Michael Fauscette

Organic Business Networks

I was having a conversation the other day with a colleague about trends that are impacting and driving change in businesses and as often happens lately we ended up on the subject of business networks. When discussing new concepts we have no choice but to apply words that have existing, accepted meanings, even if those terms don't quite fit what we're trying to say, and add other adjectives to help translate the picture that you have in your head to mutual understanding. For the last few years, as I've focused my research more and more on emerging trends in the enterprise, I've found this task very challenging. Using the word social in some business context for example, is fraught with issues as people try to shoehorn their own understanding of the word into some new frameworks. The word network, I've learned, is another ambiguous term when used in a business context. It seems that the word's techie baggage, while appropriate to some extent in understanding where I'm trying to go with this idea, causes some confusion. The challenge then is to find the right adjective(s) to start to move people in the right direction, or perhaps, even though it's not my favorite activity, delve into a more detailed definition of business network.

The problem with the word network is also part of the strength of applying it to the current emerging business environment. From IT networks that are flexible, scalable, configurable, fault tolerant, accessible from multiple points and on multiple devices, we can borrow concepts that businesses need to begin to apply more broadly. The downside I think, to using the word network is that when many people hear the word they start to think of the physical connectors, the Ethernet cables and routers, etc. that make up the LAN or WAN and that's very limiting. Or perhaps they think of it in terms of the social web, which can also be distracting even though again some of those characteristics apply.

Sitting in the Philadelphia airport early this morning in one of those inviting white rocking chairs they provide, sipping a cup of tea and prompted by the sight of so many people connecting and carrying out business, I had an idea. When I think about business networks in the context of all of the other technical and cultural change factors that I see in our post-industrial information economy, maybe what I mean is "organic business networks". The word organic could be confusing though, but when I think about it in this context I am thinking that it has similar traits to organic computing. Organic computing is a computing system that is self-optimizing, self-healing, self-configuring and self-protecting. More broadly organic models are generally patterns and methods found in living systems used a metaphor for non-living systems. So applying an organic model, organic business networks are networks that represent the interconnectedness of the emerging information business environment. Organic business networks connect people, data / information, content, and IT systems in a flexible, self-optimizing, self-healing, self-configuring and self-protecting system. People are the primary nodes of the network but the other nodes, data, content, applications and systems, are no less important.

A business functioning as an organic business network would incorporate the characteristics of a social business, as I listed here, but go beyond this basic idea, using social business as the operational paradigm but using the organic business network as the mode of operating it's business. The two concepts play off each other, social business is the "what" and the "organic business network" is the how. An organic business network lets the business work outside of traditional "firewall" boundaries and is the continuously adapting implementation of an optimized business strategy. In this approach value creation can move to the optimal point in the network depending on strategic influencers like economy, market dynamics, customer behavior, prospect behavior, partner behavior and needs, supply chain dynamics, predictive business outcomes, etc. An organic business network driven company is the anthesis of a hierarchical, rigid, reactive, process constrained, and silo'ed organization. Instead the business can adapt to changing conditions, leverage assets effectively and thrive in a hyper-connected, global competitive, information driven environment. What do you think, does that add a little clarity?

Salesforce.com, VMware partner to launch VMforce

Earlier this week salesforce.com and VMware announced a partnership to deploy a java-based platform as a service (PaaS) called VMforce. Unfortunately I was not able to attend the announcement briefing in person as I was in Boston attending a Novell analyst summit. I've since spent a bit of time catching up on the announcement and had some time to think about the implications for customers, partners and competitors. The developer preview won't be available until this Fall so we have some time before the announcement will have any real impact for anyone beyond the beta users but still it is an interesting development in the PaaS world. A lot has already been written on VMforce so I won't spend a lot of time digging into what the PaaS will look like but instead focus on what implications it might have on the industry and on the enterprise.

What is VMforce? VMware's SpringSource GM, Rod Johnson, provides this simple explanation on his blog:

"VMforce is a joint service from VMware and SalesForce. VMforce uses the Force.com physical infrastructure to run vSphere with a special customized vCloud layer that allows for seamless scaling and management. Above this layer VMforce runs SpringSource tc Server instances that provide the execution environment for the enterprise applications that run on VMforce. Spring applications can store their own enterprise data in the Force.com database or use data already resident there. All of these architecture details are seamlessly integrated into a single platform that allows the developer to interact with the server in the way they would with a local tc Server or Tomcat instance."

During his part of the announcement presentation salesforce.com CEO Marc Benioff claimed that Java developers using the VMforce platform could build apps "5 times faster and for 1/2 the cost." Now short of conducting a primary research project after the developer preview is available this Fall I have no way to substantiate that claim, but I will say that after watching the demo of developing on the VMforce platform is does appear significantly faster than approaching development in a traditional Java dev process. Part of that simplification is provided by the Spring Framework IDE of course but the integration with Force.com does provide some interesting advantages.

I've believed for some time that PaaS has the potential to be a disruptor in the enterprise SW world, although that disruption was likely to take place over a long period of time. The disruption itself is caused by the assertion that developers can build and deploy custom enterprise apps in less time than it takes to deploy and customize a traditional package app and for lower cost. I admit that at first I was a skeptic on this topic but after working with several salesforce.com Force.com partners I am inclined to believe the claims. One of the hurdles to adoption of the Force.com PaaS has been the proprietary development language Apex. Not that its flawed in some way, but simply that it is different and not widely used. There are not a lot of experienced Apex developers and training and experience take time. Java on the other hand is in widespread use and there are an estimated 6 million Java developers (and a reported 2 million of them are using the SpringSource platform already). Take the value proposition of PaaS and add in the Java dev community and well, scale and adoption become a benefit not an obstacle. VMforce has the potential to rapidly accelerate the disruption of PaaS.

From a competitive standpoint this move by salesforce and VMware helps create two distinct platform camps, Java and .Net. Currently Google, Oracle, IBM and now VMforce are on the Java platform with Microsoft Azure as the .Net offering. There is an active .Net community but it does not rival the Java community. Java apps can be deployed on Azure but the VMforce platform seems to change the game in ease of use.

The other interesting benefit from this partnership is the combined Force.com assets (like Chatter, for example) with the vSphere and SpringSource assets, a strong proposition. The Java PaaS story is a good one for ISV and developers and I wouldn't be surprised to see quick adoption of the model once available...and remember there are a lot of Java apps already available that could be quickly moved to the cloud on VMforce. Add to that the ease of building and deploying mobile apps on the Java platform and the potential is even larger as mobile continues to gain share in the enterprise.

Moving from the PC Era to the Mobile Era

Smart phones, mobile devices, tablets, slates...there's no question that we're flooded with an ever expanding number of options for connecting on the web. And beyond connecting the sheer number of things that can now be accomplished on these new devices is staggering. In the not so distant past you would only SMS, check email (& maybe respond if you had a Blackberry or Win mobile device), check a sports score or some other quick web task but beyond that it simply was too painful. Apple changed that almost three years ago with the introduction of the first iPhone with multitouch, a virtual keyboard and Apple and third party developed applications available on iTunes. The key reasons that the iPhone has created such a shift in mobile use, I believe is the vastly simplified and rich experience that multitouch and Apple's user interface (UI) provide, the availability of so many useful apps and the vertically integrated approach (and yes I understand that there are a lot of arguments as to why this makes Apple the evil empire but that's not the point of this post).

Now I'm at the end of week two of integrating the iPad into my workflow that was previously MacBook Pro and iPhone only (well, with the exception of that work provided email device that I'm forced to live with as well). I won't spend more time reviewing the iPad, I've already done that and my opinion hasn't changed. Instead I want to focus on the future and what I'm starting to believe is the next generation for personal and enterprise computing. I'm not going to sit here and tell you that the PC is dead, long live the tablet, but change is most certainly happening because of the enlargement of the iPhone experience to include the tablet.

Mobile is certainly the lifestyle that most of us live. If you think about it, even the laptop was developed and gained popularity for that same reason. Now of course the demise of the desktop was also predicted because of the laptop and that hasn't happened either, at least not yet. There are still reasons to have a desktop, more power, gaming, graphics intensive applications (like CAD for example), calculation intensive apps (CAE for example), etc. but for the most part we can live without a desktop these days (my last desktop left the house about 3 years ago, but I don't do gaming, that's what my Wii is for, and except for photo and video editing nothing I do is very computing power intensive. My MacBook Pro has all the horsepower I need for what I do). What I'm finding interesting and compelling with the tablet is the same thing that I find interesting and compelling about the iPhone, the touch interface, clean UI and the vertically integrated experience. For a lot of tasks I'm starting to prefer the tablet over the laptop. I find that I mostly leave the laptop in my home office and take the tablet everywhere so portability is attractive. Beyond that though media consumption is just better on the tablet and a lot of my time is spent in research. I'm also finding that creating things that are mixed media, like presentations, mind maps, and drawings are easier and more fun with the touch interface. Id probably switch to the tablet for presentations completely if it wasn't for some current limitations (I'm mostly using Prezi for presentations and it's Flash based so you know that story. Also most of my colleagues use PowerPoint not Keynote, sadly, and translating files back and forth is still problematic). Even typing on a glass keyboard isn't bad, even though it does take some getting used to.

The UI paradigm for PCs is getting dated. Really the idea of mimicking offline in a virtual "desk top" with folder and files cabinets is pretty silly, even if it is very familiar and probably did aide adoption when PCs were just becoming popular. Maybe we're past that now? We're starting to see a new generation of online communications tools like Twitter, Facebook, YouTube, 12second.tv, Google Wave, Novell Pulse, salesforce.com Chatter, Socialcast, Pana.ma...the list goes on, so why not also new UI paradigms?

For mobile to continue to evolve and gain adoption in the enterprise we need to solve a few things. For one we have to get out of our IT control model that has limited many companies to Blackberry as the only approved device, employees are simply working around that anyway. We also have to give employees access to the complete portfolio of enterprise apps, not just email or a few very simple vendor provided mobile apps. One solution that I'm pretty excited about is mobile virtualization. Citrix has a product called Receiver that is first of it's kind, and provides a very good user experience while solving enterprise security issues.

The PCs not dead yet by a long shot (probably for quite awhile yet), but things are changing. More of the workforce will start to use devices like smart phones and tablets to do real enterprise work and companies will be compelled to figure out how to enable that use. There's a great case around employee productivity if we will look beyond our current limitations. The intersection of three things, cloud computing, mobile and social are driving technology and business for the foreseeable future.

Is Freemium a Real Business Model?

I had the pleasure of joining Emergence Capital and a group of executives from some of its portfolio companies for dinner a couple of weeks ago. All of the companies are selling their products in the freemium model, and the dinner was an open discussion about the model and its many permutations. The discussion was spirited as often happens when you get a group of software executives together to talk business models, but also very engaging.

So what exactly is "freemium" anyway? I suppose it has some connection to the "free trial" model that is very common with SaaS applications, but it carries the idea of free to a different level (and as the CEO's of a freemium model company are quick to point out, is NOT like a free trial). The concept is to tier the product offerings and offer an "entry" level product with low barriers of entry (free). Besides the free product there are any number of enhanced products and/or features that the company tries to use as enticement to move to a paid edition. All of the freemium model companies had that much in common, but beyond that the details are very specific to the product, market and target customers. Noted VC (and EverNote investor) Fred Wilson talks about the model here.

The least complex freemium product offering usually involves 2 editions, free and premium. The free offering has enough of the feature set to provide customers with the genuine user experience but not enough features that some of (and hopefully a lot of) customers would not eventually feel the need for the premium product. The free version has to be as pain free as possible to encourage sign up, no long profiles to fill out and no credit card needed. Asking for more than basic customer information should wait until you have established the relationship and started to build some trust. Often the free product is ad supported as well, generating some revenue for the company, and possibly providing some additional incentive to move to the ad free premium edition. Companies using this simple version of freemium include popular note taking app EverNote, NewsGator, InsideView (an Emergence company, SaaS sales intelligence with 3 versions, free, Pro and Team), Box.net (storage / file sharing, 1 GB free, $ for more), Yammer (an Emergence Company, internal microblog, pay for administrative features) and social network LinkedIn. The model can be expanded beyond this simple 2 product tiers to include additional versions or even add ons like bandwidth, storage, etc.

The next permutation of freemium is what I'd call the viral extension model. The idea is to offer a product / service that has at its core a way to draw in new prospects as a part of its process. This method of gaining customer share was pioneered by Hotmail in the 1990's and is still used by Yahoo, gmail and others...basic is free, pay for more services like PoP access or more storage. Expansion comes from the free advertising that is on the bottom of every free email sent. A couple of the Emergence portfolio companies fall in this model, EchoSign (electronic signature and contract visibility, the contract is the viral vehicle) and Yousendit (just like the name implies, sending, receiving and tracking large files...the file is the viral vehicle of course).

The model has several benefits, most importantly lowering the cost of customer acquisition. The freemium companies are all cloud based products / services which provides an interesting benefit for the companies by making the variable cost go down as customer volume increases. This is very important in a business model where only a percentage of the total customer base is paying for the product. Conversion is of course key and the successful company is very focused on conversion metrics. They need to understand what creates the conversion event and when it generally occurs to manage the business and cash flow. Many of these companies see very high attrition rates for the free product but generally the attrition happens very early in the relationship. If a customer sticks around for very long (more than a month or so) the conversion opportunity is pretty good. Unfortunately though, at some point that conversion rate falls off. If you stay free for too long there's a much greater chance that you will not convert unless of course the conversion event is something like storage capacity or bandwidth.

There are some risks and detractors for the model as well. Conversion or more specifically lack of conversion, is the greatest risk. Finding the right balance between making the free offer compelling enough to acquire the customer but not rich enough that they never want to move up to a paid product is critical. And no bait and switch, what's free stays free, that's the quickest way to create a nasty customer backlash.

Oracle reports Q3 2010 results

Last Thursday Oracle reported its Q3 2010 results and continued its strong performance trend. Generally for Oracle Q3 is somewhat weaker from a seasonality perspective but the Oracle team delivered a strong quarter with results that seem to indicate they are pulling out of the recession faster than many competitors. Showing growth both in new licenses (up 10% y/y excluding Sun) and overall revenue (up 7% excluding Sun) Oracle's field continues its strong execution focus. Overall new license growth was distributed regionally with the Americas growing 22%, Europe 3% and Asia / Pacific at 12%. Database / Middleware new license was up a total of 11% y/y with the Americas growing at 20%, Europe at 2% and Asia / Pacific at 9%. Applications was up 21% y/y with the Americas growing at 26%, Europe at 7% and Asia / Pacific at 29%. This particularly strong showing in Apps seems to indicate both that there was some typical end of year effect from customers as well as an overall strengthening of software spend.

Last year was tough for all the on premise and hybrid software companies. In general Cloud apps companies held up exceptionally well as customers shifted spend to non-capital intensive investments and as Cloud adoption moved mainstream. All of these Cloud apps companies though are working off a much smaller base revenue number than mega-vendors like Oracle. Oracle proved that the hybrid model could perform well in a down economy as well. At IDC we track performance on a calendar basis and just finished updating vendor performance. For Oracle the 2009 calendar year was slightly negative for apps (~ -2%) and slightly positive for database and middleware (~ +2%) to end up overall slightly up in total revenue (total almost $20B) for the year.

So why did and does Oracle's apps business continue to be strong when other apps competitors are struggling? I believe that several factors are responsible:

1. Oracle's broad product portfolio, leveraging something like 61 acquisitions in the last 5 years, allows its salesforce to meet a much broader set of needs for its customers so if a market cools they can simply shift focus to more in demand offerings.
2. The strategy to acquire / build out deeper vertical product offerings has proven to be one of the biggest strengths of its continued performance and gets much of the credit for new license sales over the last year.
3. Oracle's cross sell / up sell strategy is a strong asset as the overall install base grows with every acquisition.
4. Three or so years ago the field organization set out to minimize churn and establish a longer term view of managing customer relationships that is paying off with stronger same account sales.
5. Oracle's more channel friendly stance over the last three years is producing strong partners who are growing their business.
6. The On Demand business is getting much more attention and is growing in importance in the overall strategy.

This year should continue to be strong for Oracle's apps business especially as the new Fusion applications roll out mid-year. In the earnings call Oracle CEO Larry Ellison validated that the Fusion apps (which were built with multi-tenancy capabilities) will be available in both on premise and on demand offerings from launch. I've previously talked about the strength of the offering and with both delivery models available I believe Fusion apps have the potential for good upside to its apps business over the next few years.

A fresh take on SAP's strategy under the new Co-CEO's

I attended a roundtable Monday with SAP's new co-CEO's, Bill McDermott and Jim Hagemann Snabe to get an update on their business strategy. SAP has had a few rough years and was hit especially hard by last years recession. They have taken quite a bit of criticism over their slow to execute cloud strategy and their attempts to push customers to a higher tier maintenance offering by eliminating lower price options (and subsequently re-instituting the basic tier). I won't rehash those issues here though, instead let's look at what we discussed at the meeting this week.

Moving forward SAP's product strategy is based on three pillars:

1. On demand - Both executives basically reiterated the on demand strategy that was outlined at the SAP analyst summit in December (see this post). The most obvious shift though, is the level of prominence the message gets from the executives and that customers will probably buy / deploy in hybrid models. According to Snabe the next release of Business by Design (ByD), version 2.5, which is supposed to be the "ready for general consumption" multi-tenant release, will be available in July. Snabe also stated clearly, for the first time that I know of, the reason SAP struggled with ByD was the shift to the agile development methodology from its traditional waterfall methodology. He also states that now that the shift and methodology are working and the company plans to switch all development teams to agile. In true SAP bold marketing form both execs claimed that SAP will become the leader in on demand apps and that ByD is the most complete and feature rich ERP on the market (when v2.5 is released, that is).

2. Mobile - In an acknowledgment that mobile is gaining prominence in the enterprise as an acceptable desk top replacement both executives indicated that SAP is working on an "any device" strategy for all of its apps. This fits well with what we at IDC have predicted about the accelerated shift to utilizing mobile devices to interact with enterprise systems beyond just email. While light on information at this event I'd expect much more detail around this pillar at the upcoming Sapphire conference.

3. Orchestration - Snabe talked a little at a high level about SAP's renewed focus on Master Data Management (MDM), overall lifecycle management, and delivering the lowest TCO for customers across hybrid deployments. This is certainly a key topic for companies deployed in hybrid models both across different vendors and different delivery models, something that is definitely increasing.

and three delivery models:

1. On premise

2. On demand

3. On device

The word of the day was "innovation", a term that both executives used repeatedly and in several different situations. Snabe defined innovation as the level of creativity multiplied by your companies scale in the market and McDermott stated that "innovation isn't just how you build a product, it's every bit as much about people".

Continuing with the innovation theme when asked about SAP's acquisition strategy going forward, they pointed to the Business Objects acquisition and stated that acquisition would be used as a strategy to "increase the speed of innovation" not to just buy growth.

In the hybrid business model that SAP is moving into, go to market strategy will be extremely important and the clarity of approach will need to be messaged carefully both internally and to partners. When asked how SAP will sell on prem and on demand products the answer was that it would be based on customer choice. McDermott indicated that SAP will sell on demand direct, on the web and through its channel. The ecosystem will undoubtedly want more detail around that answer.

A few other observations: SAP is still very focused on one competitor. As an executive team they are trying to "dramatically simplify things so everyone knows what to do". The one thing that is clear when you talk to SAP employees is that attitudes are much improved and the workforce seems much more motivated now. The focus of this meeting was more on high level strategy and not on technology but they did of course briefly mention the perceived advantage that their in memory processing developments will have in the marketplace.

The real question is can SAP execute on these plans and will it be enough to change their current trajectory? Expect much more detail around this strategy in a couple of months at SAP Sapphire.

Concur Fusion 2010 - the Travel & Expense Cloud goes mobile

This week in Boca Raton, FL Concur users gathered to listen to company executives and partners talk about Concur's travel and expense management solutions and preview some new directions for the company. As with all user conferences the week saw a number of key announcements on product enhancements and new partnerships. In general I think Concur is leveraging some of the key technology and business trends that are starting to gain momentum and will be "hot" topics over the next few years. Concur itself is using some social business concepts in its product development processes, for example. For me, this was an exciting conference and I saw a company that is committed to listening to and delivering for its customers.

On the partner front Concur had two major announcements. The first was a deepening of its previous relationship with American Express. Concur's T&E management solution is the solution of choice for AMEX and the AMEX sales force is coming up to speed over the last year and continuing for the next few years, so that they can sell Concur's solutions into the AMEX customer base. Over time this has the potential to drive an increasing share of Concur's new business. The second announcement is the intent to tightly integrate Concur's solutions with Amadeus, a global travel industry technology and solution provider. This integration, slated for release later this year, includes making Amadeus distribution technology available in Concur Clickbook Travel and pulling travel booking from Amadeus eTravel Management back into Concur Expense. With Amadeus strong presence in Europe this partnership should help increase Concur's footprint there while giving Amadeus a stronger presence in the US market.

Concur is investing heavily in providing mobile travel solutions on three platforms, iPhone, Blackberry and Windows Mobile. The mobile app is an extension of the decktop travel and expense management solution and provides the capability to view and manage itineraries, book rental cars, hotels, dining reservation and taxi's, enter expenses and manage / review expense reports. There's even the capability to capture receipt images and send them along with expense reports. The mobile functionality is extended by incorporating other 3rd party functionality for things taxis (RideCharge), an approach that could open up all sorts of services to the mobile user. The move to mobile for Concur is interesting for another reason, it is a new focus (or I should say adds new focus) as in the past the focus customers for Concur were the travel managers and the expense department. Adding focus on the end traveler adds a lot of value to the user base, IMHO and is the right strategy in an environment that is starting to shift focus to the individual (or as I've said before, as the people become the platform). This is a first version of the mobile app and there is a lot of interesting things on the roadmap as Concur moves forward, things like leveraging location awareness for a variety of functions (from finding hotels, restaurants, etc. to automating milage reporting on expenses), integrating social networks, and adding Android support.

As icing on the Concur cake, they also reported FY2010 Q1 earnings this week. They had a strong quarter with 16% year over year growth with total revenue reaching $67.7M.

Cloud meets social meets gov contracting, Deltek launches govWin

Last week Deltek launched govWin, a community platform including a CRM app for gov contractors that is built on the recently acquired community platform mySBX. mySBX provided the existing community of 7000+ gov contractors from small independents to large mega-contractors like Lockheed Martin an environment where they can list opportunities, find partners, place resources and collaborate on gov contracting. With the launch of govWin Deltek leverages the strength of the existing community and adds significant additional value by adding a SaaS based CRM solution for gov contractors that is tailored for gov contracting business processes and will help streamline the biz dev and customer management process.

This announcement is important on several fronts. Deltek is a leader in providing solutions for gov contractors, AEC and professional services firms but has traditionally only offered the solutions in an on premise (or partner hosted) model. This move into cloud based apps starts to capitalize on the strong growth trend we are seeing overall in cloud apps and specifically in the project based solutions market which I predict will outpace the general software apps market this year. The solution is also the first community based platform for gov contractors and facilitates peer to peer networking, a practice that our research shows as a key practice for driving business growth. govWin also provides community members with useful content based on best practices and the ability to increase the effectiveness of business dev efforts.

Some Predictions for 2010

2009 is thankfully behind us and its time to turn our attention to 2010 in ernest. Every year at this time teams of analysts all over IDC get together and produce top ten predictions documents in their coverage areas. My group, Software Business Solutions is no exception, we're putting the finishing touches on our document this weekend. I have a joint breakfast briefing with Henry Morris and Steve Hendrick this Tuesday, 1/26 to highlight predictions from the 3 major WW IDC software groups. Contributing to the predictions from my group: Mary Wardley, Albert Pang, Amy Konary, Robert Mahowald, Sanjeev Pal, Darren Bibby, Steve White, Virginia Agee, Mira Perry and Caroline Dangson.

I'm not going to share the whole document in this post, if you want that you'll have to check it out on the IDC site (should be up in a week or so), but I do want to share the predictions that we came up with this year. From a trends perspective the predictions theme is the "new normal" and they fell into a few buckets; social business, mobile, next gen apps / cloud and lasting change. Here are our predictions:

1. The social business movement gains momentum through the cultural shift that is enabled by social enabled applications that are formed from the intersection of collaboration, content, search, communities, CRM and the current web 2.0 tools like blogs, wiki’s, microblogs, etc. with 50%+ of the Fortune 500 initiating social business projects this year.

2. Software vendors, recognizing that "one size does not fit all" with partner programs, will move to an a-la-carte benefit structure versus a long list of perks with diluted value.

3. The great divide will come to an end between horizontal and vertical applications for the enterprise.

4. As a fundamental part of the Social Business transformation businesses shift their focus from technology and process to people, who in effect become the new enterprise platform.

5. Cloud infrastructure computing moves squarely into the mainstream as a significant number of the Fortune 1000 companies adopt the utility computing model demonstrated by moving a portion of their “sandbox” apps into production on public clouds.

6. In response to a productivity spike, VARs, SIs and ISVs will turn in force to contracting (virtual staffing) and partnering. Vendor programs will adapt to support these new models.

7. "There's an app for that": Mobile becomes the new enterprise desktop with more than 50% of US workers accessing applications via a mobile device.

8. The 'new normal' will give rise to increased end-user buying power causing extreme pressure on existing vendors to mold offerings and giving opportunity to aggressive suppliers.

9. A software industry shift toward subscription models will result in a nearly $7B decline in WW new license revenues in 2010.

10. Cloudsourcing becomes a major alternative for companies looking to outsource non-core business processes (software-in-a-service).

So there you have it, what other predictions did we miss for enterprise applications and their vendors and partners?

Top Tech Disruptors of the 2000's

Every decade seems to carry a set of defining themes in tech. For the 1990's it was the move to client / server, the emergence of the transaction web and the frenzy to "solve" the Y2K threat (and perhaps the rise of the Internet bubble). The 2000's started with a fizzle as the world realized that the Y2K "threat" was a non-event and continued with a loud pop as the Internet "bubble" burst. Beyond that somewhat inauspicious beginnings though, we had an active and productive decade in tech with many disruptors and advances that set up the next decade as one that will see dramatic change in tech.

So what are the key developments and disruptions from the last decade? Here are, IMHO, the most important developments of the last decade:

1. Mobile: The 2000's will be known as the decade that put the Internet in our pockets. Apple, with its introduction of the iPhone and the apps store changed everything. Yes there were so called "smart phones" before the iPhone but they were a shadow of the power that Apple put in our hands with the first (and arguably still the best) mobile computing platform. Mobile is the key that opened or at least accelerated many of the other disruptions in the 2000's.

2. Cloud: We opened the decade with the applications service provider (ASP) or hosted business model starting to make small (very small) inroads against on premise apps and we leave the decade with full blown concept called cloud computing disrupting the software world. Salesforce.com led the charge first in the apps market and then breaking ground again in the platform as a service (PaaS) market with its Force.com platform. Cloud computing has broken out into 3 distinct "layers", cloud apps (like Salesforce.com's Sales Cloud and Service Cloud), PaaS (Force.com and Netsuite's Suitecloud for example) and cloud infrastructure (Amazon EC2, Rackspace, etc.). A 4th layer started to emerge in 2009, Cloudsourcing (I wrote about it here), or software in a service that combines business process outsourcing and cloud apps into a single offering. I believe we will see a lot more from cloudsourcing offerings in 2010. I could spend a lot of time predicting where I think the cloud is moving as we step into 2010, but I'll save that for the upcoming predictions post.

3. Social Web: This last decade will be remembered as the time that the social web grew up. It did have roots in the late 90's of course, but the move from the transaction web to the social web happened during the 2000's as blogging matured as a media form, social networking redefined on line relationships, and microblogging set a new standard for real time information sharing. The social web has proven to be transgenerational and transformative on the consumer side. For business we started with enterprise 2.0, which often focused more on internal enterprise processes, social media, which manifest the use of web 2.0 tools for outbound business (like Twitter, blogging, etc.), social CRM and finally, as we leave the 2000's, the more holistic social business movement. Social business starts to combine all of these different movements into an internal and external business strategy to transform the way people interact. One other concept should be mentioned in this context, in fact I almost made it its own separate disruption, collective intelligence. So much of the value in the social web for business comes from the application of the concept of collective intelligence to solving business problems and deciding which products or services to build / sell.

4. Service Oriented Architecture (SOA): A few years ago...actually for a good part of the last decade, SW vendors talked about SOA. First vendors released apps that were SOA "enabled" and now we're seeing the release of "native" SOA apps across the next few years. SOA is important but I do think that some vendors over-played the SOA card where customers were concerned. Frankly I'm not so sure how much customers cared about SOA, they certainly cared about the results, easier integration and in a world that is increasingly seeing IT departments with apps both on premise and in the cloud integration is an even higher priority. To me buying an app with SOA is like buying a house with modern, up to code plumbing; I'd certainly care if it wasn't there or didn't work, but its not a factor in why I would buy the house.

5. Context aware apps: Building apps that react appropriately to the real-time context of their use is a concept that we've talked about for quite a few years. Over the last few years (especially the last 2 years) we've started to see good examples of this concept in software and devices. Probably the most prevalent example is in mobility where augmented reality apps are making some headway in using location to provide a variety of information ranging from user generated tags and reviews of restaurants, coffee shops, bars and clubs to tour guide-like information on local landmarks (I discuss this more in this post). Smart devices that combine SW and HW to provide contextual information are also starting to become available (Fedex SenseAware, for example). There are other enterprise examples as well, things like analytics that provide relevant information to users based on who is using the app (role) and what specific function they are performing.

6. Influence: OK, influence isn't a technology disruption, but instead it was significantly disrupted by technology over the last decade. The social web has caused a huge shift in the way we look at influence in almost all industries. Since I'm in the technology influence business it's easy for me to see just how broad and deep this disruption is causing change. The analyst business is certainly feeling the impact of this disruption and the changing channels and models that accompany it. Content used to be where a great deal of the value was for tech analysts firms, for example, but because of the changes content is now becoming something that is available in ever increasing quantities for free. This change alone has caused a massive ripple in media, especially print. Don't get me wrong, content is still important, its just not the point of value, instead the influence itself is the point of value. Taking this further, content establishes influence and influence and content establish credibility. Companies will pay for credibility in the form of consulting for example. Blogs, microblogs (Twitter), online videos, podcasts and social networks are increasingly the center of building / increasing influence.

7. Real-time: The web is becoming real-time through channels like Twitter and search is following this trend (see this post). Today people look to the web for breaking news and real-time information sharing (conversations). This has all sorts of implications for traditional media and for all consumers of information. The evolution of real-time search fuels this shift and will make the web both the channel and the source for real-time information gathering.

8. Connectedness / people as the platform: The last decade has seen the start of a shift in focus in the enterprise from technology to people. As people become the platform technology becomes the enabler for this process. Mobile combined with our always on culture is accelerating the shift both personally and in the enterprise.

9. Consolidation in tech: The last decade was in many ways defined by the massive consolidation across the tech vendor landscape. Many of the major brands of the 1990's are no longer independent companies but instead part of the remaining few mega-tech vendors. Oracle of course led this movement with something like 60 acquisitions in 5 years but many of the other mega-vendors did major acquisitions as well. Multi-brand product portfolios, something seen often in other industries, has become a very viable and profitable business model in tech. Here are two posts that talk more about the impact of this new landscape: 1 and 2

Well that's my list. Now some may ask why Google didn't make the list. I debated this with myself quite a bit. I do think that Google has the potential to be a disruptor in the enterprise but this list is about disruptions that have already started and I just don't see Google's influence as that strong in the enterprise yet. Certainly they're the powerhouse in search and I believe that they have the potential to be a powerhouse in mobile with Android. The other things they're working on, including Google Apps, Wave, etc. are all interesting but I still think we're at the wait and see point. Come back and check this list in another 10 years, maybe Google is a major disruption by then...