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I was re-reading Eric von Hippel's excellent book Democratizing Innovation and found something in it that might help explain the popularity of cloud computing 
and Platform as a Service (PaaS). I am on the way to Dreamforce and have little visibility into what Salesforce.com (NYSE: CRM) might announce in the next day or two, but no doubt there will be a lot about the cloud, so this might be a good opportunity to make my point. Regardless, I will have more to say later.
Von Hippel is a genius MIT researcher who has, from what I can tell, spent the last few decades studying innovation and users' roles in it. We all take for granted that vendors innovate, and we get the results. But according to von Hippel, far more innovation happens within a company or household than we might realize. For example, IT departments are, after all, major centers of in-house innovation.
To Build or to Buy?
When I started my career in sales , I recall that Massachusetts General Hospital (MGH) had built its own operating system to support its clinical computing systems. Makes me feel old, but the culture of innovation was that strong. MGH was by far not the only place that was up to its elbows in software innovation, either. DEC had multiple operating systems tailored to support manufacturing and other back office processes. Most of the ERP original systems that companies used came from the same kind of in-house innovation.
Somewhere along the way, it became less expensive to buy rather than build software, giving rise to the big enterprise software companies. However, at about the same time, application complexity skyrocketed, and we discovered the pain of project delay and overruns.
Back to von Hippel for a moment -- his research shows that users engage in innovation for a variety of reasons that cross business and consumer markets. Some people innovate because they like it, some for the challenge and reward or feeling of accomplishment. Many engage in innovation because there is no good alternative if they want the end result to exactly mirror their needs. Certainly in IT we can see a lot of that -- companies' applications very often embody the entity's secret sauce; their software is inseparable from their business models.
When people have a stake, they take more control of the outcome. If a project looks like it will run late, they might be more understanding or, more importantly, they'll have more control over deployment, opting to chop a project into smaller deliverables.
A lot of that got lost in early, monolithic enterprise computing, though it should be acknowledged that the industry has made many improvements since then, including giving users a great deal of flexibility in maintenance, deployment and creation options. Nonetheless, the advent of PaaS and cloud computing is bringing back the ability for users to innovate at a scale that makes sense for them.
Watch Your Buzzwords
When I talk to companies that use PaaS now, the people involved sound very casual about what they do. There's little drama about a big customization or development project or upgrade cycle; it's usually just a few people who say, we did this, then we did that and next year we plan to do something else. It's rather organic and highly innovative.
Interestingly, in the comparison between a true cloud platform and Infrastructure as a Service (IaaS), the thing that is most obviously missing is the ability for users to innovate. IaaS simply moves the computer room from your building to the vendor's, but it doesn't do much about the overhead of old software built on old ideas.
Democratizing innovation is not simply a feel-good idea. Innovation that is practiced by a larger number of people is innovation with the accelerator firmly pressed to the floor. It's iterative, producing more results in less time.
An IaaS environment might be very good for specific applications, and I don't want to imply that there is no use for it. But in the inevitable rush for all stripes of vendor to use the same buzz words, like "platform," it's pretty obvious that an IaaS-only solution is qualitatively different from PaaS and that the true value of PaaS is the democratization of innovation.
Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and Web site. He is working on a book and can be reached at denis.pombriant@beagleresearch.com.
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