CIOs continue to resist Bezos Law at their own peril

Amazon CEO Jeff Bezos speaks at a news conference during the launch of Amazon's new tablets in New YorkI just returned from CIO Magazine’s CIO 100 Symposium and Awards where the “Top 100 CIO’s” were recognized for their achievements. I was shocked to find that even among this elite group of CIOs there were still a significant amount of CIOs who were resisting the cloud. They had a multitude of reasons or rationalizations as to why they were not embracing the cloud.

When asked what I was most proud of I said “getting out of the datacenter business” and returning the on-premise square footage to the business. Many heads nodded in agreement but there were also many CIOs who thought I was crazy. In discussing why they felt this way I came to the conclusion that many CIOs rose up thru the technical ranks and they derive their sense of self esteem and job security around their historical success of owning and understanding the technology. The cloud was perceived as just too risky for them to give up control.

Many CIOs rationalized they were in the cloud by stating they had a “private cloud” and when I pressed them on what they meant by that  they told me about how virtualized their datacenter was as if VMs somehow equaled cloud. I asked them what the attributes of a cloud was to them and they kept coming back to VMs. Virtual Machines are rapidly becoming yesterday’s news as Containers like Docker are becoming the most efficient way to run workloads. But even this misses the point entirely as I pointed out in a previous post “What does Bezos’ Law mean for CIOs?”

Then, today I read this article by Greg O’Connor, “Bezos’s law signals it’s time to ditch the data center” and it further laid out the case for embracing the public cloud and getting out of the datacenter business. In it Greg points out:

“Previously, I posited that the future of cloud computing is the availability of more computing power at a much lower cost. I termed this “Bezos’s law,” and defined it as the observation that, over the history of cloud, a unit of computing power price is reduced by 50 percent approximately every three years.”

“Now comes new cloud computing data based on Total Cost of Infrastructure (TCOI), proving cloud providers are innovating and reducing costs in areas beyond hardware. The result is a more compelling case for cloud as a far cheaper platform than a build-your-own data center. Further, the economic gap that favors the cloud provider platform will only widen over time.”

This seems so obvious to me but clearly many CIOs don’t get it. I stand by my statement that “Bezos Law is today’s version of Moore’s Law and CIOs who do not recognize this will be rapidly replaced.”

 

 

What does Bezos Law mean for CIOs?

Amazon CEO Jeff Bezos speaks at a news conference during the launch of Amazon's new tablets in New YorkWhen Greg O’Connor the CEO of AppZero proposed in this post a cloud version of Moore’s Law called Bezos’s Law for Amazon CEO Jeff Bezos, it got me thinking about the implications for CIOs and IT departments. He defined it as the observation that, over the history of the cloud, a unit of computing power price is reduced by 50 percent approximately every three years.

If Bezos’ Law reflects reality, which the numbers support, then the only conclusion is that most companies should get rid of their datacenters and move to the public cloud to save money. Clearly, public cloud, as opposed to building or maintaining a datacenter, is a much better economic delivery approach for most companies. But the cloud is much more than saving money. The primary value of the cloud is agility or time-to-market, or more accurately, time-to-value.

What is driving Bezos Law? Clearly there are efficiencies in the cloud computing model over the owned and on-prem model but the main driver is the fact that Amazon, Microsoft and Google are in a race to the bottom. The strategic importance of developing a public cloud platform coupled with the lead Amazon Web Services has built up, force Google and Microsoft into scrambling to match each other’s price cuts in order  to remain competitive. They, and others who are trying to become players in the public cloud space really don’t have any choice due to the paradigm shift that cloud computing represents.

So, what does this mean for CIOs? Many CIO’s I know – especially ones in large enterprises – are in cloud denial. They rationalize that the cloud is not secure or doesn’t provide advantages over their own”private clouds”. This is absurd. With few exceptions in really large companies private clouds are not viable and they do not have nearly the security knowledge or staffing relative to the big public cloud vendors. These CIOs align themselves with the traditional IT vendors who are desperately trying to cling to their old ways while they reinvent their businesses to provide cloud services. In many cases, they are just cloud-washing their product lines while trying to sell CIOs on continuing to buy on-prem hardware and software.

The reality is the owned and operated vertical technology stack model cannot meet the needs of today’s mobile world. The center of gravity has shifted from the desktop to the pocket. Mobile is the direction in which business and society are going, and companies who don’t keep pace will be left behind. Either you aggressively embrace the cloud to leverage it’s inherit advantages for mobile computing or your successor will. It’s as simple as that for today’s CIOs.

And how can an enterprise datacenter possibly keep up with the hyper-competitive innovation from Amazon, Google and Microsoft? CIO’s who get it know how this is going to play out. They’re way ahead in asking: “Why should we continue to saddle our company with a huge cost anchor called a datacenter or a private cloud?” Forward looking CIOs are viewing this as an opportunity to re-allocate budget and headcont towards creating business value instead of “raking and stacking” and “patching and plumbing” on-prem hardware and software.

Bezos Law is today’s version of Moore’s Law and CIOs who do not recognize this will be rapidly replaced.

 

 

 

Why CIO’s should be on Twitter

Twitter LogoRecently Vala Afshar wrote an article on The Huffington Post called “The Top 100 Most Social CIOs on Twitter 2014” which got me thinking – why do I use Twitter?

Many people ask me how I have time to post to social media sites like Twitter and LinkedIn. They also voice security concerns or worry about their company’s social media policies. But mostly they just say “what would I say?” They think it is just a waste of time with a lot of people tweeting about where they are or what they are doing. Seriously, what possible value could come from 140 characters anyway? I know this from my conversations with others and from personal experience – I thought that too!  I was wrong.

You should be on Twitter if for no other reason than it will enable you to experience social networking first-hand. One of my pet peeves is people who pontificate on new technologies but have never actually used them. This is particularly annoying among CIOs whose responsibility is to understand new technologies but for some reason dismiss “consumer technologies” like Twitter without actually trying them.

So, why do I participate on Twitter? The short answer is I make time because I get more out of it then I put into it. Here’s why I tweet and why other CIOs and senior IT executives should consider it.

It will help you stay connected to fellow CIOs and thought leaders – This is one of the few technologies I’ve found that actually contributes to community building.  In today’s busy world, it’s difficult to keep up with others. Twitter offers an easy, low investment tool to network with CIOs by following them, retweeting them, or replying to their posts. Twitter makes it easy and fun.  It will introduce you to new colleagues. I have met several CIOs via Twitter that have contributed to my life in meaningful ways.

It will help you keep up with what people are talking about – Twitter is the best way to find out about breaking news and topics you care about. Via Twitter, I have learned about emerging trends, hot books, cool software, great wines and even great restaurants.  Because the information is coming from real people who care enough to tweet about it, I have found it more valuable and authentic.

It will help you share knowledge with like-minded people – Most CIOs agree that an important part of their role is to teach and educate others about technology, information, and business process. So when I read a good article, I share it on Twitter so my followers can decide if it is worth their time. I become an “editor” of interesting stuff that fellow CIOs should also find interesting. I’ve developed more meaningful connections and learned from others that share common interests.

It can help build your personal “brand” – As a CIO, I am a leader with a voice that should reach my community. Though I tweet and add the disclaimer, “Opinions are my own and do not represent CAA”, my participation is thought leadership and promotes my personal brand. When people hear your name, what comes to mind?  What is your reputation?  What is the “brand promise”?  Brands are built incrementally, one interaction at a time.  Twitter gives you one more way to build your brand, one tweet at a time. It is a great way to drive people to your blog or web site too.

Don’t be afraid. You don’t have to tweet anything just set up an account and start following people. Twitter is very Darwinian in that you can unfollow people with a single click so the list of people you follow is always evolving based on the value of the tweets they post.  If someone is posting lots of low value tweets like “I’m at Starbucks”, “I’m watching this show”, then just unfollow them. It’s that easy. The converse it true. If you don’t post high value posts people will drop you in a flash.

So, if you’re a CIO or senior IT executive you owe it to yourself to give Twitter a try. I’ll bet you find that you get more out of it then you put into it. I know I did.

Bookmark of the end of the WinTel PC era

WintelFor myself, Steve Ballmer’s retirement announcement is the final bookmark of the WinTel PC era. Sure, desktop and laptop PCs will be with us for the foreseeable future but the overwhelming center of gravity has shifted from the desktop to the pocket.

This shift has been made possible by coupling cloud services and the plethora of powerful Android and iOS mobile devices on the market. Apple and Google have locked us into their orbits via the App Store and Google Play coupled with their associated content and accessory ecosystems.

We all carry powerful easy-to-use mobile devices, and we all prefer the cloud-based easy-to-consume application experiences to go with them. As a result, the desktops and laptops are getting less use and the tablets and smartphones are quickly becoming our primary go-to devices.

And overwhelmingly these devices are powered by Android or iOS. Google and Apple have captured the operating systems market for the mobile world we are rapidly rushing towards. The old IT-standards of Microsoft and Blackberry were crushed by consumer-based Google and Apple.

Consumers have made their preferences clear – they want to do more and more of their computing with their smartphones and tablets.  IT has no choice other than to embrace this and it’s up to enterprise IT organizations to figure out what to do about it. We face a new reality.

For myself, I consider Steve’s announcement as the close of a chapter in the technology timeline.  A dividing line where the Win-Tel era shifted to the Cloud-Mobile era.

Why I use Twitter

imagesMany people I encounter just don’t “get” Twitter.  They think it is just a waste of time with a lot of people tweeting about where they are or what they are doing. Seriously, what possible value could come from 140 characters anyway? I know this from my conversations with others and from personal experience – I thought that too!  I was wrong.

You should be on Twitter if for no other reason than it will enable you to experience social networking first-hand. One of my pet peeves is people who pontificate on new technologies but have never actually used them. This is particularly annoying among CIOs whose responsibility is to understand new technologies but for some reason dismiss “consumer technologies” like Twitter.

Some CIOs and senior technology managers have others tweet for them but this never works. Real users can always tell the difference. There is no substitute for personal experience to convey authenticity.  This is not something you can effectively delegate.

Twitter will help you stay connected to people you care about.  This is one of the few technologies I’ve found that actually contributes to community-building.  In today’s busy world, it’s difficult to keep up with others.  Twitter makes it easy and fun.  It will introduce you to new friends.  I have now met several new people via Twitter.  These have contributed to my life in small but significant ways.  It will make you think about your life.  You start to see your life through the lens of the people following you.

It will help you keep up with what people are talking about.  Twitter is the best way to find out about breaking news.  Via Twitter, I have learned about emerging trends, hot books, cool software, great wines and even great restaurants.  Because the information is coming from real people who care enough to tweet about it, I have found it more valuable and authentic.

It can help build your personal “brand.”  When people hear your name, what comes to mind?  What is your reputation?  What is the “brand promise”?  Brands are built incrementally, one interaction at a time.  Twitter gives you one more way to build your brand, one tweet at a time. It is a great way to drive people to your blog or web site too.

You don’t have to tweet anything just set up an account and start following people. Twitter is very Darwinian in that you can unfollow people with a single click so the list of people you follow is always evolving based on the value of the tweets they post.  If someone is posting lots of low value tweets like “I’m at Starbucks”, “I’m watching this show”, I’m going to the beach” then just unfollow them. It’s that easy. The converse it true. If you don’t post high value posts people will drop you in a flash.

So, set up a Twitter account and start following people, companies, causes, ideas, etc, that you care about. Don’t feel compelled to tweet anything – just watch the stream.  I think you will almost immediately “get it” and quickly learn to love Twitter.

What are your experiences?

The Emergence of Competing Ecosystems

The center of gravity of computing has shifted from the desktop to the pocket. The emergence of the cloud coupled with Apple’s iPhone and iPad has forced a shift from the reining desktop paradigm that had Microsoft creating the operating system and numerous partners like Dell, HP, Lenovo, Acer, Sony, Samsung, etc. all creating hardware that was compatible with Microsoft’s operating system. This worked well for the better part of the last two decades but it is rapidly being displaced by competing ecosystems.

As I said in Apple’s Velvet Handcuffs, Apple has created a complete ecosystem that has its own “network effects” where it’s customers enjoy synergies of staying inside Apple’s “walled garden.” If you purchase a iPhone you have to use iTunes, the App Store and iCloud. If your thinking about getting a tablet it behoves you to get an iPad because it uses the same operating system and applications. Zero learning curve. Apps work seamlessly across devices. Now, say you want to consume your media on your TV, well Apple TV is the easiest way to make that happen. Once you are in the apple orbit, the Macintosh becomes more compelling via the iOS “halo effect.”

Google recognizes this and is working feverishly to replicate Apple’s ecosystem with great success. The balkanized Android market is standardizing on recent versions of the Android OS with their “Nexus reference platforms” and Google Play store. Samsung’s Galaxy S3 has become the de-facto iPhone challenger but their a de-facto iPad tablet challenger has has not yet emerged. Even Amazon is attempting to pursue a “walled garden” approach with their Kindle and Prime initiatives.

Currently, there is a duopoly – iOS and Android – and I believe there is room for at least one more “walled garden” ecosystem in the marketplace. Who will fill this void to make it a oligopoly? It seems like Microsoft and RIM have the best chance.

Where does this leave Microsoft the 800-pound gorilla of the desktop era? They recognize the situation and are attempting to walk a tightrope by creating the same kind of ecosystem but in a way that does not alienate their partners. This is a difficult task akin to being “almost pregnant.”

Microsoft created a beautiful and innovative device called the Surface in which they dictate the entire experience. How you buy it – the Microsoft Store. They created the hardware and the specs – Surface. They created the operating system – Windows 8 RT. They created the software – Mail, Calendar, Office, etc. They created how you buy apps and how they are installed and updated – Windows Store. Oddly, Windows Phone apps are not compatible with Surface RT apps. I suspect this will be viewed as a mistake when it is all said and done.

Where does this leave RIM? They are attempting to “reinvent” themselves with Blackberry 10 and a refresh of their existing “walled garden.” I think this is a real long shot as once customers are in an ecosystem their is significant inertia for them to remain. All their apps, knowledge, experience and content is in that ecosystem. RIM has none of that with current customers. Their only advantages are BBM and the physical keyboards on their devices.

All of these companies are attempting to create “walled garden” ecosystems where they hope to do so much for their customers that they will never leave. It is ironic that the “walled gardens” of the past – AOL, Prodigy, CompuServe – were destroyed by the open internet. Only history will show what happens to these “walled gardens.”

As a CIO, I have to adapt to the realities of these ecosystems as they represent the direction of where computing is going. How are you adapting to the shift from the desktop to the pocket?

A crisis is a terrible thing to waste

crisis2One of my favorite quotes of all time if from Sanford economist Paul Romer who said:

“A crisis is a terrible thing to waste.”

In my career, this has been one of the most important things to seize upon and leverage.

In IT this is a gift from the gods.  Think about Y2K. Think about how many new systems were upgraded or implemented in the run up to the Y2K scare? Think about the latest security breach your company experienced. Were you able to allocate funds to upgrade your security? What about an acquisition or a bankruptcy of a strategic vendor? Were you able to get CAPEX funds that were previously unavailable due to the risk associated with the situation?

The bottom line is you need to be able to leverage the “crisis” to do the right thing for your company in the moment. Sometimes, the crisis are of our own making and sometimes they are outside of our control, but either way we need to be prepared to respond to the crisis to make the best of a bad situation.

It may be an acquisition that causes you to have to respond to an immediate need for a technology solution that would have otherwise difficult to justify or was a long-term solution. Or, it may be a bad economic situation that causes you to restructure or reorganize the department  to address the situation.  Either way, the “crisis” allows you to do things that would otherwise would be inappropriate or extremely difficult to accomplish and in the heat of the crisis they are acceptable outcomes.

Are you ready to leverage the next crisis that comes your way?