Friday, November 20, 2009

Who owns the customer in the cloud?

In the world of technology, customer ownership has always been a huge issue. The company that owns the relationship is able to influence purchasing decisions that surround their product(s). For example, if the customer is tied into a specific application, that application can influence purchases down the stack (database, operating system, etc.). In these cases the specific (e.g. vertical applications) had an inherent advantage over the more generic or interchangeable (e.g. databases).

Then companies began to standardize on certain infrastructure elements. For example, a company might say “We are a Windows shop” or “We are an Oracle shop” and unless you had a REALLY compelling reason, you had to run on that infrastructure.

Cloud computing introduces a new dynamic. For example, you might be an HP equipment company, but if you use Amazon AWS, what is their equipment? They won’t tell you. What is the storage equipment used in S3 and EBS? Sorry, can’t say. You see those pieces are commodities.

In time, the process of commoditization will move right up the stack, and the cloud vendor strongly influences this process. Sure you can run various databases on AWS, just create your own AMI. But if you want the vertically integrated “out-of-the-box” database, that would be RDS running MySQL.

So, who owns that MySQL customer? Amazon, not MySQL/Sun/Oracle. The Amazon package bundles EBS, automation and more, and only Amazon can support it properly.

Who owns the customer when an application like SugarCRM is run on Amazon? That depends. Who sold the customer. If SugarCRM sold the customer and offered it as SaaS, then they own the customer. If the customer goes directly to Amazon, then Amazon owns the customer. If Amazon takes it one step further by integrating various other services, tools, etc. and then brands the resulting package as Amazon CRM, then Amazon will increasingly own the customers of the future.

In fact, I wouldn’t be surprised to see Amazon offer a suite of fully integrated business applications based upon open source applications and the LAMP infrastructure, sort of a back-office suite. Then you don’t have to worry about all those messy integration issues. Your CRM application will work with your document management application, etc. Sure, you could assemble your own solution in a piecemeal fashion, but why would you?

At that point, the question is not what CRM do you use, but rather which cloud suite do you use and is it compatible with my cloud suite. In other words, does the Amazon suite interoperate with the Cisco, EMC/VMWare, HP, IBM, and Rackspace suites.

The starting point for all of these solutions will be LAMP and open source applications. But each will focus initially on automation to simplify the effort, like RDS. Then they will deliver interoperability. Finally they will innovate in proprietary ways to deliver a better experience. And with each step they will further establish their ownership of the customer. This is why every major technology company, with the exception of Oracle, is assembling their own cloud solution, because they don’t want someone else owning their customers.


  1. I always enjoy learning how other people employ Amazon S3 online storage. I am wondering if you can check out my very own tool CloudBerry Explorer that helps to manage S3 on Windows . It is a freeware.

  2. Interesting post, most of which makes perfect sense.

    I'd like to understand why you think that LAMP is the necessary starting point for Open Source apps. I guess I don't need much convincing on the LAM part, but the P, while a fine choice, doesn't seem an absolute necessity to me.

  3. The term LAMP is mere shorthand for the open source stack. Yes, there is a lot of LAMP (php, python), but there is plenty of Java, Ruby, etc. out there. BTW, it appears that VMWare is also assembling a stack that is largely open source.

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