What is Cloud Computing

The cloud computing revolution is real: it’s on the front page of theAustralian Financial Review this morning. But is it really “a radical new business model that purports to slash technology costs by up to 80%”?

What is cloud computing?

Every business bigger than one person needs somewhere to store its data and run its business applications and communications, including email. A generation of businesses has installed a server — or many servers in a data centre — and hired specialist IT staff to run it.

With cloud computing, you instead rent capacity in a provider’s data centre, and connect over the internet. The provider’s staff install, maintain and upgrade hardware and software as required. Typically you’ll rent a service, such as data storage or email or accounting, rather than ‘a server’ as such, and pay $X per user or $Y per business per month.

Why is it called cloud computing?

Network diagrams have traditionally used a cloud symbol to denote ‘the internet’ or, before that, the telephone network outside the customer’s zone of responsibility.

What services are on offer?

You name it. Google’s Gmail and Microsoft’s Windows Hotmail are email in the cloud. In the lucrative business productivity market, Google Docs and Google Apps compete directly with Microsoft Office and Exchange — the latter now ‘in the cloud’ as Microsoft Online Services.

Accounting, customer relationship management (CRM), project management, email marketing, spam and virus filtering, data storage, ecommerce, online publishing, audio and video streaming, general databases — all available in the cloud.

Why use cloud computing?

Potentially cloud services are cheaper and more flexible. Because they’re internet-based, you can access them from anywhere — often including mobile devices.

Most servers and internet links lie idle most of the time. Cloud providers host many businesses on a pool of hardware, sharing the cost of servers, electricity, data links, backup systems, IT staff and even real estate. A cloud provider can quickly add extra capacity or scale it back again when you need it. Capital expenditure on servers and up-front software licenses, and the unpredictable costs of dealing with emergencies, are replaced by a predictable operational cost.

Can it really cut IT costs by 80%?

That’s hype. Hardware and internet costs are dropping, sure, but supporting end users is still a significant cost. Moving to the cloud removes the cost of maintaining your own systems, but you still need to configure the generic cloud-based service to match your business’ unique needs, train your staff and help them find lost spreadsheets.

Is there a downside?

You become dependent on your cloud providers. If there’s no easy way to extract your data in a usable format, your business success is now intertwined with theirs. There may also be legal and privacy issues: will your data become subject to the privacy and data retention laws of another country; will you still be compliant with your industry requirements in Australia?

Is it secure?

Big cloud providers like Microsoft and Google have some of the best security staff on the planet. Their backup procedures are likely to be better than yours too. (Where are your business data backups right now?) However big cloud providers do represent an attractive target to hackers — if they can break in.

Is cloud computing “radically new”?

Not everyone thinks it’s that big a change. It’s more evolution than revolution. “Cloud computing is not only the future of computing, it is the present, and the entire past of computing is all cloud,” saidLarry Ellison, founder of Oracle Corporation and the world’s sixth richest man, in a passionately entertaining rant last year. “It’s not water vapour. All it is is a computer attached to a network. What are you talking about? I mean, what do you think Google runs on?” As Ellison points out, CRM provider Salesforce.com has been running more than a decade.

In many ways cloud computing is indeed just the current buzzword for what has also been called utility computing, grid computing, software as a service (SaaS), IBM’s ‘On Demand’ branded services, the application service provider (ASP) model, or even good ol’ mainframe timesharing.

Where is Australia in all this?

Some big companies have committed to cloud computing, including the Commonwealth Bank, Westpac, Visy and Komatsu. The Royal Australian College of General Practice will provide GPs with cloud-based e-health applications by this time next year. Even the Department of Defence’s CIO is advocating the cloud.

On the supply side, Telstra is investing heavily to become a player — they’re providing the RACGP’s services. Saasu and Campaign Monitor are Australian success stories in cloud-based accounting and email marketing respectively.

Cloud computing does require solid internet links, however. Australia’s relatively expensive broadband infrastructure may have held back adoption. The NBN will presumably fix this.

Zoho Projects Now Integrated With Google Apps

Web-based productivity suite Zoho has continued to integrate its products with Google in order to make it easier to use Gmail and Zoho apps simultaneously. Last summer, Zoho, a web-based software suite that includes document, project and invoicing management tools, integrated Google and Yahoo sign-ins, allowing users to sign into Zoho using a Google or Yahoo account. And over the summer, Zoho is launched sign-in integration with Google Apps, letting users login to Zoho using their Google Apps credentials. Today, Zoho’s project collaboration product, Zoho Projects, will become an extended application to Google Apps.

Zoho Projects is a team collaboration and project management application that allows teams to plan, track and collaborate on everyday activities and big projects with external customers. With the new integration, Google Apps users can login to Zoho Projects using their Google Apps sign-in info. Users can then upload their documents from Google Docs to Zoho Projects directly. Any tasks, meetings or activities in Zoho Project will automatically bee updated in Google Calendar. And Zoho Projects gadgets can be embedded within Gmail, iGoogle and any other OpenSocial compatible sites.

The integration comes on the heels of the initial roll out of Google’s own all-in-one, futuristic collaboration tool, Google Wave. But despite facing competition from the big guns like Microsoft and Google, Zoho continues to remain as a player in the document management space thanks to continuous innovations and iterations to its products. It’s almost reminiscent of Salesforce.com’s strategy.

In fact, because of this highly competitive landscape, integrations are vital to the software’s success as an application suite. Recently, Zoho launched integration with Microsoft Sharepoint as well as with Microsoft Access. Zoho’s project management application, Zoho Projects 2.0, also added the capability to import existing projects from MS Project, Microsoft’s project management desktop software. And Zoho also launched a forum tool, called Zoho Discussions. It looks like the startup’s strategy is paying off—Zoho has been able to accumulate 2 million users in just 4 years.

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SaaS battlegrounds: Salesforce v Zoho

When Salesforce.com CEO Marc Benioff put on his jocular performance for the analysts and press at Dreamforce yesterday, I’m sure he didn’t expect little ol’ Zoho to come bite him in the pants. That’s exactly what’s happened.

According to Venture Beat’s Anthony Ha:

Salesforce.com’s strategy can be boiled down to one word, according to chief executive Marc Benioff — love. Of course, Benioff was being a little tongue-in-cheek…

As with its other offerings, Microsoft’s new cloud-computing application platform, Windows Azure, is all about tying people into Microsoft products and services, Benioff said. Salesforce, on the other hand, is much more about being open and cooperative, both in its customer relationship management (CRM) services, and inForce.com, its platform for business applications. Salesforce is interested in connecting multiple clouds, platforms and devices — witness today’s announcement that Force.com will integrate with the Facebook platform and Amazon Web Services, or Salesforce’s integration of Google Apps earlier this year.

Comparing Microsoft and Salesforce, Benioff said: “They hate everybody and we love everybody, and that’s pretty much the difference. We even love Microsoft. … This is our core strategy, love.”

Rough translation: we’re good guys (ergo trust me) and Microsoft are bad guys (ergo don’t trust them. Sounds sweet until you understand the game of hardball Benioff plays when faced with anything he sees as a competitive threat. Benioff’s message certainly raised hackles with Sridhar Vembu, Zoho’s CEO. In a blog post today, Vembu recounts how Benioff tried to strong arm Zoho into giving up on its CRM development:

Benioff told me he could not permit us to play on the AppExchange as things stood, but he would be happy to acquire us. We had several rounds of meetings on this,  finally I told him I really don’t see any cultural compatibility between the companies. He changed tack and repeatedly tried to get us to discontinue Zoho CRM, in return we would get to play on AppExchange. I was furious because both Benioff and his team clearly knew we had a CRM offering going into this engagement, and if they had this as a pre-condition for us to integrate into AppExchange, we would never have put in the resources we did.

Since then, Salesforce has repeatedly tried to block customers from migrating to Zoho CRM, by telling them (falsely) that they cannot take their data out of Salesforce until their contract duration is over. We have emails from customers recounting this.

This is not a new story but one I have heard Vembu recall on a number of occasions. Vembu then goes on to assert that while Google represents a potentially much bigger competitive threat, Zoho has experienced no difficulty in getting engineering assistance from Google. What’s going on here?

Readers need to understand that Benioff comes from Oracle, a company famed for playing hardball as epitomized by its CEO, Larry Ellison. Oracle has a knack of turning out hard nosed, often successful Silicon Valley execs that are super competitive. Benioff is another in a long line of execs that include Tom Siebel (Siebel Systems), Craig Conway (PeopleSoft) and Zach Nelson (NetSuite.)

These companies understand one thing - winning is all about lock in and with the Force.com, Salesforce.com is no different any of its predecessors. Benioff as near admitted as much when he said to Ha that:

When an audience member pressed Benioff on his touted openness, Benioff emphasized that he’s talking about cooperation with other companies, not open source, per se. He also acknowledged that Force.com has its closed aspects, namely the fact that if you build an application on Force.com, you can connect it to other platforms, but you can’t fully move it to another cloud.

Ergo once you’re on Salesforce.com’s cloud for business critical applications, you are in no different a position than if your code was tied to SAP’s ABAP. You can’t move without significant retooling. This runs contrary to many people’s expectations about what ‘cloud computing’ is all about; openness, flexibility and the ability to on and off-ramp as requirements demand. That may not apply so easily for transaction based systems and that is what Salesforce.com is counting upon.

Is Zoho alone? Is it a case of the yappy dog going after the farmyard pitbull because it isn’t getting its share of scraps? Hardly. If GE successfully completes its evaluation of Zoho Office, then Zoho will have scored one of the biggest, if not THE biggest saas applications deals to date. Something that must stick in Benioff’s throat but which ironically will have been won from Google.

On the Silicon Valley grapevine, I have heard of other cases where Benioff has tried to strong arm technology vendors, only to be sent away with his tail between his legs. Of course in the Valley, there is always an element of hubris, but every now and again, these stories bubble up.

As Salesforce.com gets bigger and it attracts more developers to its Force.com platform, we can expect more yapping and reminders about however much Benioff may declare his love, he is really acting like every other enterprise vendor that has gone before: locking you in while smiling benignly. In the long term, that also means higher cost as the captor squeezes as much out of its prisoners as possible.

Zoho steps up its contextual search game

Zoho on Tuesday rolled out a search feature for its business apps that allow users to aggregate data across a company.

The so-called “actionable search” consolidates a bevy of search boxes specific to each Zoho application—Zoho Mail, Docs, Writer, Sheet etc. Zoho said in a blog post that its results are designed to show the interworking of the business apps and gives you context on relationships between the data on a single page.

As for the actionable part, Zoho said that each result allows a user to open an application from within search results. For instance, an email app doesn’t have to launch to reply to a missive in a search result.

Zoho’s new search is another incremental feature designed to better compete with rivals ranging from Google to Microsoft. Zoho CEO Sridhar Vembu said in a recent interview that the company was staking its claimon contextual relevance between its various applications.

The Zoho universal search box will be integrated into all Zoho Apps.