Cloud Computing Hits (mostly) Unexpected Cycles in 2015

Cloud ComputingThe cloud computing march will hit some interesting hiccups in 2015. There will be innovation and growth.Complementary technologies like big data and social media will drive more to the public cloud. And, new business models based on ramping up digitial services on the cloud will emerge. However, legacy enterprise software vendors are in for a tough ride as customer concern about lock-in, integration and usability hits critical mass.

Yet, core information assets will remain on-premises and many organizations will adopt hybrid approaches: non-core assets on the public cloud, family jewels where they belong. That means that IT (information technology) isn`t dead. Yet.

Which leads me to the illusion of cloud computing: private cloud is not cloud. It could be shared services. Or, virtualization. Or, better use of information resources. But, it ain’t cloud. It does not give the elasticity, the temporary scaling, the testing capabilities of true cloud. Cloudwashing will continue in 2015 but more people will see through the illusion.

My predictions:

  1. News of the death of IT because of cloud computing is greatly exaggerated. The realization that “private cloud” does not provide “public cloud” advantages will cause some intermediate industry changes. Hybrid cloud will increase with core assets on premises and non-core on public cloud.
  2. Complementary technologies like big data will create cloud demand – public, private and hybrid. Cost saving for traditional application types will be less of a driver than quick accessibility to new and improved technology categories.
  3. The next cloud loser, after traditional enterprise software, is outsourcing. Cloud services enable experimentation, less-expensive automation and lower IT burdens. This will take the bottom “low hanging fruit” from outsourcing but not higher value services.
  4. Cloud growth will continue, but expect a backlash against the over-promise. As Ray Wang told me, there is a growing concern about public cloud security, availability and vendor lock-in. And, there is also the concern that “engineered systems” for “private cloud” are yet another way for vendor lock-in. The cloud enthusiasm will be curbed.
  5. The SaaS market will remain unkind for established enterprise software vendors. Cloud changes the calculus for application decisions from complexity to simplicity. From customization to configuration. From features to usability. From horizontal to vertical capabilities. Major vendors will not be able to acquire and integrate cloud providers fast enough.

 

Why Big Data?

Why Big DataIt’s important to keep up with major technology trends like “big data” that promises to change the way organizations operate. Big data didn’t suddenly appear as a solution in search of a problem. Many have jumped on the bandwagon. It is becoming more clear what value big data brings organizations. The problem is that big data surveys run by associations, technology analysts and systems integrators tend to ask different questions. That’s possibly because of a desire to promote specific technologies over others or the need for consultants.

We were able to put together a meta analysis of sorts to see what business processes are most enhanced via big data and the major benefits for big data for decision-making.

The major data advantages relative to traditional business intelligence, in order:

  1. speed of information
  2. data accuracy & quality
  3. data availability to more people
  4. improvement of collaboration
  5. completeness or comprehensiveness in data

Improved “decision making” was sixth, but my observation is that this was implicit in many studies and was not a separate option

The business processes that benefits most from big data, in order:

  1. revenue increase
  2. improved customer engagement, servicing, segmentation
  3. innovation
  4. risk
  5. cost reduction
  6. improved business process management
  7. human resources
  8. marketing

The surprise here is how low “marketing” rated, especially compared to the hype. It was also interesting to see that cost reduction rated as low. This may be a result of early adopters who focus on revenue, customers and innovation first.

FreeBalance discusses Smart Cities at FEMETROM

FEMETROMYesterday, FreeBalance had the opportunity to attend a great event organized by FEMETROM (Federation of Metropolitan Municipalities), FUDEU (Foundation for Urban Development), ICE (Instituto Costarricense de Electricidad ) and the National Bank in San José, Costa Rica.

The event theme was Towards a Master Plan to Smart Cities: Financing Local Development, and municipalities from Costa Rica explored financial alternatives for the development of smart cities, technology platforms and municipal infrastructure.

FreeBalance, along with Costa Rican partner GSI, sponsored the event, and our own Isaac Maya and Eduardo Capecci were featured presenters.

Isaac’s presentation on Harnessing Technology for Fiscal Reform was well received and addressed the important role technology plays in public financial management. Isaac reiterated that fiscal reform must be addressed holistically, and the best practices for PFM reform require a GRP solution dedicated to the public sector in order to meet their information needs, controls, segregation of duties, effectiveness and efficiency in the process solution.


FreeBalance habla de Ciudades Inteligentes en FEMETROM

FreeBalance tuvo la oportunidad de asistir a un gran evento organizado en Costa Rica por FEMETROM (Federación Metropolitana de Municipalidades), auspiciado por FUDEU (Fundación para el Desarrollo Urbano), ICE (Instituto Costarricense de Electricidad) y el Banco Nacional en San José, Costa Rica, entre otros.

El evento tomo a cabo en el Hotel Corobici, donde varios alcaldes, gobernadores, funcionarios civiles y privados abordaron la temática del evento “Hacia un Plan Maestro de Ciudades Inteligentes: Financiando el Desarrollo Local y los municipios de Costa Rica exploraron alternativas financieras para el desarrollo de las ciudades inteligentes, plataformas tecnológicas y la infraestructura municipal”

FreeBalance, junto con su socio costarricense GSI, tuvo la oportunidad de no solo participar en el evento como expositor, pero también tuvo la oportunidad de dar una charla sobre las ventajas del uso de la tecnología de Gestión de Recursos Públicos (GRP), diseñadas para el sector público, con el fin de lograr las metas y objetivos establecidos por los gobiernos. Isaac Maya, tuvo la oportunidad de presentar un análisis de información titulado “Aprovechando la Tecnología para la Reforma Fiscal”

La presentación de Isaac, fue bien recibida y explicó la importancia que la tecnología emplea en la gestión de las finanzas públicas. Isaac reiteró que la reforma fiscal debe ser abordada de manera integral, y las mejores prácticas para la reforma del PFM requiere una solución GRP dedicada al sector público con el fin de satisfacer sus necesidades de información, controles, la separación de funciones y la eficiencia en la solución del proceso. Con el fin de crear un ambiente transparente donde el ciudadano se siente empoderado, sabiendo que sus impuestos atribuyen a la mejoría del país.

 

A Look at Africa’s Growth Initiative

This week is the World Bank/IMF Spring Annual Meetings in Washington D.C. The city is buzzing with people and the cherry orchards are blooming. All hotels are filled with government delegations and streets are blocked off at every intersection. Amid this chaos, this is the perfect opportunity to go to policy events at Brookings Institute, Wilson Center and CSIS to watch, listen and discuss. On April 15, I went to a discussion led by African Development Bank President, Mr. Donald Kaberuka, about the growth initiatives in Africa. It was a fantastic speech filled with very important information about what is currently going on in Africa and what is the forecast for future growth. See the Storify embed below for a better understanding of the Africa Growth Initiative.

The Real Cost Burden for Enterprise Software

Many of us in information technology believe that innovation is all about product. Building bleeding edge technology.  Sometimes bleeding edge doesn’t solve your problem. For example,  Vinnie Mirchandani recently described how the use of engineered systems with a proprietary database does not solve the fundamental customer problem of high Total Cost of Ownership (TCO) in enterprise software.

The number one cost variable? Professional services (internal and external) to customize software to meet unique requirements. And, to change the software to meet new requirements. And, to manage upgrades when there is custom code. And, to build up product development and quality assurance capacity.

I’ve written a lot about the TCO problem and how FreeBalance keeps these costs down.  Yet, major enterprise software vendors are touting the notion of reducing TCO – generally by buying more proprietary software, or by changing your business rules to meet the so-called “best practices” that are come out the box. This is a complete myth. Governments operate processes based on legislation.

Code customization is the factor that generates high TCO.

Four Approaches to Meeting Government Requirements

There are different Commercial-Off-The-Shelf (COTS) approaches with different TCO implications. For example, reuse of a custom-developed application from one government to the next does not take advantage of true COTS: multiple customers running the software and full quality assurance.

4 Approaches to GRP

  1.  Custom developed – significant code customization burden
  2. Project reuse – significant code customization burden
  3. COTS ERP – although there is significant existing code, the code customization burden can be significant depending on the amount of true government functionality
  4. COTS GRP – customization is virtually eliminated

What Do We Mean by Customization?

Some vendors can be disingenuous in the definition of “configuration.” This can mean scripting and macros that requires programming but may not be programming within the Integrated Development Environment (IDE) used by the vendor. We’re purists at FreeBalance:

components and implications

COTS Are Not Always the Same

There are many problems with legacy COTS and ERP systems, some described below. Some of this is reflected in technology choices. The most important FreeBalance advantage is in process.

COTS vendors are rarely involved in government implementations. Therefore, it is up to the customer and system integrator to customize the system. Customers can request new features that may or may not show up in the future. It’s a feature lottery.

FreeBalance is involved in every implementation. We partner with many system integrators. We commit to new features as part of the contract. So, any missing feature is developed by FreeBalance and placed into the next release. This means that this “customization” is no longer orphaned. It is fully supported.

not all COTS the same

Transparency? No Thanks

Douglas Hadden

Executive Vice President, Strategy and Innovation

Are Germans anti-transparency? That emerged as an interesting CeBIT 2015 takeaway.  Germany seems to be on the leading edge in almost all e-government services, yet behind on transparency. Many guests to our booth indicated that this was a cultural factor: the ramifications when exposing mistakes.

Lesson Learned at #mobilegov15

On April 1st, 2015, FreeBalance attended the 5th Annual Mobile Gov Summit in Washington D.C. The conference was great – a nice mix of government and industry folks. The speakers were excellent and shared a lot of knowledge about best practices of mobile app building, from a technical and policy standpoint, and Salesforce even delivered a live demo. Blackberry was there as well – and guess what?? They closed the first quarter one a good note and are now showcasing their new phone, ” Classic.” Now, for the recap of the event below:

Enterprise Software Incumbents Strategic Inflection Point

Douglas Hadden

Executive Vice President, Strategy and Innovation

The enterprise software market is inundated with hype. It’s a reality distortion field where old is presented as new. Down as up. Of noise and flash of shiny objects. CeBIT, that massive technology fair, is where the tired enterprise software vendors congregate to dazzle. Dazzle they did-but not enough to obscure the emerging pattern:

  1. Innovation has gone global where monolithic vendors are falling further behind in individual technologies
  2. Cloud and open source, in particular, shifts economies of scale and scope to smaller and more agile organizations
  3. Major incumbent vendors need to understand that “social” isn’t just another form of broadcast

 

The Last Days of Enterprise Software Lock-In?

Doug Hadden

Executive Vice President, Strategy and Innovation

The latest “innovations” from many large enterprise software companies looks to me like increasing commitment to a failing strategy – proprietary platforms. The irony is that these firms came to prominence through operating system and database agnostic open strategies. This made for a compelling “rip and replace” tactic in combination with the Y2K bogey man.

Today, it’s all about proprietary user interfaces whose power can only be leveraged through the purchase of engineered systems. These behemoths are not content with owning your software stack, they want to own the hardware part as well. There is significant incentive for these software manufacturers who derive the majority of revenue from maintenance and drive gross margins of $9 for every $10 spent by customers. Lock-in and barriers to replacement is a good business model for vendors and bad for customers.

We’re bucking the trend at FreeBalance. Our recent announcement of Version 8 of the FreeBalance Accountability Platform adds more openness from Version 7 – which was database, browser, operating system agnostic. Version 8 is user interface and middleware open in addition. That gives our customers more choice.

Open – it’s the right thing to do.

Transparency, Accountability and Good Governance.