November 24th, 2009
EuroCloud UK and a lesson in SaaS marketing
In the midst of a busy schedule the past couple of weeks I’ve been preparing for the launch meeting in London of EuroCloud UK, the British instance of the Europe-wide SaaS and cloud industry community network that was first unveiled last month. Any readers from UK SaaS or cloud ventures who will be in London this Wednesday are welcome to come along, by the way — there will be quite a few people there from some of the country’s key players — but please make sure you register online (using the link above) before you come to make sure your name is on the guest list.
Acting as EuroCloud UK co-ordinator, I’ve found myself in the past few weeks making some snap buying decisions about online services that I imagine are similar to the decisions many SaaS prospects in start-ups and small businesses are making every day. Trade associations, like government organisations, have to be conscious of the need to be economical in how they spend the funds entrusted to them, so I’ve been wary of incurring commitments. Furthermore, the organisation is as cash-constrained as any start-up — until we start signing up members, we’re decidedly pre-revenue. We’re time-constrained too, since none of us involved in the start-up team are getting paid for our time.
Short of time, short of cash, unwilling to make big upfront commitments: how do such customers make their buying decisions? I thought it might be instructive to share some of the thought processes I’ve gone through with readers of this blog.
The need to promote the launch and track registrations for the event created the first really crucial ‘crunch moment’ when a buying decision had to be made. Read the rest of this entry »
November 21st, 2009
Taming the Chatter cloud
Not attending Dreamforce, it appears I missed a telling moment, the irony of which I would have enjoyed had I been there to witness it in person. It seems Salesforce.com has announced a new feature named after that most social of activities, Chatter, which aims to bring to the enterprise the functionality seen in social network tools such as Twitter and Facebook. But as Marc Benioff later told a gathering of press and analysts, it’s not a social network, oh no.
As I wasn’t there I can only go from what’s been reported. But it seems Benioff (no doubt guided by his marketing advisors) has decided to follow the advice promulgated at the recent Enterprise 2.0 conference in San Francisco — by no less a figure than Enterprise 2.0 guru Andrew McAfee — not to overuse the word social in front of business software buyers when talking about, erm, social computing. “I have rarely come across a word that has more negative connotations to managers in enterprise organizations,” McAfee warned his audience two weeks ago.
Benioff this week was devastatingly forthright about why social isn’t going to figure in his sales team’s lexicon when they tell customers about Chatter. According to VentureBeat’s Anthony Ha (my emphasis added):
“Salesforce was careful to position Chatter as a collaboration tool, not a ’social this or social that’ because there’s such a glut of social networking tools, he said, and customers are more willing to pay for collaboration software. ‘We really want to talk about collaboration, because that really is a budget item for our customers,’ Benioff said.”
So there we have it. Chatter’s going to be positioned as a collaboration tool, because that’s what customers are willing to pay for. I can still see problems ahead for this product, on three fronts, but let’s deal with that positioning question first, because I have quite strong views about it.
Interestingly, Microsoft seems to share no such qualms Read the rest of this entry »
November 15th, 2009
Can the Economist entirely be trusted?
I think a publication with the renowned integrity and impartiality of The Economist would have the sense to put its hand on its heart and say, ‘We try our best and we’re the best there is, but no, you can’t entirely trust any source.’ But if it were put in a position of asserting its trustworthiness against alternative publications it would surely have no choice but to speak out with a resounding voice in its own favor.
Thus I ask all my readers to vote a resounding ‘no’ to the proposition in the current Economist Debate, “This house believes that the cloud can’t be entirely trusted.” I’ve written here about many of the pitfalls to be avoided in the cloud, as with any computing platform, but the alternatives to a good cloud provider are far too flaky to be worth considering.
As fellow Enterprise Irregular Vinnie Mirchandani recently posted to the debate (and to his own blog), “the incumbent, on-premise establishment … can overprice, under-deliver, cause massive overruns, suck out 80% of our IT budgets for routine work — but we need to keep trusting them.” It is no surprise that the heritage of buggy, unproven and unwarrantied software that businesses and individuals have been saddled with by the established vendors over many years has led us to instinctively mistrust any computing that forces us to rely on a third party.
Yet despite our understandable caution, it is far better to trust the cloud, where security and performance are continuously open to public scrutiny, where costs can be predictably mapped to actual value delivered and where the technology is constantly kept up-to-date for no extra cost or disruption to the customer. Provided the buyer makes proper due diligence and precautions, there is in my view no alternative form of computing that is more trustworthy.
November 5th, 2009
Microsoft cuts BPOS price to squeeze Lotus
While most observers portray Microsoft’s sortie into online email and collaboration services as a titanic battle to keep Google off its productivity applications turf, the real target of this week’s price reductions is IBM’s Lotus unit. In a briefing earlier this week, Ron Markezich, corporate VP, Microsoft Online Services told me that most of his team’s customer wins are at the expense of the IBM division: “Seventy-five percent of our enterprise customers are coming from a non-Microsoft platform — predominantly [Lotus] Notes.”
The half-price reduction for hosted Exchange seats (from $10 to $5 per month) and a one-third cut in the cost of the full BPOS suite (from $15 to $10) is designed to keep those deals flowing through. IBM earlier this year introduced its own hosted LotusLive iNotes service at an aggressive $36 per user per year. Microsoft’s old pricing was at a level destined to give prospects pause for thought. At $60 per year, it’s close enough to raise fewer objections. The lower pricing will surely help, too, in those cases where Google’s $50-a-year service is the competition.
Interestingly, we now have a market price established for online corporate email services in the $35 to $60 per year range (indicative of a new price range for all categories of enterprise software?). As Microsoft VP Chris Capossela told CNET’s Ina Fried, “it’s the price that customers are really excited to buy our suite at … We’re pretty excited about the price and not so much focused on free services or the price Google or others might charge.” You bet.
Microsoft execs were happy enough to focus on Google when it came to throwing brickbats this week. Every briefing seems to have included a drive-by shooting directed at Google. “It takes more than a few billboards to win enterprise accounts,” Markezich told me, in a reference to his rival’s current ‘Going Google’ ad campaign. “There’s been a lot of investment in billboards. I question how much investment there’s been in enterprise capabilities.”
There’s also been a concerted effort to question the size of Google’s paying customer base. While Gmail is hitting the volume mass market, Microsoft currently has the edge in large enterprise accounts. Google spent a lot of PR dollars to promote its recent win of a 35,000-seat account at Rentokil Initial, along with its 30,000-seat contract with City of Los Angeles. Microsoft Online Services is currently scoring much larger wins, including a 110,000-seat implementation at pharma giant GSK, a “large number” of which are already deployed, Markezich told me. He also disclosed the existence of a much larger, as yet unnamed customer, currently “in the midst of deployment” to more than 300,000 users.
October 29th, 2009
Cloud cuts everyone's cost of ownership
Speaking in the opening keynote of SIIA OnDemand in San Jose this morning, SuccessFactors CEO Lars Dalgaard let slip a statistic that set several attendees a-twittering. He revealed that the SaaS provider’s multi-tenant application infrastructure supports its 2,850+ customers and 5.4+ million users on just 150 servers.
The ability to achieve such enormous economies of scale demonstrates the huge power of multi-tenancy and gives the lie to the line, so often peddled by the conventional on-premise software vendors, that SaaS is just a delivery option. SuccessFactors would not be able to run its operations with anything like the same low overhead if it had to separately maintain the ability to ship on-premise instances of its software.
The conventional software model perpetuates a scandalous wastage and duplication of resources. Every single customer of an on-premise platform or application installs their own custom implementation. Every one of those implementations builds in enough spare capacity to support unexpected usage spikes and peak load at the organization’s busiest period of the year — yet remains idle the rest of the time. Its IT staff acquire a huge store of learnings and experiences that are solely revelant to their own environment. All of those needless investments and expenses are replicated across thousands of an ISV’s customer base. The aggregate waste adds up to a burdensome cost of ownership spread across its customer.
With SaaS, the customer base shares a single infrastructure, eliminating Read the rest of this entry »
October 22nd, 2009
Box.net wants to be the Switzerland of data
Today, online file storage and collaboration provider Box.net launches integration with Salesforce.com. As TechCrunch explains:
“… businesses will be able to add a Box.net app to their Salesforce accounts, allowing them to quickly access their documents, media, and other files from directly within their CRM … businesses need to sign up for Box.net’s enterprise plan, which includes free access to the Salesforce app. As an added bonus, any businesses using the new Salesforce integration will be eligible for unlimited storage on Box.net …”
The move is a first step in a strategic direction for the company, its VP of marketing Jen Grant told me on Tuesday: “We’re moving towards a broader look at how the cloud can help a business. Now we really want to start connecting clouds together,” she explained. “Today, we’re connecting the Box.net cloud with the Salesforce.com cloud. In the future, we’re looking at partnering with many other services.”
The unlimited storage is a key part of this offering, which is designed to act as a single, permanent home for users’ data as they move between online applications. If Box.net succeeds in its ambitions, it will become the “Switzerland” of online data storage — the one neutral location where everyone feels their online valuables are safest.
Of course one vital component in winning that role will be the trustworthiness and reliability of Box.net as a cloud repository (especially in light of recent failures elsewhere). With $14.6 million venture funding to date (almost half of it in a round announced last month), Box.net is not yet in the topmost league of cloud providers so may need to continue its expansion before it can afford a fully redundant architecture. But convenience and competitive pricing are also important considerations in the small-to-mid-size business market that produces most of the customers of this service. Here’s what Grant told me in an email when I followed up our conversation on Tuesday with a question about security and disaster recovery at Box.net:
“Here is a detailed outline of our current security measures in place: https://enterprise.box.net/features/security
“In the short term, we’re adding encryption on files at rest (among other initiatives) in addition to the encryption in transit that we already have; you can expect this to be complete in the next few weeks.
“For the long term, we’re currently undergoing the SAS 70 certification process within the company, which will ‘officially’ endorse our standards regarding both security and privacy. This is above and beyond security implementations that most companies have on an internal server or collaboration tool.
“… keeping our customers’ data safe and secure IS the core of what we do, and we know that our very business depends on us maintaining that level of security. Because of that, we spend a great deal of time thinking through how to implement and maintain the highest level and latest advances in security technology.”
Box.net has produced a useful YouTube video explaining how the new Salesforce.com integration works.
October 20th, 2009
What EuroCloud means for SaaS in Europe
Today EuroCloud, a new industry organization that aims to promote cloud and SaaS, launches in seven European countries. I’m involved in the initiative, having agreed to act as UK co-ordinator for the launch. Other groups are launching in France, Denmark, Finland, Belgium, Luxembourg and Spain, and the launch has the backing of almost thirty SaaS and cloud vendors, ranging from giants like Amazon, Salesforce.com, Microsoft and McAfee to up-and-coming local players including Huddle, INES, Mimecast, NTRGlobal and Twinfield. Full details are on the website and in the launch press release (PDF). Initial blog coverage (in addition to this post) has been by Dennis Howlett, David Terrar and Ben Kepes, and there’s developing multi-language news coverage across Europe.
I’ve written in the past about the difficulties European SaaS vendors face in expanding across borders and getting the visibility they deserve. There are a huge number of highly successful SaaS vendors in Europe, who are thriving in spite of the challenges of expanding across borders into different languages, cultures and business jurisdictions. The lack of established European-wide tech industry networks and media leaves them doubly sidelined — unable to command visibility against better-known US-based peers with the global tech media, yet sidelined by local tech media in their own countries because SaaS isn’t considered part of the mainstream software business.
EuroCloud changes that by creating a ‘go-to’ destination across Europe where everyone will be able to see, just by scanning the membership list, the breadth and depth of indigenous SaaS and cloud players. Today EuroCloud issues its call for membership so the names aren’t there yet (apart from the 70 members of the pre-existing EuroCloud France) — however I know from the responses I can already see coming in to just the UK group how quickly that’s going to change. Membership is open to any SaaS or cloud ecosystem participant, and those who want to take an active role in taking EuroCloud forward have the opportunity to get in on the ground floor and help drive its momentum.
Meanwhile, we already have 29 companies listed as ‘European Launch Partners’, all of them organizations with a presence in at least two European countries. Some of my US fellow-bloggers and writers may say, Read the rest of this entry »
October 19th, 2009
Beware the allure of Fool's Cloud
Even more insidious than the perils of Amateur Cloud (which I covered in my last post) is the allure of a phenomenon I’m calling Fool’s Cloud. The more familiar name by which this is known to many enterprises and IT vendors is ‘private cloud.’ It’s what happens when people look at the phenomenon of cloud computing, latch on to a few of its features, and implement something within their IT infrastructure that appears identical in their eyes, even though it omits some of the most crucial elements of cloud computing.
I’m not saying that privately-hosted cloud computing look-alikes aren’t useful. All I’m saying is, don’t fool yourself that they’ll deliver all the benefits of cloud computing.
What’s really insidious is the way that Fool’s Cloud deteriorates so rapidly in comparison to true cloud computing. It starts off all shiny and new, sparkling with state-of-the-art capabilities and value. But because it’s cut off from the cloud that it attempts to emulate, it quickly falls behind, tarnishing the competitiveness of your IT infrastructure and becoming as resistant to decommissioning as a lump of radioactive waste.
These captive, private clouds fall into obsolescence because they’re not exposed to the continuous, collective scrutiny and collaborative innovation of the public cloud. Read the rest of this entry »
October 16th, 2009
How to avoid the amateur cloud
Someone this week asked me, what’s the cloud equivalent of SoSaaS? What do we call it when people take outdated data center management practices and label them as cloud computing, even when they fall far short of what’s required? We already have the name, I replied, thanks to the events of the past week: amateur cloud.
There’s going to be a lot of amateur cloud in the market for the next few years, and businesses of all sizes will have to be intensely wary of the pitfalls when they go shopping for cloud services. Amateur cloud won’t be easy to spot, and often it’ll be operated by huge, reputable companies with long, honorable track records in computing and data center operations. In many cases, businesses will knowingly choose amateur-cloud providers for reasons of cost or habit. As a result, the transition to the cloud computing era is going to be lengthy, troubled and painful.
The past week’s Sidekick debacle has been an object lesson in the full perils of amateur cloud. The hit to the reputations and brand image of Microsoft and T-Mobile has been massive. To its credit, Microsoft has pulled out all the stops and seems well on the way to recovering the lost user data, which will go a long way towards restoring its cloud credibility. But at what cost? — not only in direct resource costs but also the unseen cost of top-level crisis management that has had to be devoted to the rescue exercise. One silver lining (though scant comfort for those who suffered directly) is that every such failure has the welcome side-effect of driving home to all cloud providers the risk exposure that amateur cloud represents. Many will now be re-examining their vulnerability and tightening up procedures or strengthening their infrastructure, all of which helps raise expected operating norms a few notches higher.
One can’t help feeling sorry for venerable, established players like IBM, berated by Air New Zealand’s CEO for last week’s data center outage, and Hitachi Data Systems, caught up in the incident that caused the Sidekick data loss. As several of the Talkback commenters to my previous post have argued, it’s not as if they’ve done anything different from what they’ve always done in the past. They weren’t even attempting to operate as cloud computing facilities (although Sidekick’s users certainly regarded it as a cloud service and trusted it as such).
Yet somehow in the space of a few short months, the world has changed. Suddenly, every online service is being measured against cloud standards. What was once Read the rest of this entry »
October 12th, 2009
The cloud: no place for amateurs
The boss of Air New Zealand has given us a convenient term for companies that can’t get to grips with the realities of delivering computing as a service: “Amateurs”. His reported comments were addressed to IBM, which failed to restore operations at a mainframe data center in a responsive enough fashion after a major outage on Sunday:
“In my 30-year working career,” he reportedly emailed the hapless vendor, “I am struggling to recall a time where I have seen a supplier so slow to react to a catastrophic system failure such as this and so unwilling to accept responsibility and apologise to its client and its client’s customers.”
T-Mobile is another reputable company left looking amateurish today after the catastrophic loss last week of all user data stored on its Sidekick service. But the real amateurs behind this story appear to be Microsoft and Hitachi, who are believed implicated in a server failure that took out both the production and backup databases on the storage network where Sidekick data is stored.
To read a contrasting story that shows how cloud outages get handled professionally, check out Michael Krigsman’s post last week about the recent 15-hour outage suffered by on-demand ERP provider Workday. Here, too, a network storage device caused a total meltdown, shutting itself down when it detected a corrupted node in a backup disk. Workday avoided Sidekick’s fate by invoking its disaster recovery plan. It avoided IBM’s fate by acting rapidly and going out of its way to keep its customers informed.
As I’ve often written in the past, big, established companies frequently over-estimate their competence at cloud computing and SaaS, simply because they fail to realize it’s far more than just a repackaging of what they already do. Unfortunately, their inability to grasp the emerging as-a-service business model and the demands of cloud-scale computing leave them performing like amateurs. The pity of it is, their arrogance and incompetence undermines trust in all cloud computing providers, even those that take their responsibilities seriously.
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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