially – after all Forrester just told us that public sector was lagging in the cloud computing adoption rush. However, Andrea builds up a pretty impressive case of why cloud trend is inevitable for governments.

There are a few factors which when considered together make the cloud happening:

Overall commoditization of government services and ever blurring boundaries between government, NGOs, public, etc.
Commoditization of IT services: the trend from custom applications, to packaged applications, to central/shared SaaS-style apps,
Internal budget constraints,
Public technology (such as YouTube) often being simply the easiest and most effective way to reach out to citizens.

This does not mean that governments are rushing to move all their applications to Amazon. However, there is a trend to:

Use existing public social media platforms,
Centralize services across agencies (effectively building some kind of private clouds),
Use public horizontal services (HR, messaging, collaboration) where privacy, security, compliance and other concerns can be mitigated.

Andrea’s report provides details on these trends and looks at their manifestations across:

System and Application Infrastructure
Public Data
Constituent Data
Applications
Business Processes
Constituent-Facing Services
Channels

Read/buy the report here.

Cloud Computing MORE popular with Enterprise than SMBs

Dmitry Sotnikov — Fri, 12 Jun 2009 12:00:20 +0000

Forrester’s Frank Gillet just published results of a big survey on Infrastructure-as-a-Service (IaaS – like Amazon’s compute cloud or internal cloud-like datacenter) acceptance across geographies and company sizes titled “Conventional Wisdom Is Wrong About Cloud IaaS“.

As the title implies the survey has a few very interesting results.

First and foremost, they found that bigger customers are actually more willing to use IaaS than smaller companies – Frank attributes that to enterprises being more familiar with virtualization trends.

Public clouds are actually more popular than private (internal) ones – which in my mind is because there is simply too much confusion about what internal clouds are and technology not really being at the commodity level yet. Frank adds a very good point on inadequate positioning on internal clouds as pay-per-use, rather than self-service on-demand resources which makes the idea look less appealing.

Production use is as high as dev/test – actually this makes a lot of sense. In the early virtualization days it was mostly used in dev/test environments and only then got accepted for production systems. In my opinion, cloud computing is now piggy-backing on this virtualization success and thus jumping ahead right to the production acceptance.

Level of acceptance of cloud computing is approximately the same across geographies (e.g. US and Europe) but not across verticals (e.g. public sector lacking way behind retail – which again makes sense because the former has more regulatory concerns and the latter is used to supply chains and is all about efficiency.)

Overall, this is a very good report with lots of useful data. If you are a Forrester subscriber or have $1999 to spend go get it here.

Garter finds a ‘Killer App’ for Cloud Computing

Dmitry Sotnikov — Wed, 10 Jun 2009 21:10:51 +0000

“APaaS: A Step to a ‘Killer App’ for Cloud Computing?” is a great report by Yefim V. Natis and Eric Knipp published by Gartner last week.

Yefim and Eric, as it seems to me, managed to articulate the very essence of what makes Cloud Computing so disruptive:

“Easy to learn and use application development environment, with runtime deployment of virtually unlimited scalability and reliability, at small or midsize business (SMB) technology prices” sounds too good to be true. However, it is one of the promises of the state-of-the-art cloud-computing environment.

As you can see from the title is on application-platform-as-a-service (APaaS). However, I found it very true to my area – systems management software. We are currently working on turning some of our software products (such as Recovery Manager for AD) into subscription-based services, and all these points are extremely applicable:

Easy to learn and use – no need to set up and maintain all the storage, reporting, and management infrastructure as you normally would,
With runtime deployment of virtually unlimited scalability and reliability – absolutely: you will never run out of tapes or disk space, or have your backup storage fail, and you get your backups stored off-site without having to pay someone to come and ship your tapes to another location,
At small or midsize business (SMB) technology prices – economy of scale and subscription-based pay-as-you-go model make this really affordable to everyone.

The report goes into details on these points, as well as provides an overview of the challenges ahead. Overall, a very good read regardless of whether you are planning to provide/use APaaS or any other cloud technology.

Get (or buy for $495) it here.

My cloud interview at TechEd

Dmitry Sotnikov — Wed, 03 Jun 2009 21:21:39 +0000

Technet Edge posted the interview David Tesar made with me while at TechEd last month. Check it out here.

Dmitry Sotnikov of Quest Software, gives us his perspective on services in the cloud and answers some of the frequently asked questions in his sessions such as:

- When is the right time to move to the cloud?
- What roles/services are not good to think about moving to the cloud
- What types of things you need to be thinking about when moving your services to the cloud
- How is portability a concern on where you want to host your applications?
- Where he sees benefits with Azure and BPOS over the competition

Active Directory, Exchange Online, and Azure applications

Dmitry Sotnikov — Wed, 27 May 2009 18:18:17 +0000

Recording from my TEC session on IT professional view on identity management and AD-integration for Exchange Online and Windows Azure has just got posted:

Enjoy!

You can find other session recordings from TEC (including keynote!) here.

Also, if you are based in Europe – TEC Europe in coming to Berlin in September and early bird discounts are still available – see the conference site for details.

Gartner surveys cloud backup solutions

Dmitry Sotnikov — Fri, 22 May 2009 11:42:56 +0000

“Dataquest Insight: Cloud-Based Server Backup Services, 2Q09 Update” by Adam W. Couture is a good feature-by-feature (including pricing) comparison of a dozen of major online backup solutions for the enterprise space.

Backup might initially sound like the worst cloud application you can think of: after all it involves big data transfers and most likely the data about which you care the most – and thus for which you have the biggest security and liability concerns.

Yet, backup and recovery products (and obviously migration solutions) are normally the first ones to emerge in any new markets – the pain is much more obvious than whatever management tasks you might also have – so the cloud market is no exception. Also, specifically in the cloud space there is an additional bonus of the backup data being by definition in a remote location – and thus safe from natural disasters which might hit your local datacenter.

Gartner survey is a great source of information if you are considering buying an online backup service or going to the market with one. It seems to be a rapidly evolving space with major players entering the market and solutions advancing from simple file storage to those including standby emergency environments and virtualization support. The report helps you make sense of who is doing what and how much is that going to cost you. A very good read indeed.

You can buy the full report here.

My TechEd Sessions

Dmitry Sotnikov — Thu, 07 May 2009 21:27:22 +0000

If you are at Microsoft TechEd next week there will be a few sessions I will be giving there:

Birds-of-a-Feather,”Going to the Cloud: Are We Crazy?” Dmitry Sotnikov, 4:30 p.m. Tuesday May 12, room 501A – this one is IT-oriented discussion of risks and benefits of putting your IT systems into the cloud.

PowerShell Ask the Experts Session, Dmitry Sotnikov and Kirk Munro, 12:30 p.m. Wednesday May 13, Quest booth 808 – this will actually be PowerShell – not cloud – oriented.

Birds-of-a-Feather, “Developing on Azure: Stories from the Trenches,” Dmitry Sotnikov, 6:45 p.m. May 14, room 502A. A developer-oriented discussion so everyone who is kicking the Azure tires can share there war stories and get advice.

“Case Study: Migrating Existing Client Applications to Windows Azure,” Dmitry Sotnikov, 2:45 p.m. May 15, room 515B – my main session of the show. I will talk about how Quest is using Windows Azure to turn its products into SaaS offerings.

Also, check out this session if you are interested specifically in Exchange Online and corresponding migration path: “Migration to Microsoft Online Services from Exchange and Non-Microsoft Platforms,” Quest’s Keith Ridings and Microsoft’s Erik Ashby, 4:30 p.m. May 14, room 403B.

Hope to see you next week!

Is McKinsey wrong on cloud ROI?

Dmitry Sotnikov — Fri, 17 Apr 2009 11:12:51 +0000

McKinsey published a report this week claiming that their research shows that for organizations with revenues above $500 million using external cloud computing resources are more expensive than using their own datacenters: $366 a month per unit for cloud compared with $150 a month for traditional datacenter.

I had received quite a few emails with links to articles on this report (e.g. this or this) so I decided to post my opinion in this blog as well.

First of all, you don’t have to work for McKinsey to do a simple exercise: go to Amazon’s web site, see their EC2 pricing, multiply their, say, Windows/SQL server price by 24 hours by 365 days and learn that your costs can get as high as $28K a year.

Does this mean cloud computing is overly expensive? The answer is: it depends.

First of all, as Joe rightly mentions here, even if Amazon’s price seems way too high, you might actually be spending a lot internally as well – you just don’t realize that because a lot of companies don’t calculate these costs.

Secondly, just the costs of running the computers (or VMs) and pretending you are doing a comprehensive cloud computing analysis is a somewhat flawed approach. Of course, when we simply talk about computers, and the amount of compute power you need is constant (so you don’t need elasticity and can provision in advance) then owning is probably cheaper.

However, this does not mean that consuming services is more expensive than deploying and maintaining corresponding software implementation. Deploying, say, a modern messaging system such as Exchange following all the hardware a design guidelines can cost a fortune even to a medium-size business, for a lot of companies their SAP or PeopleSoft implementations are huge expensive projects, and desktop costs are probably higher than anything else.

Cloud computing means a lot of different things to different people and when we see costs analysis reports like that we often generalize and start comparing apples to oranges. Depending on what exactly you are planning to consume from the internet and what would be the on-premise alternative can make your mileage vary a lot.