IaaS Will Count for a Third of IT Resources in 2014

About 77 percent of enterprises respondents surveyed by PwC have a plan to adopt some form of cloud computing, and 64 percent said some type of cloud, including private and public, would be the best way to manage IT infrastructure in three years.


Precisely what that means for would-be providers is not quite so clear, though. 


PwC surveyed 489 business executives in an effort to understand the real state of data center management, and the results suggest both increases in traditional data center operations, "private" cloud operations and some increase in public cloud activities. But there will be a huge decline in use of traditional data center services managed by service providers. 


Traditional IT outsourcing service providers are about to see their business models and customer value propositions disrupted. 


But the essence of cloud computing is a move towards highly standardized racks of commodity servers and a software environment that together make for a highly efficient use of resources. Who needs to outsource to a third party when such capabilities are available?

"We have seen major technology shifts in the data center in the past," says David Stuckey, PwC's US leader of its data center infrastructure practice. "These shifts in reality have just added to the mix in the data center, increasing complexity and cost."

Cloud computing, when done right, has the potential to actually replace, and not just augment, legacy environments while adding value by reducing costs and increasing agility," says Stuckey. 

Private cloud is infrastructure operated solely for a single organization, whether managed internally or by a third-party and hosted internally or externally.^[43]

They have attracted criticism because users "still have to buy, build, and manage them" and thus do not benefit from lower up-front capital costs and less hands-on management,^[44] essentially "[lacking] the economic model that makes cloud computing such an intriguing concept".

IaaS Will Count for a Third of IT Resources in 2014

Google to Launch App Store for "Google Apps"

Google is preparing to launch an online store in which it will sell third-party business software to Google Apps customers, the Wall Street Journal reports.

The Wall Street Journal says that Google's store could arrive as early as March with the works of third-party developers available as enhancements to Google's office productivity software suite. It appears the store would allow Gmail and Google Docs users to purchase add-ons for niche features too specialized for the mainstream Google Apps product.

The Google Solutions Marketplace contains lists and reviews of third-party software for Google Apps and Enterprise Search, but it does not let you buy the applications directly from Google. That might be what is about to change.

Developers would have to share revenue with Google from sales of their software through the store, and it would be reasonable to assume revenue splits similar to those used by mobile application stores run by Google, Apple, and several other companies.

Typically, the developer gets 70 percent of the revenue.

As iTunes was the "secret sauce" that helped propel the iPod to prominence, and as the App Store has been the surprise attraction for the iPhone, perhaps app stores might provide similar value for service and device providers.

New Era of Discrete Apps?

Many changes are possible as we move into an era of Web-based applications, built and accessed as Web services. On the demand side, users will be accustomed to a new way of buying and using software. On the supply side, we will see different business models. 

Especially for communications-enabled business processes, we likely will see more reliance on something we might call "discrete applications," rather than the more-monolithic approach we have seen historically, where lots of features were purchased upfront with the buying of a switch solution, for example. 

That doesn't mean every application is efficiently provided discretely. Generally speaking, large scale tends to dramatically tip the scale towards platform-based solutions. Conversely, low volume tends to tip the scale towards hosted, Web-based approaches. 

That is a pattern we have seen for services such as business phone systems, carrier switches and server farms, for example. If a provider or enterprise has high volume and lots of users, buying and owning switches and facilities tends to make more business sense than leasing or renting services or capacity.

Conversely, small entities with relatively low volume demand almost always are better off renting capabilities rather than buying and owning their own infrastructure. 

Roughly the same sort of economic logic should come into play in a new era where more applications are built and intended for use by relatively smaller number of users than in the past. The example already is seen in the broad consumer market.

Consider even broadly-purchased applications and services such as multi-channel video services. In an older paradigm, a single provider might expect 70 percent penetration. In a competitive market, even a successful provider might expect to get just 30 percent penetration. 

That changes the economics of network investment. Where once a provider might build a whole network and expect to get customers at seven out of 10 homes, now a provider has to build a network where ultimate penetration is three homes out of 10. that means shared costs must be borne by a considerly smaller number of actual paying customers. 

In the Web sphere, roughly similar sorts of phenomena are at work: in the vast majority of cases, any single application will have a smallish number of users. The opportunity for any single application will be quite small, compared to an earlier era where most people used a small number of relatively-standard applications. 

The good news is that all of the tools and infrastructure we now have will support robust business models even at relatively lower levels of end user demand. So one of the other implications is that we may be entering an era of vastly-expanded use of "discrete applications," custom built in many cases using pre-built modules or "primitives."

That in turn presupposes new ways of packaging, pricing, marketing, delivery and support, new ways of discovering needs and building solutions to match those needs. This means more discrete apps and fewer of the monolithic sort, even though some apps will continue to be relatively monolithic because they have mass usage. 

Enterprise Software: Negative 1st Quarter

If you buy enterprise software, you most likely will be spending less, or no more, than you did last year. For what it says is the first time in years, a ChangeWave member survey shows negative growth for enterprise software spending for the first quarter of 2008.

Better than 22 percent of members polled now say their company will spend less for software over the next 90 days compared to the previous 90 days.

For the time being, that will put some discretionary buying plans on hold, while some providers might do better by touting lower upfront cost or lower recurring cost or both. That ought to be good for providers of Web-based software as a service providers.

Has the Web Killed Enterprise Intranets?

Between emerging social networking tools and Web browser front ends, it is conceivable that the need for enterprise "intranets" is not so urgent anymore. As the Internet was seen as an external network, intranets were supposed to make internal data bases, information and communication available to enterprise associates.

But email, instant messaging, texting, mobile phones, Saleforce.com and other Web-based tools arguably not allow organizations to do those things without building dedicated intranets.

Instead, we've flipped everything inside out. The big movement now is towards software architectures that allow internal resources to be exposed to users with access to Web browsers.

90% of Software Can be Delivered Online

Eric Schmidt, Google's CEO, envisions that 90 percent of today's computing tasks can be moved online. High-end graphics processing is an example of a computing task probably not well suited to online use.

Google execs also argue that more and more computing tasks are unrelated to productivity suites. "If you're creating a complex document like an annual report, you want Word, and if you're making a sophisticated financial model, you want Excel. That's what the Microsoft products are great at. But less and less work is like that," said Google's Dave Girouard.

For now, 2.000 companies start to use Google Apps every day (most try the free version), Google Docs had 1.6 million U.S. users last month, according to Compete.com, while Gmail doubled its U.S. users to 20.1 million in November, according to comScore.

DT Channels BT: Will Others Follow?

Telcos have not in the past had much success as providers of enterprise system integration and management services. That may be changing as the business of system itnegration begins to look a lot more like advanced communications. BT has been forceful about transitioning in this way. Now Deutsche Telekom (DT) may make a bid to buy IT services giant EDS (EDS).

Telcos and mobile services providers are increasingly becoming IT providers, either directly or as integrators or aggregators of IT functions that they then deliver to their customers. Similarly, large software providers are moving towards "software as a service." And what is communications but "software as a service."

BT was ahead of the curve on this trend.

More Enterprise Moves for Google

Google now is any tier one communications service provider's biggest fear, stated or unstated, and it mostly is stated. So Google's acquisition of Postini won't help clam any such fears. Google gains instant access to Postini’s client base of more than 35,000 businesses including many large businesses.

Postini will help Google further refine its "software as a service" architecture for critical business applications, moving Google further into the business services and software space.

Postini has offered managed email security services to corporate customers since 1999.