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Sep 20
2010

Why are we still debating about what Cloud Computing is?

Posted by: Eric Novikoff

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Here at ENKI we use NetSuite for our back end accouting and CRM systems.   If you read our bios, you'll see that many of us are NetSuite alumni, and we like the "one system" approach that it provides for us to manage the business and in particular, to guarantee customer support responsiveness.

But, is NetSuite cloud computing?   Today, I logged into NetSuite and saw a little banner that said, "See Why CNBC Says that NetSuite is at the Center of Cloud Computing!"    As a 4-year veteran of providing cloud computing to customers, an attendee at numerous panels and events, and the writer of blogs and papers on Cloud computing, my first reaction is, "NetSuite is not cloud computing!"   The problem is that now 4 years into the Cloud Revolution, we're still debating what Cloud computing really is.   The consensus of the pundits - renewed at last weeks's 451 Group HCTS conference by Rachel Chalmers - seems to be that it has 4 fundamental characteristics:

  1. Computing delivered over the internet.
  2. Scalable, i.e. you can add or reduce resources to meet need - in particular to assure a constant level of service.
  3. Pay-as-you-go, meaning that you only pay for what you use.
  4. Self-service, meaning you can add or subtract resources/services yourself - though this is not universally agreed-upon.
NetSuite only meets the criteria for (1).   Since you're on a year's contract with no flexibility to reduce or easily increase resources, NetSuite is neither scalable nor pay-as-you-go.   The fact that its performance - like many cloud applications - varies widely during the day and the users can't do anything about that, also means it's not scalable.   And it is so difficult to negotiate a year's contract - often taking months - that one cannot speak of self-service.  
 
Lest you think I'm singling NetSuite out, its major competitor, SalesForce.com, suffers from the same combination of cloud hype and taking advantage of people's confusion about what cloud really is.  And there are many more vendors - usually in the Software-as-a-Service space but not always - that are "cloud-washing" their services.
 
Why does this matter?   Because there really is a genuine and powerful advantage to businesses from cloud computing.  As one of my customers put it, "I had no idea of how powerful the flexibility of your cloud computing service is - it totally transformed my business!"   And unfortunately, there are a lot of solutions out there claiming the advantages of cloud and not delivering them.  They may be just fine in their own right, but they dilute and depreciate the value that true cloud computing can bring to customers by confusing them and putting them off from what for many is still a different customer-vendor relationship than what they are used to.   By creating confusion about what Cloud is, they get customers, but they also lose the trust of those customers.
 
So, my challenge to NetSuite - and to SalesForce.com the legions of other cloud-washed products out there - is to embrace the cloud model fully.   If you expect your customers to put their fears aside to embrace the model, you must do it whole-heartedly as well.   That flexibility I spoke of? Well, your competition that is actually providing cloud computing as it is defined will have that flexibility in their back pocket to out-compete you. I see this with customers we host who are able to build a SaaS service with no IT staff or hardware for a tiny fraction of the cost and time that NetSuite spent pioneering the space.
 
So why are we still debating what Cloud is?  It's not because we don't know what it is! 

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