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.
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…
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…
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?
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…
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.
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.
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…
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.
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.