Piyush Lumba, Director of Product Management for Azure Data Services at Microsoft, talks about what the Marketplace can do today and shares some of his perspectives on ways that the nascent data market space could evolve.

Following up on a blog post that I wrote at the start of 2012, this is the eighth in an ongoing series of podcasts with key stakeholders in the emerging category of Data Markets.

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In many ways, the core concept of the data marketplace is nothing new. Companies like Bloomberg, Nielsen and Experian have built (extremely) profitable businesses by aggregating data, quality checking it, and selling it on. Often their customers could have gone directly to the source(s) and paid far less, but they don’t. The convenience and quality assurance of dealing with a single — reputable — source is perceived to have value. A brand like Bloomberg’s is associated with trustworthiness and authority, and the brand of the marketplace is far more prominent than the data sets upon which it is built.

Similar sites have also served the needs of those seeking data for free, with IBM’s ManyEyes project, Freebase (acquired by Google), Hans Rosling’s Gapminder or The Guardian‘s Data Store amongst those typically mentioned. Current government enthusiasm for ‘transparency’ has fed all of these sites with data, and led to creation of large government-specific data repositories such as data.gov.uk.

The commercial services like Bloomberg have tended to focus upon specific domains (finance, in Bloomberg’s case) or types of data. They have also tended to be eye-wateringly expensive; aimed squarely at the small market segment for whom the data are mission-critical and the fees are affordable. The free services like Gapminder also tend to focus (global development statistics in this case). Other, perhaps, than experiments like ManyEyes, both the free and the commercial sites tended to aim for a degree of comprehensiveness and authority. They wanted to become the place to turn for their type of data.

But for the new generation of data markets, the picture becomes far less clear. They tend to be catholic in their data acquisition policies, they typically don’t even attempt comprehensiveness, they mix free (almost all of them hold identical large swathes of government data from the US, the UK, and elsewhere) with commercial data, and they continue to feel their way toward business models that might prove sustainable for the long haul. Perhaps more seriously, they appear almost schizophrenic with respect to brand projection, attempting to push both their own brand and those of the data sets they host in ways that can confuse far more often than they enlighten.

In attempting to differentiate themselves, today’s data markets are seeking to add features and functionality in order to be seen as far more than simply places to buy third-party data. They want to become recognised for quality assurance, for data enrichment, or for tools and capabilities that make working with the data easier or more powerful. They want to become sticky, and they want to be seen as different from their competitors. The trick, though, is to explain those features and those differences in ways that make sense to potential customers. Those customers will ultimately pay for functionality and utility, not for gimmicks or under-the-hood technological distinctions that have no real impact upon getting on with the job in hand. Are today’s data markets describing their features in ways that help prospective customers to understand why they should be chosen over the alternatives? Not really. At least, not yet.

Also, as RedMonk’s Stephen O’Grady touched upon amongst a set of related issues, we’ve really not begun to see much evidence of price competition. There are too few suppliers, each with their fiercely loyal bands of tame users (‘customers’), and too few people prepared to shop around for the best deal.

The new data markets are still young. Understandably, they are still feeling their way in order to understand what the market wants, how much it is prepared to pay for what it wants, how large the market might be, and what their individual niche within that broader market might look like. Earlier models, based upon almost monopolistic domination of specific verticals and polarised pricing, offer some lessons but are ultimately unsatisfactory blueprints for this more competitive, open, and complex environment. Beyond specific domains like finance (which may be ripe for disruption), the data markets must struggle to convince prospective customers that they have something of value to offer. Those customers may already have their own processes for obtaining data. They may generate the data themselves, or expect — as so many do — to be able to access what they need for free. They are perhaps suspicious of data produced by third parties who are, in other contexts, their competitors, and they are almost certainly unwilling to allow ‘the competition’ to benefit from their own data. They invariably do not understand the costs associated with gathering and quality-assuring data, or the challenge of preparing different data sets in order that they may meaningfully be combined. And into this, the fledgling data markets must insert themselves, market themselves, and sell themselves. They must change behaviours, they must challenge presumptions, they must alter working practices, and they must persuade their new customers that all of this pain is worth paying for. A tall order, indeed, but necessary if any of them are to realise their potential.

The European Commission, at least, begins to comprehend the scale of the challenge. A set of projects are currently being finalised, and this year will see European SMEs given the funding to boot-strap a number of new data sources. With Commission funding, it is hoped, the chosen projects will be able to explore models by which data can be created, curated, shared and re-used in a manner that is cost-effective and ultimately sustainable. The funding should enable these projects to reach viable scale, and give participants the freedom to explore alternative commercial models. The projects will be announced shortly, but only time will tell if the funding and the incentives are sufficient to break through the barriers that prevented any of these markets from forming by themselves.

But outside the rather artificial bubble created by European public funding, there is a lot of work to do. Investors are intrigued by — but still wary of — the opportunity. Infochimps is spending its way through over $1.5 million of investment, Factual has almost $30 million, and companies like Talis and Microsoft are making not-insignificant investments in their own efforts. We’re all still experimenting, but with the real market for these services currently falling far short of the money at stake, it mustn’t be long before investors start asking harder questions. Back in 2010, Pete Soderling and Pete Forde described data as a $100 billion market. The data markets may be after a significant chunk of that but, today, they’re not even close.

The ways that data markets are attempting to differentiate themselves, and the work being done to understand the market opportunity here, will have to wait for subsequent posts.

Disclosures: I am a former employee of and current shareholder in Kasabi’s parent company, Talis. The European Commission is, from time to time, a client.

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The PATRIOT Act’s acronymic name may evoke harmless images of bunting, parades, and national anthems, but the reality is rather different. A product of America’s post-9/11 entrenchment, the Uniting (and) Strengthening America (by) Providing Appropriate Tools Required (to) Intercept (and) Obstruct Terrorism Act of 2001 affords the Federal Government wide-ranging and far-reaching powers that show little — if any — respect for geographic boundaries or inconveniently contradictory local legislation. A US company (like Microsoft or Amazon) is subject to the Act’s powers all around the world. A US citizen’s data, stored in a US company’s data centre that is physically situated in the United States is subject to the Act, and everyone might be reasonably comfortable with that. But so is a German citizen’s data, stored in an Amazon data centre in Ireland; and German, Irish and European lawmakers appear almost powerless to intercede.

European countries tend to be stricter about use (and abuse) of personally identifiable information than the US. Although surveys identify some national differences, it also appears that Europeans broadly embrace the approach taken by their governments. And, anecdotally, conversations with European and American entrepreneurs and European and American individuals repeatedly point to rather different sets of basic presumptions operating on either side of the Atlantic. Europe’s Data Protection Directive, and its implementation in national legislation such as the UK’s Data Protection Act, are clear about the ways in which a citizen can expect data about themselves to be collected, stored, shared and used. The penalties for intentional abuse could probably be tougher, but the sentiment remains clear. The Safe Harbor Principles provide mechanisms by which US companies can self-certify that their normal operating procedures meet European standards (Microsoft, Google, Amazon and many others do this). The February 2010 ‘model clauses‘ that Microsoft embraced last month codify some of these protections in a manner that — theoretically — makes it easier for customers’ lawyers to understand what Microsoft will do with their data. It’s unlikely that the legalese (PDF) will actually make things any clearer for the average customer, though.

So, from the perspective of Europe’s governments and citizens, and for US companies that choose to trade here, things appear more or less ok. Personally identifiable data can be collected, stored, shared and used, but only within a set of constraints that Europeans broadly seem comfortable with. Unfortunately, all those Safe Harbor self certifications and model clause endorsements are summarily ignored whenever the PATRIOT Act is invoked. Data Protection Directive requirements not to transfer data to random third parties are trumped by PATRIOT Act powers enabling the US Federal Government to take what it wants. Data Protection Directive stipulations that citizens be informed when their data are taken are over-ruled by the PATRIOT Act’s cloak of secrecy. And on and on the list of contradictions continues. And the PATRIOT Act wins every time, because its powers, its penalties, and its backers are so much scarier than the officials in Brussels. Despite tougher language, it’s not clear that sweeping changes to Europe’s data protection directive will really resolve the contradictions. Indeed, once enshrined in law, the proposals will most likely result in more polarisation, not less.

In Europe too, of course, there are exemptions to the data protection legislation specifically intended to permit reasonable use of data by law enforcement agencies and others. This makes sense, and it could be argued that the PATRIOT Act is simply more of the same. But it’s not, because European law enforcement agencies must demonstrate a far clearer need before they’re allowed to — legally — start rooting through a citizen’s data.

It is unlikely that the PATRIOT Act is routinely invoked, or that US officials spend much time reading Europeans’ email. The cloud — even the parts run by US companies — remains broadly safe, secure, and reliable. Safe Harbor provisions, model clauses, and the ability to insist that data normally resides in one territory or another remain an effective means of ensuring that day-to-day cloud operations meet user needs whilst complying with relevant local, regional and international legislation. But, every now and again, the PATRIOT Act will be invoked, and data will be taken. Whilst it’s something to be aware of, it’s probably not something for most people to lose too much sleep over. You’re more likely to lose data yourself, or have it escape into the wild because of an error in your own systems or a malicious hack by a competitor. And you could and would be held accountable for those breaches, in a way that you almost certainly wouldn’t for a PATRIOT Act data seizure.

So the PATRIOT Act may not be as scary as it might now appear. But it remains a visible illustration of a rather more worrying issue; a belief that the laws of one country should be able to trample over the laws of other countries at will — even inside those countries. Further, it suggests a (growing?) disconnect between the attitudes and expectations on either side of the Atlantic. And one particular aspect of that is the subject for my next post.

Image by Flickr user John Morgan

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Formed as a partnership between Microsoft and Accenture, Avanade focuses upon delivering IT solutions based upon Microsoft’s suite of technologies and products, including Cloud offerings such as Azure and the company’s Business Productivity Online Standard Suite (BPOS).

I discussed Azure in a podcast with Microsoft’s Amitabh Srivastava last year, and in this latest conversation Scott and Bob share some of the experiences Avanade has gained in rolling out over 1.3 million BPOS seats to a wide range of enterprise clients.

This podcast was recorded on Wednesday 28 July, 2010.

During our conversation, we referred to the following resources;

• Accenture
• Amazon
• App Fabric
• Avanade
• Avanade Cloud Computing
• Azure
• BPOS
• Hotmail
• Java
• Lotus Notes
• Microsoft
• Microsoft Live@Edu
• PHP
• Werner Vogels

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“All too often, insider analyst research and commentary is costly, inaccessible or ineffective to the entrepreneurs, investors and innovators who need timely insights most. We’re changing this by making high-quality expert reports, data and commentary easy to access and highly interactive for our community in key emerging technology areas.”

I was therefore delighted when VP of Research Michael Wolf got in touch before Christmas to ask if I’d be interested in providing them with content.

My first piece, which is published today, explores some of the issues faced by Cloud service providers and users in negotiating the attitudes and laws of the different jurisdictions through which their data may pass. I would welcome any comments on the piece, and must thank Microsoft‘s Matt Deacon, Sun Microsystems‘ Michelle Dennedy, IBM‘s Harriet Pearson, Rackspace‘s Simon Abrahams, Computacenter‘s Matthew Yeager and F5 Networks‘ Lori MacVittie for taking the time to talk with me as I prepared it. Thanks, also, to Celeste LeCompte at GigaOM for editing and for Americaniszing my spellingz… Any misunderstandings, misrepresentations, typos etc, are of course my own.

I look forward to my next GigaOM assignment!

For those on this side of the Atlantic with a particular interest in the topic, London’s Powered By Cloud event (where I participated in a panel last year) is back for a second edition on 8 and 9 February. Of particular interest in this context is an addition to this year’s event; 10 February’s dedicated to a Cloud Law Summit.

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It might seem that the mega-bucks reports from the likes of Gartner, Forrester et al are the preserve of CxOs with vast desks upon which they can array the multitudinous documents to which their employers’ subscription entitles them. The truth, though, is that these documents — which notionally sell for hundreds or thousands of dollars apiece — can often be downloaded in exchange for some contact details. The source of this apparent largesse is not the analysts’ own website, but rather the sites of companies looked upon with particular favour within a given report. The back-room exchanges of kudos, cash, or mutual back-slapping that sees these assets made freely available are well understood, and legitimate.

And so it was with a recent report from Forrester, made freely available to all via the web site of 3Tera; the co-founder of which I spoke with recently in one of my podcasts.

The report is ‘Deliver Cloud Benefits Inside Your Walls,’ dated 13 April 2009, and produced by Forrester’s James Staten with input from Simon Yates, John Rymer, Frank Gillett and Lauren Nelson. Billed as “the first document in the ‘Private Cloud’ series,” it would appear that Forrester, at least, has no hang-ups about the notion of a Private Cloud. Whilst some purists become incredibly agitated about this ‘dilution’ of their dream, realists, pragmatists and (it would appear) analysts are simply getting on with it.

According to the report’s Executive Summary,

“While the excitement about cloud computing centers on Amazon Elastic Compute Cloud (EC2) and other public infrastructure-as-a-service products, many enterprise infrastructure and operations professionals are taking this concept in-house and building their own internal clouds. These pools of virtual machines can be built upon either virtual server or high-performance computing (HPC) grid foundations and can be operated according to the specific security and process requirements of the business. But to deliver the fundamentally better economic value of cloud architectures within your walls, these clouds require a dynamic platform (or automated workload management) and developer self-service interfaces. There’s a growing list of vendors eager to help you deploy an internal cloud, but be sure you understand that these solutions are more building blocks than complete solutions and must be customized to your specific needs.”

It would be impossible to cover the space in much detail in a report comprising just nine pages of substantive content, but Staten and his co-authors do a reasonable job of outlining some high level benefits of internal deployment whilst also flagging some of the issues in need of addressing. Prominent amongst these is the suggestion that ‘bypassing IT Ops’ to hand developers their own internal Cloud is not necessarily something to be done lightly;

“Whether you buy the hype or not, enterprise application developers are finding the self-service, pay-as-you-go, instant deployment values of cloud computing platforms appealing. Developers can go to a Web page, sign up with a credit card, and instantly instantiate any number of virtual machines and applications without any IT ops involvement. Interviews conducted by Forrester show that many
enterprise developers are doing just that.

But IT ops processes and procedures — and enterprise architecture rules for that matter — exist to ensure that the overarching needs and policies of the business are fulfilled and followed. Although making time in the deployment process to accommodate these demands may hinder time-to-market, often there are very good reasons to do so”

This is true, but overlooks the reality that those processes and procedures arose to manage a very different environment. There is a middle ground to steer here, and it is one that should make a great deal of sense. Virtualisation, elasticity and more create significant opportunities for the cost-effective provision of Enterprise IT. Rather than simply accepting the status quo of those established processes and procedures, or routing around them with the departmental credit card and some cheap Dells or EC2 instances, there is a real opportunity for IT and business teams to engage in fresh dialogue; to understand the match between changing expectations, changing requirements, and changing possibilities.

A throwaway comment also points, tellingly, to the real need for organisational change if we are to optimise the benefits of these new opportunities;

“We can stand up a LAMP stack or Windows VM within 24 hours now — one hour to provision the VM and 23 hours to move the money.”

Elsewhere in the document, the Forrester team suggests that,

“With today’s virtual infrastructure solutions and a growing list of internal cloud platform technologies, it’s fairly easy for an enterprise to start up a cloud-like environment within its own domain.”

The document goes on to suggest that, in Q3 of 2008, around 4% of surveyed enterprises in Europe and North America had done so, with a significant number implementing or seeking budget. More than half of those surveyed, though, were either ‘Not Aware’ or ‘Not Interested’ in an Internal Cloud. For ‘small businesses’ of fewer than 100 employees that figure rose to a massive 80%. It would be interesting to see the same figures for ‘Public Cloud’ utilisation… although there is likely to be significantly more under-reporting of public Cloud use as so much of it will be by individuals and teams who are below the corporate radar.

With one of the significant cost reductions in the public Cloud being directly related to more efficient utilisation of virtual and physical machines, the corresponding saving within the enterprise — whilst still significant — is likely to be smaller, and there may still be a need for a hybrid arrangement to permit ‘cloud bursting’ at times of particularly high load.

The document draws out three ‘internal Cloud solutions’ — 3Tera, Elastra and Zimory — all of which are worth a look, and then goes on to very briefly touch on three alternative approaches. Here, more than elsewhere in the document, Forrester seem not to go into enough detail. They touch upon a DIY approach based upon EUCALYPTUS (now available in commercial form, of course, although the authors don’t mention this), contracting with a systems integrator such as IBM to secure a bespoke solution, and ‘waiting for the major virtualisation vendors to show up.’

There’s an awful lot of activity already underway from these companies, with whom enterprises probably already have a relationship, and it seems unhelpful to pass over them so quickly. What about Windows Azure, for example, which Microsoft is increasingly suggesting should be available for local utilisation?

So, on the whole this document is a useful overview. As might be expected in something of this length, it ends up raising more questions than it answers (which drives Forrester customers back to their Analysts, of course), and there are one or two areas in which it leaves odd gaps. Maybe the next document in the series will begin to fill some of those gaps?

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Everyone who wants to do so should have had their chance to read the Open Cloud Manifesto by now, and to see the list of companies putting their names to it. As expected, Microsoft, Google and Amazon are not there.

Reuven Cohen of Enomaly is one of those involved in bringing the Manifesto to fruition, and I spoke to him on Thursday evening last week to hear more.

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Long known for their dominance on the desktop, Microsoft is now making a concerted effort to carve out a space of its own in the Cloud with Windows Azure. Amitabh Srivastava, the company’s Corporate Vice President with responsibility for Azure, spoke with me this week and the result has just been released as one of my podcasts.

Production of this podcast was supported by Talis, and show notes are available on their Nodalities blog.

Amitabh talks about the company’s aspirations for Azure, and reports on the success of the current ‘Community Technology Preview;’ effectively a beta programme for Azure ahead of its formal launch towards the end of this year. We also discuss the nature of Azure, digging into the question of where Azure will be deployed, and the extent to which it will interact with desktops and data centres beyond Microsoft’s control.

In line with recent announcements from the likes of 3Tera, Amitabh stresses the importance that Microsoft sees in a comprehensive Service Level Agreement (SLA) for Azure.

Have a listen, and see what you think.

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Open, Interoperable services in the Cloud. Sounds like a no-brainer, eh? Well over the past 24 hours or so, a plethora of blogs, mailing lists and social networks have been getting extremely agitated over some nascent efforts intended to support exactly that. And, what’s more, the vast majority of those getting most agitated haven’t even seen the document in question.

I have seen the document. I have spoken with some of the people behind it, and I even have at least one podcast discussing the Manifesto and its aspirations. But those conversations were conducted under embargo, and I respect embargoes. I’ll be releasing my formal coverage of the Manifesto when that embargo lifts next week.

I can talk about the current storm without breaching those terms, and try to cut through some of the name-calling and innuendo to shine a little light on what’s actually going on.

This all began with a blog post by Steven Martin. Steven works at Microsoft, leading to commentary suggesting that;

“Earlier today Microsoft savaged an undisclosed effort to develop an ‘Open Cloud Manifesto’”

and

“Microsoft criticizes drafting of secret ‘Cloud Manifesto’”

Microsoft is a big organisation, and one that has long held the extremely enlightened view that its employees should be allowed to express their own opinions. Steven works for Microsoft. That doesn’t necessarily mean that when he writes on his blog Microsoft is speaking, despite his relatively senior position.

Sam Johnston then joined the fray (subsequently followed by most of the big tech sites on the blogosphere, the majority of which seemed to simply take the original post at face value, attribute it to the Redmond giant, and apply a healthy dose of pro/anti-Microsoft bias to the mix in order to increase the confusion.)

Both Steven and Sam make a number of extremely valid points, but these have been buried under the Microsoft-bashing directed at Steven by some and — especially — a readily apparent history of tension between Sam and Enomaly co-founder Reuven Cohen, one of those behind the Manifesto.

Sam goes on to establish a competing effort, the ‘Cloud Computing Manifesto.’ Whilst there may be a need for such a move if the community is not served by the Open Cloud Manifesto, to divide and confuse just days before we’ll all be able to read the first public draft of the Open Cloud Manifesto and decide for ourselves seems unhelpful.

By next week, everyone will be able to read the Open Cloud Manifesto. By next week, everyone will be able to see the companies that have put their weight behind it. By next week, everyone will be able to see the companies that chose not to support it, and the companies that — whether by conspiracy or otherwise — were not invited into the founding group.

Whether we like it or not, the politics of aligning powerful and competing interests often leads inevitably to the need for conversations in back rooms, and to a process in which some are earlier to the table than others. Having been involved in the evolution of quite a number of de facto and de jure standards and specifications, I’m well aware that there are a plethora of pros and cons associated with most processes for reaching consensus. The fact that this particular effort began life as a series of quiet conversations with movers and shakers does not mean that it’s inevitably a conspiracy or an attempt to bully the community into line.

Let’s stop second guessing the motives of its instigators and the wording of the document, take a weekend to do something more important, and then show those behind the Open Cloud Manifesto the courtesy of reading their document when it’s published. At that point, if there are things to criticise, then we can do so. But equally, if there are points to support and celebrate then we must do that to.

This endless speculation and innuendo helps none of us, and I expect that I can — easily — count the commentators and stirrers who have read the document on the fingers of one hand.

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Sage is a titan of the UK software scene but has struggled recently, both with expansion beyond Europe and (like others) with shifting their business toward a hosted capability.

According to Duane Jackson of competitor KashFlow (also picked up by Dennis Howlett and Ben Kepes at CloudAve), Sage are only weeks away from rolling out SageLive;

“On a laptop tucked away in a quite corner I spied a program running in a web browser with the title “SageLive Beta”. I got chatting to the guy demonstrating it (without saying who I am). He confirmed it’s their newest product, in development for 18 months and due for release in January. Until now they’ve tried to keep it under wraps. I commented that it seemed to be a new approach for Sage to develop a product from scratch rather than acquire an existing company. They were obviously very proud of what they’d achieved and rightly so.”

This is interesting, but I’m intrigued to understand more about why Sage were showing this ‘in a quiet corner’ at a big trade show? Is the product still ‘under wraps’? If it is, why on earth was it there for the competition to oggle? And if it’s not, why aren’t they talking about it? Maybe Duncan Hawes, Development Manager for the product, would like to set the record straight?

Duane suggests that SageLive is ‘posting to a Sage 50 database in the backend,’ which (if I understand correctly) means they’re limiting the reach of the new offering to just the UK because of the data structures used in that particular product line. If true, this would seem something of a missed opportunity for alignment of the company’s confused product mish-mash.

It would also be interesting to have a lot more information about the target audience for this product; small businesses, medium businesses, big corporations? And is it an alternative for existing customers, part of a drive to acquire competitors’ customers, or an attempt to address pockets of non-consumption?

Come on Duncan; tell us what you’re building up there in Newcastle. I drove past your building on Sunday, too. If only I’d known this then, I could have popped in for a chat!

Update 3/12/2008 – The Financial Times reports on Sage’s results…

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