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.




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 love Evernote

Evernote Logo

A couple of weeks ago, I read an article in BusinessWeek by Rob Walker called As Evernote’s Cult Grows, the Business Market Beckons and it got me thinking about my use of Evernote.

Over time, Evernote has been “stealing” minutes from other productivity applications in my life. The biggest “looser” has been Outlook. I used to use Tasks in Outlook for my “Trusted System” but for the last couple of years I have been using Evernote.

It has also been stealing minutes from Word because I do lots of my rough outlines and “brainstorming” in Evernote too. It just seems like Evernote is so flexible and solves so many of my problems that it continues to gobble up more and more of my time.

As Walker says in the article, “Once you get it, they say, you live and die by Evernote” and sooner or later you get caught up in “The Evernote Lifestyle.” Not only do I rely on it as the foundation for my GTD Trusted System, but I use it for and ever-increasing range of tasks.

It’s logo is an elephant because it is designed to help you “Remember Everything.” Here is a quick example, I’m in the gym and I keep running into the same people in the locker room but forgetting their names. So, I say “I’m sorry I forgot your name” and then when they tell me I put it in Evernote with a little clue to help me remember. Then the next time I see the person I just whip out my phone and I can easily find their name. This has happened countless times.

Getting information in and out of Evernote is the key to its success. You can capture anything – your ideas, things you like, things you hear, and things you see. You can capture and retrieve your “stuff” on any device because Evernote works with nearly every computer, phone and mobile device out there. And you can find you stuff fast by searching by keyword, tag or even printed and handwritten text inside images.

Evernote is exhibit A for what a modern app should be. It is easy to use, fast, free, works on virtually all devices, leverages the cloud to store your information and sync it across all your devices. It leverages the “freemium” model where you can pay for additional functionality.

The people who I have recommended Evernote to generally fall into one of two camps. They either, try it for a little while and quit because they don’t “get it” or it becomes the foundation for their entire organizational structure and they can’t imagine life without Evernote.

Which camp do you fall into and why?

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?