Stefan Ried

Forrester’s Improved Blogs Sphere

As you might have realized, I posted most articles since a while on www.stefan-ried.de and on blogs.forrester.com in parallel. Now, Forrester significantly improved its blogging platform to make this effort obsolete.

Forrester’s whole research concept is following a role approach with IT, Marketing and Tech Industry roles. Most of my posts are strategy related and appeared on blogs.forrester.com/vendor_strategy. However, many people like to follow specifically what I am writing and not all the stuff appearing for one or the other role. Thus, I was double posting many things on www.stefan-ried.de.

The new Forrester blogging sphere now supports both analyst related AND role related blogs. All  content can be found in two perspectives:

• Stefan’s Personal Blog: blogs.forrester.com/stefan_ried
• Vendor Strategy Blog: blogs.forrester.com/vendor_strategy

Is www.stefan-ried.de dead now?

No, definitely not! My personal-private blog will continue to be a platform to communicate my personal opinion independent of Forrester. As you might realized, I’ve done many things beyond my coverage at Forrester in my spare time.  I am happy that Forrester offers now a way to sort out my official professional communication and my private cyberspace.

Please continue to visit me here and at blogs.forrester.com/stefan_ried and subscribe my new
RSS feed.

Cheers

Stefan

I had the chance to visit the CeBit last Friday and like to share some personal impressions around the show and my conversations with execs indicating some enterprise IT trends:

The CeBit in general
is still world’s biggest and most global IT fair. Although not as big as it was three years ago or even in the Dot-Com times ten years ago, it recovered on a solid level. The giant trade fair campus in Hannover hosted this year 4.157 exhibitors out of 68 countries. North American software vendors used this platform to get global market traction and APAC hardware vendors showed again a strong presence to sell their (OEM-) hardware to EMEA and US brand vendors and distributors. The organizers continue to experiment with the format of the show, which was only five days this year. It attracted 334.000 visitors which is still a bit behind the 400.000 of last year. CeBit went 6 days last year which meant a bigger commitment of the exhibitors’ staffing. The five to five day comparison is already a 3.7% increase in visitors compared to last year. The reduced effort for exhibitors will hopefully motivate more vendors to show up again. The CeBit organizers will give the show an even stronger structure next year with a “Cebit pro” for professional IT users, a “Cebit gov” for the public sector, a “Cebit lab” as an networking platform for research and education and finally a “Cebit life” focusing at the consumer market. The structure will make it definitely easier to navigate across the halls and drive more customers to the right vendors. But it’s questionable if CeBit can catch-up on the topics that they underestimated such as the take-off of the mobile business. Barcelona’s MobileWorldCongress dragged literally 49.000 visitors from CeBit’s potential.

Enterprise Hardware sales is reshaping. In confidential discussions execs from multiple hardware vendors admitted that their traditional sales to direct customers will very likely never fully recover to the level prior to the downturn. Although hardware innovations such as IBM’s Power 7 and Z10 helps to consolidate hardware, I perceived another driver of new hardware sales on CeBit. The larger hardware vendors are confident to recover with two new strategies. IT users definitely buy less hardware to install their packaged and custom developed software on their own. So, hardware vendors drive more partnerships with software and consulting services provider again to offer merged solutions. IBM reshaped their whole CeBit booth for example into such a smart solution approach versus the traditional hardware, software, and services categories of previous years. The second strategy shift in hardware sales is already caused by the global cloud computing hype. Sales execs start to realize this year, that some deals are not lost to hardware competitors but to Infrastructure as a Service (IaaS) providers in the cloud. Some hardware vendors are starting to create special offers for cloud providers for the public cloud and the virtual private cloud which is naturally characterized by less consolidated and more regional players. In this respect I found some irony in Amazon showing up on the CeBit the first time with a little booth dedicated at AWS right next to IBM’s large presence.

Enterprise Software at CeBit lags innovation. The enterprise software market is quite innovative, but this was not obvious at the CeBit! The innovation happens a lot in the cloud and at software vendors that have unfortunately not returned to CeBit. Innovative SaaS applications like NetSuite’s ERP or Successfactor’s human capital management was hardly represented. Oracle driving the next level of enterprise middleware and ERP applications was again missed at the CeBit. The traditional strong presence of SAP is proportional to SAP’s dominant market position in Germany and Europe. However, it was pretty difficult for an average visitor to realize the incremental steps of the SAP Business By Design slowly moving feature packs for example. Most of the innovation was provided by SAP’s well developed ecosystem rather that by the vendor itself.

The Cloud drives infrastructure management innovation. In contrast to the absence of cloud business applications, the cloud was quite visible for infrastructure solutions. Even more important than the Amazon AWS booth was the fact that systems integrators like T-Systems showed already well established offerings for virtual private clouds and its migration out of traditional dynamic hosting model. T-Systems also showed some exciting pilots for dynamic sourcing across on premise, virtual private and possibly public clouds in the future. In cooperation with FluidOperations and Zimory, T-System was able to show a dynamic provisioning of SAP Systems in a elasticity that is hardly found elsewhere. This could actually help SAP on their own to fix the operation issues of Business By Design, but T-System showed again more instinct and sensitiveness to leverage start-up innovations into a commercial offering.

Service Management is a real challenge in the Cloud. Most people are still concerned about security in the cloud. But those that articulate this concern loudly are not the same people that are using cloud! I have not found anybody on CeBit or elsewhere in the last 2 months, who was really disappointed by the security levels of any major cloud computing provider that they use. Once you onboard the cloud, the integration to the legacy systems becomes one major challenge, which was not yet visible on the show this year. Major integration vendors such as Software AG leverage cloud infrastructure to run their own community services, but they do not offer dedicated cloud/legacy products and services yet – very likely a hot topic on next year’s CeBit. Beyond the technical integration of cloud and non-cloud services, the unified management of services is a major cloud-challenge which was already addressed from some vendors on the CeBit. Innovative software vendors like helpline realized early that an extended service management can go far beyond ITIL services and could be applied for example to facility management or to healthcare helpdesks. These vendors are now in the pole position for the race of an higher level cloud business service management. This is a missing steps to turn innovative cloud sourcing projects such as T-System’s pilot, finally into a commercially successful solution.

I guess every analyst’s personal selection of CeBit highlight is different. Let me know what was most exciting for you if you made it to Hannover and leave a comment.

Stefan

Oracle’s Sudden Jump Into The Cloud

Oracle is about to launch its Cloud Computing strategy with a worldwide roadshow. What does this mean for Oracle customers and partners?

First of all, Oracle remains a technology platform provider and will not jump into the hosting business themselves for PaaS. Only for the space of hosted applications, will they remain in the OnDemand hosting business. Let’s have a look at the SaaS and PaaS segments separately:

Oracle has built into its Oracle Fusion Middleware 11g stack a couple of important capabilities that are needed in a PaaS deployment. The foremost important one is real multi-tenancy. This means you can achieve multiple independent platform tenants, not only by the virtualized deployment of multiple installations, but also within a single instance. This brings significant additional flexibility and reduces further operations efforts. Some of the tools required for a real PaaS functionality will be made available over the next months under the 11g main release.

In contrast to Microsoft, Oracle will not host this PaaS stack on their own (to Forrester’s current knowledge). Oracle’s focus is to enable partners for cloud business models with their technology stack. This can be Amazon’s EC2 images, or eventually soon a multi-tenant Oracle installation at a hosting provider like Rackspace.

The immediate reaction from most Oracle partners (hosting providers and system integrators) I talked to was very positive. In contrast to Microsoft, Oracle enables them for future cloud business models instead of competing with them. Many of them are really disappointed about the current partnership relationship with Microsoft in this respect.

In additional to the enablement of partners in the public cloud, Oracle brings the same technology stack into private data centers. This is even the focus of the initial message to end users in the current roadshow. Oracle talks about the “private PaaS” which means the further evolution of their grid computing story. Now, complemented with typical private cloud tools and capabilities, the private PaaS looks similar to IBM’s private cloud approach. But again the multi tenant capabilities are a major differentiator to IBM, as the Websphere stack can only achieve this with a virtualization approach.

The end-customer reaction to this was twofold. Some customers embraced the potential immediately and were very pleased about the final commitment of Oracle to the cloud business. The other group of customers were struggling to understand the disruptive difference from already existing Oracle scale-out mechanisms like grid and RAC. Some characteristics of private clouds are actually not primarily technology issues but are describing a new interaction model between the IT side and the business side on one enterprise. Pay-per use, self-service, high level of standardization, charge-back and immediate availability of an elastic service delivery can turn a private grid into a private cloud. Oracle needs to release the already planned tools within the 11g stack supporting these kinds of PaaS functionality to also convince the skeptics.

Long term, customers fear lock-in situations the most. While, for example, the Salesforce.com platform Force.com, locks the customer both into a technology and into a specific deployment model, the Oracle approach will allow customers to move applications between the cloud and their premises without many changes.

The SaaS application business with Siebel On Demand and E-Business Suite On Demand remains unchanged. However, Forrester expects that the upcoming next generation of Oracle’s ERP application (Fusion Applications) which are based on Fusion Middleware will support the multi tenancy of the platform. This will provide unknown efficiency to hosting models of the Fusion Application. As of today, we do not know if Oracle will mainly enable outsourcing companies or will compete with self-hosted Fusion Applications to their channel.

Cloud computing challenges the CIO legally as well as technically!

Cloud computing is the availability of standard IT resources over the internet in a pay-per use model. Initially this is an attractive proposition. However there are many challenges which CIOs will face when running firm critical applications and data over the internet. The most successful CIOs have built an IT governance strategy to avoid the uncontrolled variety of technologies, meta data and business process evolution in their IT landscape. A good governance strategy ultimately makes the implementation of legal compliance requirements from Basel II or SOX much easier. Without searching first for critical data, an orderly approach is much simpler and the CIO won’t be the only one sleeping better.

So long as everything is in your own company or at local infrastructure, IT governance and compliance should be governed centrally from the CIO office. But what happens when a firm’s cloud computing is effectively deployed? This technology paradigm has its largest cost savings when applications and business processes have extremely high and uneven resource requirements. In most cases these are automatically firm critical applications and confidential data. The responsibility of a CIO then moves from pursuing operational excellence in the datacenter, to the greater responsibility of developing and managing intelligent sourcing concepts in the cloud and bringing its consequences under control. The large cloud computing vendors are nearly without exception international firms and a core basis for their cost-effective deployment lies in their global sourcing strategies. IT governance and legal compliance must also be developed to cloud governance and global provider governance.

Most firms have their Basel II or SOX compliance under control. IT was an essential, but not the only, risk factor that needed to be dealt with. Many firms introduced tools to help better structure and document processes and document flows. Large firms even established new roles for taking such responsibilities, with titles such as the Chief Compliance Officer. The challenge for cloud computing is that the former compliance strains now appear as childsplay. Cloud compliance requires constant interaction with many different experts — and not only within your own company.

An international example is the move of SWIFT’s datacenters from the USA to Europe. SWIFT is known as one of the most important IT resources for banks outside of their own data centers, dealing with all kind of money transfer between different banks. In today’s Cloud Taxonomy one would describe this as a “Virtual Private Cloud” (see Forrester’s Cloud Taxonomy). The legal situation has changed among European governments, regarding forbidding the unrestricted interception of banking details through the CIA. So far they have not done this. Although from December 2009 the European Parliament is discussing this option and could change its legality. From the perspective of banking CIOs then, cloud compliance is suddenly the interaction of internal technical experts and cloud vendors, as well as in-house legal experts and if necessary external legal advice. Compliance requirements should not however slow down the utilization of cloud resources. As to do so would mean the essential business advantages of the cloud will be lost — in particular the ability to react quickly to changing requirements. Forrester expects the first vendors in 2010 will bring compliance-tools to market that support a firm grip on cloud compliance. This will be an agile information exchange and approval process between IT, business and legal experts. But this time beyond the company borders. So these are even the best conditions to run cloud compliance tools as a SaaS application in the cloud, and not in your company.

Let me know if you are a vendor and plan to move into the Cloud-Compliance Space

Regard

Stefan

Selling the Cloud

A New Forrester Research Workshop

Dec 1st, Foster City, CA

Hi,

I’d like to point you to a new workshop series that we start in three weeks in the Bay Area. Depending on demand and your feedback, we will run the same workshop in Cambridge (US), in London (UK) and in Frankfurt (Germany) in January and February 2010.

The workshop basically explains how to make money with cloud computing for ISVs and System Integrators. Starting from the new technology options for platform selections,  we investigate the current Platform as a Service provider. Best practices of business models in the cloud help ISVs to size their opportunities. We disclose the first time in public the full Forrester Cloud Taxonomy and a detailed market sizing for each cloud service and product category. This brings a lot of structure to the Cloud.

For Large scale IT users, the significant change of the whole IT ecosystem will be only one of many exciting topics in this workshop. How does the role of an CIO change? Understand the raising challenge of cloud-compliance!

Please see the full agenda here.

Caution: This workshop is an highly interactive event. If you simply wanna hang-out a day and listen to presentations – your are wrong here. We have developed a cloud readiness assessment which helps you to identify your person option moving a software application or business model in the cloud. Each participant works out an individual guideline with  your next steps in strategy, technology and go-to-market.

If you have any questions or special topic you’d like to see additionally in the agenda, please do not hestiate to call me oin Foster City 650-581-3844 or in Europe +49 69 959 29856 or email sried at forrester.com.

See you December 1st in Foster City.

Stefan