Despite our recent(ish) blog post bashing Microsoft’s cloud initiatives, there’s a nugget of brilliance in “The Economics of The Cloud,” a recent paper published by Rolf Harms and Michael Yamartino, head corporate strategists at Microsoft. It’s a good paper, but the brilliance is in the opening metaphor:

When cars emerged in the early 20th century, they were initially called horseless carriages. Understandably, people were skeptical at first, and they viewed the invention through the lens of the paradigm that had been dominant for centuries: the horse and carriage. The first cars also looked very similar to the horse and carriage (just without the horse), as engineers initially failed to understand the new possibilities of the new paradigm, such as building for higher speeds, or greater safety. Incredibly, engineers kept designing the whip holder into the early models before realizing that it wasn‘t necessary anymore.
Initially there was a broad failure to fully comprehend  the new paradigm. Banks claimed that, “The horse is here to stay but the automobile is only a novelty, a fad”. Even the early pioneers of the car didn‘t fully grasp the potential impact their work could have on the world. When Daimler, arguably the inventor of the automobile, attempted to estimate the long-term auto market opportunity, he concluded there could never be more than 1 million cars, because of their high cost and the shortage of capable chauffeurs.
By the 1920s the number of cars had already reached 8 million, and today there are over 600 million cars – proving Daimler wrong hundreds of times over. What the early pioneers failed to realize was that profound reductions in both cost and complexity of operating cars and a dramatic increase in its importance in daily life would overwhelm prior constraints and bring cars to the masses.
Today, IT is going through a similar change: the shift from client/server to the cloud. Cloud promises not just cheaper IT, but also faster, easier, more flexible, and more effective IT.

We absolutely love the analogy between the advent of the car 100 years ago and the increasing importance of cloud computing today. While Harms and Yamartino focus on economic comparisons, we believe there’s a real aesthetic comparison as well: specifically, we think many SaaS vendors (and SaaS wannabees) are building “horseless carriages” and not true SaaS platforms. Instead of revisiting business fundamentals and building from the ground up, many vendors are rehashing decades old interfaces and workflow models. Ironically, Microsoft is more guilty of this than anyone.

Good SaaS platforms and cloud-based apps don’t include whip holders. If you’re a consumer or business looking at cloud solutions, or you’re an innovative vendor, make sure the products you use and/or sell fundamentally leverage today’s technologies. Don’t drive a horseless carriage.

Read the original blog entry...