API’s are definitely becoming mainstream. It is certainly mainstream for web companies. So why not SaaS companies ?

SaaS providers serve different customers. As SaaS has become more  mainstream (accepted by fortune 2000) customers, the need for API’s has grown – firstly for integration and secondly to build customer apps. The need for integration has been solved by SaaS integration vendors like CastIron building adapters, but having been in that business for a long time, I know they could use standard APIs from the vendors.

The need for custom applications is also increasing as customers are building composite applications that use data stored in their ERP (on-premise), CRM (on-line) and web 2.0 applications like Google maps.

But at the end of the day SaaS vendors will provide the API’s for 3 reasons:-
1. competitive differentiation – customers ask for it when evaluating similar SaaS providers
2. increase stickiness – to embed themselves in a customer’s enterprise applications
3. new revenue stream – as an add-on MRR (monthly recurring revenue) source.

These are compelling reasons! API’s are becoming mainstream and yes, almost all SaaS vendors need to have an API.

(And of course, once you have one, API management becomes important to differentiate your service and customer sat..)

Michael Healey recently wrote “8 questions to ask before going live in the cloud“. Good read. We see customers going through this  general thought process:

• what is the business driver (generally time to market or costs) ?
• what is the ‘pilot’ application (new application are easier)
• select team, infrastructure/platform provider.
• focus on the security/compliance/visibility
• deliver project
• measure ROI (generally not required, as it is obvious)
• move to mission critical application

Most enterprise cloud applications are being driven by business/IT folks are focused on helping their business counterparts on time to market. it is important to approach w/ caution, but try to jump in fast…the water feels fine after you are in . No big bang approach about replacing data centers etc., just start with baby steps.

- 50% of all folks interviewed (enterprises with more than $1B in revenue) are doing cloud computing
- 66% of those do not have a security strategy
- RSA has put together a “Security for Business Innovation” council comprised of 10 security executives chosen by RSA.

Kudos to RSA for taking a customer centric approach. There is a shift happening in enterprise computing, it is becoming Web centric. The Web has been very successful in creating de facto standards without formal standard bodies, hopefully we have learned from it. Much like the Web, cloud computing adoption will have a life of it is own. Instead of trying to control it, lets guide it.

Highlights include no longer worrying about server power consumption or load balancing. Bob also notes that operating in the cloud keeps you from “Worry[ing] your engineers are spending valuable time worrying about infrastructure and worse physically visiting that infrastructure instead of doing something that gives your company a distinct competitive advantage.”

ZDNet’s Larry Dignan responds that these are great in theory but cloud computing isn’t a reality yet for most companies – I think it’s actually a lot closer than Dignan says and these 10 advantages are an incentive for companies to adopt the cloud sooner.

How will cloud computing affect business models of existing
enterprise computing vendors?

The impact of cloud use and associated business models will be profound on existing enterprise computing vendors. More so than open source software and software as a service (SaaS), cloud computing has the potential to change the very nature of what a traditional enterprise IT vendor is and does.

The business solutions and process values become the focal point of how IT is used and consumed in the coming era, making the “how” less critical as an acquisition criteria than the “what.” It’s quite possible that in the not too distant future the buyers of IT applications, services, solutions and processes won’t ever know what underlying platforms, systems, and technologies are involved. When you rent a car from Avis, do you know what is running their servers, or what tools went into creating the applications? Should you?

IT vendors will become the picks and shovels of cloud solutions, regardless of their physical locations, inside and outside the enterprise. Businesses will purchase solutions, including packaged cloud implementations inside their firewalls, perhaps managed and refined from yet anther ecology of solutions providers. This is a very different business from buy, license, install, integrate, support/maintain, and upgrade, etc.

What are the types of projects that will move to the hybrid cloud/on
premise model?

There will need to be a new methodology for assessments and costs-benefits analysis to address the question, because it will vary greatly. In fact, the way in which enterprises evaluate and implement the division between external cloud and internal IT resources will go a long way to determining their success as a business entity. Make the decisions wrongly, and it could crater the company. Make the decisions very well and it could provide both highest ability to meet business and customer demands — but at the lowest cost with the least complexity.

Doing cloud “correctly” can make or break a company, so it can’t be taken lightly. Each company, given its history, reality and goals, will need to precisely factor how they acquire and deliver IT functions that support their processes and strategies. There will be a super opportunity for consultants to craft the proven methodologies to determine and refine the right cloud “fit” for any organization.

Who will be the key driver (person) of cloud computing in the
enterprise?

It couldn’t possibly be one person, even in a company of one. This is what makes cloud challenging from specification, transition, governance and maturity perspectives. There are new areas, but we know that cloud effects more than IT, more than management, more than suppliers. It affects the entire organization and the communities that surround it. Like SOA, cloud has great importance because it can affect so much, and provides great challenges for the same reasons.

Suffice to say that cloud drivers will need to be both top-down and bottom-up. The adoption paths will need to be methodically and systemically evaluated and re-evaluated. The winners will be those that can leverage the benefits of the cloud IT approach across as many aspects of the entire business as possible, while managing the challenges on as many levels.

Don’t expect cloud to happen overnight, but expect it to impact the business broadly — for better or worse.

How are enterprises ensuring compliance as they deploy applications
in the cloud?

Governance, security, risk, and automation of control at the required (but not overly required) levels will be essential. Striking the proper balance between cloud push and cloud pull in any organization will also be critical. That said, a centrally managed and server-based IT architecture – even as the location may be variable – offers much greater security, management and automation than client/server and distributed models. A properly architected and introduced cloud IT facility will provide far better and comprehensive compliance. The cloud is the governance ultimately, and that means a strong story for managing risks. That’s why the intelligence and defense communities are closer to cloud than commercial enterprises today.

From the article: “Not all compute clouds are created equal, and whether cloud computing gives you enough visibility and control for datacenter adoption depends very much on what type of cloud computing you’re buying.” While I agree that different elements of the cloud have different levels of concerns, what happens when you have an API that lives across multiple cloud providers?

For example, an application that works across EC2 and Force.com needs to address visibility and control holistically. The cloud provider is not at the center, it is the application that is the center and visibility and control needs to be provided from that point of view.

One of the major reasons people are standing behind the cloud today is cost savings. Another big cloud benefit that we’ve talked about here before is the ability for businesses to create new revenue streams with cloud computing. I think this is more important than cost saving – savings can take you only so far, whereas new revenue channels grow your business.

In discussions with many customers on the impact of cloud computing, one of the key takeaways is that it will make “IT more Strategic.” As always there will be early adopters and laggards. Look forward to seeing the rest of Bob’s series on the cloud.