Some recent comments on LinkedIn about a post I wrote about a year ago prompted me to re-read it. It has some good insights worth repeating. The post, with some trimming of fluffy stuff, is below.
Attribution: InternetNZ. Original post is at https://internetnz.net.nz/news/blog/2012/Expertise-Service-EaaS-or-Cloud-Computing-20
Prediction: in five years time some organisations will be making more money selling their core expertise as a cloud service rather than using that same expertise themselves. For New Zealand, geographically remote from the rest of the world, that’s a huge opportunity.
Consider the evolution of the Web. Back in the early days, we were primarily consumers of information. The Web rapidly became the major source of information on anything and everything. Then, Web 2.0 came along and we were now producers as well as consumers. Not only could people and organisations find information, they became sources of information too.
I see early signs of that evolution in cloud computing. A Cloud Services 2.0 as it were.
First, the backstory of cloud computing. The early days contains the seeds of the future. Just as Sir Tim Berners-Lee’s original intent and vision for the World Wide Web foretold the need for Web 2.0.
The bursting of the dotcom bubble had left Amazon with 90% of its computing resources unused. It launched S3 or Simple Storage Service in March 2006 and then EC2 or Elastic Compute Cloud in August 2006. This allowed organisations to access scalable computing and storage resources via the Internet on a pay-per-use basis.
Others including Google and Microsoft followed. The rest is history. Cloud computing has become the saviour of IT vendors keen to push their wares. Flexibility and replacing up-front capital costs with ongoing operating costs were increasingly attractive for customers, particularly as the economic screws tightened globally.
Today’s cloud computing thinking
As in the first phase of the Web, much of the framing of cloud computing today is people and organisations being consumers. The dominant theme is vendors of online services and IT equipment chanting the cloud computing mantra in an effort to get more sales. From a customer’s perspective, everything IT is now available as a service- infrastructure (Iaas); development platforms (PaaS); and software (SaaS). The services are deployed in many flavours, with customers’ encouraged to make sense of private vs. public vs. community vs. hybrid clouds.
These services have domain expertise embedded in them. After all, you’re hardly likely to sign up to Xero for accounting or Salesforce.com for customer management otherwise. Many cloud services also act like platforms for other providers to sell their own add-on cloud services.
Yet there’s one thing that underlies the current cloud computing model- the assumption that we are only consumers of cloud services, not producers of them. Just as the first phase of the Web assumed we were only consumers of information.
Evolution of AWS
To get a feel for what could be different, let’s go back to Amazon Web Services. It started off as extending Amazon’s shop front across the Web and hawking spare computing capacity (though Amazon now denies that was the original intent). Over time AWS has evolved to also provide Amazon’s core expertise as granular web services for anyone to use in their own way, for their own purpose, at very low cost. As for Amazon itself, AWS is estimated to have pulled in $1.2 billion last year and stands up as a “separate business running at massive scale.”
So if you want to set up a retail presence online, Amazon’s core expertise is available to you on tap- micropayments; fulfilment; text search and indexing; bulk and transactional email sending; and workflow.
This is the key- AWS is a way for Amazon to make its core expertise available as a cloud service to everyone for whatever they want to do with it. They are of course a cloud computing provider too.
What if it was possible for any and every organisation to provide their core expertise to others as a cloud service? They would shift from being a cloud computing customer to also being a cloud computing provider.
That’s what I call Expertise as a Service (EaaS). Producers as well as consumers à la Web 2.0. People and organisations providing their core expertise as a cloud service.
Trade Me example
This might be clearer by taking a specific example. As a caution, this is based only on my understanding of Trade Me.
We can all easily accept that Trade Me knows what it takes to be successful at running an online auctions business.
The first opportunity for Trade Me is to provide a cloud based online auction platform. This is typical of existing industry-specific clouds so it’s not a new idea. Anyone would be able to use ‘Trade Me SaaS’ to set up their own online auction business anywhere in the world. And, as Trade Me has shown, they will quickly realise that success doesn’t lie in software but network effects and developing trust in their own online marketplace.
Trade Me also has more granular expertise. Let’s take one example. A large volume of auctions are started all the time, too many to review manually prior to each one going live. To deter fraud, they must have figured out what to look for programmatically as typical signs of a fraudulent auction. That’s core expertise.
Now imagine if they commoditised that core expertise and made it available to everyone in the world as a cloud service, for a fee. If you’re building a service, say a way for allowing anyone to transfer money to anyone else using a smartphone, would you be willing to pay for Trade Me’s expertise in detecting fraud to detect signs of something not quite right in real-time? How about a service that deters comment spam better?
The market for Trade Me is both to consumers of granular expertise as a cloud service as well as other cloud service providers to use it in their own cloud service offerings. The whole world is now a market for Trade Me’s core expertise. Just as Amazon has done with AWS.
EaaS for everyone
As thinking and tools evolve, EaaS will be ‘democratised’. That’s one thing the Internet is really good at.
Then the EaaS opportunity will not be restricted to large organisations alone but available to every organisation irrespective of size and, one day, to individuals too. We will all be able to think about what core expertise we have individually or in our organisation and make it available to others as a cloud service, for free or a fee.
Does your organisation have expertise in credit scoring potential customers? Know the critical control points for profitable sheep production? Expert in locating stoat traps? What about automated detection of the next fashion season’s hot trends? Know a data mining technique that predicts divorce? As an individual, can you figure out sentiments about a topic based on tweets? Know the best way to locate lights in a room? How about being able to figure out if a guy is going to get the second date?
The possibilities are endless. Wikipedia showed that everyone is an expert in some fact. Perhaps one day EaaS will show we are also experts in some function or understanding.
There are obvious limits. For example, Google is unlikely to ever make its core expertise of search engine algorithms available to anyone else in any form whatsoever. There are many other areas of expertise Google already makes available to everyone but there will always be areas of expertise that provide such a competitive advantage that they will never be commoditised and sold. But these areas are really quite small (which is why outsourcing exists).