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Thought Leaders In Cloud Computing: José Almandoz, CIO Of Novell (Part 2)

Posted on Tuesday, Aug 17th 2010

By guest author Shaloo Shalini

This part of the discussion covers topics such as the key focus areas for cloud vendors that could swing cloud purchasing decisions made by large enterprises one way or the other, newer business models, available and acceptable pricing strategies in the cloud and how traditional infrastructure vendors – telecom companies are trying to gain their share of cloud computing market.

[Note to readers: You may want to read more on top five mistakes that cloud vendors make including integration and more, here.]

SM: Let’s shift the discussion to business models in the cloud. Traditional business models are changing with the advent of cloud computing, and different business models are emerging. Earlier, vendors were catering to these different segments of businesses, say, large enterprises, small and medium businesses, and small office/home office (SOHO). Has cloud computing created any new customer segments?

JA: Let me answer that question first from the perspective of Novell as a customer of IT vendors. Yes, we continue to be seen as an enterprise company, but there is something interesting happening with cloud computing that I don’t have totally figured yet. You see a lot of innovation on the consumer side. This is true of some of the things that Google or other companies focused on consumer side are doing in social networking.

Our interest in some of these things as an enterprise is from consumption of such technologies, and we are working on that aspect. For one, how do you migrate or how do you adapt a traditional consumer offering to be something that an enterprise can really leverage. How can a company such as Novell take advantage of Facebook or Twitter in an enterprise environment in a way that really makes the enterprise more productive? I was reading an article that said the British economy was losing £14 billion in productivity owing to personal use of social networking by enterprise users. This is enormous. We know such technology has its place in the enterprise world, and we need to leverage these tools. But the question is, how do you do that in a way that is useful for business? The point I am trying to make is this – I see that there is some overlap between the consumer market and the enterprise market. But we need to figure out the benefits of these technologies for the enterprise.

Now, let me answer your question from the perspective of a software company. Yes, we still deal with the enterprise SMB and SOHO markets, but we are focusing more on this specific soft segment in the market that will really drive cloud solutions. I mentioned before that outsourcers, service providers, and telecom companies are the companies we believe are already taking a leadership role in cloud computing. So we are developing a specific go-to-market approach. That is a segmentation we are making in order to reach new customers in the marketplace with a specific solution. This approach also drives different licensing and pricing models. We just announced some of those changes in the past few weeks. I see that cloud computing is changing our go-to market strategies.

[Note to readers: You may also want to check out an interesting conversation on the impact of new business models emerging out of cloud computing for large enterprises such as Novell here.]

SM: José, what you just said is very interesting. So, Novell is going to market with their software solutions through these service providers who want to become value-added resellers in some sense. Is that right?

JA: Yes, that is correct. If you are a Verizon or a large service provider in telecom space, you see what is going on with cloud computing can make you very concerned, because companies such as Google or Microsoft, for which major business used to be something other than infrastructure, are now entering the market that you as an infrastructure provider play in. The question is, what are you going to do? This is the market Novell is trying to go after. These service providers and vendors are now trying to figure out offerings in the cloud computing space in an effort to secure their share of the cloud computing market. They want to be in the cloud and move up the stack by attracting other vendors that can offer applications or other infrastructure software database services such that they can enter this business and offer a complete solution instead of just the pipes or infrastructure they offer today. They understand that complete solutions are what their existing customers are going to buy. Small or medium businesses will no longer be interested in the existing options on the market. Customers want applications because it is easier for them to get started quickly with using the functions instead of worrying about the infrastructure setup and deployment costs. This is what some of these service providers are trying to do, and we are trying to see how Novell can help them in driving the cloud computing change.

SM: Very interesting. We did a series of interviews similar to this one a few months ago in which we asked CIOs what their priorities are in terms of what they are buying or what kind of business problems they are trying to solve.  Virtual collaboration was one of the overriding priorities of these CIOs.

If you map that on to what you just said, virtual collaboration requires a combination of telecom services and applications on top, and these applications require rich media telecommunications include video, audio, Web conferencing, data sharing, file sharing – all sorts of collaboration functionality which at some level depends on the carrier, the telecom providers. If today’s telecom providers want to be relevant in the twenty-first century, they have to provide those services.

JA: Yes, that is very interesting. Thus far I have been focusing my comments on the software infrastructure that we provide. But Novell also provides collaboration solutions. We have a new solution called Pulse, which is a cloud-based collaboration solution. In that context, when we talk to some of these vendors you will be surprised to know how interested they are in adopting these solutions. Well, I mentioned Verizon earlier. I don’t want to drop names, but you are right – telecom vendors are looking for such value added-solutions that are closer to application layer because this is how they are going to attract customers.

This segment is part 2 in the series : Thought Leaders In Cloud Computing: José Almandoz, CIO Of Novell
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