A word like “critical mass” is so often used in the figurative sense, it is sometimes hard to remember its original, technical meaning: the smallest amount of fissile material needed for a sustained nuclear reaction. This was first achieved by the great physicist Enrico Fermi, in a “pile” (and that’s the technical term) of Uranium in the unlikely location of a squash court at the University of Chicago.

It turns out that different isotopes require a different mass to go critical. So Fermi needed a pile 8 metres high of unrefined Uranium, but a ball of just 10 cm (the size of a softball) of Plutonium is needed.

Cloud Network pioneers also wonder how long it takes to “go critical”. A common target in the network world is 50pp, 50 percent penetration of the target market. I prefer the term “network effect”, and the idea here is that networks ( just like a pile of uranium-235), when they get to a certain size “go critical”, and the benefits of adding a new node exceed the costs of creating and connecting it.

Let’s look at some Network Effects over the years. They all exhibit the same chicken-and-egg effect in that it makes no sense to buy a telephone (lay rails, string cables) if there are not enough people to connect to.

Network

Started

Critical Mass

Time Required

Built by

Railroads 1820’s 1880’s 70 years Tycoons, Barons
Electricity 1860’s 1930’s 70 years Local Govts, co-ops
Telephones 1870’s 1940’s 70 years Ma Bell
Oil Pipelines 1880’s 1920’s 40 years Standard Oil
Credit cards 1950’s 1980’s 30 years Visa
Internet 1960’s 1990’s 30 years Fed Govt
Cloud 2005 ? ? Various
Source: Infrastructure History Series (Amy Friedlander) http://www.cnri.reston.va.us/series.html

One fact that seems inescapable is that things are speeding up, just as we’ll, as  investors are unlikely to want to wait decades for the network effect to take off. Also, the time taken to get to “criticality” depends on the cost of setting up the node and connecting to the network. Stations on a railroad are expensive, so are the tracks between them.

There’s certainly more to a Cloud Network than just scale, such as the classic cloud benefits of service levels and guaranteed delivery but scale matters. And of course there are many examples of networks that fail to go critical at all: Apple’s Ping, the Philips Video Disc, the CueCat, the 3DO games console.

How can you tell if a network has reached criticality? The mathematical definition states baldly that at criticality, the value obtained from the network is greater than or equal to the price paid for access. Not very helpful, but there’s one important thing that is needed: a sustainable business model .

A sustainable business model is in effect when the profits to the network administrator scale in proportion to the value that its subscribers receive. If you have to endlessly pay for more hardware (e.g. phone lines, wireless spectrum, racks at Amazon Data Services) as you get more members, then you don’t have a sustainable business.

There are plenty of Business Networks out there, and when one of them goes critical, it’s going to create a really big noise.

We discussed in the past how . Our newest paper on PaaS integration finds that cloud leaders prefer to build their own cloud platforms and are using the cloud to collaborate with partners, suppliers, and customers.

Download our full paper (free, but registration required).

Capitalizing on cloud-integration strategies requires a significant amount of groundwork. Popular methods of preparation include purchasing integration tools (58%), creating dedicated teams to focus on integration (55%), and engaging integration service providers (52%); cloud leaders are more likely to do each of these things, and less likely the other firms to outsource integration to third party vendors.

From our newest study, Connecting the Cloud. Download (free, but registration required).

Connecting clouds and building joint business networks via cloud platforms can simplify the integration process, especially with the use of IaaS and PaaS. Yet it is critical for business and IT executives to avoid thinking of cloud tools and technologies as simple plug-and-play options, tempting though that idea may be when many services can be switched on with nothing more than a credit card. The reality is that a robust infrastructure and integration strategy is required to achieve maximum value from cloud networks, expanding their capabilities.

And these capabilities are wide-ranging, including mobile services, social media, and Big Data analytics all of which must also be integrated. Another pressing need is for consistent data across an entire IT environment, including internal servers, virtualized systems, and cloud systems and platforms. A growing stream of unstructured data audio, photos, video, e-mails, text messages, text files, metadata, and so on must coexist with structured data that is slotted into conventional databases. Finally, the focus must always remain on security.

From our newest study, Connecting the Cloud. Download (free, but registration required).

There has been much commentary about Kevin Spacey’s new series, “House of Cards”. On the blogosphere, the talk has been mainly about the innovative distribution method via Netflix. The rise of Netflix, especially its recommendations of films by your peers, is certainly a great example of the Cloud Economy. At Blockbuster, you could see the shoppers drifting among the aisles not knowing what film they wanted to watch. Solving this problem with the power of the cloud was key to the success of Netflix. The transformative Network effect, promised in the name of the company itself, turned out to be not streaming over the net (a recent innovation, after Blockbuster had already been mortally wounded) but recommendations from your network.

As noted, a well-worked theme.

I want to focus on one of the signature artistic aspects of the “House of Cards” series. I was a fan of the original 1990 BBC series, which was wildly popular, as it happened to be screened at exactly the same time as Thatcher’s deposition by her Conservative Party colleagues. One of the memorable aspects—which has been faithfully kept by Spacey’s remake—is when the protagonist turns to the camera to address the audience directly. One memorable line delivered this way  is,  “You might very well think that; I couldn’t possibly comment.” The line is still used by current politicians, as a suitably ambiguous answer to a penetrating question.

In acting, this is called “breaking the fourth wall”; a phrase from theatre, where the actors perceive the audience as behind a wall, and it is forbidden to interact with them directly. It might be acceptable in pantomime or burlesque, but about the only time an actor addresses an audience in live theatre is to tell them to “turn off that bloody phone”.

In the Cloud Economy, we break the taboo and breach the “fourth wall”. Our internal processes of production and finance used to be played out in an enclosed walled garden. The stakeholders of suppliers, customers, banks, and other partners used to be passive observers but now—through the breaking of the Fourth Wall—they can engage directly via the cloud.

Our internal processes become visible to our partners and we invite them to participate in the cloud with us. They can share production schedules with us and we can exchange financial documents with them.

In certain forms of theatre, the fundamental distinction between actors and audience starts to disappear. I saw the theatre troop called Showstoppers last year: a brand new musical is created from scratch at each of their performances using audience suggestions to create a show on the spot. The audience is no longer passive, but guiding and shaping the show.

As the Cloud Economy matures, the distinction between internal and external processes will similarly blur. Buyers and suppliers will become homesteaders on the cloud, joint ventures will become more common, and maybe the difference between employees and contractors will become increasingly more blurred.

It is no longer taboo to involve people who used to be merely the audience in our drama.

My daughter is into rock climbing. So I spend my Saturday mornings watching her scramble up terrifyingly acute slopes with the sound of carabiners snapping to attention as she ascends ever greater heights.

In climbing, there is the concept of the “lead” who determines the optimal route, tests the footholds, inserts the clippy-things (I’m no expert), takes most of the risk, and guides the team behind her. “Reach a little over to your left, there’s a good hold just above you.” They carry their own rope, and have much further to fall than everyone else.

Leading is hard, enervating, can be dangerous and only the most experienced can do it. It’s a similar role as that played by the Everest climbers Hillary and Tenzing, but played out every Saturday morning on English granite.

In any Cloud Platform, going first is also hard and risky. The first sellers on eBay were not sure that there would ever be enough buyers to drive prices up in their auctions. The first purchases of expensive telex machines had to persuade their trading partners to buy one, and to some extent, train them on its use.

The good news is that in the latest Cloud Platforms the leaders have already ascended, leaving the well-marked routes for us all. They have all

  • Battled with technology
  • Experimented with different business models and found which ones work
  • Got legislation changed (for example EU legislation regarding electronic signatures)
  • Developed training, information packs and tools for their trading partners

The risks have largely been eliminated and the result is a clear, well-marked, safe route to the top.

The danger is you’ll be left on the ground staring upwards while everyone else is “following the leader” and are even now swarming up the rock face. The Leader on your route could be any of the following:

  • A key supplier who wants to send an updated catalogues of their latest products
  • A large customer who insists you must invoice them electronically
  • A logistics partner who wants you to include their tracking page with your shipment information
  • One of your sales channels that wants to set up a web storefront for your products

Time to Clip-in

As they say in the climbing world, it’s time to “Clip-in” and take the first step up the slope. The view from the summit is incredible.

Cloud integration must be built on a solid IT foundation. Developing a strategy and framework requires a thorough understanding of the capabilities required, which go beyond simply consolidating and distributing data more efficiently. Good infrastructure must support a variety of business networks in a stable environment and allow organizations to build and configure highly customized applications and IT environments.

One critical area of integration lies across business functions. Already, key areas such as marketing, purchasing, and sales are substantially cloud-based, and slower movers like HR will see rapid cloud adoption in the next three years. The increasing adoption of function-based clouds raises the risks associated with information and process silos and disjointed processes and workflows, making integration a necessity.

From our newest study, Connecting the Cloud. Download (free, but registration required).

79% of respondents to our survey expect meaningful gains in innovation, speed, and efficiency from cloud solutions.

“What’s attractive about cloud services is that they can be switched on, scaled up, scaled down, and reconfigured quickly, and with few IT resources,” says John Rote, Vice President of Product and Experience at Bonobos, a fast-growing apparel retailer. “It’s possible to go from State A to State B without having to navigate an intermediate state.”

From our latest paper on business networks, .

More than half of survey respondents are building their own cloud networks. Less than 10 percent report no cloud participation.

From our newest paper, Connecting the Cloud. Download it (free, but registration required).

Cloud platform integration is a labor-intensive but worthwhile investment. From our newest paper on business networks, .

Cloud computing has transformed the business world by making IT more flexible and agile, allowing companies to remap workflows, reduce administrative overhead, and eliminate inefficiencies. But these are only incremental gains compared with those promised by the merger of disparate clouds, whether operated by different groups within the same company or by external business partners.

Integrating systems and building an infrastructure that can deliver these high magnitude results is the next big task for firms just now mastering one-off cloud projects. Gartner Vice President and Fellow Massimo Pezzini, writing at the Gartner website, says, “The problem of integrating cloud-based systems with each other and with established on-premises environments should be addressed with the same rigor and discipline that organizations have adopted to support on-premises data and application integration or e-commerce B2B integration.” This can be a difficult task, especially for companies supporting branch offices and foreign operations. The reward, though, is return on investment that is greater than the sum of its parts.

Download the full paper (free, but registration required).