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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 »
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 »
September 24th, 2009
Why you should be glad about Gmail failures
Gmail is having problems again today and some users are squirming while others aren’t worried.
Of course it’s a hassle when Gmail’s not there any more — I found my work rhythm was interrupted and instead of writing and sending some emails as I’d planned, I had to switch to another task and they’re still sitting on my to-do list now. But the way I look at it, every Gmail outage is a small investment I’m willing to make towards a future when I’ll be able to take its reliability utterly for granted.
With every Gmail fail, Google learns more about operating a cloud-scale, enterprise-class email infrastructure. While it may be true that Hotmail and Yahoo! Mail have more registered users and traffic, neither of them are trying to attract enterprise customers as Google is with its Google Apps suite (of which Gmail is the flagship application). That means no one has ever attempted what Gmail is now doing, and with each slip-up along the way, it learns how to do it better.
Remember the big outage that affected the Gmail web interface on the 1st of this month? Read the rest of this entry »
September 23rd, 2009
SaaS for your business in the cloud
Not to be smug, but SaaS is a great place to be in the software industry these days. I was talking to salespeople for several SaaS vendors and partners at a customer event a few weeks ago and there was a palpable sense of relief that they’d moved out of on-premise sales — one described to me a recent joiner’s event at his current employer where a dozen or so former Oracle high-fliers were coming on board. “These guys know all about following the money,” he commented.
Today, I’m at a NetSuite customer event in London and CEO Zach Nelson has just displayed a chart quoting IDC and Gartner data that shows on-demand ERP sales are growing at a rate four times faster than on-premise. OK, that’s from a lower base, but remember too that SaaS vendors book far less each year from each individual deal than their on-premise rivals, which makes their faster revenue growth even more impressive.
So I’m wondering, what’s driving this remarkable growth? Conventional wisdom says that it’s just lower upfront cost and faster time-to-live that’s driving businesses to adopt SaaS, especially in these straightened, cost-conscious times. But there’s another factor that I think is underrated and I’m interested to hear Nelson emphasize it in his presentation.
“So you’re going to build your business on software that was designed before the Internet existed?” he relates asking a customer in a recent sales call. Increasingly today, business is done in the cloud — with customers, suppliers, employees — and Nelson’s message is that, to participate fully in that medium, business systems have to be in the cloud, too. “Your company is in the cloud,” his presentation concludes.
The message is reinforced by Peter Bauer, CEO of Mimecast, which adopted NetSuite to manage its growth providing email management services as a multinational business. “You have to increasingly think of customers visiting your organization as an online experience,” he said, speaking on a customer panel at the event.
Perhaps more SaaS vendors should take a leaf out of NetSuite’s book. Instead of going on about the lower cost and faster time-to-live of their solutions compared to conventional software, they should just point out that operating in the cloud is how business is done these days, and anyone whose business systems operate anywhere else is going to get left behind. It’s as simple as that.
June 10th, 2009
Wookey: SAP's future is on-demand
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 »
May 5th, 2009
Web giants and the helpless individual
Like many users of technology today, I have developed an essentially dysfunctional approach when things don’t work properly: I do whatever it takes to avoid fixing it. I wait to see if it ‘fixes itself’. I make a workaround. I live with it till the next upgrade. Or I just use something else. It’s only when I absolutely can’t function without resolving the problem that I take a deep breath, grit my teeth, and embark on the quest to find a solution.
My worst nightmare is to find myself in the kind of situation frequently described in anguished blog posts by victims of Google, Amazon or eBay glitches and terminations. I’ve been collecting a few samples recently:
- When Amazon fails, it does so big time ranted fellow Enterprise Irregular Dennis Howlett last weekend after an ill-fated attempt to buy a high-spec digital camera from the online retailer. A security exception on his order triggered a defective process that closed his account with no viable means of getting it reopened.
- Nobody Can Hear You Scream If Your RSS Feed Is Dead wrote Louis Gray back in March when a glitch at Blogger wiped out his entire RSS feed, including all archives (among other casualties of the same glitch, Kent Newsome provided an entertaining and informative account).
- Google is Evil, Worse than PayPal: Don’t use Google Checkout for your business wrote Amy Hoy later the same month when her website’s Checkout account was disabled with no notification, no explanation and no appeal.
- Don’t ever use Google Apps for anything important, wrote an anonymous poster to the Business of Software discussion community in January after being “stuck in this kafkaesque place” that is Google Apps support. [Updated 5 May at 22:52. An earlier version of this item incorrectly attributed the comment to Joel Spolsky, who is not having any problems with Google].
- Hello, Google, is anyone in there? I wrote last summer after several incidents when Googla Apps users were locked out of their accounts with no information.
As is the norm when these mass-market automated online services fail, the victims Read the rest of this entry »
February 11th, 2009
Sage shows why bigcos can't be trusted with SaaS
The first of my promised SaaS stories from Europe ends with an uplifting David-and-Goliath twist, but is first and foremost an object lesson in how not to introduce a SaaS offering, courtesy of one of the world’s leading small business software vendors, UK-based Sage. I know I ought to start with one of the many positive stories about SaaS in Europe, but I’m steamed up about this one, so here goes.
After a claimed 18 months in development, Sage at the turn of the year unveiled the beta of Sage Live, which combines a free-of-charge invoicing application and a simple £10-per-month accounting product for small business owners. Although to my mind I found it a bit too simple from an accounting point of view (no multi-currency support for example), it has some interesting Web 2.0 features such as integration with Google Docs and Google Calendar, keyword search across the application, support for RSS feeds in the dashboard and a Blackberry mobile client. Online accountancy watchers Ben Kepes and fellow-Enterprise Irregular Dennis Howlett both gave it positive reviews, while noting that this was a beta release and Sage was keen to listen to feedback and evolve the product.
But two weeks ago, Sage Live went dead after serious security flaws were exposed in the product, leading the company to shut down the beta trial. This is where the David-and-Goliath angle comes in. The flaws were exposed by the blogging founder of a tiny SaaS rival to Sage. Duane Jackson, CEO of UK-based KashFlow, which just last week celebrated passing the 2,500 customer mark, decided to have a detailed look at his rival’s offering and immediately blogged about what he discovered:
“Almost unbelievably, [Sage Live] show[s] your password on-screen when you log-in — in plain text. It’s sent to [Sage's] central ‘passport’ service using a GET rather than a POST — so your password is actually in the requested URL which is displayed in the status bar … Make sure no-one is looking at your screen when you log in …
“A little bit of prodding around the site and I found myself looking at … pages that only authorised people should be seeing.”
Russ McRee, a security analyst with Microsoft Online Services and (via his personal blog) a deadly scourge of flawed SaaS security practices, found additional problems and reported them to Sage, as did many others over the following days. A week after Jackson posted his findings, Sage took the service completely offline and it has not yet been restored.
I’m not privy to what went on within Sage during the development and unveiling of its new offering, but it seems clear that Read the rest of this entry »
January 14th, 2009
Google endorses the cloud channel
With the launch of its Authorized Reseller program today, Google publicly acknowledges something that’s been privately evident for some time: most all its significant enterprise wins for Google Apps wouldn’t have happened without partners to champion and manage the implementation (another SaaS partner myth debunked).
There are plenty of examples in the US, but for an even clearer demonstration of the role played by Google’s partners, look to France. With six out of Google’s ten biggest European early adopters, enterprise adoption of Google Apps in France is way ahead of its neighbours (including the UK). Google’s big wins there (including one 10,000-user account) have been brought on board by Paris-based Revevol (pronounced ‘rev-evol’), whose founders first visited Google’s California headquarters to discuss the emerging opportunity six months before Google Apps was formally launched.
“We have brought to Google many clients because of this work we have been doing the past two years,” Revevol’s CEO Laurent Gasser told me yesterday, emphasizing Google’s debt to his company: “Once you have that type of traction in the market, it’s easier to get going.”
Google’s dependence on partners is similar in the US — albeit with a larger band of them, including Appirio [disclosure: a recent client], SADA Systems, Horizon Info Services and the evocatively named Cloud Sherpas. Look under the covers of any significant enterprise win and you’ll see Read the rest of this entry »
November 22nd, 2008
When to spend cash in a SaaS business
Josh James, CEO and co-founder of enterprise web analytics provider Omniture, revealed to an enthralled crowd at the SIIA On Demand conference this week the magic formula that helped his company sustain rocketing growth, dwarf its competitors and become the second-largest listed pureplay SaaS provider in the US, with 5,000 customers and annualized revenues approaching $320 million.
The key to understanding the formula is to recognize that SaaS companies bleed cash with every new customer they acquire — the complete opposite of what happens when a conventional software company lands a new account and pockets a huge upfront license fee. Especially if, like Omniture, the application requires significant infrastructure investment but the subscription is billed monthly.
“Every time we add an incremental customer, it costs us more money that quarter — it costs us more cash that quarter,” explained James. “When you multiply that by 250 customers in a quarter, that’s a lot of expense for no money.”
Some statistics illuminate the scale of Omniture’s infrastructure: it operates 15,000 servers for its 5,000 customers, and processes almost a trillion transactions per quarter — that’s a hundred times more than Salesforce.com’s proudly touted 10 billion. The average transaction rate is 125,000 per second, with spikes up to twice that amount. Those are truly petascale numbers (to use a word I learnt just last week) and every new customer means adding more capacity.
The financial consequences look exceptionally dire when Read the rest of this entry »
October 25th, 2008
Gathering clouds brew up a storm
With all kinds of cloud announcements promised at Microsoft PDC next week, rival vendors Amazon and Rackspace have tried to steal a little early thunder with some announcements of their own. This is the beginning of a titanic struggle to establish the top cloud providers, and this week’s announcements have each been significant enough. It’s quite a landmark to see the beta label drop off Amazon’s EC2 service, which also (very sensibly) added an SLA. It’s another landmark to see Rackspace, a leader in the managed server hosting industry, embrace the cloud as thoroughly as it did this week. We’ll see next week what Microsoft has up its sleeve.
What I found interesting about Rackspace, who briefed me ahead of the announcement, is that it seems to be under no illusions about where the hosting industry is headed: “For us, cloud is the next iteration of hosting,” said Lew Moorman, the company’s SVP of strategy [disclosure: Rackspace comps me a cloud hosting account].
Rather than have upstart cloud competitors start stealing its customers away, Rackspace has decided to embrace the cloud and make it an option for any of its hosting customers. “We have traditional managed hosting that can be logically connected to the cloud,” Moorman explained. The thinking is that most customers will want to keep some managed servers while moving other workloads to the cloud. “The move to the cloud is a breakthrough for IT departments to match capacity to demand, get increased reliability and redundancy,” said Moorman. Having both within the same network infrastructure will save customers from suffering extra bandwidth costs or time lags when connecting the two.
From that point of view it’s a smart decision, but it’s not without financial risks, as ComputerWorld’s Patrick Thibodeau spelt out: 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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