Monday, March 8, 2010

Be Careful in the Custom Infrastructure Wasteland

An interesting article was posted today at CIO Zone. The article was titled “Cray Teams with Microsoft on Cloud Computing.” Apparently Microsoft and Cray plan to work together on cloud computing systems. Cray is a supercomputer company. Microsoft is a well known provider of software for PC’s and servers... I find it interesting in that on first blush these are strange bedfellows and neither is “top of mind” in this market. It appears to me that they’re trying to get into the game.

The two have formed a partnership whereby Cray’s custom engineering group will work with Microsoft Research (italics are mine) to explore and prototype cloud computing infrastructures. They’re focus is to “dramatically lower the total cost of ownership for cloud computing data centers” through the application of “latest breakthroughs in high-density packaging and cooling technologies.” According to Cray this is the engineering group’s first move into the commercial market. Until now they have designed and delivered custom solutions to the specifications of an individual customer.

In previous posts I have referenced the Everett Rogers’ Diffusion of Innovations and Geoffrey Moore’s application of this idea to the marketing of technology solutions in Crossing the Chasm. In those models today’s announcement involves two innovators who are enthusiastic about their technical prowess and the contributions they can offer. They will likely construct some impressive prototypes and go to beta with a few customers (including themselves). Then they will face the challenge of getting material adoption from the market at large.
If history serves the Cray and Microsoft technology enthusiasts and visionaries will have a hard time convincing the wider “pragmatic market” to adopt their solutions. For one thing, as enthusiasts and visionaries they will tend to have a tin-ear to the non-technical buying patterns of the market at large. The pragmatic market wants providers with track records that cover not just the technical but the financial and support aspects of the buying decision as well. They want providers with organizational infrastructure and history. They want reliable, long term partners from that space. This is a new market for the partners.

For another thing, by the time the partnership is ready to go the relative importance of their packaging and cooling technologies will likely diminish. Theirs may always be better than what competitors offer but it will be hard to be so much better that it sways buying decisions in the face of other benefits competitors will bring. In large scale computing like Das Kloud everyone is working on energy conservation. So-called Green Computing makes everyone feel good and saves a lot of money. Other technically advanced and well heeled, long-time players are hard at work on their own efficiencies. Cray’s advantage will have to be substantive to drive very many decisions by customers.

Still, some IT management can’t resist the temptation to use “the new new thing.” In one ancient example a colleague was surprised to find that the IT director, unsatisfied with the IBM operating system that came with his mid-range device, had written his own, “Chief/370.” In another, a major insurance company’s technical services group was unsatisfied with the transfer rates and job control capabilities in the standard labels for data center tapes and wrote their own. They were internally efficient and had no upward compatibility at all and could not share files easily with others.

More recently companies are building their own content management systems or buying “unique and innovative” Enterprise Service Busses. In all of these cases the maintenance and support of the technology becomes an internal, un-leveraged expense versus a shared expense across all users of the technology. Sometimes you don’t even get to an operating solution. Not long ago a major financial services firm planned to rewrite all of their 30 year old core account management systems in a solution so elegant it required proprietary, early-stage processors. Soon enough the runaway project collapsed and hundreds of millions of dollars went wasted. The hardware vendor collapsed too.

Working on Step 2

Previous posts have shown the total cost of ownership relationship between developing systems and the down-stream costs of maintenance, support and operation. If the underlying infrastructure you are using is unique to you or shared by a very few others your total cost of ownership for that portion of your applications portfolio will be high, in some cases prohibitively.

On the other hand, if the only thing you do is employ technologies that are widely installed and thoroughly market tested it is unlikely that you will be able to generate any material competitive advantage from information technology. For most companies it becomes important to not only keep an ear to innovations but to pursue them from time-to-time. How to proceed?

My first suggestion is that you soberly set your context in business terms. Either you work for an aggressive company or you don’t. There is an expectation that managers try new things in some companies. In others managers have less leeway. All companies experience change. Perhaps your company is experiencing more change in the nature of the competitors you are facing, in how people are winning (or losing), in what the future holds. The more aggressive your corporate personality, the more leeway managers have, the more change your industry is facing the more innovative risks you should consider.

Still, when considering risks be hard nosed about it. Malcolm Gladwell published an instructive article in The New Yorker in January describing how true entrepreneurs like Ted Turner, Sam Walton and the hedge fund manager John Paulson, were not actually wild risk takers. Instead, they were thorough, detail-oriented and, once they fully understood an advantage, very aggressive. The people who thought they were risk takers, or crazy, hadn’t done the homework that showed they had a sure thing on their hands.

You may well want to use a burgeoning rules technology or a better business intelligence platform or cloud computing from Cray and Microsoft. Make a thorough analysis of all your options. Know the total cost numbers objectively, deeply and coldly. Do not sugar-coat your internal support costs or the risk that you’ll have to provide more support than the vendor or your internal enthusiasts think. It’s always better to have others in the buying pool with you. Being the only owner of Chief/370 is a disaster. Have some company you can talk openly and bluntly with.

Lastly, give yourself an out. When sitting in design meetings you’ll have discussions about establishing structured interfaces between modules and systems or using an SDK from the vendor (that may well be under design as you’re talking). These are important discussions. A friend often said that “an interface is a freedom creating device. If you obey it you can do whatever you want on your side.” In this sense establish an interface between all other systems and the technology innovation. If the innovator’s solution doesn’t prove out you can move on to another solution. By then the market may well have surpassed the innovator. Unless you like failure do not accept the compromise of speed-to-market for fudging on this out. If the project gets behind or gets costly then adjust the budget and timeline or get out. The minute you customize the solution it’s broken and it’s yours and that’s rarely a good thing.

1 comment:

  1. One of my rules of technology management is fairly simple: if you're not in the business of developing technology, don't.

    Dennis McDonald
    Alexandria Virginia
    twitter: @ddmcd