Amazon Web Services: $1B in stateless computing revenue, "less than 10% of its eventual size" -- NYT

Active in Cloud, Amazon Reshapes Computing - NYTimes.com:

When an AWS customer speculated on the price of a server--which he never has to buy thanks to Amazon's servers in the cloud--he said, "for me, that would be like knowing what the price of a sword is."

This is an excellent article from the New York Times.  The success of Amazon's effort highlights three important Big Ideas:

• Abstract complexity
  If you can't eliminate the complex, manage it so the part that is consumed appears simple.  AWS abstracts the entire data center so well, end users neither know nor care how it happened.  Don't Know, Don't Care (DKDC) is one of the biggest enablers of:
  
• the Service Oriented Enterprise
  Up to now, buying, configuring and managing servers and the place they live was like a piece of a very elaborate jigsaw puzzle.  It had many edges and only fit together in one way with other similarly elaborate pieces.  AWS is like Lego blocks: standard and predictable. It can be assembled in millions of ways. When the elements of business processes are decomposed into reusable component parts, it's the difference between a Lego store and the impossibly jumbled Room of Requirement in the Harry Potter stories.
  
• Decouple data, applications, and machines
  Remember, cloud computing, for all its (mostly justified) hype, is only one part of the stateless future.  AWS represents the impact of stateless processing power at the top level; imagine the same impact propagated across personal and mobile computing, user data, and the applications in your enterprise, and you begin to see the true promise of the stateless future. 

For CEOs: 10-minute business process/technology dashboard

Technology and business processes are locked together.  Each supports the other, each is dependent on the other--a mismatch between them can be deadly, a great match can mean synergy and profits.  They can make or break the business you are trying to run.

That's why I developed this executive 10-minute benchmark tool, to help you see those relationships more clearly, and to generate an enterprise process/tech snapshot as a kickstarter for strategy planning. It may help you know where you need to transform your business or whether you can simply bring it into sharper focus.

The highest-level parts of business are grouped into 4 big categories:  Things You Sell, Your Customers, How You Work, and Your People.  For each area, rate it 0-10, asking yourself:

--does it do what I need?
--is it current?  Does it reflect best practices, or a legacy that can be improved? Or retired?
--does this process take advantage of the existing technology?
--does this technology fully support the existing process?
--does process hold back our technology, or does our technology hold back the process?
--is this a pain point or a reward center?
--is it more complex than it should be?
--does it add value or competitive advantage?  Could it?

Here is an example I populated to demonstrate the concept.  Formulas average your input across the categories, and automatically flag red-yellow-green depending on the values entered.   At the bottom is an average across all the processes and technologies.



Here is a blank Process and Technology Dashboard Tool you can copy to do the exercise yourself.

Comments:

--This version is directed at the C-suite, especially the CEO or COO, or another officer who has an overview of the entire company.  Clearly, a lot of sub-processes and technologies are rolled up into their highest levels in this version of the tool.  To work this idea as part of a strategy evaluation, I recommend that the first iteration be a gestalt response--not a compilation of metrics, but the C-suite's sense of where things are.

--By expanding the idea, and pushing it out to departments, you can then build similar reports at higher detail, adding lines under Supply Chain, for instance, to list all the component processes and technologies.  The end result will be a map of your entire enterprise process/technology system.  

--Compare results generated closer to the processes with those predicted by executives.  The differences will point out the accuracy--or lack thereof--of many of the executive business metrics you use.

--How do your existing strategic plans fit with this view of your enterprise?  Are you paying attention to the right things, at the right level and sense of urgency?

Please do give me feedback; this is the first publication of this tool and this idea on Infrics.com.  I am building out toolsets to be part of an overall offering for on-site workshops on Strategy in the World of the Future.

On the cloud, of the cloud, and all stateless: Sensr.net delivers cat-cams, community, but not complexity

A capture from Mission Cats' Sensr.net live stream

Sensr.net: from left, co-founder Yacin Bahi,  web designer Chris Whitefield,
co-founder Tom Sheffler

Here is a picture of a cute cat. If it weren’t for our insatiable appetite for cute cat photos, the internet might not be what it is today.

Sensr.net delivered this picture as part of their online service.  Individuals and businesses upload feeds from webcams, where the video is available online; camera owners choose who can see them, from one or two family members up to public views accessible to anyone.  In itself, that isn’t remarkable, it just sounds like a good business idea.  Sensr is a freemium service; basic access is free, with paid options to add higher quality video, notification services, and more archiving.

What is remarkable is the way Sensr.net does that, what it represents for technology in business, and what it tells us about the ways online social communication is evolving.  In this first of two parts, we’ll look at the technology of a “stateless company,” in which cloud services allow Sensr the agility to change at will, scale on demand, and operate from anywhere.

“We’re consumers and users and believers in the cloud,” said Sensr.net co-founder Tom Sheffler when we sat down to talk in Burlingame, CA, at Sensr.net’s office.  Although the location is in the heart of all the silicon valley tech glamor, it’s a modest set of three or four rooms on the second floor of a bank building.  It could be your accountant’s office.  

Therein lies the way Sensr.net is practically an icon of the new possibilities of the services oriented enterprise.  Sensr.net is a cloud company; you buy and consume their entire offering from the cloud.  But it is also a company built on the cloud, with no data center, no onsite technology at all beyond a bank of three or four laptops and monitors.

Here is an excerpt from our conversation, in which Sheffler explains what that means: “The genesis of this company--our 3 co-founders, we all have PhDs in Computer Science, we all come from supercomputer backgrounds, we love building big systems, and we have personal needs and saw a general need.  ‘Boy, there’s these cameras on the market, I would love to be able to watch my environment, I’d love to be able to check in on things, and it’s just too difficult.’  

We really wanted to simplify a big problem and we didn’t see a product out there to do it. And what’s been really fascinating for me, as part of a startup, is building a cloud service on top of other cloud services.  It used to be that to build something like this you’d have your own data center, and power, and air conditioning.  So we’ve built it using Linode as our service provider, Amazon S3 is our storage, we use Google voice for our phones, we’ve used Expensify to track our internal expenses.”

DH: You introduce an idea I haven’t even really covered yet, essentially a stateless company.

TS: That’s an interesting way to put it.

DH:  An enterprise that really hardly has any capitalization at all.  

TS: That’s an interesting idea....

DH: Is that an accurate way to describe Sensr.net?

TS: Yeah.  I think so. I think so.  You know, most of our...we have a couple of people here, we all move around a lot, we’re kind of a modern version of a garage startup in that we’re a cloud startup. We have a small office, we have a couple of people here,  we have a few distributed around the country.”

When I speculated, “this is just rental space, you could be anywhere,” Sheffler agreed, and I went on to ask if the bandwidth to the office was an important part of their needs.

TS:  The bandwidth is with our service providers. We don’t need a lot.

DH: Do you need any disaster recovery?

TS: That’s handled in the cloud.  That isn’t handled here, we’re relying on the security and redundancy of Amazon S3 to handle that for us, and we rely on the redundancy of Linode and their data centers to provide that for us.  Our job is to develop the platform in such a way as to make use of the redundancy and protection in the right way.

DH:  When I talk to people in traditional enterprises, and they think about moving any piece of their enterprise to the cloud, to something that they don’t physically touch and own, disaster recovery and data security are among the first things you see expressed as “reasons not to.”  Or fears that they’ll expose themselves if they do that.

TS:  Well, for many of our applications, I think, we are going after a consumer market and somewhat of a do-it-yourselfer, and for many of the applications, people would want to see what’s going on in their house, but they also want to be prepared for the intruder or the emergency and in that case, it’s best to move data offsite as soon as possible, get it up in the cloud where it’s safe.  And I contrast this to more traditional security systems where you have a hard disk in your house and maybe the robber steals that, or if there’s a catastrophe, your home computer equipment gets destroyed.  In these circumstances you’ll want this out of your house, and it’s gotten into our system and we’ve analyzed and cataloged and put it in the cloud, it’s safe.

DH: None of your users ever has to consciously think about backing up anything.

TS: No.  It’s always backed up.

DH: The second piece of that, that came to mind immediately when you began to talk about that is, enterprises traditionally, whether they think about it or not, have some kind of ecosystem within their application hierarchy of data and security and authentication and so forth.  Is part of what you do at Sensr.net that integrative layer among these various cloud services that you consume and then deliver to your customers?

TS: Oh, absolutely.  We’re providing the user authentication layer for the consumer to come into our system. We are protecting his data and interfacing with--we’re authenticating to Amazon S3 and authenticating to Linode and we’re setting up our own virtual routes to protect the user’s data from their home up into the cloud and then to insure that only the proper users have access to the data they’re supposed to.

DH:  So you are an ecosystem on behalf of your users so they don’t have to authenticate.

TS:  That’s right.  For a single user to build a system like this, they’d have to interface with a number of services, they’d have a much more complex authentication problem, they’d have all the ones that we did, they’d have to recreate.  And we’ve simplified it to a few mechanisms of login and camera setup.”

In the Infrics.com articles on the Service Oriented Enterprise--one based on service tiers that can be managed to enable simplicity and agility--I talked at some length about complexity management.  You can either choose a simpler process than you’re using now, or you can manage complexity at each service tier in such a way that you abstract complexity away from those who consume the service.  It appears simple to the user because you’ve designed it that way.  I asked Sheffler if Sensr.net is abstracting complexity away from customers.

TS: That’s right, and we give people a simple user interface, and we also have programming interfaces, APIs, that abstract all this complexity that we’ve harnessed into a service. A camera service.  The API is where a user or another company can say ‘on behalf of me, on behalf of this other company, I’d like to allocate a user at Sensr and provision a camera upload.’  And behind the scenes, we’re managing a lot of the compute resources, the storage resources,  the routing resources, to allow that abstraction, that very simple video abstraction for an individual or another company.

DH:  You mentioned that a lot of your customers are individuals, and relatively low tech, although an awful lot of people are more sophisticated than we think...

TS: They’re getting pretty sophisticated.

DH:  What about big enterprises? If someone wanted you to manage a thousand cameras in their enterprise, how’s your ecosystem set up to scale?

TS: Well, it’s set up to scale up that way.  We do have--I wouldn’t say they’re fully ready to go--developer APIs, so a company that wanted to personalize the Sensr experience, to provide it through their own channels, we offer a platform for developing video services on, and I think you’ll probably see us announcing more of that in the next year.

We’re a consumer product, but we’re also a video platform for other products to be built on.

DH:  If your enterprise is itself stateless, it stands to reason you would also deliver your own service in a stateless way: a web application rather than an “app,” a locally installed client-server application on a computer or mobile device.  Is that the case with Sensr.net?

TS: Our goal is to render users’ information on standard devices, using widely-available technology, so right now that’s HTML5, javascript, and a little bit of Flash.

DH: So you’re not having to do a locally-installed app, say on an Android or iOS device?

TS: Not right now, and right now, Sensr.net does not require an app.  That’s been great for us, because we’re leveraging these technologies that have huge development efforts behind them.

DH: Did HTML5 give you the ability to do things that you wouldn’t have been able to do otherwise?

TS:  Through the use of javascript, HTML5 and Flash, we’ve been able to give an experience that is almost like that of an app on a mobile device.  And our experience will get even better.

DH: I follow the big research companies because I used to be a client, I used to manage that research, that’s what I did for those other companies, and Forrester right now is engaged in a fairly big corporate-wide push that we’re entering an era they call the “app internet.”  They’re seeing the success of the Apple app store, for instance.  I think they’re right as far as they go, that people have more power to choose and deploy things.  But when you have to download and constantly update an actual application on any device, you lose the benefit you get with something like HTML, where if you make it better, you do it once on your server and you get that update automatically by consuming the service.

TS:  Yeah, I love that model, I personally suffer from app update fatigue, and our user experience is continually improving because we’re using HTML5 and javascript and a little bit of Flash, and I think we’ve been able to push out a lot of changes without asking our users to reinstall anything--and they’ve had a great mobile experience too.

DH: Would you rather have a million individual homes with one or two cameras, or ten Target Corporations, or Wal-Mart, or both?

TS: Yeah...I think both. They’re slightly different.  I think what’s interesting is that to me, personally, is that the individual consumer market is underserved right now.  I don’t think that there are services quite like what we’re offering at the consumer level.  I think we’re defining a market that doesn’t exist and hasn’t been served, and that’s really exciting to me.”


By showing us in startup form what a stateless company can look like, Sensr.net demonstrates the way technology has changed the rules of business engagement.

• Complex business processes can be managed as services in such a way as to appear simple to those who consume the service. If those service consumers don’t have to know or care about the complexity, it has been abstracted away from them.  This is perhaps the single most important benefit of the service oriented enterprise.
• Sensr itself is a service consumer; Linode, Amazon, and others have themselves abstracted complexity away from Sensr, so that it consumes those services itself: DKDC (Don’t Know, Don’t Care) cascades through the service chain.  
• Sensr used existing features of the services it consumes and did not need those services to be customized.  They developed a highly-specialized service using highly standardized components: exactly the model that can be scaled up to multi-billion dollar enterprises.
• Sensr is an enterprise built with ideas more than one built with money.  The amazingly low capital inertia of the cloud makes this possible.  Your current and future competitors, those who succeed against your own business, will know this and use it.  Or maybe, your own company will act on the new rules instead.  Which will it be?

This article is about Sensr.net’s cloud and service architecture, the technologies that make a stateless enterprise possible.  But what they do is also fascinating as an expression of the social uses of technology.  In part two, Tom Sheffler and I talk about the ways people are using personal video networks, from viewing cats to maintaining family connections.  

The future in a catchphrase

OK, I've been posting a lot today.  One last thought, this one is from me instead of curation of someone else's reporting.

Mashable posted a major slam this evening of the new Chromebook and Chromebox.  In the process of posting my contrasting opinion on their Facebook post, I said:

Everything you need is everywhere you are.

I think this will be my new slogan.  It sums up almost everything I think about where technology is taking us.  I said it in the context of the benefits of stateless operating systems, but it's really about the ways technology gives greater voice to community, moves power to the end users in enterprises, and will shape the future of the machines we will use to take us there.

You heard it here first.

The CIO of the Future: Conductor not Controller

Today's worthwhile reading comes from cloud integrator Appirio.  The "orchestrator of services" role for the CIO is right in line with the Infrics.com discussions on the service oriented enterprise.

The CIO of the Future: Conductor not Controller

From ReadWriteWeb: CIOs see consumerism as threat

Read this on the ReadWrite Enterprise site and see if it doesn't sound familar:


CIO survey: consumerism threatens the enterprise cloud



One quote in particular is comment-worthy:  "Consumers just have unrealistic expectations for the levels of services that IT departments are capable of delivering, say 74% of CIOs surveyed worldwide and 81% of U.S.-based CIOs. As a result, IT departments are having to be tasked with delivering functionality levels and multiple device support that they're not even ready for."

This is exactly what we've been discussing in the "era of you" series, and is a natural corollary to the conversation I reported with Podio's Ryan Nichols.  The IT organizations as they exist in most enterprises, and by association the businesses they serve, are threatened by the expectations of their users, and by the services those users can deploy themselves without an IT department at all.

The quote from CIOs has a hidden prefix: "As we operate today, if we don't change, we can't meet consumer expectations."  The logical extension of that quote is this: "we have to do things differently in order to meet those expectations."

Three things to start changing today: the big ideas

1. Get your services house in order.  Structure data, infrastructure, ERP, and other elements that are mission-critical but unrelated to competitive advantage so they can be delivered as reliable, repeatable, recomposable services.  Manage complexity here to enable the flexibility you need at the user level.  This is hard work, but it's crucial to your success. 
2. Get out of the business of managing devices.  Virtualize users' desktops, adopt stateless devices, sunset old client-server technology wherever possible, require new applications to be web-enabled.  Secure your data and quit thinking that securing the device is your responsibility.  Once you are stateless, every app and all the data lives in the cloud, and the device has virtually no security risk anyway.
3. Organize for less command-and-control, more responsibility moved to individuals and teams. No organization can compete well in an era of empowered users when everything is subject to committee, cover-your-ass stagegates and approvals, and "I can't budge until I'm 100% certain I won't be blamed for doing the wrong thing" thinking.  

The fears about consumer demands are very real.  Moreover, in an improving economy, those consumers inside your company and without will vote with their feet, and take their skills and their business to those who implement the action points above.  

How much longer do you think you can get away with inaction? 

C-suite talk: the siren song of low-hanging fruit

This story is a case where the everyday world reminded me of the challenges executives face every day, choosing where they will invest their treasure of time and company resources.  The Meyer lemon tree in our south Florida backyard has rewarded us with a big crop this year, literal low-hanging fruit.

Meyer lemons almost touching the ground. Low-hanging fruit

The phrase is beloved of vendors and service providers, promising great rewards for doing easy things. Business cases and ROI studies tell us they are going after low-hanging fruit as soon as you give the go-ahead to their project.

Chances are, you've worked hard and made good choices already, or you wouldn't have that C in front of your title. There's not a lot left that's near the ground.  But maybe we can turn the metaphor around and think of some other lessons to learn from the saying:

• Someone had to plant the tree.  High-reward/low-effort opportunities rarely just appear out of nowhere.  There are cases where the confluence of emerging technologies (tech triggers) makes a new LHF situation appear (web-based applications and cheaper/faster/more reliable network access, for instance, make IT moves to the cloud easier and more rewarding.)  But in many cases, what looks like low-hanging fruit is the result of a lot of hard, disciplined work in your organization--one of the best examples is Master Data Management (MDM) -- heavy lifting,  but it enables a cascade of service-enablement across your entire company.  Leading to the related idea:
• The heavy lifting you do should move the rest of the fruit lower, not buy you taller ladders.  A crucial C-suite mandate is to make things better, not just solve today's problems.  If huge chunks of your talent and money are maintaining burdensome legacy processes or technology, your company may stay upright, but you're just buying taller ladders.  If you're working to simplify processes, mask complexity, and enable a service-oriented enterprise, you're moving the fruit lower.
• Where there is fruit, there are windfalls. Let's think of it this way: there are opportunities to find benefits that fall outside the mainstream: to mix metaphors, the long tail of the crop. Is there a corollary business benefit to be gained by letting small teams explore niche opportunities to repurpose other efforts?  The ability to think "repurpose" is dramatically helped once you adopt the service-oriented model, which relentlessly standardizes core services to enable greater ease of personalization and micro-customization at the user level.
• It doesn't all ripen at the same time. Sometimes, you walk away from a classic LHF situation thinking, "yeah, that WAS a high reward for a relatively small effort." In the IT and business world, one of the clearest today is web-based e-mail: necessary but not a competitive advantage, adapts well to mobile and consumer-driven usage.  Don't turn away once that's done.  The experience of web-based e-mail may enable further benefits from the cloud-sourcing of word processing and other office productivity applications.  Can cloud-sourced productivity apps pave the way for "bring your own device" policies and respond to workforce consumerization?
• On the other hand, should you pick low hanging fruit at all? In 2008 I saw a presentation from a mid-size corporation that had decided to commit to cloud-enabling IT wherever possible.  In the slide showing a grid of the applications in the cloud, corporate e-mail was still in the data center. "Why not e-mail?" asked an audience member, "isn't that low-hanging fruit."  "Yes," said the CIO, "but our existing e-mail works fine.  Why take the time to change it when it's not a problem?  We wanted to concentrate on areas where the cloud could make a real difference for us."  In other words, just because you can doesn't always mean you should.  Web-based mail can make a lot of sense, but in this case, other priorities came first.  No matter how easy an opportunity might seem, sound rules of business value cannot be repealed.

Do you have a success story of an easy win that came from an unexpected place?  How do you maintain focus on long range improvements when there are so many demands to solve problems close at hand? Leave comments, or drop me e-mail.

C-suite talk: can you make complexity disappear?

Building blocks, not jigsaw pieces.
Image from countingblocks.com

In the last of the C-suite articles, I talked about managing complexity, either by relentlessly simplifying processes and applications, or by abstracting a complex service in such a way that it appears simple to those who consume it.  This time, let’s take a closer look at the latter: how to use complexity abstraction and why it’s an underappreciated business tool.

A service oriented enterprise is composed of 4 service tiers (for more on service tiers, see “How Technology Disappears”):

1. Lines of business, end users
2. Service Orchestration
3. Service Management
4. Infrastructure

There are exceptions, but in general, the tiers build on one another: service management uses the products of the infrastructure service to enable service orchestration to serve end users. One of the simplest measurements of success at each level is the degree to which service providers can offer consumers freedom from concern over where the service came from and how it was provisioned. It just works.

This is not revolutionary, but it’s very actionable. By simplifying and standardizing component parts of complex things, the care taken by providers at each service tier abstracts the complex into a simple, consumable product.  How can you do this?

• Standardize: practice strong, almost rigid exception management when customization is requested at lower service tiers.  This is an area, especially in IT, where businesses have traditionally operated backwards.  Your business and your employees are locked down to enable success of highly customized infrastructure and applications, when it should be exactly the other way: very high levels of standardization at lower levels in support of ease of deployment and customization at the user side.  If you are abstracting complex services by standardizing their component parts, you almost automatically guarantee your business is right-side-up here.
• Reliability engineering: Attack the weakest link in a complex process, and do the heavy lifting required to get its reliability up. Think of your car engine: the ignition system and fuel delivery systems were once high-maintenance items that demanded a fairly high level of driver involvement. Today, both are handled by computers. The Bosch computer in my old car has now managed ignition and fuel injection without attention for 22 years. Reliability is a great complexity abstraction if you make it a component of service delivery.
  
• Building blocks, not jigsaw puzzle pieces: each can be assembled into something useful, but jigsaws can only be assembled one way.  Building blocks are the ultimate abstraction, and can create many outcomes from standard shapes. That structure is the metaphor for your abstracted complexity.  If it only has one purpose, it it worth it?
  
• Externalize: instead of creating abstraction inside your own four walls, pay someone else to do it for you, and purchase a consumable service, which appears simple to you as the consumer. This is the province of services like cloud computing, third party payroll managers, and distribution services like UPS.  Their success lies in managing away the complex so you don’t have to.  It’s their core business strength.  Is it really worth it to make it part of yours?  The greater core simplicity you can structure into your business--the areas that don’t justify customization or added complexity--the more opportunities this solution presents.  The explosive growth in enterprise-ready external services and their abilities is also moving favorably in your direction.

The idea is to create a virtuous circle: structuring for managed services enables simplification and abstraction of complexity, which enables greater agility and higher business efficiencies. It sets you up for “one question to rule them all,” namely, “do I have to care about where that service came from, or can I just put it to work?”

C-Suite talk: agility starts with 2 questions

C-Suite Talk: an Infrics.com series about ideas that matter to executives

Individuals--consumers of technology--move through rapid change like dancers. New ideas, new products, short implementation times and perpetual beta? Not only do they make it look easy, as former Texas governor Ann Richards joked about Ginger Rogers, they do it “backwards and in high heels.”

Corporations--enterprises--move like hikers with a 90-pound packpack. Burdened by legacy technology, the sheer size of their businesses, and business practices laden with feature creep, the best answer they can give to technology is often “not now,” and sometimes, it’s just plain “no.”

Without seeking to make light of the very real challenges of running a business, don’t you sometimes sit alone in your office contemplating your own business, and wish you were more of a dancer and less of a plodder?  If there is one single element that stands between you and agility as far as business is concerned, it’s complexity.  

Complexity sneaks in like a thief, but because it’s stealthy, it works its way through your processes and technologies until it begins to seem more like the norm than an unwelcome intruder.  Reducing complexity is strategic, but it takes a solid tactical mindset to achieve. As you tackle complexity in your organization, try looking at it by asking these 2 questions:  
Is there a simpler way to do this?

If not, how can we manage the complexity so that it appears simple to those who use it?

Images from wikipedia.org

These are hardly revolutionary ideas. But the thought of seeing complexity through two different lenses is a powerful one that can be used in a lot of situations.  One can build on the other.  Can you simplify underlying processes as a means of abstracting a more complex one?  Can an abstracted complex process enable a simpler approach in another area? 

When you either reduce or abstract the complex, you service-enable it; the components of your technology and your business become building blocks. It is not realistic to think you can eliminate the complex, but it is a critical business success factor that you manage it.  

Complexity management is the business equivalent of laying aside the backpack, and walking on level ground instead of uphill all the time.  It is a core concept of the service oriented enterprise, and is a core tool for the C-Suite to manage enterprises well.