During IBM’s Q3 earnings call a few weeks ago, IBM CFO Mark Loughridge highlighted business analytics as a sector where Big Blue is investing significant amounts of cash. The company recently acquired data analytics company SPSS for $1.2 billion and business analytics firm RedPill. Tonight, IBM is unveiling a new internal analytics product that the company is touting as the “largest private cloud computing environment for business analytics in the world,” which launches internally with more than a petabyte of information. Along with this internal product, IBM will launch a companion product for clients to build upon this cloud-based architecture, called IBM Smart Analytics Cloud.

The internal product, dubbed Blue Insight, will provide 200,000 employees in IBM’s sales and development department with the ability to extract data and information to make decisions and gain further insight at the point of sale. Blue Insight will gather information from nearly 100 different information warehouses and data stores, providing analytics on more than a petabyte (1,000 terabytes or 1,000,000 gigabytes) of data. For example, sales execs may use customizable queries of real time data to understand revenue opportunities and how many sales in their region are closing to help improve prediction. Or a manufacturing process engineer can evaluate real-time data on the plant floor to identify trends and data to improve yield and reduce shipment delivery times.

IBM Smart Analytics Cloud offering for clients will similarly deliver powerful business intelligence via the scalable, private cloud. The product will lets the client import data and than transform this information into insights to develop strategies and decisions. The service sill offer the ability to create reports, analysis, dashboards, and scorecards to monitor business performance and measure results.

IBM has been shifting its focus towards software and services as opposed to hardware and Big Blue’s strong earnings are an indication that this strategy is paying off in a big way. It’s not surpising that company is continuing to invest in R&D in cloud computing and business analytics, which seems to be the future for both Big Blue and other enterprise-focused tech giants like Oracle.

MindTouch Cloud is meant for a business community to create their own dashboards. It allows users to collaborate with a familiar wiki environment with the capabilities of an enterprise platform.

It’s also another example of how enterprise technologies are increasingly designed so the average business user may perform tasks that have traditionally been the domain of the IT department.

What differentiates MindTouch from Sharepoint and other services is its emphasis on the data. Users may collaborate across multiple enterprise systems and web applications.

MindTouch Cloud is an enterprise mashup service. Business critical information can be exported from enterprise systems and mashed up to create reports and build applications. It has the requirements for the enterprise, including authentication using LDAP, single-sign on security. Role management is built into the service with the capability to create new users, roles and groups.

Compare that to Salesforce Chatter and you see some similarities in how applications can be integrated to create an intelligent dashboard environment that fits into an enterprise environment.

MindTouch does need some work on its user interface. But it has all the features that can make it a valuable service for a business looking to build dashboards that can mashup enterprise data and external applications.

This is MindTouch’s first cloud computing effort. Pricing starts at $7 per user per month.

I asked a question to myself: “Why has Google been incredibly successful in defending and growing its core as well as introducing non-core disruptive innovations?”. To answer my own question I ran down Google’s innovation strategy through Clayton Christensen’s concepts and framework as described in his book “Seeing What’s Next”. Here is the analysis:

Google’s latest disruptive innovation is the introduction of free GPS on the Android phone. This has grave implications for Garmin. To put this innovation in the context it is a “sword and shield” style entrant strategy to beat an incumbent by serving the “overshot customers”. The overshot customers are the ones who would stop paying for further improvements in performance that historically had merited attractive price premium. Google used its asymmetric skills and motivation – Android OS, mapping data, and no direct revenue expectations – as a shield to enter into the “GPS Market” to serve these overshot customers. Google later turned its shield into a “sword” strategy by disinteremediating the map providers and incentivizing the carriers with a revenue-share agreement.

On the other hand Google’s core search technology and GMail are a couple of examples of “incremental to radical” sustaining innovations where Google went after the “undershot customers”. The undershot customers are the ones who consume a product but are frustrated with its limitations and are willingly to switch if a better solution exists. The search engines and the web-based email solutions existed before Google introduced its own solutions. GMail delighted the users who were frustrated with their limited email quota and the search engine used better indexing and relevancy algorithms to improve the search experience. I find it remarkable that Google does not appear to be distracted by the competitors such as Microsoft who is targeting Google’s core with Bing. Google continued a slow and steady investment into its sustainable innovation to maintain the revenue stream out of its core business. These investments include the next generation search platform Caffeine, social search, profiles, GMail labs etc.

Where most of the companies inevitably fail Google succeeded by spending (a lot of) money on lower-end disruptive innovations against “cramming” their sustaining innovation. Google even adopted this strategy internally to deal with the dilemma between its sustaining and disruptive innovations. One would think that the natural starting point for Google Wave would be the GMail team but it’s not true. In fact my friends who work for Google tell me that the GMail team was shocked and surprised when they found out that some other team built Google Wave. Adding wave-like functionality in the email would have been cramming the sustaining innovation but innovating outside of email has potential to serve a variety of undershot and overshot customers in unexpected ways. This was indeed a clever strategy.

So, what’s next?

If I were AT&T I would pay very close attention to Google’s every single move. Let’s just cover the obvious numbers. The number of smartphone units sold this year surpassed the number of laptops sold and the smartphone revenue is expected to surpass the laptop revenue in 2012. Comcast grew their phone subscribers eight-fold with the current number exceeding 7 million. Google Voice has over 1.4 million users of which 570,000 use it seven days a week. Even though Google does not like its phone bill Google seems to be committed to make Google Voice work. This could allow Google to serve a new class of overshot customers that has a little or no need of land line, desire to stay always-connected, and hungry for realtime content and conversations. Time after time Google has shown that it can disintermediate players along its value chain. It happened to NavTeq and Tele Atlas and it is happening to other players with Google Power Meter and Chrome.

Many people argue that Chrome OS is more disruptive. I beg to differ. I believe that Chrome OS does not have near term disruption trajectory. Being wary of hindsight bias, I would go back to the disruptive innovation theory and argue that Chrome OS is designed for the undershot customers that are frustrated with other market solutions at the same level. For the vast majority of the customers it does not matter. If Google does have a grand business plan around Chrome OS it certainly will take a lot of time, resources, and money before they see any traction. I see the telco disruption happening much sooner since it serves the overshot customers. I won’t be surprised if Google puts a final nail in telco’s coffin and redefines the telephony.

Cloud computing heralds an evolution of business that is no less influential than e-business, according to Gartner Inc. Gartner maintains that the very confusion and contradiction that surrounds the term “cloud computing” signifies its potential to change the status quo in the IT market.

Gartner defines cloud computing as a style of computing where massively scalable IT-related capabilities are provided “as a service” using Internet technologies to multiple external customers.

“During the past 15 years, a continuing trend toward IT industrialization has grown in popularity as IT services delivered via hardware, software and people are becoming repeatable and usable by a wide range of customers and service providers,” said Daryl Plummer, managing vice president and Gartner Fellow. “This is due, in part to the commoditization and standardization of technologies, in part to virtualization and the rise of service-oriented software architectures, and most importantly, to the dramatic growth in popularity of the Internet.”

Mr. Plummer said that taken together, these three major trends constitute the basis of a discontinuity that will create a new opportunity to shape the relationship between those who use IT services and those who sell them. Essentially it will mean that users of IT-related services will be able to focus on what the service provides them rather than how the services are implemented or hosted. Gartner maintains that although names for this type of operation have come into vogue at different times — utility computing, software as a service (SaaS) and application service providers — none has garnered widespread acceptance as the central theme for how IT-related services can be delivered globally.

The types of IT services that can be provided through a cloud are wide-reaching. Compute facilities provide computational services so that users can use central processing unit (CPU) cycles without buying computers. Storage services provide a way to store data and documents without having to continually grow farms of storage networks and servers. SaaS companies offer CRM services through their multitenant shared facilities so clients can manage their customers without buying software. These represent only the beginning of options for delivering all kinds of complex capabilities to both businesses and individuals.

“The focus has moved up from the infrastructure implementations and onto the services that allow for access to the capabilities provided,” said David Mitchell Smith, vice president and Gartner Fellow. “Although many companies will argue how the cloud services are implemented, the ultimate measure of success will be how the services are consumed and whether that leads to new business opportunities.”

Gartner predicts that the impact of cloud computing on IT vendors will be huge. Established vendors have a great presence in traditional software markets, and as new Web 2.0 and cloud business models evolve and expand outside of consumer markets, a great deal could change. “The vendors are at very different levels of maturity,” said David Cearley, vice president and Gartner Fellow. “The consumer-focused vendors are the most mature in delivering what Gartner calls a ‘cloud/Web platform’ from technology and community perspectives, but the business-focused vendors have rich business services and, at times, are very adept at selling business services.”

Branding is a powerful and revenue-generating asset for potential vendors. Gartner analysts cited Wal-Mart as an example of a company that has two brands — one with consumers for its low prices and one in the business world for its supply chain expertise, its core competency, which it capitalizes on to support its consumer-facing brand.

“Companies invest billions of dollars in building up their core competencies, much of which goes into IT,” Mr. Smith said. “If companies could lease their core competencies to other companies then they would capitalize on both brands, driving revenue both in the consumer-facing market and the business service market in the way that Amazon has done with technology.”

Gartner maintains that cloud computing is very much an evolving concept that will take many years to fully mature. It also underlined the fact that the cloud-computing model is not simply the next generation of the Internet.

“When organizations cross the threshold between the Internet as a communications channel and the deliberate delivery of service over the Internet, then we truly start to head for an economy based on consumption of everything from storage to computation to video to finance deduction management,” said Mr. Plummer.

Additional information is available in the Gartner report “Cloud Computing Confusion Leads to Opportunity.” The report is available on Gartner’s Web site at http://www.gartner.com/DisplayDocument?doc_cd=159034&ref=g_sitelink&ref=g_SiteLink. This document is part of the special report on Cloud Computing. A full listing of the reports is available on Gartner’s Web site at http://www.gartner.com/it/products/research/cloud_computing/cloud_computing.jsp.

Gartner analysts will further discuss cloud computing trends at the Gartner Web Innovation Summit: Profiting from Web 2.0, SaaS and Cloud Computing taking place September 15-17 in Los Angeles. The event is focused on the next generation of Web technologies, including Web 2.0 and cloud computing and will cover future trends and innovations, best practices, vendor and product selections, tutorials, and tactical decision frameworks. For complete event details, please visit the Gartner Web Innovation Summit Web site athttp://www.gartner.com/it/page.jsp?id=648611. Members of the media can register by contacting Christy Pettey atchristy.pettey@gartner.com.

Cloud Computing and its related initiatives (Virtualization, SaaS, Grid, SOA, Web 2.0 / WOA) hold tremendous potential for modern enterprises. This e-zine will aim to explore the economics of Cloud, the business implications for various industries, and the technology enablers that make Cloud Computing a reality.

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RightScale, the cloud manager, has integrated its platform with New Relic’s real-time RPM Ruby-on-Rails application performance management software. So RightScale users should be able to detect, diagnose, and fix performance problems with their cloud-borne Rails applications. CEO Michael Crandell says, “Ruby on Rails has always been one of the most popular development frameworks for web applications on the RightScale platform.” RPM

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In a follow up to my October 23rd post on Arista Networks attempting to copyright / trademark the term “Cloud Networking” The companies CEO Jayshree Ullal has stated that they will no longer be attempting to trademark the term. (Mission accomplished). In a recent post she shed some light on the topic saying “It has been 100+ days since Arista Networks formally unveiled our new name, Cloud Networking mission and our much talked about leadership team. What is clear is more has been achieved in 100 days of Cloud Networking than is possible in 100 weeks.”

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Glenn Brunette, Chief Distinguished Engineer and Chief Security Architect for Sun Microsystems, will be presenting at SYS-CON’s 2nd International Cloud Computing Conference & Expo in New York City this coming March 30-April 1, 2009. Security is consistently rated as a leading customer concern impeding the full scale adoption of Cloud Computing. At the same time, security is viewed as complicated and painful. In this session, Brunette will address how to help to ease the pain by focusing on the key issues to be considered along with specific best practices for deployment. This session will share a number of security models for IaaS machine images based upon these best practices to illustrate how we can improve upon the security state of the art in cloud computing today.

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Raghavan Srinivas, Technology Evangelist for Intuit, will be presenting at SYS-CON’s 2nd International Cloud Computing Conference & Expo in New York City this coming March 30-April 1, 2009. Is cloud computing hype or reality? Is it mere old wine in new bottles and the advancement of the notion that the “network is the computer?” Attend this hands-on session to get a very brief overview of the terminology associated with cloud computing, what the different “?aaS” platforms mean and to build a simple CRUD application that can be deployed on the cloud in the matter of 20-30 minutes. After attending Srinivas’ session, attendees will walk away with a better understanding of the taxonomies of cloud computing and being able to understand the challenges of writing simple to non-trivial applications on the cloud today.

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