Cloud Computing is MAD
Karl Deacon, UK CTO, Capgemini Outsourcing discusses the origins of cloud computing.
18 December 2008
Publication
[This article appears in full at Business Cloud 9]
Could Cloud computing be MAD? It all has its roots in
teaching of historical analysis for the purposes of forecasting what’s to come.
I have to admit that apart from some crazy teachers, whose draconian and alarmingly
punitive techniques of teaching are outlawed today, I don’t recall much from my
days at school. I do, however, recall one teacher Peter, for he awoke in me a
passion for (arguably a somewhat unfashionable subject) History. One of his lessons
gave me an insight that I’ve used many times in considering emerging trends; but
more of that later - indulge me for a minute with a brief scholarly history tour.
Peter taught me to veer from accepted thinking, to consider what lessons history has to offer; the ability to spot emerging trends and occasionally the obvious inevitability of things that came to pass, from the study of their origins. The theme being that history teaches the future. So why is this relevant when I consider cloud computing? What on earth am I talking about when I reflect that cloud computing may be MAD? It all has its roots in teaching of historical analysis for the purposes of forecasting what’s to come.
Looking Back to Look Forward
Firstly it was history that got me interested in examining how companies, markets and populations are shaped by technology tipping points; by social trends and financial events that have an impact on us. Peter, and history with him, taught me how to examine emerging trends, their likely outcome and how if you look carefully these were obvious inevitabilities.
This helps me in my day-to-day role as CTO: identifying potentially useful new technologies for their application in the general markets, for reduced cost, increased performance, better use of our resources and sustainable profitable growth. Also he encouraged me to ask, “why, like branches of extinction trees, do some emerging new trends, or technologies, fail to be adopted by the masses or result in any significant, lasting change?”
Secondly one of the lessons he taught me has stayed with me throughout my life and is at the heart of much of my own personal lens on the world of new technologies for business model transformation. That lesson is evidenced in the devastating impact on the canal boats and canal ecosystem industry, after the introduction of railways as a mass transportation and freight mechanism around 1850.
Railways, adopted en masse, became a completely transformational disruption, affecting society, industry, economies, markets and beyond. The signs that railways would become massively adopted methods of effective and efficient transportation (for both people and cargo) were evident before the tipping point. Many however, including the canal industry leaders, failed to see the proverbial “writing on the wall”. The term I now use for such impacting disruptions is ’mass adoption disruption‘, or MAD.
Lessons learnt
I consider the introduction of railway transportation a mass adoption disruption: it has a severe impact on everything and everyone involved in the canal boat industry and its supporting ecosystem, as well as society in general in so many ways. The lessons are obvious and alarmingly relevant to modern technology in the last 40 years, The canal boat legacy industry was relatively vibrant right up to the point of impact. The canal boats, and canals, were in good working order and functional. Business had been good and profits remained relatively healthy; leading to scepticism and uncertainty as to the nature of potential disruption from new inventions.
This tells me that:
(1) It wasn’t the failure of canal boats, the industry or the canals that led to demise; the consumer market just moved to a new technology, and did so en masse.
(2) When a consumer market moves away from one supply solution to another, the first dies off and falls into disrepair, when this is a rapid move only the very dynamic or responsive will survive, but it will be in new ways not previously foreseen.
(3) Consumers are notoriously fickle, willing to try new things if they meet basic needs in new or different forms or at different price or experience points
There appears to be an element of timing, or colliding conditions, that enable mass adoption disruption
I remember witnessing a similar set of conditions in the data centre space, when the PC was first introduced and taken up so quickly by users. Then again with client server computing and, of course, the internet, to name a few.
History shows us the patterns that precede tipping points?
Having learnt there are always parallels that history teaches us, I looked at why we don’t respond to weak signals in the lead up to a tipping point and why we can’t easily identify MAD until it happens. One of the key capabilities of market leaders is their ability to sense deeply into their market, and in an ever faster fashion respond rapidly to meet or supply to the emerging demand model.
Market leaders must both spot potential MAD opportunities from innovation and then move quickly to leverage the opportunity as first market mover. There are some notable leaders in this field of course: Ford historically and the likes of Google more recently. They actively search out ways to utilise innovation in order to transform their business model, or their market; and seek to expand that success to mass adoption.
Well I’m betting you’ve made the connection now to cloud computing. But before we go there, let’s examine some of the reasons innovations sometimes crash and burn. There are after all, plenty of examples that we are familiar with: Esperanto, Betamax, Sinclair-C5, Token Ring, TV Rental, the list could go on.
Each of these is of course subject to a wide range of impacting forces, which in the examples given, conspired against them; it doesn’t necessarily follow that they were inferior products or services.
Insufficient demand. As in the case of the failed attempt to promote a single unifying language ‘Esperanto’, when there was simply insufficient numbers of people willing to speak the language.
Timing. Technology, products and services of any description have to hit the market
at the right time. Trying to sell mobile phone gadgets and accessories when the
bulk of the population have no mobile phones would be a non-starter. However
when there are more mobile phones than people in the UK, when people want to appear
a bit different, have the money to do so the opportunities and demand are great.
Emotional & financial connection. Trying to persuade a person to get rid of the expensive lawn
mower they have just purchased and buy a hover mower is a task doomed to failure. The person has already spent emotionally and financially in choosing that product;
trying to even suggest that they have acquired the wrong product is not a good
starting point for a sale discussion.
Benefit Differentiation. What if something is only slightly different/better? If a person has a product which just about does the job, it might not be perfect, but it does most of the job. In order for a new product to entice the customer to consider something else, it has to be substantially better – oh and at a better price point. Just doing the same for a little bit less is insufficient to encourage the buying decision. What if it is fundamentally different? A transformational new opportunity to compete in new ways, or to leapfrog competitors, or change the very nature of their market, business model or situation.
Of course success comes in many different shapes and sizes, but in this article I’m looking for those where mass adoption of an innovative product or service leads to widespread disruption. This was the case in the scenario of the railways’ impact on the canal and canal boat ecosystems.
What is really interesting to me are those that spanned much wider than the initial business application into societal change, business model or industry transformation across the supply and demand ecosystems. These situations created sustainable profitable growth for those who launched them into consumer demand, whilst also positively stimulating or even creating new related supply ecosystems as in the case of just about every supply industry supporting railways back then and still today.
Cloud computing – is it a potential MAD candidate?
With this backdrop in mind two years ago, I was struck by what seemed to me to be an inevitable evolution to MAD. This began I believe from datacentre or server consolidation, grew up into widespread virtualisation, then matured as less-widespread even experimental grid & fabric technologies, before finally morphing into very widely available cloud computing. At any point over the past two or three years, that continuum was always in my mind, and many people I talked to could also see that forward trajectory. Today of course that is a history lesson in the making.
When I consider the themes that identify causal effect in failure or success in the context of cloud computing, I believe there is a case for it being considered a potential candidate for MAD. It’s vitally important we consider this innovation carefully. In my view MAD innovations tend, by their nature, to drive wedges into standing successful business models and fracture existing revenue stability for suppliers in the supporting ecosystems. MAD innovations also tend to leave one or two corporate casualties lying around, as in the case of the canal boat owners from my history lessons.
So how does Cloud Computing compare in analysis of successful adoption themes?
Timing. As with any alternative approach, the time and circumstances when organisations (or people) adopt, or reject innovation is crucial. Considering Cloud Computing, there are several factors working in its favour:
The economic downturn. At times such as these, whilst the need to continue to innovate and do new things still remains valid, the funds available and the appetite for risk is significantly reduced. On that basis, the ability to adopt a pay as you go model, without incurring high asset costs will be attractive. Furthermore, the ability to start small and grow depending upon the success, or failure, of the venture is another attractive proposition
Time to market. The ability to utilise another organisation’s infrastructure, rather than ‘growing your own’, implies that one can start running a proof of concept cheaply and significantly faster – enabling ‘in market testing’ as an inexpensive concept for many corporations, with very cheap and rapid set-up.
Staffing Flexibility. In the IT arena, skills remain tight and costs high. Cloud offers a reduced staffing profile enabling rapid movement to deploy without need to acquire additional staff or skills.
Demand & Availability. Despite the downturn in the financial industry in particular, the need to innovate to reduce operating costs, continue to deliver projects in new, faster ways continues. Nicholas Carr in his book “Does IT Matter?” clearly outlined the need for the IT industry to “commoditise” or “industrialise” their offerings to industry and consumers alike. Consider the take-up of the pay as you go mobile phone contracts: this saw a massive explosion in the whole industry and is a good comparison to consider.
Benefit Differentiation. On the question of being fundamentally different, although as I’ve suggested earlier there is a similarity with previous technologies, Cloud Computing is very interesting and in many ways very different from what went before. The way this technology has been packaged and delivered to the consumer and the manner in which it can be acquired is so significantly different from its predecessor, it has a unique advantage over any alternatives.
Cloud computing is MAD!
I now see “The Cloud” and its various delivery instances, such as software as a service , challenging a wide range of corporations to review their own costs and procurement methods for both infrastructure and application services.
Furthermore I see that Cloud Computing offers such rapid time to market and cost flexibility in it’s usage model that it is hard to resist in a capital constrained environment. This is amplified as we have also collided with the expansion into a global highly competitive market. In this market there is persistent demand for differentiation. Large corporations are driven by a need to launch new projects delivering new products or service features almost dynamically in order to win or retain ever fickle consumers.
Finally, given its massively available nature, via internet web interfaces on a global scale, it is simply very easy to use, very cost effective and rapid to deploy applications into.
Conclusion
Cloud Computing is a major tipping point in the supplier and consumer use of technology for business transformation and will become a mass adoption disruption. Its effects will reach way beyond our industry to have profound social (affordable consumer communities), political (aka Barrack Obama) and economic (IT supply chain fracturing) impact. My guidance would be for companies to move quickly to establish how cloud computing will benefit them to avoid the risk of becoming a modern day version of the canal boat industry leaders.
