Cloud Computing marketing failure

[Marcus Thelander]

So, Cloud Computing is emerging and so are different cloud business
model. Some says that the catalyst for business and market adoption
are new business models. As well, one of the reasons to the failure of
Grid computing in spite of the promising technology was the lack of
effective business models. To facilitate further adoption, how should
we communicate Cloud Computing? Or, if I put it the other way around,
what are cloud computing marketers biggest mistakes?

(Through your respond you will contribute to my dissertation
concerning Cloud Computing and marketing. Please let me know if you
are interested of my forthcoming conclusion.)

[Vic Winkler]

Marcus

Around 2004-2007, I worked on the public-facing Sun Grid (1$ a cpu hour). I don't think the business model was lacking, rather what seemed to be missing was more in line with what we call PaaS and SaaS. We kind of nibbled at some SaaS aspects of public grid computing, but not anywhere near what cloud brought. I would say what was missing was sufficiently compelling and properly marketed solutions/products that customers could just run (SaaS like).

As far as furthering cloud adoption -- I think cloud adopters are looking backward at your question and saying something like: "Done deal".

As far as big mistakes for "cloud marketers", I think two notable ones are (1) hyping anything as being cloud, when it doesn't meet the NIST definition; and (2) making absurd claims about security or privacy protection -- I'm not saying that no one has high-trust-worthy offerings, just that many seem to blatantly exaggerate what little they might do...

To be clear, I am an advocate of both public and especially private cloud models for IT. I think the average consumer of cloud services will be able to achieve more "professional grade" security --if you carefully evaluate your vendors-- and more cost-effectively than they can possibly afford to implement on a per-system basis or in-house in a small to medium enterprise. All this comes at the risk of your provider deciding to change some aspect of what they do that you are depending on... 

--Vic Winkler

   v...@vicwinkler.com

   My Cloud Security book:  http://amzn.to/gRY1Bp

   Now in French: http://alturl.com/7tpzu

--
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[Peter Shenkin]

On Mon, Nov 28, 2011 at 7:02 PM, Vic Winkler <v...@vicwinkler.com> wrote:

Marcus

Around 2004-2007, I worked on the public-facing Sun Grid (1$ a cpu hour). I don't think the business model was lacking, rather what seemed to be missing was more in line with what we call PaaS and SaaS. We kind of nibbled at some SaaS aspects of public grid computing, but not anywhere near what cloud brought. I would say what was missing was sufficiently compelling and properly marketed solutions/products that customers could just run (SaaS like).

If I'm recalling correctly, only Solaris was supported, or maybe Solaris and one other OS -- I forget what. It was not IaaS, but I would describe it as closer to PaaS in this sense. I remember talking to someone from Sun at the time and suggesting that they support Linux, but they had another axe to grind. And it's always hard to sell two axes at the same time, even if they're both sharp.

-P.

[Raja Srinivasan]

I have been "selling" software for the cloud for the last 2 years and
have learnt a lot about corporate marketing and sales and also about
the cloud in general. These comments are not in any particular order,
and you will find that companies are struggling to address this
market.

1. There is a lack of enterprise software in the cloud. Let me be
clear. There is plenty of software available, but most enterprises are
interested in products like Oracle, SAP etc. Users want to pay for
these on a "pay as you go approach" and sadly these companies are
reluctant to offer their products in this format.
2. Most Managed Hosting companies and Enterprise Software companies
do not have hourly pricing. They are struggling with monthly pricing.
Their biggest problem is not marketing, but how do you recognize
revenue and pay your sales teams? Some companies are overcoming this
problem by asking the customer to commit to a 6 month or 12 month
commitment. This is not cloud computing.
3. Most sales teams are interested in closing the deal and moving
forward. The cloud is all about "keeping the customer happy all the
time" since the customers are paying by the hour, they can cancel
anytime without incurring penalties. Most of the enterprise sales
teams are not "trained" or "paid" to think along these lines.

Put these on top of the security and other aspects that Vic is talking
about and you get a pretty clear picture of the challenges facing
software and managed hosting providers. Therein lies the opportunity.
The enterprise software companies are being dragged into the cloud by
their customers. Even the managed hosting companies are being dragged
here by their customers. I can tell you anecdotes of how customers are
threatening to go to Amazon if they can't have monthly pricing without
any commitments!

Raja

[Govind Tatachari]

These are great insights about sales issues related to public cloud and managed hosting providers. Similar insights into sales and/or buy-side issues related to private cloud adoption by market segments will be great!

Regards,
Govind Tatachari
408-257-0236 (W), 408-206-1655 (M)
skype: govind_tatachari
http://twitter.com/govindtatachari

[Vijay Sukthankar]

I have been supporting "sellers" for last 1 year on Cloud Opportunities in Growth Market and learnt a lot on how these stuff are on the ground.Some of my observation.

1) In most of the scenario buyer has only 1 goal, " to have a great RoI" without understanding what can contribute to it. In some cases they have Virtualized environment in test and production and Automation can give a few more points but lots of ease of administration which they feel is not enough.

2) As rightly pointed out by Govind, enterprise products should look at the changing the licensing model. Also Cloud Managers ( VmWare ) changed the model which is based on managed nodes which has its pros and cons.

3) Most of Cloud deals take few quarters to realize and there is not patience from 'sellers" to wait for long.

4) IMHO  Hybrid Cloud model would be successful where the enterprise have a private cloud with few nodes on OSS or basic Cloud Managers and they would like to exploit Public Cloud ( Amazon VPC ) for handling peak load conditions. So it comes down to how to transfer the data secure across the instances, how to monitor instances in Public Cloud and keep the data secured in Public Cloud..

Cloud is more of generating new Business Model and enterprises would have to excite customers with new ideas.

---

From: Govind Tatachari <gtc...@gmail.com>
To: cloud-c...@googlegroups.com
Sent: Tuesday, 29 November 2011, 9:32
Subject: Re: [ Cloud Computing ] Cloud Computing marketing failure

[Ian Mills]

An interesting theme to explore would be the position of the current large IT vendors, the IBMs the MSofts the Oracles. Cloud is a real threat to them. A typical IT server in one of their customers has an average utilisation of around 5%. Yet the customer pays for 100% of the hardware, software and support. In a cloud service, public or private, you can easily achieve 20%. So you get four times the business function for the same price, or more worryingly for the vendors you can get the same business function for a quarter of their price, crash their revenues and even more so their profits, this 'stuff' still has the very high margins.
So how have they reacted? Most with initial scepticism and throwing on cold water and then later with cloud offerings which did not seem to sell because they weren't realy trying. None have made significant marketing push to promote cloud. Why should Amazon still be the biggest cloud supplier when any one of the large vendors could just swat them with one swipe?
 

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--
Ian Mills
0755 394 6958
Service to the customer, the pursuit of excellence, respect for the individual.

[Raja Srinivasan]

A major factor to consider is pricing for the cloud. Most of the
enterprise vendors sell to large enterprises with so called perpetual
license deals worth anywhere from $50,000 to $500,000 per license.
These licenses support between 100 to 500 different applications. When
a business-user (it is always the business user and not the IT
department that initiates the first move), they are looking to
deploying a single application on a pay as you go model.

How does an enterprise software company price their product? Most of
them come up with a formula based on the life of the software (between
4 to 7 years) added a processing margin on top and come up with a
monthly price. But get this: This price is still based on their old
enterprise price supporting 100-500 different applications, not on a
single application! Therefore the ROI model that the business user is
looking for is not there. On top of it, you have Ian's situation of
server/software utilization. It is no wonder that more and more
companies are looking at Open Source software when they go to the
cloud.

If the Oracle's of the world do not pay attention, they are likely to
lose their dominance in a few years. It seems just like yesterday when
I was told, we are a complete Microsoft shop and everyone used MS
Software. Today 30% of the sales team have Macs and quite a few of the
developers and internal IT folks are running Linux. I would estimate
the MSFT adoption has dropped to about 50% in my current organization.
Is this the future for enterprise software vendors?

Raja

[Vijay Shah]

Most of enterprise vendors like IBM, Microsoft, Oracle are coming up with licensing agreements where you can use their products in public cloud like AWS and mostly it is based on number of core being used and not on the no of applications.. Also most of these vendors are coming up with SAAS based licensing model for their products like office 365 , sharePoint online, Sibel online etc.. .if you talking about fortune 500 players, it is dominated with private cloud implementations for running core business critical processes..I think with the Public cloud option now enterprise software companies have easy way of providing their products for small- mid size businesses as well...

Vijay

[Rubert, James M]

The license is the next step.  But even if there is an private cloud offering many of those companies are using the cloud for application development and Testing before they bring the application source code into their private cloud.   

 

From: cloud-c...@googlegroups.com [mailto:cloud-c...@googlegroups.com] On Behalf Of Vijay Shah
Sent: Tuesday, November 29, 2011 8:00 AM
To: cloud-c...@googlegroups.com
Subject: Re: [ Cloud Computing ] Cloud Computing marketing failure

 

Most of enterprise vendors like IBM, Microsoft, Oracle are coming up with licensing agreements where you can use their products in public cloud like AWS and mostly it is based on number of core being used and not on the no of applications.. Also most of these vendors are coming up with SAAS based licensing model for their products like office 365 , sharePoint online, Sibel online etc.. .if you talking about fortune 500 players, it is dominated with private cloud implementations for running core business critical processes..I think with the Public cloud option now enterprise software companies have easy way of providing their products for small- mid size businesses as well...

Vijay

[Dave Corley]

I think you're right, Ian, that most packaged software giants are throwing cold water on cloud-based services. But these same companies see the value of offering their own suite of cloud services... Office365 and Azure being the msft example. 

IMO, this is to be expected. Sales teams and CFOs must continue to focus their immediate effort on the packaged software cash cow while offering alternative XaaS to hedge their  bet on the future. Deep in the heart of these same companies, they realize the operational efficiencies of XaaS over packaged software to their own business. As with all tech transitions, the largest hurdle to overcome is getting the customer and the sales teams to come to terms with the new pricing/compensation models.

Dave

[Pietrasanta, Mark]

I agree this applies to SaaS versus buying a license.

 

But buying a license in the Cloud versus on-premise really makes no difference (to the software vendor in terms of revenue).   And in many cases it means more license revenue.

To date, I’ve seen two very clear reasons for software vendors lack of support for cloud-friendly licensing:

1)      They are afraid of support – this issue is rapidly declining, but still out there, and many are now taking a “go ahead and do it, but if the cloud is the problem you’re on your own”;

2)      They have an existing licensing model with VARs that is incompatible with cloud licensing, and this takes lots of time and lawyers.

 

A great example of this is why we don’t see Windows 7 pre-built VMs in the large commercial clouds.  Microsoft’s VAR licensing model ties the Windows 7 license to a single, specific CPU – this is entrenched to ensure that one Windows license is used on one “computer”.  This also is to avoid the common practice of “you can install on your work and home machine” used by some other software.  It’s really explicit, and directly tied to the commercial PC business model.

 

Clearly tying to a specific CPU doesn’t work in any public cloud, as the specific CPU cannot be guaranteed.

 

While to you and me it seems like an easy change, the ripple effects on the Microsoft reseller chain is potentially huge.  And they need to figure all that out.

 

But from a revenue perspective, they will likely only make money by offering this – more licenses = more money.  There’s lots of incentive for them to allow Windows 7 in the cloud, just as they allow Windows Server in the cloud today.

 

Anyway, I don’t think it’s as much conspiracy theory as it is just annoying, historical, legal-ese that needs to get undone without breaking anything else.

 

 

-------

Mark Pietrasanta | CTO | o: 301-939-1152 | www.Aquilent.com

Aquilent - Innovating Tomorrow’s Government

Top 50 Best Places to Work, Washington Business Journal

Government Contracting Firm of the Year, Tech Council of Maryland

 

From: cloud-c...@googlegroups.com [mailto:cloud-c...@googlegroups.com] On Behalf Of Dave Corley
Sent: Tuesday, November 29, 2011 12:16 PM
To: cloud-c...@googlegroups.com
Cc: cloud-c...@googlegroups.com
Subject: Re: [ Cloud Computing ] Cloud Computing marketing failure

 

I think you're right, Ian, that most packaged software giants are throwing cold water on cloud-based services. But these same companies see the value of offering their own suite of cloud services... Office365 and Azure being the msft example. 

[Rubert, James M]

Your two reasons is why we will see more and more PaaS solutions from the vendors cloud.  Then it is all about the NPV of using it verses the company’s internal cloud offering or internal virtualized service. 

[Desktop Anywhere]

The biggest Cloud Computing Marketing Mistake I think I made was one
of strategy. We were really excited about Virtual Desktops via
Terminal Server and Citrix and we pushed them hard. We liked them,
used them and knew they worked better for the right situation. The few
customers that used them from us liked them better and they just made
sense from the perspective of cost, accessibility, etc. At least for a
lot of the 10 - 100 desktop companies we supported. These cloud
desktops might not meet the published definition of cloud, but we
didn't have that at the time. The lesson here is fundamental I think.

Strategically we thought the facts were more than compelling enough
for virtual/cloud desktops and began pushing bids stressing the server
based desktop model when there was a fit and our clients needed to
upgrade their stuff or new clients popped up. The clients/prospects
typically reacted like they thought we were trustworthy experts
somehow selling up the option that would make us less money. They
tended to be very uncomfortable with the whole notion. Tilt!

It is not like they were completely satisfied with the infrastructure
they had at all. If anything, they seemed to cling to familiar misery.
It was the early/mid 2000s and the Cloud meme had not taken hold and
caused the herd to look up. In hindsight, we were trying to do right
by the clients and build the business we really wanted, shifting from
a traditional IT shop to the next generation of computing.

I think if I had to do it over again, I would be more neutral about
viable competing solutions (it's not my money after all and therefore
not my decision to make) while using for our own purposes and those
who wanted it, the server based solution I knew to be "best". If
customers then asked what we used or how did I get my desktop on one
of their machines, for example, I would show them and explain why we
used it and tell them, very truthfully, you're probably not ready for
this yet. And likely then, there would not much I could do to talk
them out of wanting just what we had. At the least they wouldn't be
playing defense.

We clearly tried to get out ahead of the wave and bring our clients
along, but likely would have done much better to fold in somewhere
behind the leading edge.

I like the question. It is certainly something something I still think
about.

Jeff

On Nov 28, 3:15 pm, Marcus Thelander <marcus.thelan...@gmail.com>
wrote: