One of the less mentioned cloud computing-related phenomenon is the pattern of its adoption in the market, and in particular, the enterprise.
Many might be surprised to know that Amazon’s greatest innovation with AWS wasn’t the notion of utility computing, on demand or a pay-per-use pricing model -- all of that already existed. Its greatest innovation was that it targeted developers and not IT executives.
What few remember is that almost two years before Amazon launched its Elastic Compute Cloud (EC2) service in November 2006, Sun Microsystems launched the first true public cloud. The Sun Grid, which is what the utility computing service was called, had many of the key elements that were later introduced by EC2: on-demand access to compute resources, elasticity and a $1/CPU hour payment model. There was one big problem with the Sun Grid: it failed miserably.
It’s no news that when it comes to introducing technological innovation to the market, timing is everything. But there is a saying among the VCs on Sand Hill Road that despite the so-called “first mover advantage” it is actually better to be slightly late to market than slightly early. So a simple analysis of the Sun Grid failure could say they were just ahead of their time, but I think the problem was more fundamental.
One of the major differences between the Sun Grid and Amazon EC2 was the audiences each of the companies targeted. While the former pitched their IaaS to their traditional customers, such as Wall Street CIOs, the latter went after a non-traditional target market: developers.
Amazon’s cloud was appealing to developers because of its origin within the company. Contrary to popular belief, it didn’t emerge within the company to take advantage of unused computing capacity. That would have been an IT-oriented move. It was developed at the demand of the company’s software programmers who needed a more agile, flexible way to access computing resources and wanted API access.
Naturally, what worked for Amazon’s web-savvy developers would work for thousands of similar developers outside the company. But there were additional forces at play in AWS’s success.
One such force was the growth of developer influence. This began with open source software. Developers would be the ones within the enterprise to choose the winners and losers in the application stack, because they could now download for free and without licensing issues any open source software component they needed. For more on this check out Stephen O’Grady of Redmonk’s post: Meet the New Kingmakers; Same as the Old Kingmakers.
As with open source software, with cloud and AWS too, once developers started successfully using it for proof-of-concept and testing, it quickly crept into production environments.
This pattern of adoption isn’t only what drove infrastructure-as-a-service adoption with services such as EC2. It is also what helped early software-as-a-service offerings such as Salesforce.com catch on.
In his book, Behind the Cloud, Salesforce.com founder and CEO Marc Benioff writes about one of their first enterprise accounts, Sungard: “The salespeople were buying it on their own credit cards and going around their managers to purchase an account…” As he explains, Salesforce had a competitive advantage because although their enterprise customer already made a top-down decision to use Siebel’s CRM software, the rank & file -- in this case the sales people -- were buying Salesforce.com with their credit cards and then expensing it.
The main reasons for bottom-up adoption becoming so dominant fall into two categories: motivation and opportunity. Enterprise users now have the motivation to buy IT services that just worked for them. As consumers we are getting used to technology that is simple, always available, on-demand and just easy and fun to use. So why is it that at work we use software that is not any of these things? That’s what folks are asking themselves creating the phenomenon that’s been called “the consumerization of IT.”
But of course motivation isn’t enough. They need an opportunity. And the opportunity is here now because cloud computing and SaaS services have removed so many of the barriers that existed in the past. Employees, low- and mid-level managers can simply make the decision on their own.