by Mark Chillingworth

Public cloud set to be a private golf club business model

Feb 23, 2011
IT Leadership

I had a rare spare moment earlier this week to just discuss technology. Jason Liu is a serial-entrepreneur in the tech sector and was in London talking about his latest venture an automation software provider UC4. Inevitably the conversation turned to the clouds, that is cloud technology, we weren’t just discussing when spring will appear or any other meteorological topics. Liu, probably with good reason, is fascinated by the possibilities of cloud computingand especially where automation will play a role. “Cloud will be the largest transformative technology in my career,” he said and it could be a statement that will ring true for many CIOs. Liu sees automation and cloud technology as intrinsically linked to the CIO role because both are about lowering the cost of service delivery, which is done by removing the opportunities for human error. Unlike a lot of vendors, Liu is a proponent of the public cloud and sees it as actually offering more opportunities to CIOs that the so called secure and walled environment of the private cloud. He points out that the problem with the public cloud at present is a perception one, because the widely held view of the public cloud is that it exists solely on the Amazonplatform and is therefore not secure enough for the business demands of a CIO. Liu thinks that true public cloud adoption is possibly up to three years away, but a new business model will evolve that will enable CIOs to adopt it comfortably. Looking at the current world economy and the pressures it faces as growth is incredibly slow, Liu thinks public cloud specialists will appear that focus on a particular vertical, so there will be financial services, retail, public sector, logistics, manufacturing and healthcare cloud providers. As a CEO Liu uses the analogy of these public cloud providers being akin to private golf clubs where the members all know who the other members are and know they have been selected because they fit in with the rest of the club. I like the analogy and as I unpicked my conversation with Liu, the more it made sense to me. After all the application software community is not dissimilar with a small select group of vendors serving a vertical and rival traders accepting that there is no advantage is having applications that are any different to their rivals. Away from IT the same picture is true; there are freight companies that specialise in verticals, just as there are property companies and recruitment agencies. As with software and recruitment, there is little advantage in being different, by adopting the golf club model, a form of co-location as Liu points out, CIOs could drastically cut costs. The cloud will standardise and enable a group of CIOs in the same vertical sector to share costly resources. The challenge will be for the traditional vendors to select and specialise in the verticals they think they can serve best. Following Liu’s analogy of the private golf club, the question to you the CIO is: would you adopt public cloud computing if it was like joining a private golf club?