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There is an overwhelming view among the pundits that PaaS is the future of cloud services and IaaS will slowly go into the background. In fact, in my opinion, PaaS is the idea of cloud computing that comes closer to the utility comparison made by Nick Carr in his book “The Big Switch”. In this series I am going to dig deeper into the future of PaaS and how various companies are positioning themselves to meet this future. In this first post of the series, I am going to dig deeper into the general idea and then take a look at how different players from the entire cloud stack, IaaS to SaaS, are playing the game. In the next post, I will talk about one of the interesting companies in the mix, Heroku, and briefly touch upon a recent news that came out recently.

Why PaaS and Why Not IaaS?

The poster boy (girl) of cloud computing is Amazon Web Services and they are basically an IaaS player offering compute and storage services. Their huge success is one of the reasons why cloud computing is gaining so much traction with everyone from individual developers to small businesses to enterprises. They completely altered the way we do computing by cutting down the costs drastically empowering the startups and small business to have IT similar to that of enterprises. Their success has lead many more providers to jump into the infrastructure game making IaaS the pretty girl (handsome boy) in the cloud computing block.

IaaS completely changed the way developers deployed their applications. Instead of spending big with their own datacenters or managed hosting companies or colocation services and then hiring operations staff to get it going, they can just go to Amazon Web Services or one of the other IaaS providers, get a virtual server running in minutes and pay only for the resources they use. With cloud brokers like Rightscale, enStratus, etc., they could easily grow big without worrying about things like scaling and additional security. In short, IaaS and other associated services has enabled startups and other businesses focus on their core competencies without worrying much about provisioning and management of infrastructure. IaaS completely abstracted the hardware beneath it and allowed users to consume infrastructure as a service without bothering anything about the underlying complexities.

Even though IaaS made it easy for developers to go to the market fast with their applications and other services, it still required them to have some operational expertise. In the case of startups and other small companies, the use of IaaS still required the developers to know a bit about managing the virtual servers, OSes, middleware stack, etc.. If the developers didn’t have much expertise, they had to hire sysadmins who could take care of managing the infrastructure. On the enterprise level, it needed significant investments in operations workforce. In short, it was not the cloud which Nick Carr made us all to imagine.

This is where PaaS came in handy. PaaS is one layer above IaaS on the stack and abstracts away everything up to OS, middleware, etc.. This offers an integrated set of developer environment that a developer can tap to build their applications without having any clue about what is going on underneath the service. It offers developers a service that provides a complete software development lifecycle management, from planning to design to building apps to deployment to testing to maintenance. Everything else is abstracted away from the “view” of the developers. In short, PaaS takes operations out of the picture and gives the developers a complete peace of mind. With IaaS, a developer with no help on operations from people with sysadmin skills is very likely to botch up the application either at its inception or while scaling. PaaS makes developers succeed even if they are completely “operations blind”. This makes PaaS ver attractive for the future of cloud computing.

The advantages of PaaS are

• Complete abstraction all the way up to development environments and other middleware components, taking the operations out of the picture
• Considerable cost savings and faster time to market
• Better security. As Chris Hoff pointed out,  one could enforce sanitary programmatic practices across the derivate works built upon PaaS

Does it mean end of road for IaaS?

Not really. PaaS will not kill off IaaS. Rather, it pushes IaaS completely into the background. Even in a PaaS dominated world, IaaS is still important because

• PaaS will not be dominated entirely by big players like Google or Microsoft. There will be many smaller level players, some of whom offer some niche platforms. For example, PaaS companies like Heroku and Engine Yard can’t afford their own datacenters. Such players will run on top of IaaS
• There are other component services that extend core PaaS platforms. These players will run on top of IaaS while integrating with PaaS players
• There may be many developers who want custom platform stack for their needs. Such developers will always need IaaS

There are many other reasons why IaaS will exist in the background ceding limelight to PaaS.

The Future Of IaaS Vendors Are Gloomy. Huh?

Not exactly. Many IaaS vendors are understanding the PaaS based world in the future. That is why they are already planning to move up the stack. Whether it is public cloud providers like Amazon or players who are strong in the private cloud space like VMware, they are already moving up the stack. We will continue to see this trend where these originally IaaS players differentiate themselves in the PaaS layer. It is not just the IaaS vendors who are moving up the stack but we are also seeing SaaS vendors moving down the stack. For example, we have seen how Salesforce is trying to make their Force.com platform attractive for the developers. SaaS vendors are also seeing a PaaS future and are repositioning themselves to take advantage of such a future.

In the future posts in this series, I will take individual providers and dig deep into their offerings, strategies, etc.. The next post in this series will feature Heroku and I will follow it up with other players in the coming weeks.

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In the weekend, Meebo, along with companies like Google, Yahoo, Myspace, Disqus, Janrain, etc., announced the release of an open identity platform called XAuth. For Meebo, it gives an option to make their Meebo Bar more relevant among the publishers. For Google, this gives them another stick to beat Facebook Connect and Twitter’s identity system after they botched their OpenSocial plans. For users, this is supposed to give a better user experience with online authentication systems as it taps into the web services they use the most. In this post, I am going to briefly discuss about this new platform and see how it affects the SaaS users.

Definition Of The Problem:

One of the unique characteristics of the SaaS world is the mushrooming of vertical SaaS applications. Unlike the traditional software world, SaaS vendors focus on one niche area and do it well. The low cost of setting up a service in the current cloud based world has contributed to the mushrooming of services across many different verticals. This has lead to serious problems for both individual users and business organizations in terms of their identity and management. The problems range from issues like how the users’ are going to manage multiple usernames and passwords to how enterprises can ensure the credibility in authentication, authorization, etc.. Essentially, identity problem has become the biggest speed bump for the SaaS adoption.

From the individual users’ perspective, the myriad of SaaS applications poses a big problem with the handling of usernames and passwords as they have to remember too many of them. From an enterprise perspective, not only the proliferation of multiple usernames and passwords a big hassle, it also tears down their security because there is no way for them to enforce their security policies in this situation. On top of it, enterprises have to take care of regulatory requirements related to user access and any access to critical information. For example, Sarbanes-Oaxley requires an enterprise to implement stringent policy, processes and audit to regulate employee and non-employee access to critical business information. This makes SaaS identity problem a difficult one for the enterprises. In fact, this problem has turned away many users from SaaS, making this one of the most urgent problems facing the SaaS vendor community.

This is not just an issue of handling multiple identities but also an issue of lack of interoperability and presence of data silos. The lack of a single identity system to tie up multiple SaaS vendors/services makes interoperability and integration a more difficult problem to solve.

Potential Solutions and related issues:

One of the solutions is the federation of identity services. SaaS providers could outsource the identity and its management to third party providers and focus on their core competency. This way they could offer better rich functionality in their applications and better security. A federated system allows SaaS vendors to deploy stronger authentication, give SaaS users a choice of identity management services for authentication and, also, a way to enforce their authorization policies more effectively. There are many ways of doing implementing such a system, from a centralized provider like Facebook Connect to a more distributed option like OpenID.

Some users and organizations prefer a centralized approach because it is easy to use and manage. Plus, they will have a single throat to choke in case of a problem. However, this approach puts the user (or organization) at the mercy of the identity providers and it doesn’t bode well from a risk reduction perspective. On the other end of the spectrum is the OpenID, a distributed approach to identity and management. OpenID and OAuth could turn out to be the kind of solution we are looking for to solve the identity problems and interoperability issues. OpenID provides a single identity for the users with a distributed authentication system and OAuth provides a way to give access to users data without giving any access to the identity information. A combination of these two could offer a reliable and more secure authentication for the SaaS applications. However, the user experience with OpenID is very bad compared to, say, Facebook Connect. It leaves a lot to be desired and, hence, relatively lower adoption than what many originally envisioned. 

The problem with OpenID and OAuth based implementations is that it is too daunting for average users. They are both overwhelmed and confused by the choices offered to them from a myriad of identity providers. This discourages them from using SaaS based applications even though they don’t have to create yet another username and password. In fact, the difficulty with OpenID based implementations also poses considerable problems for enterprises wanting to implement an OpenID-OAuth based system for their users.

XAuth to the rescue?

XAuth is being pitched as a perfect solution to solve this problem. XAuth stands between the identity provider and SaaS applications and offers the users just a handful of identity providers based on their usage patterns. By observing the services they access regularly, XAuth offers the identity system of the most used services. This cuts down on the confusion and offers the users the service they are comfortable with. This solution greatly simplifies the identity management and has the potential to make SaaS interesting to them. In short, XAuth could increase SaaS adoption because

• It greatly simplifies the login experience of users by offering them to use the providers they are already using regularly
• Being open source, it makes it easy for SaaS vendors to implement XAuth

However, there is one potential problem that could make XAuth a non-starter. The way in which it observes the access patters of users is really creepy. It has the potential to create a backlash from the users. However, users can disable it completely by visiting XAuth.org from their browser. Personally, I would have preferred an opt-in mechanism rather than an opt-out mechanism. But I don’t see it as a roadblock either. We saw how user backlash on Gmail’s implementation of contextual text ads vanished once users started experiencing the superior user experience of Gmail. If XAuth manages to offer the users similar satisfying experience, their concerns about privacy will eventually go away.

if done right, XAuth could make SaaS more palatable to both consumers and enterprises. But, it is too early to predict how it will turn out. XAuth is not the miracle pill needed to solve the SaaS identity management problem but it is a neat trick to enhance the user experience. I would love to hear from the SaaS vendors to learn more about what they think of XAuth and whether they consider it to be part of their future plans. Feel free to post your comments or send me an email.

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Dyyno, the Palo Alto based company backed by Artiman Ventures and Startup Capital Ventures, offers a SaaS based video distribution platform that allows anyone from individuals to SMBs to enterprises share video and other media at a very low cost. The ease with which it can be done takes the IT out of the picture completely. They are the industry’s first 1080p HD video platform that taps into P2P architecture. They use a hybrid technology based on P2P and the cloud to deliver this high reliability video streaming platform. Dyyno online video platform supports three modes of streaming: LIVE for live events, WebTV for scheduled and creating your own online video channel, and VOD for on demand viewing and video asset management.

Today, they announced the release of a new version of their broadcaster with additional features and EZ Broadcaster, a complete broadcasting toolkit in a box. Some of the features in the new version includes

• Lots of presets making video broadcasting a child’s play
• Advanced monitoring of the broadcasts
• Broadcast failover
• Dynamic recording
• Video asset manager

and more. The most interesting part about today’s announcement is the availability of EZ Broadcaster. This is a broadcasting kit that will help you stream from any video camera that has a RCA/S-Video output. This $49 kit will be a boon to many of the broadcasters wanting to stream good quality video.

What I like about their service:

• The biggest attraction for me was their use of P2P technology along with the Amazon cloud to deliver this platform. The reliability and scalability offered by this hybrid mix is too attractive
• This fully featured platform supports the entire video lifecycle from capture to encoding to streaming to asset management to audience engagement to monetization to analytics
• The fact that they make it easy to use any video camera instead of just the webcams in the laptop makes their platform very attractive

What else I want from their service:

• Definitely a Mac client and, possibly, a Linux client. Looks like they will soon be releasing a Mac version of their desktop software
• I would love to integrate their platform with my Google Apps account so that it takes the access control of my organization
• Not sure if they support HTML5 video. if not, it is definitely a need for me

Overall, it is a pretty interesting offering. I was not convinced about how they can compete in a crowded marketplace including everyone from Youtube to Ustream to Brightcove. When I queried Vamshi Sriperumbudur, Head Of Marketing, about the tough landscape, he sounded confident. He told me that the reliability offered by their unique platform added with their price point for such high quality video will make them very attractive. They are definitely an interesting company to keep tabs and I am looking forward to see how they evolve.

• Unpolished UI
• Lack of support for some of the consumer devices like webcam, printer, etc.
• More importantly, lack of availability of a good office suite comparable to Microsoft Office. Well, Open Office did a decent job of filling the gap but not many were ok with it

First off, why Zoho and not, for instance, Google Docs. Both services offer great functionality and are very competitive but the ultimate decision came down to which suited our use case the most. What we wanted was for a user to double click on a document which would then seamlessly open ready for editing. From there the user would edit, read, and maybe even save it back to the local device. No fuss, no logging in, no other requirements, just open and get on with it. Similary, when a user launches the application on its own, we wanted the correct type of service to open ready for the user to concentrate on their document. The service that allowed us to do this was Zoho. Zoho allows the user to do all of this without ever registering or logging in. Of course you get online storage with Zoho if you do register, but if you choose not to you can still get a full featured experience.

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There is a widespread opinion among pundits and cloud practitioners that enterprises are running away from public clouds. Part of the reason for this impression is the real security concerns about the cloud and the rest is due to the misinformation campaign unleashed by vendors who have a lot to lose in the cloud era. However, the enterprises are more open minded than what these people want you to believe and they are tapping into the public clouds at varying levels.

Recently newScale® Inc., the company offering IT service catalog software for enterprises, and Hyperstratus, the silicon valley based cloud computing consultancy firm, conducted an informal survey of 200 IT operations managers, infrastructure executives, developers, and architects from leading Global 2000 organizations and found some surprising results.

Some of these results include

• About 47% of the participants told that the developers in their company used external cloud providers in some form or other. Out of this, 32% told that their developers strictly use in test and dev environments and 15% said it is used in test, dev abd, even, production environments
• When asked about the importance of a hybrid environment of internal data centers and external cloud providers, only 9% told that it is not important. A whopping 91% have answers ranging from important to very important with varying emphasis on internal data centers and external cloud providers.

Even though this survey is not scientific, it does offer us a glimpse of what enterprise IT folks think about cloud computing. Contrary to conventional thinking, enterprises are not terrorized by the idea of cloud computing. In fact, when I spoke with various cloud vendors like Skytap, they told me that they see considerable traction with the enterprise customers. Many vendors pointed out that the enterprises are very open to adopting public clouds in the test and dev environments and some are even considering deployment on production environments. The above survey goes on to confirm these assertions.

I would like to learn from Cloud Ave readers about what they think about enterprise public/external cloud adoption. If you are a member of enterprise IT team or a vendor selling to enterprises, please take the following survey to help us get better insight into the enterprise mindset. We appreciate your time in taking this poll.

The 451 Group’s William Fellows in a “Cloud Outlook 2010” Webcast, says that 57% of spending on cloud computing is done in the U.S., 31% in Europe and 12% in Asia. But when it comes to the adoption of infrastructure as a service, the way to leap the furthest into cloud computing by using Amazon’s EC2 or Rackspace, 93% of that spending is done in the U.S., 6% in Europe and 1% in Asia.

I asked them about the European cloud market and what kind of traction they are seeing in the market. Christoph told me that they are finding it difficult to convince customers to move their assets to cloud. He told me that they have to put considerable efforts to educate customers about the benefits of cloud computing. In his opinion, European market is lagging behind US market by at least a year on cloud adoption.

Yesterday, I attended the GigaOm bunker series on Open Source and Cloud Computing. The event had two panels, one featuring Larry Augustin of SugarCRM and Jim Zemlin of Linux Foundation and the other with Joe Tobolsk, Rich Wolski, Shelton Shugar and Tom Hughes Croucher. There were some interesting discussions on both panels and an overall agreement that open source is beneficial for cloud computing (in the words of some of the participants, the single most reason for the very success of cloud computing). But there was one question that turned out to be controversial and it is about who makes money from Open Source. Derrick Harris from Giga Om Pro offers a good coverage of this question and the ensuing discussion in this post. During the event, I had fun observing the debate and I thought I will offer my views here.

Roughly, the participants in the discussion can be split into three camps. On one side, there were those who went gaga over how open source is successfully making money and, on the other end, there were skeptics who were wondering why Open Source is not making big bucks like their proprietary counterparts. In between these two camps were the so called “moderates” who argued that open source need not make big money but they enable others, like Web 2.0 vendors and the current day cloud vendors, make big bucks. They even showed the example of how open source is single handedly keeping Wall Street running and, thereby, helping some people make really big bucks.

My thoughts about Open Source making big money are summarized below

• The biggest mistake made by most of the participants in the room is to view Open Source as a business model. This is not something new. Ever since Open Source started gaining traction in the business world, various players involved in the game tend to view Open Source as a business model. In 2007, in response to a debate between various pundits on the true nature of Open Source, I had argued that Open Source is not a business model but a philosophical platform on top of which various business models play the game. In that blog post, I had compared Open Source to basic science and I would love to dig a bit more on this comparison here. If you tend to view basic science as a business model (many people in the industry tend to see everything using the lens of monetization and, even in a capitalistic country like US, it is not necessary), you will realize that it is one of the biggest money losing endeavor in this world. However, basic science is the single reason why we, as a society, have advanced to what we are today, including in the area of commerce. Basic science didn’t make money but it enabled the society to progress through innovation and allowed businesses to make money by productizing the results of basic science research. Essentially, basic science acted as a platform acting as an enabler of innovations and led to various business models based on these innovations. I see Open Source in a similar vain. Open Source is a platform that enables innovation by sharing of source code and allows some businesses to make money by layering a business model on top of it. Some business models may work and many might just fail depending on whether the business model is compatible with the nature of Open Source. Failure of a particular type of business model does not imply the failure of open source itself. I don’t believe in having a metric to measure everything (do we have a metric to measure happiness yet?). But, if we ever have to have a metric to measure the success of open source, that quantity will be proportional to the amount of innovation it has enabled and independent of the money that was directly made from open source itself. If we grasp this point about the true nature of open source, then Simon Crosby’s comments about the presence of proprietary components in many successful open source products will be hardly surprising. In this world view, having proprietary addons to the open source core is one of the successful business models on top of the Open Source Platform. This is not the only one and there are others including Redhat’s approach. There are many more to come in the future. Business models on top of open source may come and go but the basic philosophy will stay intact for a long time to come.
• Another mistake, in my view, is about the metric they use in measuring the success. They tend to use the yardstick they use in the proprietary world to measure the success of Open Source. One of the biggest success of Open Source from an economics perspective is the commoditization of software. The proprietary vendors made big money by the exclusivity enjoyed by their products and, in most cases, the lack of viable competition. This offered them the leverage to charge exorbitant prices to their products. The very freedom offered by Open Source breaks the spine of this exclusivity enjoyed by these software vendors. In fact, this freedom opens up an unique opportunity for more than one business to profit from the same software. The inability of vendors to charge sky high prices and the forking of business opportunities by many people will ensure that the idea of big bucks doesn’t enter the Open Source world.
• This point is more political than technological. The American idea of capitalism measures the success of capitalism in terms of the number of people who won big but my idea of capitalism is not about winning but about creating opportunities for individuals to compete. In my world view, there may not be one single big winner but many winners having their own piece in the marketplace. The comparatively moderate economic success of companies running their business on top of open source platform fits this worldview of mine. Open source empowers businesses of all sizes to compete in an equal footing, with each getting a piece of the pie based on many factors including the availability of some unique features which users found compelling, fanatical support, etc.. This spreading of opportunities ensures that no single business is hugely successful but it creates many successful businesses. Some people in America may call it socialism but it is capitalism for me. Empowering more and more people to compete in the marketplace is capitalism IMHO and open source does it very well.

Well, these are some of my thoughts on why Open Source is not making big money like their proprietary counterparts. Open Source is a philosophical idea that fosters innovation and enable many business to compete in the marketplace. Like basic science, it may not make big money but it will enable big ideas which, in turn, may make big money. Like any commoditized marketplace, the money is not going to be huge for any single player. It is important for us to understand the true nature of open source. If we understand it correct, we can better utilize this platform to innovate better. If you are a business looking to make big money with software, then open source is not the right path for you. You are better off with proprietary approach. Open source will still survive by the very itch in the hands of users (read companies in the cloud based world).