Category: Ecosystems
September 10th, 2009
Survival of the fit-most
In the emerging Web era, connectedness reigns supreme. Competitive survival is no longer the preserve solely of the strong, the quick and the nimble — the attributes popularly associated with Darwin’s adopted motto, survival of the fittest. The Web emphasizes connections, sharing and community, enabling a further advance in the evolution of homo sapiens as a social creature.
In this environment, the individuals, tools and organizations best adapted to thrive are those best able to connect. Not the fittest so much as the fit-most.
This change may seem to be the consequence of technology innovation — in this case, the Web — having an impact on society. But perhaps the rise of the Web is itself a reflection of a change that was already taking shape, a reaction against the individualist creed that culminated in the 1980s notion that ‘Greed is good.’ Today we see a generational shift towards shared endeavor and a backlash against excessive intellectual property protection.
A fresh example of this emerging collaborative mindset came last week when online backup vendor Backblaze published the specifications it uses to build low-cost storage devices for its data center. Ten years ago, this would have seemed a crazy revelation of a proprietary secret. Today, it looks like a smart move because we have a better understanding of the notion of crowd-sourcing. We realize that Backblaze aims to tap the collaborative expertise of the Web community to hone and refine the savings it can make on its physical storage costs. It’s a rational decision because the company isn’t giving away the operational details of its core service offering — it may even strengthen its selling power by publicly demonstrating the viability of its prices compared to such low capital spending costs (”three-tenths of one penny per gigabyte per month over the course of three years”).
Yet making the most of the doctrine of the fit-most means overturning long-held instincts to act privately and secretly, and instead making a conscious effort to share and use communal assets, whether as providers or consumers. The pressure to conform to deeply ingrained behaviors and customs is hard to resist (Zoho recently became the latest in a long line of SaaS and cloud providers to cave in to the clamor for a ‘private cloud’ option). We know why we want to keep things private — the arguments are well-rehearsed and almost a universal folk memory — whereas the impulse to share is much less well documented and understood.
Sharing and community are nevertheless at the heart of our success as a species, and ’survival of the fit-most’ is all about replicating that success in the cloud computing environment. Instead of trying to do everything alone as a hermetically sealed entity, the cloud encourages us to reach out and utilize the services of others that do what they do better than we can do it ourselves — which is exactly how human civilization works. We are all individually stronger and more potent when we rely on each other.
In cloud computing, survival of the fit-most emphasizes attributes such as: Read the rest of this entry »
July 23rd, 2009
Bill.com hits the banks when they're down
If things weren’t bad enough for the banks already — revealed as so inept at their bread-and-butter business of lending money that governments across the globe have had to bail them out — now their cashcow business of payment processing is under competitive threat.
This week, SaaS startup Bill.com launched a new service that allows US-based small businesses to pay their suppliers electronically for a low fee of 49c per payment — irrespective of the size of payment. The fee compares well to the $1-$3 per payment many banks charge for the same service, and is significantly less than the percentage-based fees charged by debit and credit cards or online services such as PayPal.
The service uses the US banking industry’s Automatic Clearing House (ACH) system, which processes most payments in around two working days, and which currently provides fat margins to banks that charge multiples of the actual cost in fees (an ACH transfer costs your bank anything from 25c down to as little as 2.5c). Many businesses, of course, are still in the habit of sending payments by more expensive wire transfer, which generates even larger cash profits for the banks. Bill.com’s ePayment service offers customers a way to sidestep those costly fees at the same time as processing their accounts payable with fewer errors and less effort.
To take advantage of ePayment, businesses have to sign up to the $25-per-month Bill.com application, which automates the accounts payable function for small businesses. Incoming invoices are emailed, scanned or faxed into the Bill.com system, which then provides email workflow to manage internal approvals. Once approved, Read the rest of this entry »
July 1st, 2009
WebEx augurs ill for Cisco's cloud ambitions
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 16th, 2009
Netviewer aims to outshine WebEx in Europe
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
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
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 »
April 2nd, 2009
SaaS channel models morph into shape
Mark down NetSuite’s announcement today of SuiteCloud Connect for Salesforce.com (all Techmeme coverage) as a victory for the cloud over individual vendors. Sure, this is still about who owns the biggest slice of the cloud (did you notice the resemblance between NetSuite’s SuiteCloud diagram and a pie-chart? Guess who got the lion’s share). But it represents a blow for Salesforce.com’s own-the-whole-ecosystem AppExchange model, just as much as it’s a step back from NetSuite’s former rhetoric about standardizing on a single vendor’s suite for all your needs. [Disclosure: NetSuite is a current client and I've also done work recently for Salesforce.com and Intacct].
It signals that intermediaries are going to have more power in the cloud and we’re not going to end up having to choose between just a handful of mega-vendors. Instead, interoperability (dictated by the cloud, not a self-appointed elite) is going to be the dominant meme and vendors will have to empower third parties to link their application platforms wherever customers can find the most value. The open cloud wins the day.
There’s a strong message emerging too about the importance of channels in delivering cloud and SaaS solutions to customers. While NetSuite is clearly motivated by being able to market its ERP and ecommerce platform to Salesforce.com’s SaaS-savvy customer base (and who in this market doesn’t covet a slice of that action?), it’s increasingly relying on a number of different kinds of channel partners to reach the market. At first glance, the partner ecosystem for SaaS doesn’t look that much different from the channel partners that traditional software vendors have worked with. But the detail of how they execute is much changed. Read the rest of this entry »
February 28th, 2009
Appirio, shafting the global SIs
VCs placed another $10 million bet this week that global SIs will crumble in the face of the enormous change being wrought on their businesses by the advent of SaaS and cloud computing. Jeff Richards of GGV Capital, who is joining the board of cloud integrator Appirio after the VC backed a new $10 million funding round, told me this week that Appirio is “building a leadership position” at the expense of established big-name integrators. [Disclosure: Appirio is a recent client].
“Appirio has very large customers that are signing on for multi-million dollar contracts,” he said. “When a company like Japan Post wants to do something [in the cloud], they’re turning to Appirio and not to the global SIs.”
A recent blog posting by Appirio’s CEO Chris Barbin discussed this phenomenon under the heading, Short the Global SIs, and inspired my more aggressive title, above. Forget shorting, these BigCos are utterly shafted (along with some others I could mention). Barbin recounts several examples of how woefully out of their depth they show themselves to be when pitching for SaaS and Paas implementations, summing up:
“Global SIs such as Accenture, Cap Gemini, TCS and others are still shackled by their dependence on old-school, on-premise partnerships with SAP, Oracle & Microsoft. While they may be paying lip service to cloud computing, most offer SaaS-based solutions at 2-3x the total cost necessary, are nowhere to be found in the relevant communities and developer ecosystems, and have few true SaaS enterprise reference customers to speak of…
“… enterprise executives are simply bypassing the Global SIs because of their bloated costs models, old school methods, multi-billion dollar partnerships with legacy vendors, or systemic lack of knowledge of cloud computing products and services.”
This at a time when many large corporations are starting to get deadly serious about Read the rest of this entry »
February 27th, 2009
Automated PaaS migration now a reality
The first reports of Coghead customers having successfully transferred their applications to a new platform are starting to come through. Caspio, which was first off the blocks with the offer of a migration deal within hours of Coghead announcing its shutdown, is today unveiling its first completed migration. Hawaii-based health agency Quality Behavioral Outcomes took just days to migrate several “mission-critical” database applications and has already decided it likes the new platform better than Coghead, according to Todd Addleson, director of behavioral services.
That may seem like pretty fast work — a tribute to the rapid time-to-result that such platforms are designed to achieve, and which adds new meaning to the running (escaping?) figure in the Coghead logo — but other providers have been unveiling automated tools that instantly convert a Coghead application definition file into their own application format. As I noted in my previous post about the risks of PaaS lock-out, the Coghead platform stores the metadata that defines each application in an XML file, which users can download from their account. Upload those files to rival PaaS platforms TeamDesk or Wolf Frameworks and they’ll be automatically transformed to work with the new platform, “without any manual intervention & restore all entities, screens, business rules, complete application design & even import data thru’ an automated utility,” as Wolf’s press release puts it.
Of course, Caspio has probably been using similar tools behind the scenes to help its customers get moving quickly (its ‘Coghead transition program‘ includes free support and “expert consultation services” as well as two months’ free usage). As situational apps expert Jonathan Sapir noted in a comment on my earlier posting, “Most of these platforms store the application definition in XML and use a runtime engine to interpret the XML in order to render the application. So theoretically, if there was a way to convert from one vendor’s XML to another you could get to no-lock-in nirvana (or better still, have an open standard for this).”
To see vendors already doing this gives me a useful proofpoint with which to refute Microsoft SaaS architecture expert Eugenio Pace, Read the rest of this entry »
February 18th, 2009
Weaving the real-time web into brick-and-mortar retail
When I walked into Circuit City in San Mateo last September to buy a Flip Mino pocket camcorder, the visit summed up the clash of the old and the new that retailers are facing in the digital age. The manufacturer’s website had referred the chain as a stockist, and my iPhone had helped me find my way to the nearest store. But I nearly walked out of there empty-handed because the assistant was having trouble finding the item on the shelves.
Circuit City has since gone out of business, along with a lengthening list of other familiar retail names. Another factor in many of these closures, according to one commentator writing about the demise of fitted kitchen and furniture chain MFI in the UK, is a focus on cost-cutting at the expense of staff skills and customer service. So long as consumers were flush with cash and almost limitless credit, retailers only had to open up shop and the takings would roll in. In today’s changed climate, I believe the retailers that have continued to invest in providing a good customer experience (provided they didn’t overextend their borrowings to do so) are the ones that will be best placed to survive.
Trouble is, the Web complicates the picture for retailers. For many purchases, consumers get a better customer experience from a well-automated website than they do from most retail stores. They can search easily, instantly see what’s in stock, look up product specifications and discover personalized suggestions and offers based on their browsing and buying history. Few retailers hook up their online presence to take advantage of the one clear benefit of a brick-and-mortar presence — the possibility for a consumer to drive a few blocks and pick up their purchase today — and the minority that do rarely manage to match the quality of the online customer experience with the service levels their staff are equipped to offer in store.
This is difficult enough for large retail chains — even those with deep pockets — but it’s a real challenge for the smaller retailers that often have the best record of personalized customer service in-store. How do they replicate that customer experience online without 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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