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Telco innovators and the rest…

November 24, 2013 Leave a comment

2014 will be the year in which telecom will be split into two. The ones that understand iCommunication and the ones that don’t. iCommunication is about giving a personalized communication experience to consumers and enterprises. Low cost subscription models and freemium will be the main business models. Low-cost pay per use is still possible but not for messaging or voice traffic. The value proposition needs to be higher.

What will this mean?
Bit pipes will become a reality in Europe and possible in the US (mainly dependent on what Google and others do). Telecom operators massive head count reductions. Nokia & Blackberry will be joined by other one time big telco names. The end of the world for some. Especially for those that belief telecom is a dividend generator or a bottomless pit for license taxation…

For consumers and enterprises there will be a new world of communication possibilities. Communication will be fully integrated into back office systems, e.g. CRMs like Salesforce store all calls. Improvements in voice recognition will make talking to machines a natural interface. Managing contacts will become a breeze. Forget memorizing phone numbers…

Communication as a Service will be the big innovation. The Cloud, Big Data, IoT will meet IP communication. Whatsapp will have a bigger brother for voice and video. Unless Google and Apple surprise the market with joint IP-based communication over LTE and WiFi. Asia, Africa and Latam will have two more years but most of their operators will make the same mistakes as the European ones.

Bit pipes are not even a safe business because the Ryanair of telecom will be able to quickly pickup mobile licenses and networks of the third/forth player, the one that goes bankrupt.

Things will not look nice for the next three years for some but we all knew that it was going to come for the last 10-15 years. Any CxO that calls this an unforeseen disruptive technology should be fired on the spot. The next edition of the Innovators Dilemma does not have to go back to the last century for examples. This is a textbook case for MBA students for years to come…

Solving the pressing need for Linux talent…

September 17, 2013 Leave a comment

The Linux Foundation shared the below infographics recently.  Click on it and you get the associated report. The short message is, if you are an expert in Linux you are in high demand because companies don’t find enough experts due to the Cloud and Big Data boom.

Unless cloning machines are discovered later this year, quickly expanding the number of Linux experts is unlikely to happen. This means total cost of ownership for enterprises is likely to rise. This is ironic since Linux is all about open source and providing some of the most amazing solutions for free.

The obvious alternative is to focus on Microsoft products. They are relatively cheap in total cost of ownership since licenses are “payable” and average Windows skills can be easier found.

However Microsoft is loosing the server war, especially in the web application space. So this is not a winning strategy if you are going to do Cloud.

How to solve the pressing need for Linux talent?

The only possible strategy is to lower the number of experts needed per company. Larger companies always will need some but they should be focused on the “interesting high-value tasks”. This concept of interesting and high-value is key. With the number of cloud servers exploding, we can not expect the number of experts to explode.

Open source products like Puppet and Chef have helped to alleviate the pain for the more “skilled” companies. One DevOp was able to manage more than ten times as many machines as before. Unfortunately these server provisioning tools are not for the faint of heart. They  require experts that know both administration and coding.

It is time for the next generation of tools. Ubuntu, the number #1 Cloud operating system, is leading the way with Juju. If Linux wants to continue to be successful then the common problems, the boring problems, the repetitive problems, etc. should be solved. Solved by Linux gurus in such a way that we, the less IT gifted, can get instant solutions for these common problems.

We need a Linux democracy in which the lesser skilled, but unfortunately the majority, can instantly reuse best-in-class blueprint solutions. Juju is a new class of tools that gives you instant solutions. For all those common problems: scaling a web application, monitoring your infrastructure, sharding MongoDB, replicating a database, installing a Hadoop cluster, setting up continuous integration, etc. Juju can offer solutions. The individual software components have been “charmed”. A Charm allows the software to be instantly deployed, integrated and scaled. However the real revolution is just starting. Juju will have bundles pretty soon. Technically speaking, a bundle is a collection of pre-configured and integrated Charms. In lays speak, a bundle is an instant solution for a common problem. You instantly deploy a bundle [one command or drag-and-drop] and you get a blue-print solution. Since Juju is open source, the community can create as many instant solutions as there are common problems.

So if you want to scale your IT solutions without stretching neither your budget or cloning your employees and without the lock-in of any proprietary and expensive commercial software, then you should try Juju today. Play with the GUI or install Juju today.

5 Strategies for Making Money with the Cloud

January 22, 2013 1 comment

Everybody is hearing Cloud Computing on the television now. Operators will store your contacts in the Cloud. Hosting companies will host your website in the Cloud. Others will store your photos in the Cloud.

However how do you make money with the Cloud?

The first thing is to forget about infrastructure and virtualization. If you are thinking that in 2013, the world needs more IaaS providers then you haven’t seen what is currently on offer (Amazon, Microsoft, Google, Rackspace, Joyent, Verizon/Terramark, IBM, HP, etc.).

So what are alternative strategies:

1) Rocket Internet SaaS Cloning

Your best hope is SaaS and PaaS. The best markets are non-English speaking markets. We have seen an explosion of SaaS in the USA but most have not made it to the rest of the world yet. Only some bigger SaaS solutions (Webex, GoToMeeting, Office 365, etc.)  and PaaS platforms (Salesforce, Workday, etc.) are available outside of the US and the UK. However most SaaS and PaaS solutions are currently still English-only. So the quickest solution to make some money is to just copy, translate and paste some successful English-only SaaS product. If you do not know how to copy dotcoms, take a look at how the Rocket Internet team is doing it. Of course you should always be open for those annoying problems everybody has that could use a new innovative solution and as such create your own SaaS.

2) SaaSification

During the gold rush, be the restaurant, hotel or tool shop. While everybody is looking for the SaaS gold, offer solutions that will save gold diggers time and money. SaaSification allows others to focus on building their SaaS business, not on reinventing for the millionth time a web page, web store, email server, search, CRM, monthly subscription billing, reporting, BI, etc. Instead of a “Use Shopify to create your online store”, it should be “Use <YOUR PRODUCT> to create a SaaS Business”.

3) Mobile & Cloud

Everybody is having, or at least thinking about buying, a Smartphone. However there are very few really good mobile services that fully exploit the Cloud. Yet I can get a shopping list app but most are just glorified to-do lists. None is recommending me where to go and buy based on current promotions and comparison with other buyers. None is helping me find products inside a large supermarket. None is learning from my shopping habits and suggesting items on the list. None is allowing me to take a number at the seafood queue. These are just examples for one mobile + cloud app. Think about any other field and you are sure to find great ideas.

4) Specialized IaaS

I mentioned it before, IaaS is already overcrowded but there is one exception: specialized IaaS. You can focus on specialized hardware, e.g. virtualized GPU, DSP, mobile ARM processors. On network virtualization like SDN and Openflow. Mobile and tablet virtualization. Embedded device virtualization. Machine Learning IaaS. Car Software virtualization.

5) Disruptive Innovations + Cloud

Selling disruptive innovations and offering them as Cloud services. Examples could be 3D printing services, wireless sensor networks / M2M, Big Data, Wearable Tech, Open Source Hardware, etc. The Cloud will lower your costs and give you a global elastically scalable solution.

Disrupting the Datawarehouse market with Redshift

January 14, 2013 1 comment

Amazon is taking another step at disrupting an existing market. This time they have their sight set on the Datawarehouse market. Amazon is currently running a limited preview of a new service called Redshift. Redshift promised a Datawarehouse starting from $1000/Terrabyte/Year. To get to this price point you have to go for the XL reserved instance which comes with a minimum of 2TB, so you actually pay $2000. If you want to pay per use then you pay $0.85/hour which comes to $7500 for 2TB per year. You can also scale up to a hundred of 8XL instances which will give you 1.6 petabyte of compressed data. Amazon will do the management (software patching, scaling, restarting failed instances, etc.) as well as backups for you. The initial partners are Jaspersoft and Microstrategy but more solution providers are being promised. You can connect to your datawarehouse via PostgreSQL JDBC or ODBC. The limited service is only available in the US EAST region but looking at the historic performance of Amazon this should change quickly.

As always Amazon is one step ahead of the competition and is able to offer Datawarehouse (DW) solutions to companies that were traditionally too small to pay the total cost of ownership associated with an on-site datawarehouse deployment. However as with any disruptive innovation, if Amazon is able to extend their offering to also include all the tools business analysts and data scientists need, then over time Redshift could be disrupting even the high-end DW market. For sure, to be continued…

ROI from the Cloud?

January 7, 2013 2 comments

On Quora there was a question about how much CAPEX and OPEX you can save by moving to the Cloud. My short answer is: you might not save any.

My longer answer:

If you compare owning your own data center to owning a car, than hosting is like renting and the Cloud is a taxi. If you have a lot of hardware and software that has been written off or highly utilized in your existing data center then moving your solutions to the Cloud might well increase your monthly bill. Just like a travelling salesman will see a higher transport cost when switching from a car to the use of taxis. In this case virtualization is the best solution.

So why is everybody talking about the Cloud then?

The Cloud is great for three scenarios:

1) If you are starting something new

2) If you have unpredictable load

3) Pay per use services

Starting something new

Startups benefit most from the Cloud since they have to find a sustainable revenue stream before they run out of cash. Time is money. Not having to invest upfront in hardware and growing your hardware together with your needs is very attractive to them.

Also any other type of innovation or unproven business within existing companies should be using the Cloud for the exact same reason.

Unpredictable Load

If you are lucky to be in a situation where your load grows extremely fast and grows together with your revenues, then the Cloud is ideal as well.

Also the case where you have this one day a year where your load is a 100-times larger than the second top day. Or if your load is unevenly spread during some hours of the day and falls to almost nothing during the rest of the day. All these spikes could be moved to the Cloud via a hybrid solution.

Pay per use

Instead of focusing on all that software and hardware that is fully utilized in your data center, you should focus on the software and hardware that is not. Those promising projects that went nowhere. The software that only needs to be used once a month or was hardly ever used.

Software-as-a-Service (SaaS) is the main cost saver for using the Cloud. Substitute infrequently used software by SaaS solutions and pay only for usage. No upfront investment in hardware, licenses, set-up, etc. Pay only for what you use. If you start using this type of software heavily then you can always do a business case to bring it back to your data center. There are thousands of examples ranging from general solutions like CRM, ERP, recruiting, project management, etc. to specialized industry specific SaaS. Look at SaaS marketplaces to understand the full offering.

Convert your CAPEX into Revenues

The last advise is to think about your current solutions. In case you have built a custom solution for some industry problem, then converting it into a SaaS offering for others might be the best way to save you from future CAPEX approval problems. The reason is that when a solution is converted from a cost item into a revenue generator, management all of a sudden will start looking at it with a totally new perspective…

Maarten Ectors is a senior executive whose is an expert in generating new revenues from new technologies like the Cloud, Big Data, Machine Learning, Mobile, etc. He is currently looking for new challenges. You can contact him at maarten at telruptive dot com.

 

OpenRate – Charge like Vodafone, American Airlines, Amazon AWS or Salesforce for free…

July 23, 2012 4 comments

Ever wondered how it is that two people make a similar call, fly next to one another on a plane, rent the same type of virtual server or use the same SaaS application but end up paying totally different bills. Big companies have understood since a long time that rating and charging is the key to making more money for the same service. As long as the user can be convinced that they are paying more because of some valid reason (e.g. prepaid contract, same-day return flight, on-demand vs reserved instance, monthly vs yearly subscription, etc.), a similar service can be sold at different prices.

For a long time it was expensive to do advanced rating and charging. Licensing could easily be millions. That day has changed. After a very productive discussion, OpenRate has decided to offer again a free GPL version of their open source rating and mediation solution.

Why is an open source rating and mediation solution so important?

Online charging, rating and mediation used to be something that only the most diehard telecom experts could really grasp. There was no need for it outside of the telecom and some other major industries.

However P2P, Mobile Apps, Cloud Computing, M2M, Social Networks, Online Games, Big Data, etc. have brought us VoIP for P2P, In-App Micro Payments & Subscriptions, mCommerce, IaaS, SaaS, PaaS, sensor network event subscription, social commerce, fire hose subscriptions, virtual goods purchases, data set per-event access fees, etc. All of these technologies are exploring new ways of generating money. Unfortunately none is able to afford a €1-€5/license per user per month for a professional solution. At least not from day one. With OpenRate developers, marketers, product managers, etc. are able to explore new frontiers in monetization without any upfront risk. Subscriptions, one-time-fees, pre-paid, real-time charging, discounts, etc. it is all possible now. OpenRate is a very flexible framework in which developers can use what they need.

So if you are incubating a SaaS offering that wants to push the limits of prepaid and subscriptions, an online game with a catalogue of virtual goods, a social network with a cashflow problem, an M2M platform in need of money, an IaaS seller with a large set of configurable parameters, etc. you should be looking at how rating and charging can make you more money…

Of course if you are new to the rating and charging market and want training, consultancy or need a support contract, be sure to check out the OpenRate Commercial Offering. OpenRate is a freemium company that wants to understand your specific needs in order to offer the best possible solutions, so get in contact with them on the OpenRate Linkedin Community Site.

It would be good to see OpenRate be integrated with other Open Source and Freemium solutions, e.g. open source commerce solutions, like OpenCart, could use an advanced SaaS subscriptions and discount management extension, etc. This is an open invitation for developers to let their imagination flow and share it with the rest of us…

How Open-Rate could be disruptive!

June 25, 2012 1 comment

UPDATE: The Open-Rate team has been very cooperative and are now providing an Open Source version again. Read more about it.

 

For those unfamiliar with Open-Rate, Open-Rate is an open source rating and mediation framework. Open-Rate is a framework more than a finished rating solution. You can build advanced rating and mediation solutions with it such as real-time charging.

Unfortunately Open-Rate decided to withdraw the option to download the GPL version from its website. Their feedback was that operators were not contributing to the open source product.

Read more…

Where should VCs invest?

If you are a VC and you are unclear where to invest then this post might be of interest to you.

Some Disruptive Technologies and ideas that startups might be working on or for which you might want to assemble a team:

Alternative networks

WiFi and 3/4/5G have their limitations. Any alternative networking technology that can change complete industries is probably a good pick. An example would be LiFi.
Networks as a Service – Software-Defined Networks – Openflow

This area is very hot at the moment. Today’s network are very hard to configure and manage, they are very tightly-coupled with hardware, they can not be extended easily.

Anything that makes Software-Defined Networks/Openflow easy for mass adoption is going to be a winner.

Anything that allows enterprises to buy a box once and get the network software later based on day-to-day business requirements, e.g. think about appstore for Openflow.

Anything that links Openflow to the Cloud.

M2M Disruptive Technologies
Printing electronics to make sensors cheaper.

Battery-free electronics to make sensors more mobile and less expensive to maintain.

Auto-discovery sensor mesh networks to avoid paying expensive 3/4G subscriptions.

M2M appstores to allow people to reuse the work others did.

Super-easy M2M APIs/PaaS. Look at Pachube as a model to beat.

Cloud Disruptive Technologies

Niche SaaSification in which applications that are only used in small niches can be offered as SaaS subscriptions in a global way.

Plug-and-Cloud Equipment for Hybrid Cloud & Exposure (Single Sign-on, Internal data sources, Internal integrations) – on-site equipment that allows enterprises in an easy and secure way to expose their internal assets to the Cloud e.g. employee single sign-on, secure exposure of company data, secure exposure and easy integration of company applications

Plug-and-Play SaaS integrations that allow multiple SaaS offerings to be easily integrated without programming.
Mobile

Mobile PaaS = mobile GUI drag-and-drop designer + no-programming back-end systems like Usergrid + plug-and-play integration with external and enterprise APIs + enterprise mobile app / SaaS stores + BYOD made easy solutions (some elements are optional)

Big Data / Data Analytics

Visual data miner as a service

Big Data PaaS (easy tools/APIs for complex big data operations like mood analysis, natural language processing, etc.)

Gamification/Crowdsourcing

Kaggle type of services but for other domains e.g. competition to create the easiest/best mobile interface or API

Kaggle + Kickstarter => competition together with crowdfunding. Who can build the best solution for this problem, gets their venture funded.

Nail-it-then-scale-it/Lean Startup type of crowdsourcing in which ideas get tested (e.g. paper prototypes, business model discovery, etc. before actual prototype) and funding is delivered bit by bit. Ideally with stock options of the funders in the new venture.
Enterprise/Consumer Telecom

Managed enterprise software-defined networks or BYOD – services that help enterprises to maintain their networks or devices that employees bring along in a managed way hence no experts need to be hired and the service is pay-as-you-go instead of CAPEX.

Cloud + Set-up Boxes – Appstores for ADSL/Cable Modem set-up boxes, SDKs to manage large sets of consumer’s set-up boxes, etc.

Conclusion

These are just a handful of ideas. If you want more or need more detail, let me know at maarten at telruptive dot com. Also if you are in need of an external adviser or executive in a new venture, let me now…

Data Analytics as a Service

April 18, 2012 2 comments

Every company is using Microsoft Office and especially Excel to do some sort of data analytics. However data volumes have grown exponentially and have outgrown Spreadsheets. You need experts in the business domain, in data analytics, in data migration/extraction/transformation/loading, in server management, etc. to get data analytics done on Big Data scale. This makes it expensive and only usable for the happy few.

Why? There must be easier ways to do it.

I think there are. For those unfamiliar with data analytics but eager to learn, you should take a look at a product called RapidMiner. It is close to amazing how a non-expert is able to use Neural Networks, Decision Trees, Support Vector Machines, Genetic Algorithms, etc. and get meaningful results in minutes. The amazing part is also that RapidMiner is open source hence for usage by 1 analyst it is free.

Rapid-i.com, the company behind RapidMiner, also offers server software to run data analytics remotely. It is here where big data opportunities meet easy data analytics. What if RapidMiner data analytics could be ran on hundreds of servers in parallel and you pay by usage just as you pay for any Cloud compute and storage instances?

RapidMiner as a Service

RapidMiner as a Service, RMaaS, would allow millions of business people to be able to analyse Big Data “without Big Investments”. This type of Data Analytics as a Service would provide any SME with the same data analytics tools as large corporations. Data could come from Amazon S3, Amazon’s DynamoDB, Hosted Hadoops, any webservices, any social network, etc.

Visual as a Service

RapidMiner as a Service is only one of the many domain specific tools that could be offered as a visual drag-and-drop Cloud service. VAS as a Service is another example in which complex telecom assets can be easily combined in a drag-and-drop manner. There are many more. These services will be the real revolution of Cloud Computing since they combine IaaS/PaaS/SaaS into a new generation of solutions that bring large savings for new users and potential large revenues for their providers…

Is IaaS a good business for operators?

The short answer is no unless you operate in a part of the world where there is no regional IaaS. The longer answer is:

Amazon is running their AWS services with a cost-plus pricing model. This means they aim for a 10% profit margin. Every time they have improvements in their economies of scale, they lower the price to get back to the 10%.

Although Amazon has healthy gross-margins, the IaaS is all about investing in hardware and R&D. This means that volume is the name of the game. Although Amazon is making IaaS into a billion dollar business, the number two player (Rackspace) is around $285M for their IaaS business. This shows the winner-takes-it-all.

How are operators going to compete?

Competing at price with Amazon AWS, Rackspace, Gogrid, etc. will not be an option given that they are lowering pricing continuously.

Competing with better technology is also almost impossible because Amazon is THE marketleader for IaaS innovation with services like DynamoDB. IT players are just doing catch-up and any operator that will use an RFQ process will just be buying previous-generation-software and hardware. This means in Cloud terminology: legacy systems.

Operators could give better SLAs then the 99.95% offered by Amazon. However in the world of cloud computing, SLAs do not mean anything. If you want availability, then you are better to implement a multi-cloud strategy in which you use multiple cloud providers and your software can move dynamically between them.

Trust? IBM and other IT players can provide that as well. They have been in the Cloud space for more time then telecom and are quicker at deploying technology.

Networking reliability, QoS and speed? Yes but only for a niche segment of the market. A segment that is unlikely to be big if you look at the local nature of most operators.

Geo-localization reasons? YES. This is probably the only valid reason why in Africa, some parts of Asia and Latin-America, operators should look at IaaS. However in Europe, the US, Australia, Japan, Korea, Singapore, etc. this can not be the driver.

So unless you are targetting some very specific low-latency or high data volume nice markets or are in a part of the world where reliable networking and electricity is hard to get, you are unlikely to make your CEO happy with IaaS. You should think about other parts of Cloud Computing like PaaS, business processes as a service, networking as a service, etc.

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