Tuesday, August 24, 2010

Cloud buzz: is it cheaper or wiser?

I did a piece for an industry website which focused on opportunities for companies like mine.    I'm reusing that content, but thinking about what it means for our customers.

In that article, I discussed some content that my HTG colleague, Reed Wilson from Palmetto Technology, recently sent over.  He saw a marketing pitch a cloud software provider in the healthcare space.   The pitch boiled down to essentially "You were never trained to use Facebook or Gmail and you’ll never need to be trained on our software.  That’s the beauty of Cloud Computing."

Reed intelligently continues with some analysis.  He notes that it sets a very unrealistic expectation for the buyer.    Comparing practice management software to Gmail or Facebook is unrealistic.   Does the cloud application handle complex workflows and work processes?

It does, Reed continues, sell.  And some customers are buying the pitch, even if it doesn't always result in what they think it is.  The perception is that cloud computing is automatically cheaper than going with an on-premise one .   When we compare the on-premise with cloud solutions, they are often very similar.

The true promise of cloud computing is not “simplicity” or “cheap”, but in a wiser way to spend IT dollars, giving higher reliability and lower administration costs.  That doesn’t necessarily result in “simple” or cheap”.   This is critically important to examine when looking at a cloud solution.

This discussion expanded when Mike Ritsema with i3 Business Solutions chimed in.    He brought some facts to bear.

"IBM made 84% of their profit last year from services and software.  They’ve acquired over 100 companies in these areas over the last 10 years.  7% of their profit came from hardware.  They love the complication of integrating disparate technology."

Mike's list of ways companies integrate into the cloud was dead on:

EDI

Payroll

Web browsing

Buying

RFP / RFI

Collaboration

Blogs, Social Networking

E-mail

Mike outlined a recent customer solution, showing where he brought value to a small business.   "I just finished a small business a deal:  QuickBooks, Fishbowl Distribution Software, EZ Connector integration software, ASP DOT NET eCommerce, Authorize .NET Credit Card Processing, Cloud email, IBM Server, Cisco Firewall, implementation services, and Redundant internet access."   His company's value, and the area they see growth, opportunity, and the ability to make money in helping customers, is bolting and holding "this stuff together" for the next decade.

Mike continues, however, noting "It’s as complicated or more complicated than an on premise solution."  This means it's not necessarily "cheaper" but it does add significant capabilities to his customer, something they couldn't have before.

We see cloud computing as incredibly powerful -- but we also see more and more confusion in the market place.  Cloud computing is a new paradigm, a new way to deliver some solutions.   It offers high availability where it couldn't be delivered before.   It doesn't always mean "cheap", however.

Thursday, August 19, 2010

Little to say, but financials on the mind

I've had little to say.

It's been a busy couple of weeks for me, as post WPC i had work to do, and then a week in the UK for HTG11 and a few more days in Chicago for HTG5.    Now that those are done, I'm in those few moments before I dig in again.

I'm doing a financial analysis piece that one of my HTG5 colleagues shared with me this week.  It's an interesting model -- looking at your rate of change over time to understand how the business grows and shrinks as the business ebbs and flows.   I've done the first round by putting the numbers together and seeing the trends.  I want to lay on our history and the information about the economy to see how much was "me" and how much was "outside me".

So I'm off to do that.   Financials on the mind....