Enterprise Initiatives

There have been a few paradigm shifts in IT over the past 30 years. First was the introduction of the PC which changed computing forever. This moved us from a very structured and controlled mainframe environment to an empowered and chaotic distributed environment. The next big change was the introduction of the Internet in the workplace. This has fueled globalization and lead to more demanding and tech savvy customers. The next big thing is cloud computing, specifically, Platform as a Service (PaaS). Before I go into why I believe this to be true, let me clarify the terms.



On Premise
Traditionally, companies run a majority of their software, both proprietary and 3rd party, within their own data centers. Common software products that you see in corporate data centers are Microsoft Office, relational databases like Oracle, DB2, and Sysbase, and financial systems like Lawson and SAP.

Internet
Internet applications are typically web sites or proprietary applications that are built to run on a browser but are hosted within the walls of your company. Popular websites like eBay, Amazon, and Google are run from within those companies data centers. Many of the web applications that most companies built are run within their data center or by some hosting partner. Let's be clear that hosting is not in the cloud. In a hosting environment you have dedicated infrastructure assigned to your application(s) that is not shared with other companies. When you want to scale up you have to buy/lease more infrastructure and bandwidth.

Cloud Computing
With cloud computing, we are now talking about running software that is written by someone else who also manages the infrastructure. SaaS or software as a service is a prime example of this. Salesforce.com has been a leader in this space with their CRM services. You can pay to use any module and plug that module right into your environment. Mashups and services like GMail, Google Docs, Mapquest, social software like Facebook and Twitter fall into this category. How is this different then regular Internet computing? All of these products/services are open and completely programmable and the underlying infrastructure is nothing that you need to manage.

PaaS
Now comes the game changer! Major Internet presences like Google, Amazon, and Salesforce.com have built a highly reliable and scalable infrastructure platform over the years. Now they are building out excess capacity and selling it to us as a service. Now you can take your on premise and Internet applications and run them on their platform. This is a combination of hosting and SaaS but with scale and sharing. Unlike hosting, every company is sharing the same infrastructure. Now a $100M company runs on the same world class infrastructure that a $10B company runs on. There is no other way for the $100M company to justify the robustness of the infrastructure that they get with PaaS. The pricing model changes things significantly. Instead of licensing you now pay as you go. As your traffic increases, your applications have access to virtually unlimited infrastructure and you scale in real time. Good bye disaster recovery and business continuity initiatives. Your entire business continuity plan becomes running on two PaaS providers in case one goes down.

I put together this 7 minute video blog that goes into more detail for you hardcore folks out there.

So what are the main challenges that Saas needs to overcome?

• IT leaders must be educated
• IT leaders fear of giving up control
• IT leaders fear of security issues with giving up their data
• Maturing PaaS technology

It will take a few years before many companies make the move to PaaS, but it is coming. The economies of scale and TCO will be so compelling that CIOs will be crazy not to jump on the bandwagon. Eventually we will get over our control issues. Most payroll and many CRM applications are already running as hosted or SaaS solutions today. Think about it. That is our employee and customer data that is already outside our walls. How about security? When was the last time you went to the bank? Do you buy books on Amazon? Do you use your debit card for most of your purchases? It's already happening. In fact, most security breaches are inside jobs by people who have intimate knowledge of systems and/or infrastructure. PaaS might make us even more secure. Here is another reason. These PaaS vendors' core competencies are building reliable, scalable, and secure platforms. Their applications don't have to be just enterprise class, they have to be global class. They will spend more money on security then our companies can even dream about spending because without world class security, they have no customers.

What does this mean to IT?
Nick Carr, in his latest book The Big Switch, discusses his thoughts. I had the opportunity to see his presentation live at the Gartner AADI conference last week. He believes that IT shops will be substantially smaller 5-10 years from now. The reason is simple, the majority of our infrastructure and applications will be run and managed elsewhere. We will spend less time patching, securing, and upgrading and more time innovating. Today, roughly 70% of IT hours are dedicated to keeping the lights on, which leaves very little time for us to meet the business needs. PaaS does not eliminate this work, but it does greatly reduce it.

Startups and smaller companies now have advantages like never before. They can quickly bring a product to market at very low cost and only pay for the traffic that they generate. As they grow and attract customers, the infrastructure scales automatically to meet their needs. Now, they still need to architect their software to scale, but they don't have to worry about bandwidth, adding machines, and dealing with licenses. This means that your biggest competitive threat might be a company that has not started yet. Your existing competitors have all of the baggage of legacy like your company does. It will take them time to move pieces of their infrastructure to this new way of doing things. It's the new kids on the block that can quickly scale and be agile enough to move at the speed of the consumer.

There is a lot more to talk about on this topic but I'll stop for today. Many people just don't understand PaaS enough yet to see where this can go. I will try to continue to discuss what the future holds and what the impacts of these changes will be to IT and the business.