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..)

- Most customers adopting cloud computing “hide” behind cost saving to “bypass” operations. Why? Because IT operations as are very slow in responding to business needs.

- NO mid to large enterprise is even remotely thinking about moving their datacenter to the cloud. Most projects are either new, that can be done entirely in the cloud, or hybrid, extensions of existing applications that need additional features. New cloud applications are mostly driven by SaaS and customer/partner centric applications. Hybrid applications are mostly driven by the need for elasticity. Please remember this is about mid/large enterprises.

- The 15% cost savings on labor cost is wrong. The cost of running a cloud over time is much lower than running individual datacenters. Additionally these calculations do not factor in the costs from time to market.

Cloud computing is still maturing. This is EXACTLY how SaaS started out… SLAs are not good enough, it is for small companies, etc. Now we have large companies like BoA, Japan Post doing multiple thousand seats on Salesforce.com. Yes SLA needs to be higher, yes the pricing has to be aligned for continuous/long running applications, yes we need to figure out security/compliance issues (plug for Sonoa’s Secure Cloud Gateway ), but that will come. The savings or revenue just on the time to market is big enough to justify the movement.

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.

While there was initially hesitation about SaaS as a new, untested technology, once an enterprise explored the easy of deployment and cost advantages, the move was a no brainer. The same is already happening for cloud computing. Though 10 of the 12 surveyed said the cloud is not part of their current cost cutting strategy, today’s economy will continue to make the ease and low cost of most cloud services more appealing, and will eventually lead more CIOs to migrate to the cloud.

Goldsmith highlights security as the main concern for CIOs. However, he does note that those surveyed do recognize the potential down the line. He writes, “Despite the comprehensive ‘no’ vote, some CIOs expect that the cloud will indeed play a part in their future tech plans. Ben Acheson, IT manager of PADS Printing and Commercial Stationery, believes cloud computing will become part of his strategy once the wrinkles have been ironed out.”

It really just boils down to early adopters and those who will jump into the cloud later on, once they feel more comfortable. Alistair Behenna, CIO at Harvey Nash, was in the minority of the survey, having recognized the opportunity for his current IT strategies. He noted that cloud computing “has to be a viable strand in any IT strategy fabric.” He also said that it is “certainly not the whole solution but it is undeniably useful for specific areas of the infrastructure and service delivery.”

It’s always valuable to hear the concerns of those making the IT decisions. Survey these same CIOs in a year and you will see many more saying that cloud computing has become part of their cost cutting IT strategy. Survey again in three years and cloud computing is sure to be ubiquitous. Once the early adopters see that that “wrinkles have been ironed out” there will be no question that cloud is to stay for quite some time.

Mid-sized companies are just trying to survive today’s shaky economic climate and they need the capability to scale with their needs quickly and economically. Agility is really the number one concern for mid-sized operations transitioning to the cloud. The cloud’s ability to scale is a key component of this agility that should drive them to cloud now and is closely tied to the economic benefit of cloud computing.

This is much like the days when Software-as-a-Service (SaaS) was just starting out and it was the mid-sized companies that were able to first adopt on-demand software. These mid-level companies and departments within larger corporations had the ability to, and the definite need for, on-demand computing models. Today, their agility needs will lead them to cloud compute.

David Linthicum recently wrote about conserving capital with cloud computing. Companies today need to have capital on hand in order to quickly respond to the restless economy. This concern is especially important for the mid-sized companies and departments that are in survival mode right now. David notes that cloud computing is a big part of conserving capital because of its pay-as-you-go model that doesn’t require businesses to buy hardware or software. He’s correct in noting business value as the primary reason businesses are jumping into the cloud, since the subscription model was a great motivator for companies adopting SaaS.

The implication here is that when a company needs to tighten the screws and scale back, it can change its cloud subscription to a lower cost model. The subscription provides the agility not found with hardware and software infrastructure, for which companies are still stuck with a bill when scaling back. Cloud computing’s ability to rapidly scale back or build out a business is especially critical today when companies cannot afford to either throw money away or quickly accommodate new business opportunities.