The buck stops here
As with IT generally, there are a lot of facets to “cloud computing”. Some companies deliver cloud services for end-users (facebook or Microsoft’s hotmail for example). Some, like Workbooks, deliver services for other companies. And some companies deliver services to support other companies’ delivery of cloud services.
Amazon Web Services is perhaps the leading provider to such services – it is a division of Amazon which many organisations use to power their IT services by providing them with computer and storage capacity “on demand”. If you take Amazon’s Web Services’ main offering – EC2 – then you are renting “virtual machine instances”. These are systems on which you can run your own operating system and they share a portion of the underlying hardware’s resources. You are of course sharing hardware with other EC2 customers and it’s down to chance whether your fellow virtual machine users are resource hogs or not. So there are now cloud services which help you manage your Amazon Web Services and it’s perhaps unsurprising that some of them report variations in EC2’s performance.
This last category poses an interesting question if you believe in the power of the cloud computing model: if you are going to deliver cloud services yourself, should you rely on other cloud services to deliver some of your underlying components? Certainly a model where Workbooks was built upon cloud services from other providers would have its advantages: we’d only pay for exactly what we used, and it would be very easy and very fast to add capacity: simply order some more and turn it on, on demand.
When things go according to plan, everyone’s happy. But if things become unreliable it’s Workbooks which our customers would see failing – and those customers would be right to expect Workbooks to stand behind the service and remedy it. Excuses such as “it’s our supplier’s fault” just wouldn’t cut it. When you have very large third-parties delivering components of the service it’s unlikely that Workbooks’ top priority would be their top priority.
Basically, we think that the cloud model is something which works – brilliantly – where there’s a simple customer/supplier relationship but that it can break down when there are hierarchies of services unless you think very carefully about how you will deal with the contingencies. It’s a little different from traditional business relationships where you have the luxury of at least a little time to sort out most issues: we need our infrastructure to be always available and reliable. We don’t want to be involved in trying to diagnose a third-party infrastructure (like EC2) and having the responsibility to sort out issues within it without having the ability to do so.
So we took a different route. We built our own infrastructure and we are responsible for its management – right down to the hardware. Although we do use third parties for some of the components, there is always redundancy: multiple networks, multiple locations. If a provider fails to deliver a service we can call on an alternative so we can be certain we can deliver the service levels we commit to in our SLA. Maybe we will use some Amazon services in the future but if we do they’ll be non-core and we’ll be sure to have a backup plan.
5 Reasons to choose SaaS over traditional software
For small and medium size organisations, Web based applications like Workbooks.com provide a much more cost effective way to deliver effective I.T. to your business. Here are five reasons why:
Simplicity
With applications delivered on-line, all the complexity of the underlying IT is no longer your problem. At Workbooks.com our customers don’t worry about upgrading hardware, or which operating system version supports which database, or which VPN will work. We take care of the IT complexity so you don’t have to. You just need a computer with a web browser and you can access your business applications from anywhere.
Guaranteed Levels of Service
At Workbooks.com we guarantee your applications will be available 99.5% of the time. In the event we don’t deliver (which has not happened to date) there are penalties to be paid by us. Typically with most traditional software you get no guarantee on how well it will perform.
Cost Effective Pricing
There are a number of reasons why we are able to deliver ‘enterprise class’ applications to our customers at a much more cost effective price than traditional software. Including the fact our infrastructure is shared across multiple customers, so there isn’t the cost of unused I.T.. Because we don’t ship traditional software and have a controlled environment we don’t have to test our software with different versions of operating systems and databases, or write installations manuals or write upgrade guides for our customers. All these reasons allow us to produce solutions at a much more cost effective price.
Security
For the majority of our customers their key business information is more secure in Workbooks than it was in their previous I.T. systems. At Workbooks.com we run two geographically separate datacenters which contain the I.T. infrastructure to deliver our applications. Both datacenters have virtually identical equipment and your data is automatically replicated between the two. So in the unfortunate event that a disaster occurs such as a bomb or a fire in one of the centers, the second datacenter can continue delivering the Workbooks service. In addition to this highly available infrastructure we maintain a rolling backup of your data. All our customers benefit from this common infrastructure, although we do keep each customers’ data in a separate database to ensure your data remains confidential. Compare this infrastructure to what you have in place today: What would happen if there was a fire at your building? How quickly could you get new servers, reinstall all the relevant software? and How current are your backups? Would you be down for just a few days or would it be weeks? What impact would the downtime and potential loss of data have on your business?
Long Term Customer Relationship
We believe that this last point to be the most significant. At Workbooks.com we charge you an annual fee for the service. The truth is by the time we take into account the sales and marketing costs of acquiring a new customers and the money we have already spent on the infrastructure we don’t make any profit in the first year of the relationship. So it’s important that you stay with us for several years. This means we are very focused on ensuring you remain happy customers over the long term. You can contrast this with traditional software vendors who make the majority of their profit on the initial software license sale and have a relatively small ongoing support fee. Their focus is on getting you to buy the license and not necessarily the longer term view.
Traditional software companies won’t fly in the clouds
Microsoft’s recent launch of its Azure platform made me consider again whether they are likely to succeed in moving their whole business to a new model. Something that has interested me for quite a while is how hard it seems to be for traditional software companies to succeed with their ‘Cloud Computing’ efforts. There are at least two problems.
The first problem is that simply building the technology and getting the whole company (and their partners!) committed to the model is always going to take a while: educating technical staff in new architectures that can scale massively with all the implications that has, delivering applications on a new platform which was foreign to those staff, building systems for which over-the-web delivery isn’t just a bolt-on – it’s the whole point. Significantly being a player in the new world seems to require a conversion to open principles – whether these are the adoption of open standards for data transfer or open architectures. Compare, for example, Google’s approach to that of Microsoft: Google even have a team endearingly called “the data liberation front” whose role it is to make it easy to move data away from their software.
I think a second problem is more significant: that a move to the cloud brings with it a change of business model – from licensing software for the duration of that software’s useful life to a different model based on paying for what is used. Those companies in the ‘traditional’ camp have large direct and indirect sales forces which are comfortable (and paid to succeed in) selling software on a single, up-front payment. Contrast that with cloud computing where the model is that you pay for what you use: this plays havoc with those sales teams’ traditional pay structures. Incenting those sales staff to move to a new model without cannibalising their existing installed base and deferring valuable cashflow may be just too hard: effectively these companies have to build a whole new business in parallel with their existing one and manage the inevitable conflict between the two businesses and channels.
It will be interesting to see if any of Microsoft, Oracle or IBM ever get to the point where a majority of their revenue is from software delivered as a service. Of the three I suspect IBM has the best chance given their history in renting Mainframe operating systems and software. It seems more likely to me that other players, led by Google but including a host of new entrants which are unencumbered by adherence to a traditional software model, will dominate the cloud computing space.
Workbooks was founded on a conviction that applications are best delivered from the cloud so that for our customers there is “no hardware, no software, no hassle”. Who will our competitors be in five years time?