Business Software Alliance warns of governments interfering with the cloud

Robert Holleyman, president and CEO of the Business Software Alliance, cautioned cloud providers and users against a future where their services could be divided along international boundaries. Speaking at the Cloud Connect conference in Santa Clara this morning, he said that “Legislators just can’t help themselves,” and he warned of a future where governments disrupt cloud usage with legal hurdles.

Holleyman used his keynote address at the show to preview a report that will be released by the BSA next week. He said the report examined the cloud policies of countries around the world, and it found that even first-world nations are capable of hampering innovation with poorly written laws.

“It would be like having a series of walls and fences around the world,” said Holleyman. “The real world is a patchwork, with countries like Japan and Australia having good policies for the cloud. They have good policies around security, privacy, cybercrime and trade. Other countries, like Brazil and China, have a lot of catching up to do.

“You see a sharp divide between the advanced economies and the developing world. But what is surprising is what you see when you look at countries that are doing well. There are efforts by countries to wall themselves in with conflicting laws and regulations.”

Holleyman specifically pointed out the European Union. “The U.K., Germany, France; they are logical markets for U.S.-based cloud firms. All the EU countries are off to a good start, but lawmakers in the EU are putting their thumb on the scales. They’re doing things with regulations to keep non-European cloud firms waiting at the border, while their companies ramp up.”

He went on to urge attendees and software firms to become more involved in the legislative processes of the countries in which they work. He also stated that standards could help to solve these problems as well.

“How do we create a level playing field for the cloud era?” said Holleyman. “No. 1 is we need more consistent privacy and security models. Second, governments buy a lot of technology, and we need governments to throw their weight around in a constructive way. They can shape a marketplace. We need to promote innovation in the cloud the same way we protect it everywhere else. That means protecting your rights and stopping new forms of cybercrime and theft. If you’re not at the table, you’re on the menu. If we don’t make ourselves heard, the cloud will get stuck in the proverbial long line at customs.”

Internal impediments
Simon Wardley, researcher at the Computer Science Corp.’s [CSC] Leading Edge Forum and another Cloud Connect speaker, placed the cloud revolution in a historical context, comparing utility computing to electricity. Electricity had been understood for hundreds of years, but never made it past the battery, the product stage of evolution until the late 1800s. At that time, thanks to Tesla, Edison and Westinghouse, electricity went from a product to a service.

The same is true for computing, said Wardley. “In business, there’s a constant process of evolution, and that evolutionary pattern is standard. That process is driven by commoditization, which is driven by competition. Electricity became a commodity that enabled things like Hollywood. Cloud is the shift of things that have been in the product phase of evolution to the service phase.”

As this evolutionary process is standard for all business technology, predictable things occur with each passing evolution. One predictable aspect of this cycle is the accretion of inertia to change. It is this inertia that prevents market leaders from charging into new markets.

“It’s not just customers who have inertia to change; vendors do as well,” said Wardley. “I’ve spent all my time selling you products, and this creates an enormous inertia to change. This is why it’s often an outside player who breaks through those outside barriers. It wasn’t a hosting company that provided computing as a service, it was a retail company.”

This is also the reason many existing companies can’t capitalize on their own innovations. Wardley pointed out that Kodak invented the digital camera, and Blockbuster was the first company to offer online streaming video services. Neither company was able to capitalize on these innovations.

The solution to inertia to change? “You become what you disrupt,” said Wardley. Find a giant market where the competition is hugely successful, and push your changes into open source, thus commoditizing the market, he said. That change will be difficult for the competition to deal with, as success and huge profit margins add to inertia to change.

Wardley said that cloud computing is just kicking off as a disruptive service, but that there are a number of myths he’d hoped to dispel in his talk. First, he said that a popular myth is that cloud computing will reduce IT costs.

The problem with this line of thinking is that it misses Jevons paradox, a neat little thought written by William Stanley Jevons in 1865. The Jevons paradox is as follows: “Any technology progress that increases the efficiency with which a resource is used tends to increase the rate of consumption of that resource.”

Thus, cheaper, more efficient cloud servers being made available to your organization will result in more people using those servers, and more hours being logged on those systems. If everyone in your organization can fire up a new virtual machine on a whim, it stands to reason you’ll have a lot more virtual machines running all the time.

The second myth Wardley wanted to dispel was that users have choice. “If you take any activity and treat it the same as a product and as a utility, your focus is on that area, and you can customize it. Your rate of agility is lowered, and the amount of value you extract will also be lower.”

That means that spending hours or months customizing a platform to your every need may not be as efficient and useful to your organization as conforming to standards. Unfortunately, standards in cloud computing are still emerging, and until they do, all that customization and work will end up locking users into their systems.

This is a common pattern in the evolutionary process, he said. The more customizable a technology is, the less agility users will have, because IT will spend all day customizing the tools instead of solving the problems. Standards increase efficiency, he said, and current cloud platforms offer extreme customization options, especially in the private enterprise cloud market. All of this translates to slower velocity, he said; standards come from best practices, and best practices eliminate waste.

In the end, he admitted that the private cloud is a completely valid scenario, but that the end costs per instance must be between US$220 and $540 per EC2-equivalent machine, per year.