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Thought Leaders In Cloud Computing: Laef Olson, CIO of RightNow (Part 7)

Posted on Tuesday, Feb 15th 2011

By Sramana Mitra and guest author Shaloo Shalini

SM: Let’s talk about moving to Google Apps or Google e-mail at some point. Right now you work on an Exchange platform. You have developed all your applications on top of the Microsoft environment. Now if you move to Google, all of that investment kind of becomes a rogue situation, right?

LO: It does, and from a Google perspective that is not nearly as big a deal. Sometimes, for smaller providers or new startups, that could become a big deal. Back in the old days, we used to have escrow and maybe code escrow. The company went out of business; you can continue to operate it if you need to. Now, say if a cloud computing provider goes out of business, as a user of that cloud service, what do you do? Right now we are well funded with huge amounts of cash in the bank. That is not a question for our clients, but if you look further, some cloud providers that may have solutions could be in such a situation. So, there are interesting opportunities to provide business continuity, insurance, or other types of capabilities in the cloud for such a scenario. The capability to transport a user from one solution to another [would be useful]. Most of these solutions have open APIs.

It is relatively easy to go through a process to move your Exchange environment into the cloud, into one of the many cloud e-mail providers. How do you move from one cloud provider to the other? If you decide Google is not quite right for you and you want to move to Office Live, what does that look like? The cloud providers are sometimes not particularly motivated to build those bridges. But an intermediary could very easily do that in the open and with high capabilities.

SM: Interesting. Do you have any other thoughts on entrepreneurship in the cloud?

LO: You have covered a lot of ground and the entire area. There is so much innovation and transformation going on. I would say that as IT organizations begin to consume more and more cloud services, there will be shifts in how these cloud-based solutions are purchased, really changing some of the old nature of software licensing. We have a lot of vendor lock-in today, not a lot of elasticity in being able to move up and down with the available licensing options. We are taking big strides in trying to change how that is done for our clients. Right now there are some who are trying to sell licenses to me, like a very static model. You buy these for three years and can’t reduce your usage. I think one of the overall benefits we will see over time with the cloud is pricing elasticity. It is one of the innovations of the cloud, and I think it will become more prevalent. Whether it is a private cloud or a public cloud, pricing elasticity and pure usage-based consumption will play a role.

SM: We were talking about that for a while with your CEO, the CEO of RightNow.

LO: Oh, really?

SM: What is the status of that? Is it something you are starting to see in your customer base? I know Greg was very keen on leading that charge.

LO: Well, we went on unannounced, and we have lots of customers now that have gone on to our cloud services agreement, which is just that. It provides usage-based pricing such that customers are be able to move up and down. It is rollover pricing where maybe you don’t consume very much at the beginning, but you can consume more services later because the cloud is elastic.

SM: Basically you are talking about subscription-based pricing as opposed to a monthly price or subscription, right?

LO: Yeah, it is still subscription based. The promise of the cloud is a lot more flexibility in how it is consumed. I think over time, cloud providers will begin to compete on providing that flexibility to their clients and stop trying to protect their client base through their licensing model or protect their client based on the values that they bring to the table.

SM: But that kind of competition on pricing flexibility, you have not seen that as much yet? Say flexibility, your utilization model, use-based pricing? You have not seen that from vendors in the cloud industry yet?

LO: Not yet. But we are in a unique position to negotiate for it because I have just shown my cloud’s services agreement that we provide our customers, and it has been a great negotiation tool with my client. This is what you should be doing, I said; I hope we can arrive at a good agreement. To a certain extent they are able to accommodate us.

SM: It is not easy if you are not set up to do usage-based pricing. For that, you need the billing and monitoring infrastructure. Would it be accurate to say that most cloud providers today are not set up to do that kind of flexible pricing?

LO: I think it is hardest for more traditional folks. The IBMs, Oracles, and the SAPs haven’t really thought about selling software that way. So, I think it is harder for them. Some of the newer companies are building from the ground up, so it will be easier for them, but yes, it is a big shift.

SM: Laef, thank you for a very interesting conversation. We look forward to covering the story. Let’s keep in touch.

LO: Yes, thank you. Great talking to you, it was very interesting!

This segment is part 7 in the series : Thought Leaders In Cloud Computing: Laef Olson, CIO of RightNow
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