Archives for September 2008

I have been struggling with what Fusion is now with all the announcements coming out of OpenWorld – and so are the likes of Gartner. Then I saw Larry Ellison’s not so optimistic view on Cloud Computing and the profitability of the industry.

So, I replaced each “cloud computing” reference with “Fusion”. See if this Fusion thing makes sense to you now:

“The interesting thing about Fusion is that we’ve redefined Fusion to include everything that we already do. I can’t think of anything that isn’t Fusion with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”

“We’ll make Fusion announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of Fusion other than change the wording of some of our ads. That’s my view.”

Here is the original (from Wall Street Journal):

“The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do. I can’t think of anything that isn’t cloud computing with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?

“We’ll make cloud computing announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of cloud computing other than change the wording of some of our ads. That’s my view.”

I know cloud computing is real – I can click on a few URLs to start using it today:

• Force.com
• Googe App Engine
• Amazon Web Services

Comments welcome.

BTW, Oracle Fusion Middleware has done amazingly well as a business and is very real. If it were a standalone company, it would be rivaling likes of VMware. However, Fusion goes beyond that – and that’s where I am not clear.

(To those that don’t appreciate humor, please read my disclaimer. These are my personal views etc.)

Who do you think is a genius?

• Not Flying: A man who escapes a plane crash alive (Crash Survivor is a Hero proclaims newspaper) or the guy who cuts down on air travel by using video conferencing because he knows that the best way to lower your odds of dieing in a plane crash or car accident is to fly and drive less? And its good for the environment.
• Not Buying: The man who gets a great deal on a property after its down 20% or the woman who decides to not buy a home but rent in stead in Las Vegas? The company (Bank of America) that buys Countrywide or the hundreds others that walked away?
• Not Kissing: Wall Street or Warren Buffett? The genius of Warren Buffett is perhaps not so much in what toads he kisses but in the toads he chooses to walk away from. In 1992, Warren said in one of his famous annual letters:
  

  In the past, I’ve observed that many acquisition-hungry managers were apparently mesmerized by their childhood reading of the story about the frog-kissing princess. Remembering her success, they pay dearly for the right to kiss corporate toads, expecting wondrous transfigurations. Initially, disappointing results only deepen their desire to round up new toads. (“Fanaticism,” said Santyana, “consists of redoubling your effort when you’ve forgotten your aim.”) Ultimately, even the most optimistic manager must face reality. Standing knee-deep in unresponsive toads, he then announces an enormous “restructuring” charge. In this corporate equivalent of a Head Start program, the CEO receives the education but the stockholders pay the tuition.

• Not Graduating: Chasing after yet another degree that will get you a dream job or walking away from the rat race? Bill Gates chose to walk away from a Harvard degree, Steve Ballmer from a Stanford MBA and Michael Dell from University of Texas at Austin.
  

Sometimes not doing something is a sign of deeper wisdom than the heroic genius of doing, saving, buying, kissing, graduating, chasing.

Don’t just do something, sit there. There is even a book on that. And on giving up.

Here are the black swans of 2008 that very few could imagine a few years ago. And Taleb is proven right, and so is Warren Buffett.

• US Government takes over Freddie & Fannie
• Lehman to file for bankruptcy
• Countrywide falters and acquired for peanuts by Bank of America
• AIG Seeks $40 Billion to Survive

All these banks were living the life of optimized returns – rather than trying to model for preventing a catastrophe, a black swan. They would have done well to have followed Taleb’s teachings.

In some ways, Warren Buffett had been warning us customers, investors and regulators that some stories are just too true to be true. Even as Warren’s firm wrote “risky” insurance policies, it turns out that the risk that you can see is usually the good risk – it can be managed. Disasters and catastrophes happen when you least expect them.

In fact, Warren recently said, – “We found out that Wall Street has been kind of a nudist beach.”Adding a financial crisis revealed which players had been “swimming naked” when the tide goes out.

While this drama unfolds here in the US, the ripples will be felt globally. To my friends in India that continue to buy $500K apartments in a country of less than $5K per capita (annual) income – let me say once again – money does not grow on trees. Not forever, at least.

I don’t give out investment advice but here is what I can share – if you don’t keep cash for the rainy day, learn from Lehman and others – in times of real need, cash is useful. Also, try to optmize your portfolio for high returns but make sure a disastrous year or a sector does not wipe you out. You can do this by diversifying across asset classes – cash, real estate, stocks, international exposure, etc. An easy way is to put a sigfnificant chunk in diversified (low cost) index funds from the likes of Vanguard.

Update: Taleb has a new essay up on Edge.org (hat tip)with commentary relevant to this crisis and your future. (Alert – it can get fairly intricate so its not for the light-hearted reader.)

Yes, the cloud is falling. And on-premise software executives are lining up to explain to us why the cloud computing era is distant and the promise of SaaS and PaaS is false. I will let you decide after reading this post by Vinnie and the original Forbes article.

Here are 3 reasons why they are wrong because the following arguments are tenuous:

• Cloud Success Requires End of On-Premise: The argument that all computing has not moved to SaaS (and probably will never) is a false argument. DEC and Tandem did not die out because people no longer run mainframes, many do. They just became irrelevant as the newer technologies grew faster and faster. For SaaS to succeed, on-premise does not have to disappear – but SaaS is growing much faster than on-premise softare.
• Core Applications will not be Re-written: Yes, GE’s and Wal-Mart’s of the world will not rewrite their applications any time soon. But, they are always writing new applications; and, there are new Wal-Mart’s being born that will live in the world of Google GMail and Force.com. You don’t replace your 2 year old Ford SUV with a hybrid, you just buy a hybrid next time you are in the market for a car.
• Control, Security, Scale: This argument has been hashed many times. Your data is secure based on what processes are in place – not where its stored. Your applications scale based on the software and hardware architecture – not whether its inside your firewall or outside. You have control over what your users access and when based on a the capabilities of your applications and platforms – not whether you installed it yourself. Companies like Cisco, Merril Lynch, Starbucks, Dell and many others are running more and more applications in the cloud. The truth is that a platform like Force.com can help enforce greater control (one single place to administer, provision and de-provision users), enhance security (a security fix for one customer becomes immediately available for all others) and scale easily (the platform scales across customers and applications rather than having each developer worry about scaling).

No one (at least not me) is suggesting that on-premise software will disappear – its just that growth in enterprise software will come from SaaS and not on-premise (which is growing at about 4%). Venture capitalists like Emergence Capital and Hummer Winblad are voting with their dollars!

DECLARATION OF INDEPENDENCE

When in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the Internet, the separate and equal station to which the laws of computing and of computing’s God entitle them, a decent respect to the opinions of userkind that they should declare the causes which impel them to the transition.

We hold these truths to be self-evident:

That all customers are created equal; That they are endowed by their Platform with certain unalienable rights; that among these are customization, integration, adoption and the pursuit of usability;
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We, therefore, the representatives of the end users and CIOs, in General Congress assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the name and by the authority of the good people of these business units solemnly publish and declare, That these Applications are, and of right ought to be, ON-DEMAND AND MULTI-TENANT APPS; and as on-demand and multi-tenant apps they have full power to support customizations, web services, new user interface designs and do all things which useful apps may of right do.
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[Signed by] Anshu Sharma [SaaS Evangelist]

Notes:
1. After reading the flood of responses to ‘The End of SaaS‘ interview by an on-premise vendor, I was inspired to pen this declaration of indpendence on behalf of the customers and users who no longer want to be constrained by the cocaine (his words, not mine) of on-premise.
2. For those challenged in the humor department and therefore not amused, I invoke my First and Fifth Amendment Rights.
3. Computing’s God – That would be Donald Knuth