July 24th, 2008
How SlideRocket plans to make money
SlideRocket, the Flex-based online presentation builder that’s been attracting pre-release plaudits from industry observers, has shared with me its planned pricing when it comes out of beta in September.
SlideRocket has had positive coverage not only from ZDnet’s rich Internet application expert Ryan Stewart (twice, plus a screenshot gallery) but also from TechCrunch, Mashable and ReadWriteWeb, which headlined its story Look Out PowerPoint - SlideRocket Rocks.
Unlike many of the Web 2.0 startups those sites cover, SlideRocket isn’t relying on advertising, venture capital or the prospect of getting bought out by Google/Adobe/whoever to make money. It’s going to ask its users to pay — not only for its own application but also for third-party add-ons.
“I’ve never been a huge fan of the advertising model,” CEO Mitch Grasso explained to me in a call late last week. “We definitely from the get-go wanted to make sure we had the right kind of functionality that people would want to pay for.”
“I think you’re going to see more and more companies needing to do that,” he added. “Giving stuff away for free is just not a sustainable business model” [my emphasis added] “… Enough of building these destination sites that are just features and not actually [complete] products or [viable] companies.”
SlideRocket currently has 10,000 users on its beta program plus another 30,000 on the waiting list who’ll be offered free access to the application in the run-up to the production launch. SlideRocket’s moment of truth will come in October when it finds out how many of those beta users believe the functionality really is worth paying for. It plans to launch two paid versions, both with a 25% discount: Read the rest of this entry »
July 23rd, 2008
PaaS embraces client access licensing
Back in the early days of application service providers (ASPs, the doomed precursors of SaaS), software licensing was a huge barrier to growth, simply because conventional enterprise software licenses assume you already know who all your users are going to be, and expect you to pay up front for all of them. Enterprises encountered similar problems with their early extranet deployments. The licensing that vendors offered simply didn’t cater to the new opportunities opened up by the Web.
Platform as a service (PaaS), which provides hosted infrastructure for developing and deploying custom SaaS applications, is now going through the same rite of passage. Yesterday, Coghead became the latest PaaS vendor to introduce a subscription that recognizes a separate class of casual or less frequent user. Until yesterday, the price per logged-in user was around $10 per month. Now Coghead has added the option of an unlimited user subscription (confusingly named the ‘Limited User’ option) for an additional $50, which allows any number of either anonymous or authenticated users to access the application via specified access points (eg a widget or an API).
The approach is different from that taken by Bungee Labs, another PaaS provider, which charges according to the actual compute resources used. As I mentioned when I discussed this in April, Bungee’s approach can lead to jaw-droppingly low costs for occasional users, but it does have the disadvantage of being less predictable than Coghead’s approach. Paul McNamara, Coghead’s CEO, told me last week that a utility pricing scheme had been rejected because of this uncertainty: customers “don’t want this to be like cellphone bills in the 1990s.” On the other hand, the fixed pricing means that Coghead has to somehow put caps on usage “in case someone wants to create a YouTube on Coghead,” as McNamara told me.
July 21st, 2008
Sequoia bets on enterprise apps in the cloud
Silicon Valley venture capital firm Sequoia Capital is well known for making smart bets on big opportunities (its track record of mega-exits includes Google, Yahoo!, PayPal and YouTube). So what are we to make of today’s news that it has led a $5.6 million series B investment round in SaaS pureplay integrator Appirio? Especially when, as The Industry Standard notes, it’s only a few months since Appirio raised a $1.1 million series A round from Salesforce.com and angels.
Sequoia’s bet is that Appirio will prove to have been an early mover in bringing the cloud to the enterprise, in the process carving a substantial slice of the $300 billion currently spent each year on traditional on-premise computing solutions. Appirio is a leader in cloud integration in three core ways:
- A strong focus on Google Apps projects alongside Salesforce.com
- Specialization in ’serverless’ (ie cloud-to-cloud) projects (more on that below, plus a controversial prediction on Exchange)
- Its combination of ‘trusted advisor’ professional services with productized on-demand services
The combination of professional services with productized offerings was a key part of the proposition that Sequoia has backed, co-founder Narinder Singh told me on Friday, as opposed to other potential funders that wanted to focus on either one or the other. “The Sequoia investment doesn’t change our business model, it just accelerates it,” said Singh.
The combination means that in addition to Appirio’s current 60+ enterprise customers for its professional services, there are another 1100 using the products. It’s effectively Read the rest of this entry »
July 21st, 2008
S3 outage: time to double up
Probably the best presentation at London Cloud Camp last Wednesday was the one the organizers saved until last: Alan Williamson spoke about Mediafed’s experiences as a company that relies on cloud providers. Mediafed specializes in providing RSS traffic analytics to European media companies, with a blue-chip client roster that includes BBC Worldwide, LeMonde, The Guardian, IDG, Axel Springer and others. Williamson’s advice will be heeded by many wondering what to do after Amazon S3’s 6-hour long outage yesterday:
“We’ve come to realize we cannot rely on putting all our eggs in one basket,” he said, explaining that Mediafed uses two cloud providers side-by-side: Amazon and UK-based Flexiscale. “We run both at the same time.” Some customers are on one and some on the other, but all are backed up to the other cloud so that if one fails the service can switch across to the other — which presumably means its customers can still this morning access all their stats from yesterday’s RSS traffic, even during the hours that S3 was down.
Anyone concerned about what Om Malik is calling the fragility of cloud services after yesterday’s outage needs to consider putting a similar set-up into place. Frankly, I think Malik has it completely wrong — it’s not the cloud that’s fragile, it’s computers, and anyone who expects perfect uptime when relying on a single point of failure has their head, not just their infrastructure, in the clouds. Either you stay cool, like SmugMug, and accept occasional glitches as part of the value proposition you pay for; or you do what Mediafed has done and put some redundancy and a failover plan in place.
As Williamson said in his presentation, there are plenty more risks to worry about besides systems outages: “My heart is fearful of the credit card stopping at Amazon. It scares the bejesus out of me that’s going to happen at Amazon.” For all its benefits, the cloud is still no silver bullet. Working with the cloud means getting savvy about a whole new set of issues, such as becoming expert in building server infrastructure that monitors your cloud resources, or solving hairy back-up and archiving challenges (Mediafed recently calculated that it is now storing so much data in the cloud that it would take three weeks to download a back-up of its S3 data). Williamson concluded: “We appreciate that cloud computing has moved us on but [now] we’ve got a whole set of new problems.”
See also these posts about previous outages at Amazon Web Services:
July 18th, 2008
SaaS vendor quits browser to boost sales
Any SaaS CEOs who are feeling bruised after reading Sarah Lacy’s Business Week article today on the brutal slog of on-demand computing may take heart from the story of a SaaS vendor that told me this week it has cut its customer acquisition costs by a massive 80 percent. There’s a catch, though: abandoning the browser was the key to achieving this remarkable turnaround.
SaaS CRM vendor Entellium this week released a new smart client version and said it will phase out its existing browser-based product over the next 12 months. It’s doing so, I can exclusively reveal, because of business metrics (which I’ll quote below) that show its smart client product — called Rave — achieving some kickass conversion and retention rates in the past year since first release [disclosure: Entellium is a former client and I have a small investment in the company].
Like its browser-based predecessor, Rave is still based on a fully hosted, multi-tenant application infrastructure-in-the-cloud, but the user experience executes on the desktop using Microsoft’s Windows Presentation Foundation (WPF). That has allowed Entellium to pioneer an approach to contact management and sales and marketing automation that’s tailored to the get-things-done needs of the small businesses that make up its target market.
Three characteristics in particular combine to make Rave stand out against other on-demand CRM packages in the market:
- Liquid interface. Rave fully exploits all the client horsepower that WPF delivers, and the ease and visual feedback when rearranging information on the screen has to be seen to be believed. I’ve pasted a screenshot below the jump, but a static image just doesn’t do it justice. This is the first on-demand product I’ve seen where the client interface is so fluid, you need video to really convey how it looks. The purpose is not to look ‘cool’ though, it’s so sales users can organize the screens how they want them and get down to work as fast as possible.
- Gamer-influenced design. The product borrows proven techniques from games software — but again, the intent is serious not frivolous — to get users started quickly and keep them engaged. For more on this, see my post from April last year, Gaming comes to business software, plus this New York Times article on Why Work Is Looking More Like a Video Game.
- Results focus. The entire user experience is built around the core premise of “How should I spend my time most profitably?”. For example, a new analytics module lets users compare key metrics to industry benchmarks to help decide where they most need to focus attention.
Maybe it’s the results-oriented mentality, maybe it’s the ‘gamer-influenced design’ or maybe it’s simply the familiar process of receiving a digital download when you hand over your cash. Whatever it is, Entellium has found that Rave has transformed its cost of customer acquisition.
Entellium’s CEO Paul Johnston has given me a private peek at a string of metrics collected over the past year of selling Rave and the difference is stunning. Read the rest of this entry »
July 16th, 2008
How much is a unit of cloud computing?
As I make my way to tonight’s heavily over-subscribed Cloud Computing Camp in London, I’m mulling an important aspect of cloud business models that I doubt will get much airtime tonight. People who talk about computing as a utility miss a vital point that Dan Farber brought up more than three years ago:
“… an industry standard definition of CPU per hour usage doesn’t exist. There is no equivalent to kilowatt hours or the price of a barrel of oil for CPU usage.”
Although Amazon EC2 subsequently took us a few steps closer than the Sun Grid offering that prompted Dan’s remarks, the fact remains that cloud computing is nothing like the electricity grid. Cloud computing isn’t a tradeable commodity. Each cloud provider operates its own proprietary infrastructure and every one of them has their own set of pricing plans. We can measure bandwidth in MB and storage in GB, but there’s no standard unit of computing — providers measure hours or seconds of processing, but each processor configuration is different — making it all-but-impossible to compare the cost of hosting your application from one provider to another.
I guess it’s premature to expect such standards to emerge so early in the life of a nascent industry. Many providers are still evolving their own pricing models. One such case that’s been interesting to watch is Mosso, the Rackspace subsidiary that relaunched as a pay-as-you-grow cloud computing service in February (disclosure: Mosso has given me a free trial account to test its service, which I’ve just started working with for a couple of my own sites and will write up once I’m further along with it).
Last month, Mosso introduced a concept that, who knows, might provide the basis for a standard unit of computing. It has come up with the notion of a ‘compute cycle’ based on looking at the monthly capacity delivered by a typical 1.2Ghz server under average load, and has defined that as 10,000 compute cycles. This allows Mosso to calculate the processing time, disk I/O and memory that equates to a single cycle, and the provider measures this in real-time so that its customers Read the rest of this entry »
July 15th, 2008
Fear and enterprise in the PaaS channel
Traditional solution providers are understandably nervous about the potential impact on their business of software-as-a-service (SaaS) and its close relative platform-as-a-service (PaaS). For some — especially those who now face competition from Microsoft’s own hosted Exchange and Sharepoint offerings — these developments seem like threats to their very existence. But most prefer to see them as opportunities, and are actively exploring how they can embrace SaaS before others do.
One such example is Synergration, a seven-year-old company based in the Philadelphia area, which specializes in developing and marketing applications that integrate with Intuit QuickBooks accounting software. An early member of Intuit’s developer network, the company has a sizeable installed base among QuickBooks users but recently decided the time was ripe to introduce a hosted offering that would integrate with QuickBooks data. As luck would have it, Intuit shortly afterwards introduced the QuickBase Developer Program, which provides development tools and an application infrastructure based on Intuit’s hosted database platform. It also includes integration to QuickBooks data stored on local client machines.
This platform-as-a-service offering allows Synergration to bring a SaaS offering to market without having to build and maintain its own hosted infrastructure, said Synergration’s president, Tom Crawford, when we spoke about the project last month. “It gives an easy way to get into SaaS so that we get this recurring revenue stream,” he told me.
As a result, Synergration is now gearing up for a wholesale shift from its historical licensed software business to a SaaS model:
“I see it being a mainline focus not only for our development but also a big chunk of our revenue stream,” said Crawford. “Up until six months ago, all our development and sales efforts focused on our desktop product set. We see this as a transition stage for our company to move towards a SaaS organization.”
Synergration’s new contact management and prospecting application is designed to appeal to QuickBooks users who want to add these capabilities to work alongside the financials package. Delivering this as a SaaS package may ruffle a few feathers Read the rest of this entry »
July 7th, 2008
SaaS star leaves SAP for Salesforce.com
Enterprise software giant SAP has lost one of its brightest software-as-a-service stars to SaaS titan Salesforce.com, I can exclusively reveal. Steve Lucas, who spearheaded the development of SaaS at Business Objects, acquired by SAP last year, left the company at the end of June and began work straight away at Salesforce.com, where his job title is (bear with me, it’s quite long): senior vice-president of platform marketing, AppExchange and Force.com. [Disclosure: Salesforce.com is a recent client].
Lucas (pictured right, courtesy of SAP) is well regarded in the industry for his track record at Business Objects and would likely be seen as an asset for any SaaS vendor. I think his appointment sends a strong signal that Salesforce.com is determined to make a success of its platform strategy, which he and I discussed in a brief call just ahead of last weekend’s holiday — more on that in moment.
I discovered another surprise recruit also started at Salesforce.com last week. She is Erin TenWolde, who has been IDC’s lead analyst on SaaS for the past two years and spent a total of some five years on the analyst firm’s SaaS team. TenWolde knows the industry inside-out (as I joked last week, she knows where all the bodies are buried) and will be a tremendous asset to Salesforce.com’s competitive intelligence, messaging and analyst relations in her new role.
The loss of Lucas is a blow to SAP, which is battling to retain credibility for its SaaS initiatives after delaying the public roll-out of its Business ByDesign project earlier this year by 12-18 months. Lucas is proud of what has been achieved at Business Objects, but he said that SAP’s ability to make broader progress with SaaS is stymied by the lack of a central vision for the model. “SAP doesn’t have a SaaS strategy,” he told me. “They don’t have a single piece of paper that states what their SaaS strategy is.” That lack of direction was a source of frustration that contributed to Read the rest of this entry »
July 1st, 2008
UK builder switches email to Google Apps
A leading British construction company switched 1,800 users over to Google Apps on May 2nd, becoming the largest live deployment in the UK so far for Google’s enterprise applications suite. In a phone interview this morning, Rob Ramsay, director of IT at Taylor Woodrow, firmly refuted the allegations reported here yesterday that Google applications aren’t fit for enterprise use.
“We’ve had a close on three-and-a-half-year relationship with Google based on the Google Search Appliance. We’ve found it [very] easy to deal with them and anything that corporately you’d expect, they’ve been able to deliver,” he told me.
Taylor Woodrow brought 200 users live with a pilot implementation of Google Apps in November last year and more than a thousand users tried out the service prior to the May go-live date. At that point, the company switched off its legacy email system, forcing all users onto Google Apps. There had been no reliability issues with the service, Ramsay said: “We haven’t had that sort of issue from the business saying, ‘We have an outage here’.” And based on his prior experience with the search appliance, Ramsay is confident that where changes and upgrades are needed, they’ll be delivered as promised and on schedule — with the added benefit that all users will get the upgrade automatically without any local installation required.
Google Apps has replaced an antiquated HP OpenMail system and will be used primarily for email, although some users have started to use the Google Sites and Google Docs applications as well, said Ramsay. Getting off OpenMail had become a priority and the speed of implementing Google Apps was a big factor in its favor, he said: “There was a big benefit in moving the entire busienss in a very short period of time.” Another factor was the cost, which the company estimates Read the rest of this entry »
June 30th, 2008
Google’s culture ‘not fit’ for enterprise apps
Anyone hoping that Google Apps can rival Microsoft’s products in the enterprise marketplace will have pause for thought after reading the astonishing testimony of development manager Sergey Solyanik, who has just gone Back to Microsoft after a stint working at Google.
His blog post starts out innocuously enough with a list of good things at Google that Microsoft ought to emulate as an employer. But when it comes to “So why did I leave?” Solyanik rips into Google’s working practices, in particular criticizing the effects of its business model, which emphasizes free software at the expense of utility. His conclusion is brutal:
“Google as an organization is not geared — culturally — to delivering enterprise class reliability to its user applications.”
Solyanik leads up to this verdict with a three-step exposition. First of all his personal motivation for writing software:
“I can’t write code for the sake of the technology alone — I need to know that the code is useful for others, and the only way to measure the usefulness is by the amount of money that the people are willing to part with to have access to my work.”
From that starting point, he moves on to set out his dissatisfaction with Google’s emphasis on building Web properties that are popular, but which Read the rest of this entry »
Phil Wainewright is a commentator and strategist on emerging software industry trends. See his full profile and disclosure of his industry affiliations.
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