Will the Appliance Approach Gain Traction in the Wake of Recent Cloud Outages?

This week’s service outage at Intuit is fueling a new round of speculation about the dark side of cloud computing–and whether businesses can depend on cloud-based services to run their businesses. Intuit’s problems come on the heels of other service outages this month at WordPress and Sage, and as well as service outages earlier this year at Salesforce.com and NetSuite, among others.

Clearly, Intuit is not alone, and cloud vendors across the board will need to redouble their efforts to harden, backup, continuity and disaster recovery services.  Customers will also demand more transparent, accessible visibility into ongoing performance, downtime and problem resolution, and compensation when downtime exceeds guarantees in vendor service level agreements. And, as stated so well in a Hubspot blog, cloud vendors must put a a proactive social media strategy in place to lessen the fallout when a problem does occur.

That said, I don’t think that customers should leap to the conclusion that the sky–or the cloud–is falling. Smaller companies, in particular, are likely to have much more trouble keeping their systems up, running and productive than a cloud provider.

However, it does seem to me that now is good time for vendors and customers to consider a hybrid appliance-cloud approach–which has had a difficulty getting air time amidst the cloud hype and exuberance. As I discussed in What is a Business Applications Appliance and Why Should You Care?, business application appliances come pre-configured with all of the hardware and software components required to run a specific business application, such as accounting or CRM packaged together in one box. The appliance vendor pre-integrates the hardware, databases, security, storage, virtualization and other technologies with the business application to provide a complete solution.

This means that users can set up an appliance in a matter of minutes, instead of the hours or days it would normally take to source, install, integrate and tune all of these component parts on a general purpose server. And the appliance vendor (or a business partner) can deliver remote system management, monitoring, updates, patches, support and backup over the Internet, and deliver additional Web-based services, and/or download new applications as needed.

As a result, the appliance approach can bridge the gap between traditional, customer-premise deployments and cloud computing or software-as-a-service (SaaS) model, integrating on-premise, integrated appliance systems with cloud services. In many respects, this model could offer the best of both worlds to companies that want something easy to use and maintain, but are still uncomfortable with complete reliance on the cloud.

Let me know what you think–will recent cloud vendor outages shed new light on the appliance model?

Recent Vendor Briefing Highlights: IBM’s Cast Iron Acquisition

We are publishing recent vendor highlights on the SMB Group web site. As time permits, we discuss our key take-aways from more interesting briefings. I will try to remember to post them here as well. Here is the most recent one.


In May of this year, IBM acquired Cast Iron Systems (for an undisclosed sum) to help customers more effectively tackle the challenges of integrating cloud and on-premise solutions. Cast Iron, which was founded in 2001 and has 75 employees, provides hundreds of pre-built templates and a “configuration, not coding” approach to help streamline and shorten the time application integration. Cast Iron’s OmniConnect portfolio includes three deployment options, which all share the same interface, and deliver user interface mashups, process integration and data migration capabilities:

• Cast Iron Cloud2, a multi-tenant Integration-as-a-Service cloud offering
• Cast Iron Physical Appliance
• Cast Iron Virtual Appliance

Cast Iron has positioned itself as the “The #1 SaaS and Cloud Integration Company,” with more than 450 mid-market customers and an unspecified number of large enterprise accounts. Traditionally, Cast Iron has competed against rivals such as Boomi, Informatica and Pervasive in the integration market.

IBM will make Cast Iron’s solutions available worldwide as part of the WebSphere integration portfolio.

Quick Take:
IBM’s acquisition of Cast Iron was driven by a few fundamental market trends. First, cloud computing growth is exploding. IBM is forecasting global market CAGR for cloud computing is expanding by 28%, from $47BB in 2008 to $126B in 2012. In addition, data volumes are rising exponentially. IDC forecasts that data stores are growing an average of 60% annually, fueled by factors including the social media explosion, and the increasing trend to aggregate, mine and monetize data. More and more of this data will be stored in the cloud.

These forces ratchet up the need for simpler, cheaper integration alternatives. In the cloud, data and data control are widely distributed. And most companies will continue to operate in a blended or hybrid computing approach for the foreseeable future. Connectivity scenarios between cloud applications and data sources, cloud to on-premise, and between public and provide clouds are spiraling the number of possible integration scenarios. Developers, integrators and customers must deal with a staggering number APIs and technologies to accomplish these integrations.

While IBM’s WebSphere already includes a wealth of integration capabilities, Cast Iron enables IBM to provide more turnkey integration, which reduces cost and complexity, and removes significant barriers to cloud computing adoption. By leveraging this streamlined approach, IBM can strengthen its role as a integration hub for its existing enterprise customers, and more readily extend its integration footprint into the mid-market.

Of course, IBM had other acquisition options, most notably Pervasive, which is a significantly bigger company than Cast Iron, boasting more than 1,000 SaaS integration customers and dozens of integrations; and Boomi, which focuses exclusively on a cloud-based integration platform, and offers dozens of integrations. (Interestingly, Boomi, Cast Iron and Pervasive–all provide integrations for several of the leading SaaS vendors.)

So why Cast Iron? My take is that IBM took this route for a couple of reasons. First, I think IBM likes the fact that Cast Iron’s line-up features software, cloud and appliance options. IBM has been putting a lot of focus on appliances, in particular, as bridge between on-premise and cloud solutions. Cast Iron provides an appliance option, and also provides integration in a uniform way across all three delivery models. In addition, IBM likely viewed Pervasive’s PSQL database business, which still accounts for a majority of Pervasive’s revenues, as an asset it didn’t want or need.

For these and other reasons, the Cast Iron acquisition makes sense for IBM. But will IBM be able to successfully surface and leverage Cast Iron’s automated, simplified approach within the context of an increasingly complex and crowded WebSphere and Software Group portfolio–which, I’m told, is now comprised of more than 30,000 different offerings? IBM already has two disparate integration stacks, WebSphere for application integration, and InfoSphere for data integration. Smaller acquisitions have tended to get lost in the IBM shuffle in the past, and IBM Software has made additional, bigger acquisitions (such as Sterling Commerce and Coremetrics) since it acquired Cast Iron.

Meanwhile, what moves will Pervasive, Boomi and Informatica make to meet the challenges of a new integration gorilla in the mist? As important, what plays will IBM’s traditional competitors, such as Oracle and SAP, as well as cloud leaders such as Google, Amazon, Salesforce, etc. come up with as they pursue similar goals? Are other integration acquisitions in the works?

I don’t have a crystal ball–or inside information–to know how the details of new developments will unfold. But as the drivers for more streamlined cloud integration continue to intensify, this promises to be a very interesting space and one I’ll be watching closely.

There’s an App Store for That!

App stores focused on the needs of small and medium businesses (SMBs) seem to be proliferating quickly as cloud computing takes off. As discussed in “What is an App Store, and Why Should You Care,” a marquee SMB vendor, such as Google or Intuit typically builds the app store and serve as the anchor tenant for it. The vendors that run the app stores typically have a strong brand and a large customer base. They woo developers to build and integrate complementary applications around their core applications and/or platforms, and in return, take a commission on sales.

Some of the SMB-focused app stores that have already launched include:

  • Intuit’s Workplace App Center, which provides a central location where small businesses can locate and try business applications that work with QuickBooks and with each other.
  • Google Apps Marketplace, which offers Google users apps that integrate directly with Google Apps.
  • Zoho’s Marketplace, which provides applications that work with Zoho’s solutions.
  • Constant Contact Marketplace, which offers small businesses with applications that integrate with Constant Contact’s email and marketing tools.
  • NetSuite’s SuiteApp.com, which features third-party solutions that integrate with  NetSuite.

Plus, there are a few more SMB-centric app stores that I’ve been tipped off on that are in the works, but not yet announced. Of course, there are many app stores that aren’t exclusively focused on SMBs, but feature plenty of apps relevant to SMB requirements, such Salesforce.com’s AppExchange and Sugar CRM’s SugarExchange. There’s an even app store for Twitter. Not to mention all the marketplaces for mobile apps that work with different smart phones, from Apple’s App Store to Google’s Android Marketplace.

All of which leads me to wonder how this growing bubble of small business application marketplaces will sort out. Theoretically, app stores or marketplaces can help make it easier for users to find, try, evaluate and purchase applications. But things can get complicated if you use applications from several vendors that have a marketplace–for instance QuickBooks, Google Apps and Constant Contact.

Enter GetApp.com, which launched earlier this year. Unlike most app marketplaces, GetApp isn’t organized around a core application or platform. Instead, GetApp positions itself as a neutral, “meta-marketplace” that is application and platform agnostic. Any app can be listed on GetApp (the vendor has about 600 listings to date). In fact, many applications that are listed on GetApp are also on different proprietary marketplaces.

To help address integration requirements, participating vendors provide GetApp with landing pages and documentation to verify integrations between their apps and other apps and marketplaces. User ratings, feedback and commentaries offer validation–or not–about how well these integrations actually work.

GetApp’s model for developers is also different. Basic listings are free, but developers can sign up for a premium, or more complete listing, with a pay-per-click model; the vendor doesn’t take commissions based on application sales.

GetApp is a David among Goliaths, but will be interesting to watch. Potentially, GetApp can provide SMBs with more choice, transparency and neutrality than vendor-specific marketplaces–and give developers a new channel without requiring them to re-write their apps for another platform.

While it’s too early to predict how GetApp–or SMB app stores in general–will fare, the SMB Group will be tracking the marketplace area closely. In fact, we are asking respondents about their awareness, use and plans for marketplaces (among many other things!) in our 2010 SMB Routes to Market survey, which is fielding now.

It should be quite interesting to see if marketplaces can live up to their promise of becoming a new, powerful land very disruptive SMB solution channel.  If you know of other SMB app stores that we should be taking a look at, please let me know!

What is Hybrid Computing, and Why Should You Care?

(Originally published on June 9, 2010, in Small Business Computing)

What is Hybrid Computing?

A hybrid computing platform lets customers connect the packaged small business software applications that they run on their own internal desktops or servers to applications that run in the cloud.

As discussed in What is Cloud Computing and Why Should You Care?, more software vendors are deciding to develop and deliver new applications as cloud-based, software-as-a-service (SaaS) solutions. This model helps them reach a broader market and serve customers more efficiently and cost-effectively. And, because cloud computing can often provide significant cost, time and ease-of-use benefits, more companies are choosing to buy and deploy cloud computing solutions instead of conventional on-premise software as new solutions needs arise.

However, most companies will continue to use a combination of both traditional on-premise software and cloud-based SaaS solutions. Think about it: You are unlikely to get rid of an application you’re running in-house just to swap in a SaaS solution. But if you need a new solution, you’re likely to look a range of options, including SaaS applications, to fit the bill. In some newer areas — such as email marketing or social media management — this may be the only way solutions are even available. In cases where you have a choice, you may simply decide that the SaaS model makes more sense, or that traditional deployment will work better for your company.

Why Should You Care?

Many software vendors with a strong presence and customer base in the traditional packaged or “on-premise” software world are developing platforms that provide new SaaS solutions that extend and integrate with their traditional on-premise applications. Some vendors provide app stores or marketplaces to make it easier for you to find solutions that will work well with those you already have.

For instance, Intuit has developed a platform and Intuit’s Workplace App Center so that customers can find and try applications that work with QuickBooks and with each other. Microsoft’s Software + Service strategy is designed to connect a myriad of Microsoft’s traditional software applications to Web-based SaaS solutions.

Recently, Sage launched its Connected Services offerings, designed to connect users of its traditional packaged software offerings with online SaaS services. The Sage e-Marketing application, for example, connects ACT and SalesLogix users with online email marketing services, while many of Sage’s accounting solutions connect with its new Sage Exchange online payment processing.

These vendors realize that most companies will use a mix of on-premise and SaaS solutions for a very long time. While companies can get some value from using some point solutions in a standalone fashion, in many cases, you’ll need to integrate the new SaaS solution with an existing on-premise application — such as integrating payroll to accounting and HR, or social media management to contact or customer management application — to get the value and efficiencies you need.

From the standpoint of their own corporate interests, vendors can increase revenues and profitability by selling existing customers new SaaS services (either their own or those of their partners) to connect to and extend on-premise solutions they’re already using. Having a strong SaaS play that is integrated with their on-premise solutions also helps them protect against competitive SaaS-only vendors that could steadily encroach on their turf.

More altruistically, these vendors want to offer their customers the means to bridge between the on-premise and SaaS solution worlds more easily. After all, it can be very confusing to even sort through and differentiate between all the solutions in a given category, and expensive and time-consuming to integrate them so they work well and easily with what you’re already using.

What to Consider

Most small businesses run at least a couple of on-premise software applications that are critical to their business. For instance, it’s a good bet that accounting and financials are on this list. Other applications will vary depending on the business you’re in, but could include things such as solutions to manage contacts and customers, projects, human resources, logistics or a function specific to your industry.

As you identify and prioritize new requirements to streamline and automate additional tasks, think about the overlaps they’ll require with workflows in the core on-premise solutions and processes that you’re using. For instance, if you decide you want to streamline payments processing, does your accounting software vendor provide a payments processing service that can easily snap into the accounting application?

By taking advantage of the SaaS offerings available from a vendor’s hybrid computing platform, your new solution will generally be up, running and integrated with the core application much more quickly. However, keep in mind that as you snap more services into that core on-premise application, your reliance on that anchor application will grow — arguably making it harder to switch should your needs change.