Software as Services

July 1st, 2009

WebEx augurs ill for Cisco's cloud ambitions

Posted by Phil Wainewright @ 1:04 pm

Categories: Collaboration, Ecosystems, Platform as a service, Utility computing, Web 2.0, WebEx

Tags: WebEx Communications Inc., Cisco Systems Inc., Phil Wainewright

Color me skeptical, but I feel the detail behind yesterday and today’s Cisco Live event hasn’t matched the aspirations set out in executive keynotes. I like the vision set out by CEO John Chambers of providing a technology infrastructure that (as Oliver Marks puts it) does a better job of connecting people. I’m highly supportive when CTO Padmasree Warrior looks ahead to a future fabric of ‘intercloud’ interoperability standards — ending lock-in by individual cloud providers — and talks about ‘federation’ between cloud and on-premise. But when I look at the map of where Cisco claims to play in the cloud, I’m struck by how feeble its tenure is at each level, from the underlying foundation all the way up to both Paas and SaaS, where WebEx is its undernourished poster child, as I’ll discuss below.

First, there’s what Cisco calls the ‘IT Foundation layer’ — the underlying hardware and virtualization platforms on which cloud services run. Cisco expects to play a big role here with its Unified Computing System (UCS). I’m sure there’s a huge potential market for UCS among enterprises, telcos, IT services providers and many other established data center operators that want to transition their existing enterprise infrastructure into more of a quasi-cloud environment. But I can’t help thinking that most of them are missing the point when they try to scale up familiar enterprise technology instead of scaling out to a more web-scale architecture.

I’m also suspicious that Cisco is falling into the trap of over-engineering UCS so that it ends up too-clever-by-half to really deliver the promise of cloud computing. I would be more convinced if Cisco had productized the existing web-scale infrastructure that it acquired with WebEx. But just as Microsoft has developed its Azure cloud platform with a whole new set of design objectives rather than productizing the existing web-scale infrastructure it had already built for its Live properties, so Cisco is shoe-horning UCS Read the rest of this entry »

June 24th, 2009

LucidEra's demise is about money, not SaaS

Posted by Phil Wainewright @ 2:27 pm

Categories: Business models, Customer experience, Venture capital

Tags: Software-as-a-service, LucidEra, Software As A Service (SaaS), Managed Hosting, Cloud Computing, Emerging Technologies, Phil Wainewright

I’ve been struck by the contrasting reactions to two separate company shutdowns that have taken place this week.

It emerged on Monday that SaaS business intelligence vendor LucidEra emailed customers late last week to inform them the company will cease operations at the end of this month. Immediately there was a flurry of blog posts debating what this meant for the future of SaaS and of SaaS BI in particular. Tech journalist Christina Torode even wrote that LucidEra’s demise harkens to ASP downfalls.

Monday also brought the news that Clear, a subscription service that operates fast-track security lanes for frequent travelers in a number of US airports, had abruptly ceased trading. No one blogged that its demise raised question marks over the future of business services sold on subscription, nor whether the notion of commercially operated fast-track channels was simply not viable (indeed many speculated who might enter the market to take Clear’s place). This was simply seen as a story about a company that couldn’t renegotiate a crucial loan, and went under.

LucidEra, too, simply ran out of money, and it is fatuous to attempt to draw any broader conclusions about the state of SaaS or SaaS BI from its demise. Darren Cunningham, LucidEra’s VP of marketing, was contacted by phone Monday and Read the rest of this entry »

June 18th, 2009

Cheap jibe sullies SAP's SaaS strategy

Posted by Phil Wainewright @ 5:54 am

Categories: ERP, SAP, Salesforce.com, Service level management

Tags: Strategy, Software-as-a-service, SAP AG, Software As A Service (SaaS), Managed Hosting, Cloud Computing, Emerging Technologies, Phil Wainewright

My jaw dropped as I read this just-published CIO.com interview with SAP’s CTO Vishal Sikka. Last week, John Wookey, executive vice-president of large enterprise on-demand, set out SAP’s commitment to on-demand in a widely-reported speech in Amsterdam (SAP this week reiterated the commitment in a corporate press release). This week, the company’s CTO had this to say about leading SaaS vendor Salesforce.com:

“When [vendors] call their little salesforce-automation application a ‘platform’, that does actually bother me, as a technologist, to be honest with you.”

If SAP wants to be considered a leader in the on-demand space, as John Wookey proclaimed in Amsterdam, then the last thing its top executives should be doing is going around belittling the achievements of other SaaS players.

I find it astonishing that Sikka — who works out of the same Palo Alto facility as John Wookey — could be making such statements at this time. Was he not aware when he gave this interview of the likely content of Wookey’s presentation in Amsterdam last week? The message this sends is that Wookey’s initiative doesn’t have the wholehearted support of SAP’s board.

Unfortunately for SAP, the outcome of Sikka’s intervention may be the opposite of whatever was intended. His smug contention that the entirety of SAP’s supported software catalog is “timeless” is just an invitation for ridicule. Read the rest of this entry »

June 17th, 2009

Adobe morphs the online spreadsheet

Posted by Phil Wainewright @ 7:51 am

Categories: Adobe, Business models, Collaboration

Tags: Adobe Systems Inc., Financial, Spreadsheet, Financial Model, Productivity, Phil Wainewright

One thing I found especially interesting about Adobe’s new Acrobat.com announcements this week (Techmeme coverage here) is its hybrid spreadsheet/database application called Tables.

I already discussed Adobe’s subscription model in another post earlier this month, What your bank can teach you about freemium, so I won’t elaborate on that aspect of the announcement beyond mentioning that we can now start to make a judgement whether Adobe has followed my fourth guideline, “Price for value.” Here’s the verdict from CloudAve’s Krishnan Subramanian: “The frugal minded SaaS user in me thinks that this price is steep compared to Adobe’s competitors but there may be others who would like the user interface and may be willing to pay big money for it.” That suggests, given there are still a set of services available for no charge, that Adobe has got the pricing more or less at the right level. I suspect we’ll see some more developments as the offering matures, too, which may add to the perceived value of the subscription plans.

I’ve called Tables a hybrid because, although its user interface is that of a spreadsheet, its function set is focused on tabular manipulation of rows and columns, which makes it more like a database than a financial modeling tool. Briefing me about the announcement, Erik Larson, director of marketing and product management, told me: “We’re not going to build a big financial analysis engine. It’s much more about collaborating on data with other people.”

Adobe has developed the application this way, Larson explained, because its research found that the most common form of data in shared spreadsheets is tabular. Financial models are more likely to be an individual undertaking — someone sits down in front of the spreadsheet and then builds the model. Read the rest of this entry »

June 16th, 2009

Netviewer aims to outshine WebEx in Europe

Posted by Phil Wainewright @ 6:55 am

Categories: Collaboration, Ecosystems, Europe, Software licensing, WebEx

Tags: Web, WebEx Communications Inc., Europe, Citrix Systems Inc., Online Meeting, Remote Support, Netviewer, Web Meeting, Remote Administration, Web Conferencing

With more than 15,000 customers in 55 countries, one of Europe’s largest indigenous SaaS players is Germany’s Netviewer. Its online meeting platform is a rival to well-known US names such as WebEx (part of Cisco) and the GoToMyPC/GoToMeeting products from Citrix OnLine. Already the number two web meetings player in Europe in 2007 (according to market researcher Frost & Sullivan), the company added venture backing last year from Deutsche Telekom subsidiary T-Online Venture Fund and European Founders Fund, the investment vehicle of Internet luminaries the Samwer brothers. I had a chance a couple of weeks ago to connect with Netviewer’s founder and CEO, Dr Andreas Schweinbenz (pictured), to find out more about the company’s plans.

It’s still early days in the growth of the European market for web meetings, he believes, and pointed to a Gartner chart on which the European market value of $378.9 million in 2008 just happens to equal the US market value of $378.2 million in 2003. Considering the total GDP of the economies are roughly equivalent, that suggests the European market is around five years behind the US.

Another interesting comparison I’d add is to look at the US players back in 2003. WebEx already had a dominant 50 percent share with revenues of $189 million, but privately-held ExpertCity, which became Citrix Online on acquisition in February 2004, made somewhere in the $20-30 million range. Netviewer is about the same size now, based on its published accounts for 2007 (the latest available under German rules for privately-held companies). It reported gross income of €14 million in 2007 (around $20 million at the prevailing exchange rate). Citrix financial statements for 2008 show that in the five years since 2003, its online services subsidiary has grown to become a $260 million-a-year business. If Netviewer can rival or better that 10x growth over the coming five years, it has a rosy future ahead of it.

Unlike Citrix Online, Netviewer has decided against continuing to focus its efforts on the remote support market — even though that’s where it started out. “We see the larger market in the future is the meeting area,” explained Schweinbenz. That choice, incidentally, avoids crossing swords with Europe’s other significant player in this sector, Spain’s NTRglobal, which is concentrating on remote support rather than Web meetings [disclosure: NTR is a recent client, WebEx has also been a client].

Netviewer is in no hurry to take its wares to the US market, either. “Let’s not get de-focused by trying to expand internationally too soon,” said Schweinbenz. Its clear target is to be the European number one in web meetings. “The online meeting business is still in its early stages,” he said, and growth is rising: “The economic crisis is pushing the market because people want to save money.”

The company has several initiatives under way to accelerate growth. The first is a partnership strategy to encourage Read the rest of this entry »

June 10th, 2009

Wookey: SAP's future is on-demand

Posted by Phil Wainewright @ 3:42 am

Categories: ERP, Ecosystems, On-demand, SAP, Uncategorized, Web 2.0

Tags: On-demand Application, On-demand, SAP AG, John Wookey, Managed Hosting, Cloud Computing, Phil Wainewright

Citing the spectre of long-forgotten titans of previous generations of business application software, SAP executive VP John Wookey set out the software giant’s commitment to embracing on-demand applications in a keynote presentation at the OnDemand Europe conference in Amsterdam today:

“On demand is the next stage in the evolution of application development … It is absolutely essential from SAP’s perspective that we embrace this change,” he said. “On-demand is what our customers are looking to invest in. If we do our job well and listen to our customers, these are the applications we have to be delivering. We have to drive to leadership in on-demand applications.”

As previewed by articles in the WSJ and FT today, Wookey (pictured) outlined the company’s strategy for bringing on-demand applications to SAP’s existing customer base of large enterprises. This is separate from the more widely publicised Business ByDesign offering being developed for midmarket companies and the BusinessObjects on-demand portfolio, although lessons have also been learned from those initiatives, he said. As EVP of large enterprise on-demand, Wookey heads up a team with a portfolio of on-demand products targeted at large enterprises, including CRM, strategic sourcing and expense management.

The core of the strategy, targeted for availability mid next year, is an architecture where new on-demand applications can be deployed instantly because they’ll inherit the existing policy settings from the installed Business Suite infrastructure. “The on-demand applications we deliver can behave as an extension of the Business Suite,” Wookey explained. “[Customers] just turn it on. They don’t have to redefine anything to the on-demand service.” The principle has already been tested with Read the rest of this entry »

June 3rd, 2009

Intuit makes two-pronged PaaS and SaaS push

Posted by Phil Wainewright @ 2:41 am

Categories: Ecosystems, Intuit, Marketplaces, Platform as a service

Tags: Software-as-a-service, Intuit Inc., Platform, PaaS, Cloud Computing, Sales Force Management, Sales, Phil Wainewright

Hard on the heels of its $170 million acquisition of SaaS vendor PayCycle (which I hope to post some further commentary on later today), Intuit is also announcing today an extension of its Intuit Partner Platform — a platform-as-a-service offering first launched a year ago — to support third-party development platforms [disclosure: I'm hosting a sponsored webcast later today with Intuit's Alex Barnett about application development in the cloud]. Read further coverage on Techmeme, AccMan, CloudAve.

The significant element of Intuit’s PaaS announcement is that it is a land-grab to capture mindshare among developers on other cloud platforms, who can take their AppEngine, Amazon Web Services or self-hosted applications and make them available using Intuit’s single sign-on, billing and QuickBooks integration infrastructure. Market reach being one of the key attributes developers look for in a new platform, perhaps the most appealing factor is that applications will be showcased within the Intuit Marketplace, with a potential reach to the four-million-strong installed base of QuickBooks accounting software customers and their estimated 25 million employees.

One of the five partners who are live on this new Federated Applications option at launch is Vertical Response, which was one of the first companies to be successful on Salesforce.com’s AppExchange partner directory. The company grew rapidly by piggy-backing on Salesforce.com’s existing market reach, offering an email marketing add-on that was a natural and simple extension to the core sales automation application. Vertical Response played an important role Read the rest of this entry »

June 1st, 2009

What your bank can teach you about freemium

Posted by Phil Wainewright @ 4:08 am

Categories: Adobe, Business models, Collaboration, Web 2.0

Tags: Bank, Adobe Systems Inc., Adobe PDF, Premium Service, Acrobat.com, Financial Services, Phil Wainewright

People are talking and writing a lot about freemium just now as if it’s a completely new business model that was invented for the Web. The term, apparently coined in response to a 2006 blog post by Fred Wilson, describes a business that delivers services or content for free to gain users, and then makes its money from charging for extra services that a subset of users are willing to pay for. The key to the model is to have an attractive-enough free-of-charge offering that spreads rapidly but doesn’t cost too much to run, and a compelling set of premium services that a substantial minority of users will want to pay for. Some of the commentary around freemium in the past week has been prompted by startup Contenture’s plan to offer freemium as a service to commercial websites, which prompted TechCrunch’s MG Siegler to list the services he’d be willing to pay a modest annual fee to use. Social media blogger Nick Barker wrote a thoughtful blog post about the model late last week and Adobe’s Acrobat.com initiative is also relevant, for reasons I’ll circle back to later in this post.

It seems to me the financial services industry perfected the freemium model many years ago. There was a time when people used to pay an annual fee to have a credit card. Some cards still do carry a charge, but most mass-market card providers these days are all too happy for you to sign up for one of their cards without paying for the privilege. Their ‘freemium’ model is amply funded by the huge margins they earn as soon as you start paying interest on your outstanding balance. Sure, a minority of customers keep their noses clean and pay off the full balance every month, avoiding interest, but even most of them make a mistake every so often and miss the payment date, which earns a penalty fee as well as a tidy interest charge.

This long-established model has several important lessons that Web businesses should heed as they develop their freemium offerings:

• Learn to target your free offering. Credit card providers don’t waste their time marketing to people who never borrow. Their ideal cardholder is a shopaholic who holds down a good job — someone with a reliable income stream who’s always spending rather than saving. Freemium providers should remember they’re aiming to capture users who will spend money on premium services. Don’t waste time trying to sign up the largest possible number of free users — acquire too many and they’ll become an unnecessary burden. Once you’ve understood your target market, cultivate it.

Read the rest of this entry »

May 31st, 2009

SaaS in Europe at the tipping point

Posted by Phil Wainewright @ 4:37 am

Categories: Europe, Market research

Tags: Software-as-a-service, Europe, Software As A Service (SaaS), Managed Hosting, Cloud Computing, Emerging Technologies, Phil Wainewright

With just ten days to go before this year’s SIIA OnDemand Europe conference opens in Amsterdam on June 9, I’m looking forward to a few surprises about the strength of SaaS in Europe [disclosure: SIIA has paid me to help develop the agenda]. There seems to be a widely held view that Europe is a laggard in SaaS adoption, and yet the line-up of speakers at the conference demonstrates there’s a thriving industry in the region, with strong global and regional SaaS players from Sweden, Denmark, France, Germany, the Netherlands, Spain, the UK and elsewhere.

Research to be revealed at the conference by IDC’s David Bradshaw finds that three-quarters of businesses in France and Germany are already users of SaaS (and the proportion in Spain tops 85%, although surprisingly the UK comes out lower at around two-thirds). I’m interested to see the detail behind those figures — especially as they seem to contradict some of the findings that Gartner reported back in April. But the overwhelming message I think delegates will take home with them is that the European market for SaaS has quietly reached a tipping point and is about to blossom (more SaaS in Europe coverage).

With that in mind, I want to make sure that European ISVs and SaaS start-ups get every chance to be there in Amsterdam. No other event in Europe provides the same breadth of SaaS and cloud expertise for ISVs that want to validate their SaaS strategies against the industry’s emerging best practices. I’ve therefore persuaded the SIIA to make available a limited number of half-price registrations, exclusively for Europe-based ISVs, solution providers or SaaS start-ups with annual revenues of €10 million or less. Anyone wishing to apply should email me (pw AT pcxvs DOT com) no later than midnight Tuesday June 2nd, with a couple of sentences on why you should be in Amsterdam. I’ll send out a special registration code to those selected so they can register at the reduced price on Wednesday June 3rd, which is the final day for online registration. [UPDATE added June 3rd: online registration is now extended till Friday and I have one more half-price ticket on offer - contact me as above, first come, first served].

As well as a strong indigenous flavor, we have all the big names of SaaS on the agenda. The opening keynote is by Zach Nelson, CEO of NetSuite. John Wookey from SAP is delivering his first keynote since joining SAP from Oracle, speaking about on-demand in the enterprise. Adrian Joseph, the new head of Google Enterprise EMEA, will provide a counterpoint view on the same topic. Other top names on the agenda include Steve Lucas from Salesforce.com, Werner Vogels of Amazon.com, Mani Gill from SAP BusinessObjects, Annrai O’Toole from Workday, Mikkel Asger Svane from Zendesk and others from Oracle, Progress Software and Microsoft Online Services. Our user panel includes Oracle CRM OnDemand user Kodak and 3,500-seat Google Apps user Permasteelisa from Italy.

Naturally, I’ll be blogging and tweeting from the event (in between acting as conference chair) so expect a strong European flavor to my postings over the next couple of weeks. If you’re registered, I look forward to seeing you there in person.

May 27th, 2009

Intalio takes multi-tenancy on-premise

Posted by Phil Wainewright @ 4:07 am

Categories: Architecture, CRM, On-demand, Platform as a service

Tags: Salesforce.com Inc., On-demand, Customer, Intalio Inc., Managed Hosting, Cloud Computing, Phil Wainewright

I’ve been writing about hybrid cloud models recently, making the case for extending cloud infrastructure on-premise in certain circumstances. I did so with foreknowledge of an announcement that BPM vendor Intalio has had in the works for several months. Last Tuesday, I was in Palo Alto for the public unveiling of Intalio’s new application platform, which is available both on-demand and on-premise — but in a model that reverses the normal polarity of such offerings and challenges the received wisdoms of cloud purists and on-premise diehards alike. It does this by taking some of the core principles of multi-tenancy and moving them on-premise. Read James Taylor for a detailed and thorough write-up of the product announcement. Perhaps most surprising, this challenge to on-demand orthodoxy is led by Intalio’s founder and CEO Ismael Ghalimi, a long-term evangelist for the on-demand model and organiser of the annual Office 2.0 conference, a mecca for advocates of on-demand computing.

As I’ve discussed in previous posts, there are two equally valid ways of achieving multi-tenancy. The first, espoused and evangelized by Salesforce.com, is to share as many tenants as physically possible on a single instance, right down to and including the database layer. The second model, adopted by NetSuite, SuccessFactors and many other leading SaaS players, is to replicate instances across large numbers of low-cost commodity hardware machines, sharing databases for smaller customers but having larger accounts run on their own virtual database instance. This is still multi-tenancy because the replicated database schemas are identical. There is nothing that ties any customer to a specific instance, leaving the provider free to distribute and manage instances in whatever way it sees fit.

What Intalio has done is to borrow this principle of replicated instances and apply it to its on-premise implementations, as Ghalimi explained last Tuesday:

“One of the lessons that we’ve learned in the past 20 years is that letting customers change application schemas is a very bad idea. We’ve learned that lesson and the way we implemented our CRM application is, you cannot change the standard objects. All you can do is expand them. You can add fields, but you can’t remove them. You can rename a field but you can’t change its logical name. So any modifications customers do will not break the schema. We’ve learned a lot from Salesforce.com. They did a really great job there.”

This is a perfect illustration of a principle that — in opposition to Microsoft’s ‘Software-plus-Services’ rhetoric — I prefer to call services-plus-software. In other words, architect for the cloud first, and then (if you must) Read the rest of this entry »