James Dixon’s Blog

James Dixon’s thoughts on commercial open source and open source business intelligence

AWS and Your Crown Jewels

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These are my thoughts on a recent Dan Woods (Forbes) post titled “Will Companies Ever Move Their Crown Jewels to Amazon Web Services?“.

My short answer is yes, because otherwise Jeff Bezos (the Founder of Amazon) has failed. As of today Bezos is worth $28.8 bn and #16 on Forbes list of powerful people. I’m guessing he’s the kind of guy who doesn’t like to fail.

Jeff Bezos  explains his vision in this 10 year old TED talk: https://www.ted.com/talks/jeff_bezos_on_the_next_web_innovation

He spends the first 7 minutes comparing the Internet bubble to the California gold rush and then moves onto an analogy comparing the internet today with the electricity industry 100 years ago.

I admire the time and energy he spends on his analogies. He looked into different ones and compared them to find the best one. Good analogies are hard to find. The best ones sound obvious when you hear them but can hard to find. The Bee Keeker analogy for open source software took me months of iterations based on years of experience to come up with. It sounds fairly obvious when you hear it, but there was no analogy before it to help understand the model.

If an analogy is good enough will allow you to infer additional knowledge. If you follow Bezos’ electricity analogy, and look at history you can draw additional insights. Looking at the history of electricity adoption, we can draw inferences about the adoption of cloud computing (with some generalizations) :

  • Before the introduction of electricity supply as a commodity service, any large company needing electricity had its own electricity generators.
  • Before the introduction of cloud-based computing with utility pricing, any large company needing computing had its own data center.
  • Who were the first people to join the electricity grid? Small companies and residences without prior electrical supply.
  • Who were the first people to use cloud computing? Small companies and individuals without data centers.
  • Who were the last people to join the electricity grid? Large companies with their own power sources.
  • Who will be the last people to migrate to cloud computing? Large companies with their own data centers.

Looking in the press you can see that the majority of the anti-cloud talk comes from larger enterprises.

However, most companies that have started in the last five years are evolving cloud-based infrastructures. As a start-up you typically have desktop-based applications for accounting, HR, CRM etc. As you grow it makes sense to move to hosted solutions like Net Suite, SalesForce, SugarCRM etc. As you add more and more hosted solutions the cost and headache of installing and maintaining on-premise solutions looks less and less attractive.

So today’s generation of small comanies, which will become large companies in the future, have four classes of applications:

  • Domain-specific desktop applications
  • Generic applications with small scale usage (e.g. project planning)
  • Generic applications that will grow and become cloud based (payroll, CRM, or accounting in a small company)
  • Cloud-based applications

If companies, as Dan suggests, are using services other than Amazon for critical applications, then Amazon is failing in its mission due to operational issues. Jeff Bezos is not likely to let that continue for long.

Written by James

November 12, 2014 at 6:00 pm

Posted in Uncategorized

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