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Why VCs should no longer invest in mobile apps or social networks…

The “Yo” app is a clear sign that there is a mobile bubble. If an app that is created in an afternoon and only says Yo gets $1M in funding then you know VCs are running out of good investment options. Also social networks are loosing steam because there are only so many you can be active on.

What should VCs focus on instead?
The answer: enterprise.
If all the UX, mobile, social, engagement, etc. experts of this world would focus their energy on making exciting, beautiful, easy to use enterprise applications and solutions then lots of new billionaires will be around in 3 years.
However enterprise software is hard. It needs to be rock steady, always available, easy to integrate, etc.
So what is the trick?
Easy: use a plugin mechanism and focus on a platform that handles 80% of the use cases with 20% of the features. All other 80% of the features can be added as plugins from external companies. The Accenture’s of this world will come up with plugins that will beat your wildest dreams. Especially if they have an easy way to sell them. Talking about price. Your platform should be open source. It is the only way to avoid the RFP hell. If you want to be compared to SAP, Oracle, Microsoft, etc. solutions then charge at least $1. If you make it open source then procurement has no say. Business managers and solution architects will try your software. They will show their managers solutions based on your software. The director will get involved. As will the CTO. They will all love it. When finally things go to production somebody will say “we need support!” and you can sell them a support contract. This is also the moment to sell them some plugins.
Now make your software super easy to integrate, e.g. via Juju, and make sure the software is scale out. This means that you can just install it on more virtual or commodity machines instead of needing bigger more expensive servers.
Finally in addition you need to add something innovative that other solutions in the same space don’t have and would have a hard time copying.
Use lean methodology to make sure you are building a solution for a real problem. Offer an on-premise version and a SaaS version.
Now you are set to become the next billionaire. At least your chances will be so much bigger than creating yet another mobile app or social network…

Why you should care about Kubernetes, Juju, Mesos, etc.

Every day a new orchestration solution is being presented to the world. This post is not about which one is better but about what will happen if you embrace these new technologies.

The traditional scale-up architecture
Before understanding the new solutions, let’s understand what is broken with the current solutions. Enterprise IT vendors have traditionally made software that was sold based on the number of processors. If you were a small company you would have 5 servers, if you were big you would have 50-1000 servers. With the cloud anybody can boot up 50 servers in minutes, so reality has changed. Small companies can manage easily 10000 servers, e.g. think of successful social or mobile startups.

Also software was written optimised for performance per CPU. Many traditional software comes with a long list of exact specifications that need to be followed in order for you to get enterprise support.

Big bloated frameworks are used to manage the thousands of features that are found in traditional enterprise solutions.

The container micro services future
Enterprise software is often hard to use, integrate, scale, etc. This is all the consequence of creating a big monolithic system that contains solutions for as many use cases possible.

In come cloud, containers, micro-services, orchestration, etc. and all rules change.

The best micro services architecture is one where important use cases are reflected in one service, e.g. the shopping cart service deals with your list of purchases however it relies on the session storage service and the identity service to be able to work.

Each service is ran in a micro services container and services can be integrated and scaled in minutes or even seconds.

What benefits do micro services and orchestration bring?
In a monolithic world change means long regression tests and risks. In a micro services world, change means innovation and fast time to market. You can easily upgrade a single service. You can make it scale elastically. You can implement alternative implementations of a service and see which one beats the current implementation. You can do rolling upgrades and rolling rollbacks.

So if enterprise solutions would be available as many reusable services that can all be instantly integrated, upgraded, scaled, etc. then time to market becomes incredibly fast. You have an idea. You implement five alternative versions. You test them. You combine the best three in a new alternative or you use two implementations based on a specific customer segment. All this is impossible with monolithic solutions.

This sounds like we reinvented SOA
Not quite. SOA focused on reusable services but it never embraced containers, orchestration and cloud. By having a container like Docker or a service in the form of a Juju Charm, people can exchange best practice’s instantly. They can be deployed, integrated, scaled, upgraded, etc. SOA only focused on the way services where discovered and consumed. Micro services focus additionally on global reuse, scaling, integration, upgrading, etc.

The future…
We are not quite there yet. Standards are still being defined. Not in the traditional standardisation bodies but via market adoption. However expect in the next 12 months to see micro services being orchestrated at large scale via open source solutions. As soon as the IT world has the solution then industry specific solutions will emerge. You will see communication solutions, retail solutions, logistics solutions, etc. Traditional vendors will not be able to keep pace with the innovation speed of a micro services orchestrated industry specific solution. Expect the SAPs, Oracles, etc. of this world to be in chock when all of a sudden nimble HR, recruiting, logistics, inventory, supplier relationship management solutions, etc. emerge that are offered as SaaS and on-premise often open source. Super easy to use, integrate, manage, extend, etc. It will be like LEGO starting a war against custom made toys. You already know who will be able to be more nimble and flexible…

Chief Disruption Officer

An online bookstore did not only redefine retail, content distribution and gave the postal services a second chance, it also is becoming the world’s data centre. The best way, to find out if the hot school girl is open for a new relationship, is now showing IT companies how to build servers & routers and telecom giants how people like to communicate. An online search and advertisement company has revolutionised how you find anything from text, images, location, etc. It redefined mobile computing together with a fruit-like branded company. It has global networks that even the biggest telecom incumbents can only dream off. It has cars that drive alone. Body accessories that puts science fiction authors next to historians.

At the same time stamps, travel agents, maps, telephone books, book publishers, bill boards, broadcasters, movie theatres, journalists, photo film, media storage, video cameras, taxi services, estate agents, high street shops, etc. have changed and not always for better.

If you work for a “traditional” company are you sure that in five years your company still is in business or can it be that some unknown small company launched a product that makes your company’s best products look like they belong in the history museum? Remember Nokia phones!!! Five years ago they had record sales…

If software disruptors have so much power, why aren’t companies hiring chief disruption officers. Senior executives whose goal it is to setup disruptive new product families that are owned by traditional players but are allowed to question any industry rules and launch cannibalising offerings often as independent companies.

It is a lot better that a big bank owns a bit coin exchange, a peer to peer lender, a crowd funded venture capitalist, a mobile payment provider, a micro payment cloud broker, a mobile app currency exchange, a machine learning financial adviser, etc. then being put out of business by any disruptive challenger.

Of course you can always copy the telecom model. Have everybody in your company look for potential cost reductions in the form of virtualized networks, squeezing (and killing) suppliers, etc. while your (mobile) broadband network is 12-36 months away from a data tsunami in the form of 4k streaming video, free mobile video calls, fitbits telling the cloud every minute (or second) your average heart beat and twenty other vital signs, free frequency crowd sourced mobile networks, etc. At a time where your business model has not seen a margin improvement in 10 years, your costs are exploding and your revenue will melt faster than ice in the Sahara.

Why don’t you think about hiring a chief disruption officer before you need to hire a chief miracle officer…

Why is IT solving problems people haven’t experienced yet?

May 13, 2014 2 comments

Normally I write blog posts in which I answer questions. This time I would like to have somebody else provide the answer. Why is IT solving problems nobody has experienced yet?

I attend a lot of professional events around cloud, big data, IoT, etc. Hardly do I meet customers there. Mostly I meet suppliers that show me the solution to a problem that perhaps Google will experience in 5 years. I am overreacting but most IT problems are about scaling beyond terabytes. The problem is that most enterprises can’t find a quick way to setup a sub domain or to provision a new user in a central identity management system. Most enterprises need weeks if not months to do tasks that IT companies solved 5 or even 10 years ago in minutes. So why is it that trivial problems seem to capture enterprise attention? Just look at what is currently hot! Tableau software, Amazon Redshift and Dotcloud Docker. You would say that SAS, IBM, Teradata, Canonical, RedHat, Solaris/Sun/Oracle, etc. would have solved reporting, data storage for analytics and packaging Linux software. The market does not seem to agree. Can it be that the initial problems where aimed at early adopters and more and more features where added? The result is that by the time the majority started to use the “solution” it was already to complex?
Why do companies like complex solutions? Why are early adopters the drivers of people’s roadmap and not the majority? What does the IT industry need to do to better understand its enterprise customers? What are enterprise customers telling the IT industry? Are they saying one thing and doing another?

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…

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