Michael Fauscette

Does the availability of PaaS change SW consumption?

During Dreamforce 2008 Salesforce.com (SFDC) spent a great deal of time and effort talking about their development platform Force.com and "native" applications deployed on it. This is not a new strategy of course, they have been talking about this topic in ernest for 2+ years. The native ISV talk is new, but not surprising even though most of the current development on Force.com is not native apps, but more feature and function extensions to the CRM apps by customers / SI's. In a lunch discussion at the ISV meeting during Dreamforce I had an interesting discussion around development on PaaS, custom applications, vertical applications and current thinking around customer buying patterns in enterprise software. The discussion centered around the value proposition of PaaS and customer desires for more and better fit "out of the box" functionality targeted at the customer's specific micro-vertical needs and processes. The traditional wisdom story that I defended at the time was that in the 1990's customers accepted more horizontal ERP and then customized that software to fit, but that after the post Y2K recoil customers were demanding more out of the box vertical functionality and were less and less willing to customize the software, little lone build custom software except when absolutely necessary. If the 1990's fit was maybe 50-60% out of the box, I would have guessed that today, with all the pressure from customers the fit out of the box for most verticals was more like 75-80%...so the last 20% or so of fit is still customizations (or configuration to use the term of choice). The premise of the discussion was that in fact the fit for most customers today is really only about 60%, not much improvement in reality and that the real opportunity with the new PaaS offerings is to offer a completely new way to solve this issue (well, you might argue that this is an old way of dealing with the issue just enabled with a business model / paradigm change). The end result of the conversation was that I walked away going hmmm. Now Hmm is actually good for me, since I am supposed to find, track, explain new trends and / or shifts in the industry.

So I've started kicking this around a bit in my head over the last few weeks and while I don't actually have a resolution yet, it is something that bears some more investigation. The first question in my mind is what is the value of PaaS and why is it different from other custom software development tools (if in fact it is different). So what's different (at least what do the vendors claim?):

-more rapid development / deployment

-SaaS like benefits (no infrastructure to maintain, no hardware to buy, easily scalable, etc.)

-lower cost apps once developed (now that would seem to be true based on the Force.com model anyway)

-because of the architecture the old hard to maintain custom software argument is less important (I'm not sure of this one either, but)

-near 100% fit and often accomplished in the same or less time that package software deployment (the theory is that package software that has to be heavily customized can't be deployed as fast as the PaaS based custom software)

Now, like I said, I don't have this one figured out yet, but the argument is interesting, possibly very interesting and if true, could be a very disruptive trend. From an ISV / SW partner standpoint it's a great opportunity to change / build partner businesses. For the customer's perspective, if the value prop is true (or even partially true) this could be a very compelling way to consume software that is a much better fit (and a competitive differentiator). From the PaaS vendor standpoint, well, that's obvious.

Most experts agree that the SW landscape will look different after the recovery from the current economic crisis. I'm convinced that the business and business models are in a heavy change cycle. I think, for example that there is clear evidence that a hybrid business model will prevail (SaaS, on premise and Software as an appliance), simply based on the concept that customers want choice and flexibility. So if PaaS does offer such an advantage for vertical app development how would that effect SW vendors? Well, if the consumption model changed based on this idea then SW vendors would need to product more horizontal apps that support integration to custom PaaS based apps. Customers would build a mixed environment of horizontal (possibly apps like financials, transactional CRM, etc.) apps and custom industry vertical focused apps build on the PaaS of choice...this needs some deeper research...

cloud, Enterprise 2.0, SaaS, salesforce.com, Software, PaaS

The Windows to Mac transition, a few tips

I was sitting in Starbucks last Saturday writing, an activity and location that seem to fit well together, when I was approached by a lady with questions on MacBooks. It seems that she had just purchased one and was trying to make the transition from a long line of Microsoft Windows based laptops to her new Mac and was having a few issues. Now anyone who knows me at all knows that I'm something of a geek when it comes to technology and my latest passion is that very topic. You see I made the same transition about 5 months ago and have never looked back. A long time Windows / PC user, I started with a Dos based PC in 1988, courtesy of the US Navy and built my first personal computer from parts I ordered from the Computer Shopper in 1990. That was a fun project and I learned the PC literally from the inside out. Oh, I better get off this subject, but anyway last Summer was it, I decided I was done with XP, never going to Vista and was ready to see what all the Apple hype was about. Now I had flirted with Apple products for some time, I had a 1st gen iPod, then later upgraded to an iPod Classic. I also got hooked on the iPhone when it came out and now have a 16 Gig 3G model. The Apple products I had used were excellent, well designed, operated easily and almost flawlessly so I thought, why not. I had looked fondly at the well designed MacBooks every time I wondered into an Apple store, so I had a good idea of what I wanted, I was particularly fond of the look and feel of the aluminum case so that meant that I had to go with a MacBook Pro even though I thought about the portability of the 13" MacBook, the case and the extra screen real estate (I do edit photos and even though I have a 20" external LCD I need the 15" screen at times) won out. I bought the 15" 2.5 GigHZ Intel based Pro with a 250 Gig hard drive running Leopard (no running Windows in Parallel, if I'm making a change then I'm completely making the change).

When I got it home I unpacked it, plugged it in and booted up. Now the first thing a Windows user will notice is that you loose all that time you used to have to run get coffee (OK, make coffee), go the restroom, maybe run next door for some takeout...only to come back and find the PC STILL booting up. Not so with the MacBook, turn it on and it doesn't churn the hard drive for minutes, it just turns on, hmmm. Immediately a simple set up and registration wizard starts up and walks you through getting started, nice. Now I'm not completely lost, my girl friend has a 17" MacBook Pro that I had played with a little so I knew a few of the basic "how do you" things already. I dived right in configuring things, including the trial .Mac account (which I have since transitioned to MobleMe). I set up 4 work Spaces (my GF uses 6 but 4 seems like the right number for me and I've never changed that). I initially set the hot spot for Spaces in the upper left (I'm left handed and that seems intuitive) but after a few months I moved it to the upper right where I don't accidently hit it every time I'm trying to close a window. I like the Dock on the bottom with auto hide, which truthfully is exactly how I had my XP menu configured. The Dock is way more useful than the XP menu / start bar though. I have the Dashboard in the lower right as well and have several widgets including the calculator, weather, clock, dictionary, movies, etc.. Anyway, I'm going to stop rambling and get to the list, my top ten tips for the Windows to Mac transition for the new user:

1. For keyboard short cuts the Rosetta stone is that the "Command" key is roughly the same as the "Control" key in the Windows OS. Most of the short cuts then work fine, Command C for copy, Command V for Paste, Command B for BOLD, etc. One more useful key combination, Command - Option - Escape for force quit (its the Control - Alt - Del of the Mac world). Now some of you are thinking see, that Mac gets stuck too but let me explain. The Mac almost never (that I've ever seen) gets stuck on Mac based software but I tried several Linux-based products that required an add in called X11 to run and once in a while they get stuck (Gimp for photo editing, excellent program but does lock up on rare occasions and I used the previous version of OpenOffice before I discovered NeoOffice).

2. The rough equivalent of the control panel (well, a sort of uber control panel) is System Preferences. It's in the dock and looks like a box with gears (if you're an iPhone user you already know this one). Everything is set up and controlled from this window, from appearance to speech preferences. Get familiar with this one first thing after set up.

3. Touch pad: there are 2 options that are very different from a Windows based PC. Under Keyboard & Mouse, Trackpad there are several two finger options: secondary click let's you put 2 fingers on the track pad and click to get the effect of a right click on a PC; Scroll lets you drag 2 fingers to scroll instead of clicking or dragging the scroll bars; and Screen Zoom lets you drag 2 fingers on an image to zoom in our out (works with Google Maps too). The 2 finger scroll is such a great feature (when I'm forced to use a PC I'm constantly annoyed that it won't scroll when I drag my fingers, how quickly I'm spoiled).

4. Finder replaces File Explorer and the Start Menu on the Mac. It's in the Dock and is key for using your Mac (more on this later in the top ten apps, I'm experimenting with a new tool). There's a pre-configured Downloads folder that holds all downloads, files and apps. There are a bunch of other folders that are pre-configured and in general they're pretty obvious. You can of course add your own as well.

5. This is very basic but it is different, the control buttons for an open window are on the left top corner, not the right...of course they're red/yellow/green so they're pretty easy to find. One twist on these though, they close the window but they do not close the running app; to do that you must use the menu bar across the top otherwise the app keeps running.

6. I love a few of the F function keys other functions, for example the show all open windows function (F3), way more useful that Alt-Tabbing through open windows on XP. You can control screen and keyboard brightness, volume, Dashboard (F4), play/pause, forward/back and eject as well.

7. Installing new apps is a bit confusing for someone who is used to the Windows wizards. Some apps do have a wizard that starts when you hit download but not many. Most download to the download folder and you simply drag them to the Applications folder to install (drag them to the trash to uninstall, simple right)...oh and you'll have to clean up the download folder once in a while.

8. Keychain: All passwords (local and internet), certificates and keys are stored in the Keychain. Keychain is under the Utilities folder in the Applications folder.

9. Spotlight: there's a magnifying glass icon in the menu bar on the upper right hand side, this is called Spotlight. It's the search function for your Mac and very useful (I'm just testing a new app called Quicksilver that replaces Finder and Spotlight, more on that in a later post). It searches everything from email to your KeyChain (which is very useful if you want to quickly give your wireless password to a guest, for example).

10. Battery life is good. It can be maximized by setting the control (click on the power icon in the menu bar) to better energy control. In addition is you turn off Bluetooth (click the bluetooth icon in the menu bar) and the Airport when you're not using them, your battery life will be extended. Using sleep (closing the screen or selecting sleep in the Apple drop down menu) does also use power so if you're traveling and trying to squeeze all the minutes you can out of the battery shut down when you take a break. Now I know this is different for a Windows user because you really rarely use sleep (at least I rarely did because the PC would usually freeze after a couple of sleep periods) but with your Mac you'll be tempted to sue sleep all the time since it never locks up...but then again it boots so fast why not shut down...

Enjoy your Mac, I certainly am enjoying mine...anyone else have some good tips for the new Mac User?

Apple, Hardware, Microsoft, open source, Software

New SaaS partnerships - HP / Netsuite announce a new relationship

This week Netsuite and HP announced a partnership to provide the HP VAR channel the opportunity to sell Netsuite's SaaS based ERP solutions to the SMB market segment, defined by both vendors as businesses with 1-999 employees. The agreement applies to all 15,000+ HP US VAR channel partners. The agreement is groundbreaking on several points. From a business model perspective the VAR's will act as referral partners and for that referral they will be paid a portion of the monthly subscription fee from each deal. The sale will actually be handled by the Netsuite direct sales force based on the leads provided by the VAR's. According to Netsuite, the VAR's will have right of first refusal on any services component of any deal they refer.

For each of the stakeholders, Netsuite, HP, VAR and Customer, there is a great deal of value in this arrangement. For Netsuite it gains 15,000+ referral channel distribution partners that are specifically targeted at the SMB market where its solutions have been most successful. For HP it sells more hardware since Netsuite uses HP servers exclusively in its data centers plus it provides additional revenue opportunities to its VAR partners. This is particularly important because of the current financial crisis where hardware sales are likely to suffer and HP's VAR's could have a rough couple of years. This VAR channel, which HP has developed for over 30 years is a significant asset to HP and investing in that channel's continued health is paramount for HP.

For the HP VAR's this announcement provides several new business opportunities. Any VAR (even high volume VAR's) could refer its customers to Netsuite, whose direct sales force closes some portion of the referrals, while the VAR sits back and collects a new monthly annuity stream. For the more enterprising VAR's (most likely the solution focused VAR's and SI's) the agreement provides not only the recurring annuity but a significant services opportunity in delivering implementation and training services to the new Netsuite customer. In addition to the implementation and training services there is also the opportunity that some customers will need integration services for existing on premise solutions that would need to be integrated to the new Netsuite deployment and even potentially new hardware or hardware upgrades as a part of that deal.

From the customer perspective this new arrangement should also be very attractive. SMB customers in general tend to prefer purchasing from a local business where they have existing relationships. This agreement takes advantage of those local relationships while making a comprehensive ERP solution available to SMB customers. In addition, if the VAR chooses to offer them, the SMB customer can consume the necessary services from a local and trusted source. It will be interesting to watch as this relationship unfolds over the next year to see if this type of arrangement can be used effectively by other SaaS vendors.

cloud, ERP, SaaS, SaaS, Software, VAR

Dreamforce 2008

Dreamforce 2008 opened to the tune of happy clouds...9000+ attendees representing 40+ countries attending over 250 sessions. In day one's keynote CEO Marc Benioff provided a company update and then focused mostly on Force.com, the platform as a service (PaaS) offering. In Salesforce.com (SFDC) language SaaS = the CRM applications and Cloud = PaaS. Throughout his presentation and throughout the conference SFDC never missed an opportunity to reenforce their definition of SaaS and cloud, which as always is based on three things: 1. Multi-tenancy, 2. pay as you go and 3. elasticity. Since I've already blogged on the multi-tenancy concept I won't digress into that argument again here. According to Marc SFDC now has 47,700+ paying customers and added over 4100 net new last quarter. The customers appear to be spread across all size bands from small to enterprise. From a corporate strategy standpoint they use 1. manage, 2. share and 3. build, with manage and share referring to the CRM apps offerings and build tied to Force.com.

During the first day keynotes there were several announcements of note, all focused on Force.com. Adding functionality to the platform was Force.com Sites, the capability to build and operate public and private web sites from SFDC's platform. Pricing is based on the customer's tiered SFDC CRM pricing and includes a number of page views (varies by customer tier) for "free" in the base pricing...usage over the base number is priced at a very nominal $1000 / month for 1,000,000 and $3000 for 5,000,000.

The real exciting announcements IMHO centered around platform partnerships with Amazon and facebook. According to Marc there are 4 high profile platforms in the "cloud", Google (already a SFDC partner), Force.com, facebook and Amazon Web Services. The announcement with facebook combines the two platforms with social apps on Force.com and Force.com for facebook. This combination enables customers to build on Force.com and run those apps on facebook or connect to facebook to make Force.com apps "social". The customer example used was Starbucks and took MyStarbucks Idea (which uses SFDC Ideas technology) and embedded it on facebook (they also used Force.com Sites to build new web pages for Starbucks). The second partner announcement was Force.com for Amazon Web Services and enables Force.com customers to use Amazon's EC2 massive compute and S3 massive storage capabilities.

As Force.com starts to mature SFDC is pushing to move more ISV's to develop "native" Force.com apps. According to SFDC reports there are around 50 available today. Appirio, an ISV that I've meet with a few times, is one of the native ISV partners along with CODA (who introduced a simple financial app at Dreamforce) and Fujitsu (Glovia Intl.). To encourage ISV's to develop native apps SFDC is offering a no charge to sell through program until 2010 that is referred to as the Native Apps Pilot.

And one of the most exciting moments during the first day keynotes came when Rock legend Neil Young took the stage with Marc to talk about his new venture, LincVolt. Neil's dream with this venture is to design a 0 emissions vehicle that is created by converting existing cars, in his case a 1959 Lincoln Continental. The venture launched a new web site built on Force.com Sites where you can follow Neil's journey in the his electric classic car.

Day two keynotes focused on the Winter '09 CRM release. In a welcome change from last year when the focus was almost entirely on the Force.com platform, there were several new features rolled out for the CRM customers. Brett Queener, who leads CRM product strategy, talked about these new features including enhancements in all three areas: marketing, sells and service. The addition of Instranet's knowledgebase product that was acquired earlier this year is a key enhancement as well as opportunity splitting, campaigns, in-line scheduler, several iPhone apps, agent console, new page layout editor, social network integration, etc. Partner management added Portal, Salesforce to Salesforce (S2S, which is now free) and Salesforce Partner Networks. There was a lot of talk about SFDC Ideas on both days with MYStarbucks Idea and Dell IdeaStorm as the leading two examples. All in all it does seem like SFDC is paying more attention to the CRM product again even if social CRM discussions were mostly limited to Ideas, the content management app (which uses the wisdom of crowds concepts) and the social network integration (facebook as the example).

One last comment on the keynote, the second day keynote was very Dell heavy and in fact when Michael Dell took the stage it turned into a Dell commercial. This was not lost on the audience however who voted with their feet...

This was a very positive Dreamforce in general and despite the current economic woes there was a lot of enthusiasm and energy exhibited by the SFDC customers and partners.

cloud, SaaS, salesforce.com, Software

Is the financial crisis the tipping point for SaaS?

I was walking over to Moscone Center today to pick up my Salesforce.com Dreamforce conference badge and was greeted by the cutest blue sky / cloud ads plastered to everything that doesn't move (well, and to a bunch of things that do move as well). It reminded me of something Oracle CEO Larry Ellison said during a briefing to financial analyst during the recent Oracle OpenWorld event. When asked about "cloud" computing and what Oracle planned to do in cloud computing Mr Ellison said (I'm paraphrasing a little) "the software industry is the only industry that is more fashion conscious than women's fashion...for cloud computing I've instructed our marketing teams to put "cloud" on everything we do"...made me laugh then and still does but, I think, you get the point. I'm not a big fan of our shift to "cloud" computing over SaaS but whatever. Looking at all the happy little clouds and thinking about Dreamforce this week did get me thinking about the current state of SaaS and what I believe will happen over the next couple of years.

If you read my post on the financial crisis you know that I believe that the current market will actually drive more customers to consume software in the SaaS model (or cloud if you prefer). There's more going on here though. If you have tracked growth rates in SaaS for the last 2-3 years you would have seen that growth in the small and medium business segments (0-99 employees and 100-499 employees) has far outpaced (by 10-15%+) upper medium (500-999 employees) and enterprise (>999 employees). That's not a surprise, many SaaS vendors initially targeted small and medium business and the value proposition of SaaS (easy to implement, fast time to value, lower cost of ownership, less internal resources, etc.) is particularly appealing to SMB's. Over the last 9 months that has shifted and now enterprise and upper medium businesses are adopting SaaS faster than small and medium businesses (by 10-15%, SMB growing at around 40+% and upper medium / enterprise growing at 50-55%). I have for some time thought that the so called tipping point for SaaS would happen when enterprise growth / adoption of SaaS solutions accelerated / outpaced SMB's. To me, this signals the move of SaaS solutions to the main stream. So why the shift this year? Well, a combination of things came together around the same time, including last years subprime mortgage crisis, to start the shift. Add to that the visibility of SaaS vendors, the broader range of software available in the SaaS model, the general acceptance of SaaS and its value proposition and the fact that almost all of the major "names" in software are offering (or at least have announced offerings) in the SaaS model and it's easy to see why SaaS is now a mainstream offering. Today SaaS deployed software represents only about 3% of the total worldwide software market but at current growth rates it will be over 12% by 2012 2006-2012 CAGR of 33%). With the "new" financial crisis I think that number is to low though, SaaS solution growth will accelerate from calendar Q4 of this year through the next 12-18 months with CAGR for 2008-2012 looking more like 45%. That's very significant when we are lowering overall software forecasts to a 2007-2012 CAGR of 4.8% for application software...yes, SaaS is mainstream now.

cloud, ERP, financial crisis, Microsoft, Oracle, SaaS, SaaS, salesforce.com, SAP, Software