Open Source Strategy

CIOs can generate a sustainable business value with OpenStack! Here’s how it works.

OpenStack is on everyone’s lips and is slowly working it’s way forward into the IT infrastructure of German companies. 58 percent of German CIOs see in OpenStack a true alternative to commercial cloud management solutions. However, IT decision makers should look closely what they are holding in their hands. OpenStack is basically just an infrastructure management solution and accomplishes no direct value to the business success. However, this is exactly what CIOs have to deal with in order to position themselves as a business enabler. This raises the question how OpenStack is able to create a significant added value, stepping out of the shade of a simple open source cloud management software.

CIOs have to state the fundamental question, how OpenStack can provide a strategic advantage. This is only the case if they use OpenStack different from their competition and thus not only restrict oneself to operational excellence. It is rather about to understand the OpenStack technology as part of their IT strategy using it to create a real value for the company.

Playground: Enablement Platform for Developers

CIOs who want to achieve a business value with OpenStack need to see more potential in OpenStack than just a pure management solution for their cloud infrastructure. In this case it is much more than just cost savings and running an IT infrastructure. CIOs have to understand OpenStack as an enablement platform for their developers and use the open source solution exactly in this way. CIOs, who only want to focus on operational excellence, can use one of the several standard OpenStack distributions. However, these ones should consider, that they are just one of many. For those, who see a strategic vehicle in OpenStack, a distribution is a good foundation to extend OpenStack and expand it to an enablement platform.

OpenStack as enablement platform means that developers are provided with much more than just compute (virtual machines), storage or databases. It is about providing higher-value services, which can be found in the portfolios of Amazon Web Services and Microsoft Azure. This is about microservices that support the application development. These are ready building blocks whose functionalities don’t have to be developed again. Instead they can be used directly as a “brick” within the own source code. The OpenStack community has recognized the importance and slowly tries to take parts of the AWS respectively Azure service portfolio over to OpenStack. First services are Sahara (Elastic Map Reduce) and Zaqar (Multiple Tenant Cloud Messaging). Of course, this is by far not enough and further microservices are needed to make OpenStack to a powerful enablement platform.

However, one thing shouldn’t be underestimated for this scenario: the significant investments that are necessary. Building a massive scalable and globally available cloud infrastructure respectively enablement platform like the ones of Amazon Web Services or Microsoft Azure is complex as well as costly. However, this must not prevent CIOs from running an own OpenStack based platform. For this purpose e.g. partnerships with hosting providers suit to run OpenStack in different deployment models. The German research paper “Managing OpenStack: Heimwerker vs. Smarte Cloudsourcer” describes what kinds of variants are suitable.

Despite the high complexity of OpenStack it is possible for CIOs to make use of its openness and flexibility to build custom solutions based on the various sub-projects.

Innovation: Leave the Community

The common work within a community is important to push a project like OpenStack successfully forward. In addition, all involved parties benefit from the ideas other community members. However, the big disadvantage is that one member is just as good as the community itself. The community concept neither works to diversify towards the competition. In the end the focus is again completely on operational excellence. A technological or strategic advantage cannot be achieved.

The cloud market shows that solo efforts are part of a concept for success. Providers like Amazon Web Services (AWS), Microsoft Azure, ProfitBricks in Germany or CloudSigma in Switzerland have built individual infrastructure environments. This strategy has helped AWS to achieve a massive advantage in technology within the cloud market.

Another paragon in the open source space is Canonical. The Linux distributor is well-known for using the Linux open source code but only giving back a little (e.g. patches). It is the same behavior for the OpenStack project, proven by numbers (see Idealists my have a problem to understand Mark Shuttleworth’s (Founder of Canonical) attitude. However, in the end it is about the business and thus to operate in the black.

OpenStack is perfect for CIOs to serve as a foundation for their cloud infrastructure. For this purpose, standard OpenStack services like compute, storage or identity management can be used. However, in the end it is about one thing: individuality! This means that a CIO should say good-bye to the community concept in order to focus on innovation. The strategy is about to look what the OpenStack community has to offer, adopt the necessary services and develop individual enablement services and solutions on top of it. The use of standard OpenStack is not sufficient to differentiate from the competition neither to create a serious value for the company.

Business Value: Applications and Services support new Business Models

The Internet of Things (IoT) is the next megatrend rolling towards companies forcing them to finally start with their individual digital transformation. OpenStack is a powerful tool and a global standard CIOs can use to support this individuality. However, OpenStack is just a means to an end and only offers the basic functionality so far. But, based on the open source approach OpenStack can be completely customized for the own necessities and thus is the perfect foundation for individual backend solutions to support mobile and IoT applications.

For this purpose, CIOs should stand back from standard OpenStack, use a distribution as a foundation and extend it with individual functionalities. This means that they have to get used to OpenStack’s complexity. However, it is exactly this technological excellence that will pay off over time to differentiate from the competition in order to obtain a technical advantage and thus create an added value.


CIO at the Crossroads: The Enterprise IT as a Digital Factory

The progressive movements of the digital transformation as well as new megatrends like the Internet of Things (IoT) let CIOs finally reach a crossroads. Even if statements like “IT is a business enabler” were ignored as “one of these phrases” in the past, the reality brings CIOs back down to earth. No doubt, the CIO still has a pivotal role. However, he has to meet the challenge to understand the enterprise IT as a service provider for its internal customers to enable the company to reach external customers with new digital and hybrid products. This only works if he considers the “Digital Enterprise” en bloc and restructures the enterprise IT to a “Digital Factory”.

Yesterday’s IT: Keep Things Running

Over the last three decades, IT departments worldwide have developed, introduced, updated and detached a rash of IT systems. They have digitized their companies by introducing and maintaining ERP and CRM systems, office solutions and self-developed applications. So far, they didn’t have awarded another significance. The IT department was just the maintenance of the “IT engine room”, no colleague wanted to deal with respectively was able to deal with.

Today, suddenly everything is completely different. Due to the “Consumerization of IT” and the easy access to IT resources, every employee is now able to use an iPhone or a SaaS application. It is even worse, suddenly everybody is bawling for the digital transformation. In most IT departments there is a lack of understanding for this. Transforming digital? Eventually, digital systems have been introduced and maintained over the last 30 years. Indeed, the term “digital transformation” is a little bit confusing, especially if one is working in IT for decades and has seen all developments. The digital transformation describes the radical shift of a company to an entire interconnected digital organization. Based on new technologies and applications more and more processes and process elements are reshaped and are adjusted to the requirements (real-time, connected) of the digital economy. So, it is about the tight integration of entire process and supply chains within the company as well as with partners, suppliers and customers. Finally, it is about a closer customer relationship and an optimized understanding of the customer by serving a better customer experience. Thus, the digital transformation influences customer and business relationships and changes respectively create new value chains. Among this influence, companies have the chance to develop new business models.

So, the IT department has much more responsibility as just keeping the status quo. The IT needs to understand themselves as a strategic partner and business enabler and tightly engage among different departments to understand their needs and requirements. In the digital age and during the digital transformation this can become a strategic competitive advantage for the company.

This is also the overall feedback from German companies. The results of Crisp Research’s “Digital Business Readiness” study has shown that the majority of the interviewed companies see their own IT department as a strategist (34 percent) respectively an ideas provider (21 percent) in the context of their digital transformation.

Thus, the expectations are high, which is strengthening by the fact that more than half of the respondents (58 percent) understand the digital transformation as an IT paradigm. So, IT departments and CIOs are under pressure to act as an enabler and ideas provider for digital processes and ways of working within other departments – with good reason. Hidden champions even global leaders can be found in several industries of Germany’s economy. However, especially these companies should spend very much attention to the digital change in order to retain their competitive and innovation capabilities in the future or ideally reinforce them.

The Internet of Things and the Industrial Internet are both an allegory for the digitization of all industries. New smart products will be developed and existing “analog” devices will be enhanced with sensors, thus “smart” extended and admitted into the digital value chain. Existing organizational and IT structures don’t support IT departments any longer to make the digital mind shift in good time and to react with innovative ideas to the requirements of corporate divisions to proactively serve the customer with new products and solutions. The digital transformation requires a rethinking and a radical change within IT departments. One step of this transformation is the change from an enterprise IT to a digital factory.

From an Enterprise-IT to the Digital Factory

CIOs don’t create any direct value for their companies if they just setup and operate an IT environment with standard applications. In this case they are just the supporting force in the background without having any influence on the business model respectively the business success. Those CIOs who have developed own applications in the past and thus already participated in the business success belong to the innovators of the IT guild. However, also they have to rethink their approaches. Because applications and other IT solutions have been completely focused on static processes in the past. Today’s customer expectations, new business models as well as solutions for the Internet of Things are following a dynamic behavior (so to say in real-time) and thus need to be considered in all processes and the user experience.

In order to handle the challenges on the technical side, IT departments should stop thinking in silos and instead start to transform themselves into a corporate “digital factory”.

In the center of the digital factory is a cloud based IT environment that is representing the “digital power plant” powered by infrastructure-as-a-service (IaaS) and/or platform-as-a-service (PaaS). The power plant hosts an “Application Platform” where applications are developed and operated as well as an “Analytics Engine” for the analysis and preparation of data. The resulting insights are accessible for the applications running on the application platform. The application platform can be used to develop completely new products or to digitize existing products, for example, to extend it with a sensor or a smart unit. The digital power plant is supplied with existing internal and/ or digital external resources like data or cloud services. Thus, a hybrid environment is created. The digital or digitized products like mobile apps, SaaS or IoT solutions and engagement solutions that have been created in the power plant provide the digital factory continuously with data, which leads to an ongoing improvement of the products respectively to new products. The integration of the digital factory with typical enterprise business solutions like ERP or CRM systems should also be highly considered to create a value from the existing data and to interact better and more predictive with existing and new customers.

As part of the business enablement, the digital factory should also provide the internal customers with an on demand self-service to serve them with the necessary resources like compute power, storage, microservices, development platforms or other SaaS solutions exactly in the moment when they are acting. This supports them to improve their productivity. Therefore, a cloud environment is the perfect foundation for a digital factory.

The Digital Factory is the Foundation of the Digital Enterprise

In the digital age the IT department is claimed to deliver an essential part to the product and support during its development, enhancement as well as the process optimization. This is the fundamental basis to enable a company serving its customers with the best user experience and to provide them with innovative and superior services. Therefore a radical approach is necessary. This means to bring oneself into question and rethink everything. The old entrenched structures don’t work within a digital company anymore. Modern companies are mostly technology companies, independent from their industry, supported by IT. A clear defined cloud strategy helps CIOs to build the foundation for the digital enterprise. This enables their internal and external customers to experience a convenient and especially faster access to IT resources like dynamic infrastructure, platforms and other cloud services and thus improves the overall productivity and the customer experience.

The digital factory is the foundation for novel digital and hybrid products – e.g. for the Internet of Things – as well as to develop services and prototypes more efficient.

The IT department needs to enhance from a maintainer to a product center. This includes developing new products and extending existing products with digital resources. The digital factory is the technological foundation for this transformation.

Best practice examples show that decision makers have recognized the importance.

  • Klöckner & Co. (CEO, Gisbert Rühl) a steel and metal trader drives its digital transformation with a new detached team. Therefore the center of excellence “kloeckner.i” was founded, which is promoting the digitization together with colleagues from other corporate divisions. The classical IT at Klöckner & Co. is standardized. In its digital factory “kloeckner.i” most of the things are self-developed to manufacture individual products in order to constantly answer the question: “What does the customer need to collaborate easier and more efficient with Klöckner & Co.”.
  • Volkswagen AG (Head of Application Development, Ralf Bunken) considers IT as a central element during the development of a car. Volkswagen specifically analyses data to enhance products and to make its business processes – from development over manufacturing up to sales – more efficient. However, just a digital factory is not enough. Thus, Volkswagen bets on the close and interdisciplinary collaboration across several departments and experts from different disciplines, partly in cooperation with IT suppliers. For example, the responsibility for technology and software in the “Connected Car” project lies in the hands of the automotive developers. The IT is responsible for all things outside the car. However, both areas are working closely together. Volkswagen encourages its approximately 10,000 IT employees by hosting internal hackathons and offering “Data Labs” where each employee can try new things.

Introducing the digital factory requires much more than just a technological restructuring. CIOs should also consider the following topics:

  • Consider the digital transformation as a traversing umbrella across the entire company.
  • Destroy silos and promote interdisciplinary ways of working and acting.
  • Consider the DevOps model and microservice architectures to promote the continuous delivery of IT solutions.
  • Promote and establish developer know-how within the IT department and further adjoining corporate divisions.
  • Consider the API economy as a competitive advantage to increase the customer engagement.

Disaster Recovery for SMEs: No apologies!

Disaster Recovery currently plays a minor role in the strategic planning and daily routine of SMEs. Yet this negligent attitude can cause harm to the business in a fraction of a second. With the advent of new operational models in the cloud age, there is no longer room for excuses.


Dead PC market – Microsoft is the scapegoat!

To start off with, I do not agree with every decision that Microsoft takes and by far there are products which I consider critical too. But what happened here just shows how narrow-minded some arguments are. The background of the excitement are the conclusions of the market researchers IDC and Gartner on the current situation in the PC market. Both make Microsoft respectively Windows 8 responsible for the death of the PC. Lastly, even the investment bankers at Goldman Sachs and other financial analysts associated and come to absurd statements. Microsoft is here wrongly used as a scapegoat!

Background: Current data from the PC market

According to IDC, in the first quarter of 2013, only 76.3 million devices were shipped. This is a decrease of 14 percent. Gartner’s numbers a day later showing a decline of 11.2 percent, that mean 79.2 million shipped personal computers.

Quickly the culprit for this was identified. Microsoft, respectively Windows 8. IDC actually assumed that Windows 8 should ensure a revival of the PC market. However, Microsoft have worsened the situation, according to IDC, because the customer can not get used to the new tile environment, etc.

Meanwhile, the financial sector had responded. One financial analyst is quoted as follows: “The PC used in the business is a mature market with declining replacement investments and in the consumer market you need not have an Office, so no Windows and thus no Microsoft.” Investment bankers therefore have advised their customers to sell their Microsoft shares.

For me, this statement shows, that investment bankers and financial analysts have no providence and even worse, have not a hunch of ​​the market, they are asked to assess. Instead of critical scrutinize the conclusions of IDC and Gartner initially, unqualified statements are made that will possibly have a financial impact on Microsoft and an entire industry.

Hybrid Tablets are the trend

The PC market is not dead, it has changed in recent years. And if one would argue from the perspective of Gartner and IDC, it would be Apple, who is, with the launch of the iPad, responsible for the death of the PC market.

Certainly, the situation is quite different. The PC is not dead, it has now begun to assume a different shape. In my five cloud computing, mobile and big data predictions for 2013, I pointed out that particularly hybrid tablets will move into the enterprise. Hybrid tablets are tablets with a clip-on or rotating hardware keyboard. This has the background, that tablets help us to use most of the IT, the Internet and other things more convenient. However, for the full application in the enterprise, but also in the private sphere, they are not suitable. At conferences and travels, I regular see users, who bought an external keyboard for their tablet. Hybrid tablets are the best of both worlds. The tablet with its touch screen and an easy to use interface, plus the traditional laptops and their keyboards. Writing long texts on a tablet with the virtual keyboard is no fun and exhausting what are also the reactions of business users. In addition, hybrid tablets will replace today’s conventional laptops. And what runs inter alia on these hybrids? Right, Windows 8 – and even MS Office.

That hybrid tablets are the trend has now also been recognized by Apple. There are initial reports that Apple has filed a patent for a “Hybrid Tablet Notebook“.

User behavior is changing

Just as the technology market develops, our lives and our way we consume technologies is affected. If Microsoft had in 2002 waives the keyboard on their tablet and set on touch instead of a pen and chosen a thinner form factor they had been turn the PC market upside down 11 years ago. However, it was Apple that could go one better at the right time and under the hype of the iPod and iPhone with the iPad.

However, we also see that Microsoft’s concept of a hybrid tablet from 2002 already was the right decision. One may therefore say that Microsoft has already back the right horse at that time. It was, as so often, just not the right time.

Let’s look across to the automobile industry, we see similar changes. “Why are thousands of new cars secretly parking in Bavaria?” Because the orders of the automakers to go back and the sales of new vehicles breaks. “Thousands of cars have to be swapped out to make room for newer models and keep the market alive.”

And why is that? Because the user behavior and the claims change. A high SAP manager has told me at CeBIT that in the interviews of young talents it’s not about whether and which company car to get since a long time. The question is, if you get an iPhone and iPad.

I’ve heard a lecture by a Roland Berger consultant a few days ago. The message was very clear, that the car market as we know it today is dead. Logically, new mobility concepts like flinc, Flinkster, book-n-drive or car2go are much more cost efficient. In many cases it is just not worth more to make large investments in an own car. In addition to the monthly cost of taxes and insurance, gasoline prices are one reason. Here you also can not make a single car manufacturer or model responsible for this mess. It’s about what the customers want.

We are currently experiencing the greatest technological revolution until today, which breaks down directly on our society. Starting from IT concepts (cloud computing, mobile, social media, etc.) the behavior of the users in other industries are also changing. And not a single company is responsible for that!


Disgusting: Amazon treats people like virtual machines – the human cloud

This article is not directly about cloud computing, but if I look at the whole issue I see many similarities with the concept of the Amazon Web Services. Beyond that it makes me very angry, how a company like Amazon treats its employees – notabene HUMANS.


A recently published documentary by the ARD (video) has revealed the inhuman machinations of the world’s biggest retailer Amazon with temporary workers in Germany. That the working conditions in the Amazon logistics centers are generally described as very poor is no secret, there have been several reports about it. But what this report reveals is among all human dignity, for which all stakeholders including Amazon itself must be held publicly accountable.

The report reveals that the success of Amazon is generated on the back of temporary workers that must “live” under worst conditions, and this here in the middle of Germany. Therefore the corporation collects Europe-wide contract workers and accommodate them in unused holiday villages. Amazon uses subcontractors e.g. for the recruitment and the “security” of the temporary workers. In totally overcrowded buses, employees are brought into the distribution centers. If they come to late to the shiftwork – even without their own fault – they paid less. The documentary shows how a company like Amazon “… must bring along 5,000 people for three months and then get rid of.

Amazon treats contract workers like virtual machines

In order to get a little curve to the cloud, I see so many parallels between the disregard of human dignity through Amazon and the cloud computing concept as it operates by the Amazon Web Services. Simply swap the term “virtual machine” to the word “human“.

Amazon requires, as the report good describes, “humans on demand” and let them work through 15 days in a row. Amazon transfers the concept of the cloud, so the principles of “on demand” and “pay per use” in its retail business and in the logistics centers, and thus creates its “human cloud”. It is a very good analog example for the technical situation of the webshop during the Christmas season. Meanwhile, excessive resources for computing power are needed to keep the shop stable because of the high requests. The situation is similar in the logistics centers. If the requests at the webshop increase, the commissions are need to approved, accepted and prepared for shipment. If the requests decline, even in the warehouses less is going on. Accordingly, fewer people are needed, which are then no longer need to be paid. An example of an Amazon headman of the logistics center in Koblenz: “3300 employees work here, 3100 of them are temporary.”

Theoretically a nice idea Amazon, but that does not work! You can not boot up humans like virtual machines and then dispose them when they are no longer needed!


Windows 8 is a “transition model”

I’m using Windows 8 now since a few days in real production use. I really like the new operating system, even if the mix of “tile environment” and the familiar Windows desktop is “something special”. Although I must say that I particularly “would” like to work with the tile surface very much! Would, because I spend 99% of the time on the classic desktop interface. And this for a good reason. All the applications I use are indeed started on the tiles, but then switch automatically to the desktop.

Main workspace: Browser

I work mainly in the browser. And also this automatically opens the Windows desktop, even the Internet Explorer. Self-critical as I am, I must admit, I have not trawl through the Windows Store for possible candidates. There are certainly one or the other treasure that can help me.

The use is a balancing act

However, the use of Windows 8 is a balancing act. On a tablet, the tiles and usability are very well done. I was able to test it extensively. With a mouse the feeling is not the same. On the other hand, not only for the old applications, the traditional desktop is needed. But using your fingers on a tablet here is no fun. Unless you have fingers like a chaffinch female. Here is a mouse advisable.

But basically I would recommend Windows 8.

Windows 8 can just be a “transition model”

Windows 8 is respectively can “just” be a transition model. This is not meant as negative as it may sounds. But Microsoft needed to find a way to deliver users and developers a hybrid model. With the upcoming version – Windows 9 or maybe even “Windows X” – the classic desktop will disappear completely. Respectively there will be just a narrow compatibility mode for the desktop to not completely lose all the stragglers.

Over time all software developers and vendors will either switch their solutions completely to the software-as-a-service (SaaS) model via browser or optimize their apps for the Windows tile surface to offer in the Windows Store.

When is the “Microsoft Cloudbook” coming?

However, an interesting question still remains. Will Microsoft go maybe the Google way in the future? Is there may soon be a Chromebook counterpart from Microsoft? As I metioned above, the browser is my main work area number one and I’m definitely not the only one. Furthermore more and more applications move to the cloud via SaaS. And not to forget, with the Windows Azure infrastructure Microsoft provides a fully developed and efficient cloud environment over which even Office 365 is deployed and also a “Microsoft Cloudbook” can be readily supplied with applications, etc. With Windows Azure, Office 365 (Office 2013),, SkyDrive, Skype, Windows Store, etc. Microsoft has created the necessary circumstances the recent months and years.


“Consumerization of IT”: The new BUZZ and pretty cool!

Consumerization of IT basically means that not the IT-department or the purchasing department are responsible for which devices the employees use. They choose the device and software they want. For example, everybody heard the new term „Bring your own device“.

I think consumerization of IT is – based on cloud, SaaS and mobile technologies – a reasonable trend. Because we are going more and more in the direction of a mobile cloud. That does not mean, that the cloud becomes mobile itself. Instead of this we become more mobile and flexible. Because all our important data, applications etc. are always with us. Either local or provided by a cloud.

This trend also gives the employees more liberty on how they are working and actually where they are working. I am a fan of this cultural change, because I think it is basically not important where we are working. Some people are more efficient in the office and others are in the home office or a café. It’s the same with this „classical“ nine to five jobs. It is not important when you are working. It’s important that you are working and get things done in the expected timeframe.

For example: In his Connected World Report, Cisco found out, that 3 of 5 students would like to work more flexible and want to work outside the company. See more below.

Because of that it is not necessary that the IT department is dicating everything regarding the hardware or the local software because the corporate relevant data and applications are in the cloud. Of course, the whole implementation process is not easy and may become a big challenge for the IT departments.

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