Innovation and Cloud Pricing Pressures…

http://docandersen.podbean.com
https://docandersen.wordpress.com
http://scottoandersen.wordpress.com
My Amazon author page!!!!
http://www.safegov.org

So yesterday I spent the day thinking about things that influence, drive and ultimately will cause change in the world of cloud pricing. I considered a number of issues that I believe are going to be front and center in the pricing argument.

What I came to realize, however, out of the day was that the causality of pricing trends may not have as much impact as I’ve thought in the past.

A squeezed market in the end loses innovation steam. There are some things that still require a massive dose of R&D. Those are the things that are lost in an extreme commodity market.

The Red Ocean. From the great book the Blue Ocean Theory theory is an interesting concept that of the over competitive red ocean. You don’t jump into the red ocean unless, in the end you are willing to live with razor thin margins and not a lot of potential for growth in the margin.

You have to have competition. Monopolies in the end control both supply and price. But the reality of the red ocean is that it is a launch pad for innovation within reason. You have to cut the operational costs in order to continue to cut the external or customer cost. There is innovation there but it is innovation of desperation. The pressure of innovation by desperation in the end is that if you fail, you fail.

That pricing pressure of a Red Ocean and the resulting innovation by desperation is a pressure that most organizations seek to avoid if at all possible. There are tremendous risks on the back side of desperation. The biggest being as stated above when you fail, you fail. But there are others that appear as well. These pressures force many companies to reconsider their market position.

In the cloud space today there are a number of vendors that are positioned to absorb red ocean costs by moving the R&D required for innovation outside of the desperation component (the red ocean business).

Based on that shift I believe the interesting innovations are actually going to come from the smaller organizations that are in the Red Ocean up to their necks and have to innovate to survive. Without the pressure of survival desperation innovation just doesn’t happen.

In order to innovate out of a Red Ocean you have to create something that doesn’t exist in the market today. I believe there is a small company about to produce that.

Andersen’s law of innovation: The rate of innovation remains constant until there is a change in pressure applied or capabilities available.

.doc

Scott Andersen

IASA Fellow.

More Cloud changes coming…

http://docandersen.podbean.com
https://docandersen.wordpress.com
http://scottoandersen.wordpress.com
My Amazon author page!!!!
http://www.safegov.org

Yesterday I talked about two big bets I saw coming in/for cloud computing. The first is the world of automated translation and the announcement by Microsoft that they will be offering that as part of Skype going forward. The other was the broader concept of creating a new cloud IaaS offering that is unique and different.

Those were simply the first two that I see not the only ones I see. Companies that offer IT as a service but in particular service management in the cloud services space have a huge potential. Consuming an Opex service is much easier than building an in house ITSM team with Capex. I thought I would list the areas.

  1. Cloud Broker: I’ve posted a number of blogs in this space recently and will continue to do so. CSP’s don’t like Brokers today and customer’s don’t understand what the Broker could be. In the end beyond aggregation of services the broker could also provide price relief and portability. I believe this market will be significant in the future for the companies willing not to offer CSP services.
  2. Service Management in the services space will become a huge deal in the next couple of years. From helpdesk services that are cloud hosted (think of that as a SM Cloud Broker) to overflow services (doing a huge upgrade – rent part of a cloud desk for a month to take your overflow calls). This is an area that has been growing quietly on the sidelines for awhile. There are offerings in the space and the companies that have them are poised for growth.
  3. SOA 2.0, the broadening of SOA solutions where we build everything by consuming external services. SOA struggles when you consider the reality of modern IT (everything is local) but SOA 2.0 soars when you move to the cloud and begin consuming services that are already there.
  4. Agile – both the model/method and the application of agility within an organization. I was lucky enough to work with an Agile Guru for the past three years. His willingness to take the time to show me what Agile could be is a debt I hope someday to repay. The reality is that Agile today is a great way to modernize the organizational IT approach.
  5. Free Market Innovation – the Kickstarter and Indiegogo changes will continue to expand. Today those sites reach a large number of hard core project funders. As the innovations get more and more mainstream over time you will see more and more people engaged and involved in the overall projects. It’s a huge growth area that is cloud based and will become a great destination going forward.

In two days I’ve laid out the 7 big things I believe are going to change. IaaS, the red ocean of competition is the one that holds my interest right now only because I suspect there is a big change coming there. Lot’s of money is flowing into the space but the innovation has slowed to a trickle. Most of the organizations are heavily focused on automation and consolidation which makes the market ripe for someone to be a game changer.

.doc

Scott Andersen

IASA Fellow.

What are the cloud big bets?

http://docandersen.podbean.com
https://docandersen.wordpress.com
http://scottoandersen.wordpress.com
My Amazon author page!!!!
http://www.safegov.org

I got a great email yesterday about the big bets in cloud. It was someone not offering me their thoughts but asking me for my thoughts on what the big bets were going forward.

First off I think it is an interesting play by Microsoft with their new Skype translation service. I’ve been a huge Skype/MSN Messenger users for many years now and that is a huge big bet going forward. there are a number of recording applications for Skype so translations makes a huge step in the world of personal communication.

There is an exceptional Kickstarter project called MiLingo (https://www.kickstarter.com/projects/1802215296/language-translation-app-with-near-100-accuracy ) that has struggled to get off the ground twice now. Why? Because translation isn’t on the top or front page yet. I think it will be.

So direction one is the interesting reality of translation. There are so many interesting projects coming in that space that soon it may actually be moot.

Second off going with my first off theme I think the reality of cloud computing will move to the right. IaaS is now officially the red ocean. Normally when the red ocean appears it is time to slide down the Boston Consulting Group (BCG) experience curve. Get better at the services you are delivering to reduce your cost of operations. The other side however of a red ocean is the reality of innovation. As I’ve talked about in my law of innovation there are pressures that have to exist. The Red Ocean is a greatest pressure for innovation.

Someone or some company is going to come up with a way to make cloud better. That will shift the entire IaaS market to the right. It will show the agility of the big companies in the space as to how quickly they can embrace this change.

What ways could that market move? First off I think a complete integration of a broker and an automated application migration engine would start a new market. The beauty of a broker model is that a broker done right isn’t a cloud service provider. An automated application migration engine would allow the creation of standardized migration patterns that could then be moved quickly. It would buy us portability rendering the IaaS vendors as complete commodities.

Second off to create this new cloud infrastructure I think there has to be some downward pressure of gen 9 processors and hardware. Today it takes as much as 6 months between new processors being released and their appearance in the wild. That has to be reduced to days not months.

The market is going to change. The big players of today may not be the big players of tomorrow. You have to determine the organizational agility of each of the providers. Organizational agility is not something you build via hiring people that are like or better than the people you already have. Its about hiring people that are different and see things the people you have don’t yet see. You can’t prepare for something you haven’t talked about…

.doc

Scott Andersen

IASA Fellow.

You never leave the room if you never try…

http://docandersen.podbean.com
https://docandersen.wordpress.com
http://scottoandersen.wordpress.com
My Amazon author page!!!!
http://www.safegov.org

Early in the life of this blog I spent a lot of time on communications patterns and anti-patterns. The anti-patterns had to do with what I encountered over the years. The patterns were often the ideals that no one could ever reach completely but that we could strive for.

The problem is that anti-pattern behavior is much easier to achieve than the pattern is. You don’t have to work as hard and remember what it is you were aiming for. All of us have anti-patterns of communication no matter what we think. My personal anti-patterns tend towards the one’s involves not-listening and a tendency to “know the answer – what was the problem again?”

I have a really good friend who always says half the battle is identifying your personal problem. The other half of the battle takes the rest of your life and its about fixing that problem. Good news I am working on the problem – bad news its an uphill battle.

Like the image I used to have in my classroom years ago of the stork swallowing the frog with the frogs hand reaching out and grasping the throat of the stork preventing it from swallowing – the caption read “never give up” communication is a life long journey.

Ideals are wonderful to hold in front of the person. Something each of us can strive for. Not that we can as stated above ever truly complete the journey, rather that we can seek and try. There are people who that achieve the ideal so don’t give up.

In the end communication is a two way street. Even with anti-patterns present we can ultimately communicate. We just have to be aware of the weakness.

Normally at this point I would dive out of my blog with a Dylan Thomas quote (Rage, Rage against the passing of the light) that showed the need to continue fighting against your Anti-Pattern. Or possibly one from Ozmandius by Percy Shelley “Look upon my works ye mighty and despair” but as far as the traveler could see there was only sand. But instead I am going to end with a quote by Sandler Boggs, the younger brother of Phineas Boggs.

“You never fail if you don’t try. But you never leave the room it you never try.” Sandler Boggs.

.doc

Scott Andersen

IASA Fellow..

What is the TAM of your innovation?

http://docandersen.podbean.com
https://docandersen.wordpress.com
http://scottoandersen.wordpress.com
My Amazon author page!!!!
http://www.safegov.org

Andersen’s law of innovation: The rate of innovation remains constant until there is a change in pressure applied or capabilities available.

There is another market pressure to consider with innovation and that is cost. Its interesting what the cost pressure is sometimes for new and innovative ideas. For example, if you consider the marketing view of the world there is a magic price point. When you move beyond the middle of the market that price point changes.

The adoption curve kicks in once you get past the initial market but where is that price point. Too expensive and no one buys your innovation. Too cheap and you will undercut your profitability later and be unable to compete. The business connection for this is the concept of TAM (Total Addressable Market). The TAM for any solution is always less than you suspect.

All of us as humans seek the 100% TAM – that just doesn’t exist. Your TAM is more likely in the 4-12% cutting edge market. If you look at the traditional bell curve model the true leading edge of the market is always much smaller than the bell curve suggests. Within the advanced 25% you have the outliers as well (extremely aggressive in viewing new solutions, somewhat aggressive, not aggressive but watching and waiting). That reduces your TAM to the smaller number.

You point point at the 50% in the middle of the market or the 25% at the end. Your best marketing position for your innovation is to gather excitement in that leading edge. That means you have to seed influential bloggers with advance versions of your solution. You have to pay your way to CES and you have to find someone to be your external champion. Or, now, you get on Kickstarter and get to the influential donors (that are the ones that drive views on your page).

Moving from the leading edge people to the mass of people in the middle of the bell curve is much harder and is a blog for another day.

Getting a following on Kickstarter/Indiegogo isn’t hard. The folks on those sites are tuned to various technologies blogs and various influential donors. Find those, figure out if your product will appeal to them and the rest is simply getting your innovation off the factory floor and into the hands of users.

.doc

Scott Andersen

IASA Fellow.

Pressures and innovations…

http://docandersen.podbean.com
https://docandersen.wordpress.com
http://scottoandersen.wordpress.com
My Amazon author page!!!!
http://www.safegov.org

Andersen’s law of innovation: The rate of innovation remains constant until there is a change in pressure applied or capabilities available.

Yesterday I was watching the Indianapolis 500 and remembering the way the cars used to be versus the way they are now. The announcers actually said one of the drivers was less a driver and more an engineer – twiddling with the car.

They have improved the track and the cars to reduce the potential of a fatal accident. Over the years a number of drivers have sadly died before and during the race. Those innovations created in the race car for the purpose of improving the performance and safety of the car actually have moved into production cars.

The pressure to win forced the various companies involved in racing to improve their cars. Not wanting to lose drivers makes the cars and tracks safer and those innovations trickle into production cars. It’s the application of my law of innovation.

On a side note, this was the last time Jim Neighbors will sing Back Home Again in Indiana at the start of the race. He has done so for the past 43 years. Hopefully the torch will pass to another.

The pressure for and around innovation can come from any number of sources. Making a better bullet proof vest for soldiers and police officers involves making it stronger but lighter. Those innovations moved into the consumer world as well. Radio communication improved during World War II ultimately became the cellular technology we rely on today. My argument that the brittleness of computing in the 1980’s and 1990’s begat the design for failure reality of cloud computing is another example of pressure.

So what are the building pressures in the world today? What technologies are going to make a linear growth? What technologies are going to make an applied innovation? Where and what will explode exponentially in the next 12 months? Personally I think it is the market around interactive TV’s. What Google started with the Chromecast is about to explode into our living rooms.

Ah pressure as long as we keep our cool you bring so much to the party.

.doc

Scott Andersen

IASA Fellow.

The innovation conversation

http://docandersen.podbean.com
https://docandersen.wordpress.com
http://scottoandersen.wordpress.com
My Amazon author page!!!!
http://www.safegov.org

Andersen’s law of innovation: The rate of innovation remains constant until there is a change in pressure applied or capabilities available.

Thoughts on the innovation conversation. Doors that are shut seldom allow air to flow. Unless they are screen doors. Then of course you either a ruined screen or a video for America’s Funniest Home videos. Doors that are open allow for the conversation to continue.

Let’s open our doors and talk about innovation. What is an innovation? A paradigm shift? Penicillin was an innovation. It has changed the lives of most likely well North of 2 possibly even 3 billion people. Television is/was an innovation and it continues to innovate. It sparks the innovation conversation.

Interestingly today the innovation conversation in the television space is around cutting the wires. For years we have paid to have television shows ported into our homes. But the innovation that was the DVR changed everything. Suddenly we could watch any show when we wanted to not when the network showed it. The cut the wires conversation bursts out of that with Netflix and Hulu as well as many others offering on demand content. We now can not only watch what we want when we want but we are free to choose the content types that interest us.

Innovation conversations happen all the time. The newest in the television/media space is that of Virtual Reality. The potential in the VR world is amazing. The changes that VR will give a number of industries are amazing. Simply building out 3d models using VR devices will change a number of home 3d projects.

Considering the patterns discussed on this blog yesterday for innovation the conversations also fit neatly into the patterns. Linear innovation has conversations about incremental innovation. Not big blood change the world innovation but small improvements to what is already there. Consistent growth. Applied innovation takes what is there and goes a different direction. Fleming wasn’t looking for a drug (Penicillin) he was researching something else. Penicillin was an applied innovation and thank goodness he found it.

The last pattern is exponential. That conversation is the one we remember. The one that changes the game around us forever. With the exponential pattern conversation lies the context of history. When Alexander Graham Bell invented the telephone the exponential conversation starter was “Watson come here I need you.”

Conversations flow around us and link in and out of the patterns of innovation. Imagine the joy Bell had when Watson stuck his head in the room and said “what do you need?”

.doc

Scott Andersen

IASA Fellow.