July 30th, 2008

Intacct reports record growth: the analysis

Posted by Dennis Howlett @ 7:43 am

Categories: Office productivity

Tags: Software-as-a-service, Solution, Finance, Pricing Strategy, Analysis, Intacct, Software As A Service (SaaS), Pricing, Cloud Computing, Marketing Research

The other week, I started compiling a spreadsheet that shows the relative pricing for SaaS accounting style applications. It’s not meant to be sophisticated but provide an indication of the range of solutions and pricing models offered in this segment of the SaaS market. To my eternal shame, I omitted Intacct - a fact that Vinnie Mirchandani quite rightly picked up upon. In his post, Vinnie said:

I was surprised to see Finance/Accounting adoption lower than “specialized verticals”. A few days ago, Dennis Howlett put together a quick pricing spreadsheet on some of the SaaS accounting packages and I remember thinking there were so many more including NetSuite, Intacct and others as Jeff Kaplan’s Showplace lists. Without the benefit of the sample Bill and Co had access to, I would have argued it was the highest area of adoption (or tied with SFA in CRM) with 33% penetration…

In a moment of serendipity, Intacct today released its numbers. While I would hardly describe the overall numbers as sparkling, the rate of adoption is far more impressive. From the release:

“New business increased by 130 percent in fiscal 2008 versus the prior fiscal year, with Intacct’s channel business growing by more than 160 percent over the same period…Intacct grew its subscriber base by more than 50 percent in the past year, and continues to see strong growth both from businesses graduating from QuickBooks and migrating from traditional on-premises mid-market financial applications to Intacct…As of the end of Intacct’s 2008 fiscal year, the company’s multi-subsidiary and multi-currency customer base had grown to include nearly 1,000 customers — representing more than 10,000 total business entities managed”

Intacct claims a total of 2,000 customers.

Vinnie should not be surprised at the relatively small numbers. While CRM is a no brainer for sales people looking to adopt a solution they can easily expense, finance people are far more demanding.  Security is often cited as a reason for avoiding SaaS solutions so Intacct’s SAS 70 Type II certification is a BIG plus point. This certification provides assurance across a range of measures upon which picky auditors can rely.

Intacct has also taken other smart measures, especially in adopting a solid partner channel strategy.  SMB customers rely more on channel expertise than their large enterprise brethern. That’s because SMBs don’t have the in-house skills with which to assess or implement solutions. Given the growth they’re reporting, it seems clear Intacct offers VARs with a package that makes the solution a viable option. This is something I’ve encouraged others to think about. Just because a solution is an online offering doesn’t mean that the essential consulting, implementation and data conversion work magically disappears. The advantage for VARs is that working online means they can be far more responsive to customer need. That should translate into lower TCO and better customer relationships. Why SAP doesn’t seem to get this escapes me.

One area that causes me concern is the Intacct/Salesforce.com relationship. While Intacct claims integration, the SFdC channel hasn’t exactly proved a happy hunting ground for add on vendors. There is a fundamental mindset difference between sales and finance people that is often played out in fights over expenses. Vendors like Intacct really need direct access to SFdC customers. It will be interesting to see how SFdC responds to this type of situation because in the longer term, services like Intacct could easily drive more mainstream adoption of the SFdC’s core offerings. That’s because of the power wielded by CFOs. This is something I believe CODA is in part relying upon to drive adoption of its CODA2Go solution.

Anyone considering SaaS accounting solutions should be taking a hard look at what companies like Intacct, NetSuite and others are achieving in the market place. It is still very early days but the signs are good. Right now the market looks somewhat chaotic with many different types and styles of offering. Selection remains something of a lottery as vendors shake out and flesh out functionality. Howeve, if the likes of Intacct are serving as a bell weather, then there is much to admire.

July 23rd, 2008

MindTouch Deki: Kilen Woods release

Posted by Dennis Howlett @ 10:01 am

Categories: Office productivity, Social computing

Tags: Microsoft Corp., Mashup, Aaron Fulkerson, Management Option, Wiki, Collaboration, Supply Chain Management (SCM), Databases, Online Communications, Enterprise Software

Today, MindTouch Deki announces Kilen Woods, its latest and biggest release. In conversation with co-founder Aaron Fulkerson I learned that Deki is rapidly transforming itself from being a smart wiki into what Fulkerson calls the ‘connecting tissue’ between applications. Others might call it mashup environment, still others a means of getting applications to talk with one another in an environment that helps companies meet their collaboration goals.

The demonstration video above shows an example using the Microsoft Access example Northwinds with Google maps and how, with a little technical skill, companies can create wiki style pages with which users will be very familiar.

In this release, MindTouch is showcasing a new library of connectors to applications and databases with which many IT shops will be familiar including:

• SugarCRM, Salesforce.com and LinkedIn
• MySQL, Microsoft SQL Server, Microsoft Access and Microsoft ADO.NET
• VisiFire, PrinceXML, ThinkFree Office and WordPress

“We’ve now got over 100 web services that Deki can use to create basic workflows and mashups that are proving useful in the enterprise,” said Fulkerson. He also claims that Deki doesn’t require intensive IT resources but should be accessible for customizations by business process people.

According to Fulkerson, the company is clocking up 3,000 downloads per day of the product, which is available as free and open source. Management options are also available. For the curious, there is a personal free hosted version. The company claims some 400 paying customers.

I’m impressed with MindTouch Deki. Fulkerson’s passion, but more important his understanding of the need for fast track mashups and integrations shines through in the product. This is way beyond where many wikis are going. It elegantly shows the potential for getting information out of siloes and have those data become part of broader, light weight applications that solve many of the business supply chain problems that have been difficult to overcome using traditional integration methods.

Once we see adapters for SAP and Oracle Applications, then I think we’ll be seeing the emergence of new classes of application that so far have lived in the dreams of those who want to see the breaking down of departmental and cross business boundaries.

July 22nd, 2008

Zuora: the future business model?

Posted by Dennis Howlett @ 6:03 am

Categories: Office productivity

Tags: Salesforce.com Inc., Billing, Dennis Howlett

I recently caught up with Tien Tzuo, CEO of Zuora, the billing management company that offers Z-Billing, an on-demand service. In his opinion, the business model of the future will be subscription based and this brings challenges of its own. “Pricing is a much more complex issue. You need to provide a la carte options that allow for different plans for different types of customer,” says Tzuo, whose company took initial funding from Marc Benioff, CEOP of Salesforce.com, his alma mater.

Explaining the difficulties that subscription based companies face, Tzuo gave the example of change orders, where a customer might wish to onboard hundreds of new users in a month, or where price plans change mid-month. “Updating these is often a really difficult task. It creates havoc for accounting staff. When I was at Salesforce.com, there really wasn’t anything out there other than expensive systems built for telcos and utilities.”

Z-Billing, the company’s flagship solution requires that companies load up pricing matrices, catalogs, order and customers and from there on in, the system takes care of the billing operations. Critically, the system includes billings and collections workflow along with integration to QuickBooks, AccPac, NetSuite and Intacct.

“The original plan was to leverage Salesforce AppExchange but we’re getting calls from lawyers and real-estate people - anyone with a an ongoing subscription style of business. It was architected to be easily moved over to multi-currency and translated to other languages,” said Tzuo.

One area where the company does seem a tad hazy is around data aggregation. It seems to me this type of application, serving as a bridge to financial systems is the perfect place to capture patterns of activity that would have value for benchmarking purposes. So far, that doesn’t seem to be in the plan but would make a valuable addition to the existing standard customer reports.

I like this idea. Apart from the obvious administrative benefits, Z-Billing allows subscription based businesses to develop more fine grained and personalized services without worrying about the behind the scenes complexities. This should help them build more profitable businesses. At a starting rate of 2% of billings, with discounts for volume, the service compares favorably with collection services.

July 21st, 2008

Qik out of private beta

Posted by Dennis Howlett @ 1:49 am

Categories: Video

Tags: Revenue, Advertisement, Business Model, Beta, Qik, Jennifer Leggio, Strategy, Management, Dennis Howlett

Over the weekend, Qik came out of private beta. Jennifer Leggio has all the technical details, along with some insights in Robert Scoble’s outburst about how kyte.tv would kill off Qik and Flixwagon.

One claim the company makes over at VentureBeat is that they have gotten latency down to around 1 second. I’m not so sure. Where I live, the connections can be pretty ropey and delays of up to 2 minutes are not uncommon. I assume they’re talking about optimal conditions.

The other curious part of the story centers around the company’s business model. When I met co-founder Bhaskar Roy earlier in the year, he talked about a commercial business model:

Last month I met with co-founder Bhaskar Roy, who said that Qik has application in emergency services, insurance and healthcare. The company claims to have early contracts with law enforcement but would not be drawn into naming names.

In May, Roy said that the business model comprised:

They are a subscription model, advertising, revenue share with carriers and revenue share with handset makers.

It now seems that is being revised. Jennifer notes that:

Roy maintained that Qik will not move to an ad-based revenue model and will continue to be free for its users, at least for basic capabilities. In the future, Roy says, the service may consider charging for service enhancements or for some commercial services but it wants to remain a transparent service for its users and integration partners.

My guess is that the business models for services of this kind are in a state of flux and that like any other start up faced with a fast moving environment, Roy is adjusting in real time. It seems to me that ad revenues are a non-starter. The format doesn’t suit video. On the other hand I’ve always maintained that business specific charging models make more sense than any other. Unlimited bandwidth plans render deals with carriers dodgy at best and certainly not a long term play. All of which begs the question about how services like Seesmic will monetize.

Bonus link: my recording of Space Shuttle Endeavour’s night time launch.

July 16th, 2008

Twitter going commercial?

Posted by Dennis Howlett @ 1:13 am

Categories: Social computing

Tags: Twitter, E-mail, Operational Accounting, Productivity, Processors, Online Communications, Finance, Semiconductors, Hardware, Components

According to Mike Arrington, there is a commercial play for Twitter in the works. During a conversation with Ev Williams, Twitter co-founder:

MA: What is your revenue model? Do you know yet? Have you thought about it?

EW: We’ve thought about it. We had to do some thinking about that to raise a bunch of money, but it’s not actively in development right now. The broad strokes on the matter are obviously Twitter is being used for a lot of commercial purposes right now, in addition to social purposes. We think that works pretty well. We think there’s a lot of companies that we’ve talked to that seem to be getting a lot of value out of it. If that continues, if that becomes a rich world for users and the companies, we think we can extract some revenue from that.

MA: It might be difficult to define commercial activity versus not, right?

EW: It might in some cases, but in a lot of cases it will be really clear. I mean Woot.com is selling stuff. So maybe we just say, this is commercial usage and you need to pay for that and maybe there’s some features you get on top of that, that wouldn’t be as meaningful to personal users. There’s other cases, like yours, is that commercial or personal?

This is something that I’ve seen as a no brainer for a very long time. I know the VCs like to think in terms of millions of users in a consumer setting but that isn’t where the money lays. What’s more, Twitter is proving remarkably sticky as a business communications tool. Craig Cmehil (appropriately) Tweeted that:

@maggiefox a replacement to email for it is in many cases but limited to a few people in that case - twitter reduced email for me in gen 27%

That factor alone is worth money to someone. But I don’t think it’s Twitter - at least not right now. However, the company will have many hurdles to overcome if it is to reach that revenue generating Nirvana. Apart from the well rehearsed technical issues, Twitter will find that others are already developing clones. Skittr for instance is one such:

How hard is it to build a highly scalable social messaging system? Not hard if you use the right tools. Over the last week and a half, in my spare time, I wrote a Twitter clone in Scala and lift. It’s 884 ‘wc -l’ lines of code including comments. It can handle 1M+ users on a two Intel Core 2 Duo boxes (one as the web front end and the other as the message broker.) With a weeks of full-time coding, it could be modified to scale linearly with the number of boxes in the system.

If it’s that easy then a commercial offering could become the subject of almost instant price wars. Or worse still, smart engineers inside large companies just go do it themselves. The trick comes in figuring out what Twitter needs to license in order to become a commercial success. One clue comes from the many applications that are out there already. Other clues come from the way these types of service can be shoehorned into business processes. It will be interesting to see the next steps in this ongoing tech soap opera.

July 14th, 2008

Enterprise 2.0 looking more like 1.0?

Posted by Dennis Howlett @ 10:43 am

Categories: Uncategorized

Tags: Network, Enterprise 2.0, Social Networking, Public Relations, Online Communications, Marketing, Advertising & Promotion, Corporate Communications, Dennis Howlett

As the hype (and confusion) over social networking and all things X2.0 accelerates, it seems that the PR/marketing techniques that dominated the late 1990’s are back in fashion. Take this from an email and press release I received today:

Email: “I thought you might be interested in news on the recent exponential growth of XXXX, the online white-label social networking platform. The company has doubled last year’s growth in the first six months of this year.

Thus indicating demand for online social networking is ever increasing.”

Press release: “XXXX, the leader in empowering online communities, has doubled its growth in the first half of this year, compared to the entire 2007 calendar year, increasing revenues almost 200% in the period January to June 2008.

The company, which specializes in building social networking platforms and online communities for organizations, now has a customer base of 80 clients, in a variety of industry sectors including music, media and entertainment.”

All this tells me is that a particular startup company is doing relatively well. But then I wonder. The company isn’t eating its own dog food. If it really is building communities then its approach to someone in my shoes would be entirely different.

There’s a scarcity of solid market data to make the assertion that: “demand for online social networking is ever increasing.” I have no doubt that there is interest but that doesn’t automatically translate into demand. That’s an entirely different concept.

Much has been made about the way customers want to be approached in a different manner, how the Tivo generation is tuning out advertisements and how customers are much more in control of conversations around brands and products. How about fixing the PR/marketing that goes with it? Apparently not. If anything, I am receiving an increased volume of ‘messages’ that bear the 1990’s hallmarks of hyperbole. I tune those out, along with the claims made.

As to the specific claims: among the medium sized and large companies I speak with, a certain caution remains about the implications of these new technologies. The likely impact on the need to adhere to regulatory requirements is a specific concern. Just how this stuff gets implemented in a way that delivers lasting value remains unclear and community building is far from a done deal.

If government is to be regarded as any yardstick, recent attempts to keep social software out of government as discussed at Mashable indicates there is a long way to go.

July 1st, 2008

Powerset's smarts are Microsoft's gain

Posted by Dennis Howlett @ 6:24 pm

Categories: Office productivity

Tags: Google Inc., Microsoft Corp., Powerset, Mergers & Acquisitions, Wiki, Speech Recognition, Corporate Law, Groupware, Search, Enterprise Software

Larry Dignan pours lukewarm water on Microsoft’s acquisition of Powerset. Talking about Google’s near monopoly in the search market, Larry says:

Microsoft can reinvent search, but it’s still running up a natural Google monopoly. The analogy here is Windows: Microsoft didn’t have the best operating system on the planet. It just had the best positioned one. In search, the tables are turned in Google’s favor. I don’t see how Powerset will change that equation.

The Techmeme firehose has a party with this one with the likes of Nik Cubrilovic declaring:

Microsoft’s search engine market share is currently at 9%, far behind Google who has 61% of the market. The web division at Microsoft has been performing below expectations since its inception - and with the dominance of Google the challenges facing Microsoft are as big as any the company has ever faced in its history.

Oi! Both posts miss the point in my opinion because they ignore the fact Microsoft remains a business application provider. If Microsoft is really clever about this acquisition then consumer considerations aside, it can wrest the Google Search Appliance market out of Google’s hands. In one deal that I have been involved in the last year, the first thing we did was ditch the crabby appliance. It’s just too inaccurate for serious business use and I make no secret of the fact I think it’s a dumb technology that is not business grade. Given that Microsoft is punting Sharepoint as hard as it can plus the fact Sharepoint in turn is being pitched as a blog/wiki holder, having solid search becomes a natural requirement.

Interestingly, my Irregular colleagues are divided on the issue. Jason Wood whose financial nouse is usually pretty darned good says this in our Google Group conversation:

No one, Microsoft included, is saying they’ve bought the future of search here. What they’re saying is they’ve acquired a quality team of engineers who are working on solving the future of search, and this will be one small step in a long road toward that. Microsoft is spending, what, 22 minutes of free cash flow on this? So by that notion, if this has ANY impact on helping build a credible if not distant #2 to Google over the next five years, how would it not be worth it in spades?

Jeff Nolan on the other hand is skeptical. He sees Powerset as an expensive proof of concept:

I don’t fancy myself an expert in semantic search but I know enough to suggest that doing it in wikipedia doesn’t translate into “now I can do it anywhere” so as a proof of concept I would be a little leery. Now if they have unique IP then that would be something but this area is already pretty rich in IP so not sure that is the case.

I’m happy to be proven wrong but semantic search has about as good a track record for investors as speech recognition in years past so it’s a show me thing as far as I’m concerned.

Ooooh - equating to Lernout & Hauspie? I hope not.

Update: Another Irregular Bruno Haid is thoroughly dismissive:

Basically they’re [Powerset] doing three things:

1.) Let Freebase extract all structured data (categories, sideboxes etc.) from wikipedia and store them in a special format. We paid an undergraduate cs/law student 6000 USD in early 2006 to do this. Freebase value comes from being able to store and query data ’semantically’.
2.) Label this data consisting of triples (WashingtonDC is CapitalOfUSA) as “factz” and present them as search results
3.) Create a simple parser that maps certain manually pre-defined query structures (when, what, where, who … predicate, object) to search queries (mostly labor intense to get the rules right, also done by http://www.presdo.com/ and many others)

Technology bottom line:

- There is no ‘understanding’ happening whatsoever.
- Their approach isn’t really solving the problems like disambiguation or other problems mentioned in the LIVE! post.
- It inherently can’t scale to the web in general, because there’s little to no standardized structured information out there. Yet. But even if the Yahoo SearchMonkey approach seems much more viable.
- The learnings of the past 2 years don’t sacrifice $100m, considering that there are around ~10 university projects on the same technology level in Europe alone.
- Google is already using much more sophisticated approaches like these in their back-ends, but their are labeling and employing them as what they are: Purely statistic / heuristic methods and manual tuning labor. Very harshly put: Peter Norvig could come up with something similar to Powerset with the stuff he has on his notebook in the 10 hours it takes to cross the Atlantic.

Either MS did this to tell a good story to the markets or their text-based search team is far behind their imaging counterparts.

Harsh indeed.