The Need for Cloud Integration

The cloud is everywhere those days and the software industry is going through some drastic transformations.  According to IDC, “Software as a Service 2010-2014” report, software will never be the same.  The on-premise software market will go down 19% during this period from a market share of 66%.  In the same period, shares of the public cloud are expected to go up 12% to 22% of the software market revenue.  The Platform as a Service market is expected to grow between 39% and 55% a year for the next 5 years (IDC forecast vs. Forrester forecast).  This is quite some shift...

Forrester Research defines Platform as a Service (PaaS) as:

A complete application platform for multitenant cloud environments that includes development tools, runtime, and administration and management tools and services. PaaS combines an application platform with managed cloud infrastructure services.

A key value of PaaS is the ability to focus on the business application and not on platform technologies.  As PaaS becomes more widely adopted and business applications increasingly built on top of such platforms, the need for cloud integration will become pervasive.

Modern applications require the ability to expose enterprise information in the context of the task at hand.  Adaptive contextual user experiences will become increasingly critical for business users to rapidly make optimal business decisions.  In a PaaS or SaaS world, this will require robust integration with the needed information sources such as:

• Cloud based applications: CRM systems like Salesforce.com, HR systems like Success Factor or Workday, public cloud email systems and productivity applications
• Enterprise applications:  ERP systems like SAP or Oracle Business Applications
• Content management systems internally hosted or in the public cloud
• Legacy systems and applications

However, cloud integration as some serious challenges it needs to overcome.  A July 2010 survey by Saugatuck Technology confirms that data security and privacy as well as data integration concerns are top concerns in deploying cloud based business solutions.

Let’s have a look at some of those challenges:

• Data integrity and information security.  Art Coviello from RSA articulates the problem nicely:  "While cloud computing offers tremendous benefits in cost and agility, it breaks down some of the traditional means of ensuring visibility and control of infrastructure and information. Forcing enterprises to develop trusted relationships individually with each cloud service provider they wish to use is cumbersome and will not scale. New thinking in security and compliance is required to provide a future in which organizations can consume services from a wide variety of cloud service providers on-demand and for all their application needs." 
• Application security integration.  Anyone who has tried to integrate applications together knows that one major integration issue is around access control and particularly role based security.  Protocols  like OAuth have emerged to provide a simple way to publish and interact with protected data.  Other standards like XACML provide flexible solutions for enforcing granular authorization.  Unfortunately, those technologies are not broadly adopted by enterprise application making authorization integration a challenge.
• Data integration.  Many enterprise systems still require proprietary integration mechanisms.  But even cloud based applications require integration with their proprietary APIs.  Cloud based integration should provide a flexible mechanism for data mapping and integration.  As Mark Brennan, Director of Business Applications at Pandora puts it: "traditional approaches to integration are no longer adequate when you have literally dozens of SaaS applications, all needing to talk to each other. If every change, customization or refinement becomes a project, we can’t keep up. To changes all that, we need a solution that elevates us out of code level and putting the power directly into our hands".   Some of those data integration challenges may involve:
• Bi-directional data synchronization
• Transactional integrity and service orchestration
• Solutions to deal with information caching and system latency

Clearly, addressing those challenges will be key to enterprises moving and trusting their enterprise systems to the public cloud.

Software Plus Services - An Interesting Development

Last month, I blogged about next generation internet application and how companies like Amazon are innovating on the business model side and scaling their infrastructure out to provide rock bottom prices. At the Enterprise 2.0 conference, Rishi Chandra from Google touched on a similar topic. Early July, Microsoft announced it Microsoft Online Services that can:

Help relieve the burden of managing and maintaining business systems, freeing IT departments to focus on initiatives that can help deliver true competitive advantage.

Microsoft Online Services include:

• Office Live Meeting
• Exchange Hosted Services
• Dynamics CRM Online
• SharePoint Online

The most interesting part of the announcement is the pricing. Microsoft introduces a new licensing model call a User Subscription License (USL). USLs are interesting because they blend online access and on-premise access. So if a company has bought a USL of Office Live Meeting, their users are licensed to use either Microsoft Online or an on-premise deployment of Live Meeting. This provides an interesting twist to the Software Plus Services that Microsoft has been touting for a little while now.

Licensing is very competitive as well. A USL for the Business Productivity Online Suite is $15 per month. That means, for $15 per month, a user can have access to Exchange, SharePoint server, Live Meeting and, when released, Office Communications Online. See the Office SharePoint write up for a good explanation of the licensing model. Customers can also license Microsoft Online piece meal:

• $10/month for an Exchange USL,
• $7.25/month for SharePoint,
• $2.50/month for Office Communications
• $4.50/month for Live Meeting

Each USL includes a storage allocation: 1GB per USL for Exchange storage and 250MB per USL for SharePoint, and additional storage can be purchased for $2.50 per GB per month.

Looking back at how Cloud Computing is shaping to be a disruptive trend, this announcement is particularly interesting. The business model part makes it particularly attractive to IT organizations as they can start testing out mixed deployment of hosted and on-premise while protecting their investment. It will be interesting to follow how this gets adopted, but in my opinion, this is indicative of a paradigm shift in our industry.

On a closing note, an interesting description of the infrastructure required to support this offering and telling on the level of investment:

• 13 global datacenters (growing to 20 next year)
• Replicated to two distinct datacenters to provide redundancy
• Service guarantees a 99.9 percent SLA

Working in the Cloud: How Cloud Computing is Reshaping Enterprise Technology

At the Enterprise 2.0 conference, Rishi Chandra, product manager for Google Enterprise delivered a thoughtful and interesting talk on how cloud computing is reshaping enterprise technology. Rishi makes the point that the next 10 years of innovation will be in the cloud.

From Rishi's presentation, I took the following takeaways:

• The cloud will drive towards unmatched scalability which in return will marginalize the cost per unit of the infrastructure whether it be storage or processing power
• The uptime requirements of the cloud will provide unmatched reliability
• Cloud computing providers need to build trust in their infrastructure. Security being often the primary concern.
• This is a highly disruptive trend which could transform the economic dynamics of the software industry for on-premise software

During his presentation, Rishi outlined 4 areas of innovation that will further increase the appeal of cloud based solutions:

• Consumer driven innovation will set the pace. Why? Because the consumer world is Darwinian in nature. Within the Enterprise, there is a lack of direct connection to the end user as purchase decision connect vendors with IT or purchasing departments. In the consumer space, consumers have direct choice and access to the technology.
  One key lesson learned at Google is that simplicity wins. Google has been able to accomplish this by having an explicit focus on end user. This results in better solutions for the end user and drives towards increased innovation.
• The rise of the power collaborator. The world is about team and group productivity where individuals needs to become increasingly connected to be more productive. Rishi makes the point that tools in the enterprise are still built for power users. The cloud is focused on collaboration and allows users to contribute information anywhere, all the time. Rishi envisions users being able to collaboration on content online and leverage "cloud services" such as automated translation to break communication barriers between contributors, or publishing services to publish information. The cloud is the right platform to provide those services and will offer one repository of information with open APIs.
• The economics of IT are changing. The larger question for the enterprise is: how does the enterprise deal with scalability? Google as tremendous scalability challenges it needs to deal with. For instance, on the Google Picassa web service, 7 million new photos are uploaded a day. As Google scales its infrastructure, Google predicts that scale will drive unit costs towards zero. This is an interesting trend and aligned with what Amazon S3 services illustrate with storage at $0.15/GB. This provides some clear challenges for more traditional storage companies. Google positions its App Engine as a scalable hosting platform. This trend towards unlimited scalability provides huge opportunities and have great implications for the enterprise.
• Barriers to adoption are falling away. Connectivity is becoming less of an issue. In addition, the user experience of web applications is getting richer all the time. Also, reliability expectations have changed. For instance, Gmail is multi homed, providing unmatched reliability. Rishi predicts that this will provide a level of reliability that on-premise deployment will be challenged to meet. One key barrier to adoption is security. But how secure is your organization today? 1 in 10 laptops are stolen within 12 months after purchase. Rishi makes the argument that data in the clould is more secure. However Google recognizes that in order to address the security issue, it will need to build trust with its customer. Google already does this, Postini is leveraging its cloud infrastructure for security and compliance solutions.

As closing remarks, Google does not believe that on-premise software is going away but predicts that innovation will happen in the cloud and open APIs will foster competition. Rishi predicts that all Google applications will become more social and leverage a common platform.