Michael Fauscette

2009 Retrospective

It's that time of year again, you know, the time to look back at the year and think about all that's happened (and hopefully what we've learned that might help look forward into next year). It was a tough year from many different fronts, the economy spawned hardships that ranged from slower business to loss of jobs and houses on unprecedented scale. No industry was immune from the downturn and high tech certainly has seen its share of troubles. In spite of all the negatives there were some bright spots. Several tech trends that were emerging only last year moved mainstream with the help of the economic crisis.

Every year at IDC in Dec / Jan we do a series of predictions that start with high level predictions developed by a team of senior analysts that support IDC Chief Analyst Frank Gens and then move on through each major research group. Last year my group published the following predictions:

1. The 2008 Financial Crisis Will Drive Accelerated Growth of Software-as-a-Service–Based Solutions

2. Several Large Software Vendors Will Restructure Their Partner Program Tiers in 2009.

3. Open Source Software Gets the Boost to the "Mainstream" by the Effect of the Economy and the Subsequent Change in Buying Behaviors.

4. Partner Analytics Will Come of Age in 2009 as Vendors Seek Partner Quality over Partner Quantity.

5. Compliance, Litigation Preparedness, and Business Process Efficiency Will Continue to Drive Content Management Budgets.

6. Partners Will Create Several New "Partner Run" Partner-to-Partner Communities in 2009.

7. Consumer-Born Web 2.0 and Social Networking Tools Will Permeate New Customer and Partner Initiatives.

8. An Economic and Technological Perfect Storm Will Raise the Enterprise 2.0 Ship Higher than Others.

9. Platform as a Service Will Create a "Custom" Alternative for Vertical-Specific Solutions, Putting Pressure on the Major Enterprise Software Vendors to Develop or Acquire a Platform-as-a-Service Offering.

10. Next-Generation Enterprise Applications Vendors Will Win the Trifecta of Business Models.

Looking at the predictions the first thing that strikes me is that we need to make these more measurable and in fact that is our plan for this year. That said, how did we do in calling this year? #1 is pretty easy, SaaS (or cloud apps) did see very strong growth, well over 30%, in an enterprise software market that was just about flat overall. Most of the SaaS vendors saw good to very good growth as was evidenced by the strong quarterly reports from the public pure-play SaaS vendors. I'd say we get an A+ on this one and I feel confident that SaaS / cloud apps are now an accepted deployment option in both the SMB and enterprise markets that will continue to see rapid growth for the next several years.

For #2 we also did fine, several large SW vendors make changes to their partners programs that ranged from redefining criteria for program levels to adding things like specialization certification as a new differentiator (Oracle Specialized). I'd say this one gets an A.

Open Source SW, much like SaaS, did see a boost from the economy and we put the overall growth this year at ~34%. The rest of the story though is that in talking with CIO's in companies that ranged from mid-sized all the way to large enterprise it is now very common for IT organizations to have an OSS strategy and to have incorporated some use of OSS in the stack. Often now the use of OSS has grown out of just system infrastructure software and is moving up into the middleware and apps layers. I'd give us an A on this one as well.

Partner analytics is an area of partner program development that IDC has supported for quite some time. Using deep analytics to support partner program decisions and policies is a best practice. Sometimes selecting and collecting the "right" metrics on partners is difficult and while many programs do use them, the use of deeper analytics could still be improved. I'd say some progress was made last year but I don't feel like the inroads were as good as we had hoped. I'd give #4 a C.

Compliance, litigation preparedness and business process efficiency are still key factors in enterprise software deployments and their impact continued to drive some spending in content management in spite of the economy, although growth dropped to flat or slightly negative as the economy stayed weak and companies delayed SW spend decisions. We do see a good bounce-back next year though, with growth jumping up above 5% as budget controls start to relax a little. I'd have to call #5 a B-.

Partner-to-partner (P2P) networking has been a hot topic for the last few years. The major vendors have tried to build programs and offer assistance that encourages go-to-market relationships among its partner ecosystems. A few independent organizations have grown up among partners as well (IAMCP for Microsoft partners, for example). We expected to see more of these independent organizations this last year but in reality, it seems like the severity of the economy took the attention off any of these new initiatives for the most part. Grade on this one, D.

#'s 7 & 8 were probably the biggest home runs this year. We've watched as social networking and social media turned into social software solutions and social business initiatives. There's tremendous momentum across internal and external business processes and operations to look to the social web for the next generation of tools to facilitate relationships and collaboration. We're now talking about things like social CRM, social product design, social marketing and social supply chain management. Internally we are starting to see the convergence of collaboration, search, content management, and communications into social software as well. We also saw most of the major SW vendors use social tools in their partner programs. We're seeing widespread use of social software to change the way vendors interact with partners including blogs, wiki's, and even customer facing initiatives like SAP's Ecohub. Overall I'd give both 7 & 8 and A+.

Platform as a service (PaaS) has increased in importance and is getting much more attention from ISV's and SI's. Much of the progress this year was driven by Salesforce.com's Force.com PaaS and its efforts to recruit new partners. Netsuite also rolled out its PaaS offering, Suitecloud and hired a new ISV partner executive to build a community. While both of these initiatives are gaining momentum its still slow going on both the ISV and the prospect sides. The vendors are gaining traction though and some very strong hybrid partners are emerging (for example Appirio, who is a partner with salesforce.com, Google and Amazon). There's also movement from the major SW vendors with Microsoft launching Azure and SAP announcing the intent to have a PaaS offering next year. Overall I'd have to rate this prediction a solid B+, good progress but maybe not as much traction yet.

The hybrid business model, or vendors that offer on premise, SaaS and outsourced processes is gaining among larger SW vendors. Particularly the blending of, or offering customer flexibility through both on prem and SaaS seems to be the prevailing model moving forward for Oracle, Microsoft and even SAP (although most of their offerings are slated to launch next year). The third option is getting renewed attention as software in a service or cloudsourcing, although non of the major vendors have moved in that direction directly. It now seems that cloudsourcing will be a fertile ground for a new generation of process outsourcing partners that are emerging and taking advantage of the SaaS model with a services wrapper. Overall on this prediction I'd say we hit a solid B, with a new model emerging around outsourcing that wasn't really on the radar last year.

So there you have the report card from 2009. Look for our new set of predictions mid January and if you'd like to discuss them in person join Henry Morris, Steve Hendricks and me for a complimentary breakfast briefing, Envisioning the New Normal: IDC Software Predictions 2010 on Jan 26th in Burlingame, CA.

SAP coming out from behind the Clouds?

This has been a tough year for many enterprise software companies but in many ways SAP seems to have suffered more than most. The core ERP and ERP upgrade business has been near a wasteland of activity. Maintenance revenues have sustained many companies as new license sales faltered. We're starting to see some evidence of moving out of the worst of the economic troubles but even so I believe that next year is really about establishing a "new normal", not about "recovering". In Boston this week SAP reviewed its strategy with a group of industry influencers and started to reveal what SAP leadership sees as its "new normal".

The morning general sessions were heavy with marketing buzzwords but did start to show the extent to which SAP seems to be embracing some change. It was a little odd to hear the words "cloud" and "on demand" used as common fare for SAP executives a mere 7 months after I heard CEO Leo Apotheker answer, when asked about SAP's cloud plans at the Business Suite 7 launch, with something like "we are researching cloud but we don't think its scaleable." The buzzword barrage included cloud, on demand, real-time, mobile, innovation, sustainability and of course the new SAP technical mantra of in-memory database / applications, which they have used in the Business Objects BI Accelerator that was demo'ed at the last Sapphire. The overall theme from SAP CTO Vishal Sikka was "Timeless Software". Most significantly though, we did start to see a much clearer strategy around cloud (which they still usually call on demand).

I have to admit that I've been very confused over SAP's SaaS strategy for almost 3 years. The initial positioning of the Business ByDesign (ByD) as a lower mid-market solution (and as a stepping stone to A1, I think) was quickly refined within a few months and the initial release was a mid-market offering. With obvious technical and quality issues, sales of ByD were basically shuttered for some time and SAP has been mostly silent on SaaS until the last few months. In the afternoon session by John Wookey (ex-Oracle Apps Exec now leading SAP's Enterprise On Demand strategy) and Peter Lorenz (who leads the ByD and SME business), we had a much more detailed explanation of the overall on demand strategy. SAP now has three on demand initiatives: 1. Line of Business On Demand (LOB OD), 2. Business Objects On Demand (which I have been briefed on in the past but did not get an update this week, as the session conflicted with the broader on demand session) and 3. ByD.

1. LOB OD: The basic concept is to build SaaS applications that are deployed as extensions to the core SAP ERP suite by enterprise customers. This is a little reminiscent of a strategy that SAP talked about 2 years ago called "side-by-side", where they laid out this idea that customers could keep the on premise "core" and add new functionality through SaaS. The apps are built on the platform acquired with the purchase of Frictionless in 2006 (which also will be offer to ISV's as a Platform as a Service offering like Salesforce.com's Force.com and Netsuite's SuiteCloud). Currently there are 4 apps available, HCM (a partner app from Northgate Arinso), CRM, e-sourcing, and Carbon Impact. Planned for release next year SCM, Travel & Expense, Services Management and a new version of BOBJ project Kona.

2. ByD: The current ByD release (2.0) has ~100 customers in several industries (mostly services focused) and includes some partner add-ons. BbyD is model driven, with the business logic in deployment units, has an open msg based architecture, integrated under SOA & configurable. The next release, 2.5 (slated for mid-next year) according to Lorenze will be the true "ready for prime time" release adding things like true multi-tenancy. The UI is now built with Microsoft Silverlight and frankly, during the demo, look a bit dated. Using Silverlight does provide good MS Office interoperability features. The UI model is decoupled from UI rendering and the UI model is used for mash ups, mobile (which will be available for several mobile OS), etc. ByD uses in-memory technology and has real-time analytics. The 2.5 release will also include a full partner SDK for partner extensions and integration. SAP will take ByD to market through 2800+ partners.

According to SAP they're now serious about the cloud and at least the strategy is becoming more clear. A lot of details are still missing from the story and there's still a lot of "next year" in the strategy. SAP seems to be learning from its competition and emulating the best of what is in the market today. The focus areas for LOB OD, for example, are clearly aimed at speciality SaaS vendors that have made inroads in the SAP base through innovative features like HCM/talent management solutions from Taleo and Successfactors, salesforce automation from Salesforce.com, Services management from Netsuite OpenAir and Travel & Expense from Concur. The PaaS offerings are certainly aimed at Salesforce.com and Netsuite and the in-memory technology is already in use by Workday and Salesforce.com. Next year will be a challenging year and we will no doubt see if SAP can execute against its strategy of redefining a new normal.   

Some thoughts on mobile

It's the time of year when we at IDC start working on our Top Ten Predictions documents and, get some time to actually think about the future (well, at least the future for the next year or so). As I've started brainstorming for next year there are a few things that jump out as obvious shifts in technology use. I posted a while ago on the next-gen web and one of the trends I included there, mobile, seems to be even more obviously gaining momentum. Some of that momentum comes from the easy availability of true mobile computing platforms and some comes from an increasingly mobile work force. The iPhone deserves credit for setting a new standard for mobile computing platforms and IMHO was the first "real" mobile device to make mobile computing more than just quick checks for bits of information. Browsing the web on pre-iPhone smartphones was more of a nuisance than a help really. If you don't believe me try a Blackberry side-by-side to the iPhone for web browsing and I think you will quickly realize the difference. So with the iPhone and now with the addition of android-based platforms, mobile applications are taking off and they are very useful. Enterprise software vendors jumped on the trend over the last year and have released several iPhone / smartphone apps like Oracle Mobile Sales Assistant, Salesforce.com CRM Mobile for iPhone and Netsuite for iPhone. We're starting to see the 2nd generation of many of these tools and they are proving useful and popular.

My mobile prediction then is that mobile devices become the new enterprise desktop. That's not all though because there are a few other trends that seem to be converging around mobile. The first is context aware mobile applications (actually context aware apps in general but we're talking about them in a mobile context for now). This is most specifically about location aware apps for now but I think context aware apps will expand into more than location over time. Location aware apps are mostly targeted at consumers at this point but they do provide an interesting business proposition. Take FourSquare for example. FourSquare is set up like a game and you check in to different places and share that check-in with your network of friends. You get points for each check-in and unlock badges but the part that's really interesting is the suggestions. When you check-in somewhere if there's a special offer nearby you are alerted to that offer and can use the app like a coupon for a discount. FourSquare just recently announced an open API and 3rd party developers are starting to offer add-ons. SocialGreat for example takes the FourSquare feed of where people are checking in, combines that data with brightkite, Twitter and graffitiGeo to provide near real-time information on what's "hot". The power of stitching these various apps together greatly expands their usefulness. CitySense is another location aware app that provides a "hot" spot map or in their words "real-time nightlife" based on Microsense data analysis of historical geo data + real-time geo data from mobile phones and taxi cabs to find where people are congregating (integrated with Yelp data on the locations). In their next release they plan to add pattern data from where you go regularly to suggest places that you might find interesting with people of similar interests. So far CitySense is only available in San Francisco.

The next trend that is converging with mobile is related to location awareness as well. Several augmented reality apps have popped up lately. Augmented reality takes location data, camera feeds and layers information onto the "picture" about the locations that are around you. Cyclopedia is an example:

I've focused most of this around the iPhone but Google's Android software is also making some nice inroads and some of the 2nd generation devices like Motorola's Droid are quite good. I'm not really a fan of the other phone OS's at present, mostly due to the current devices but there is certainly room for one or more of them, Symbian, MS Windows Phone, RIM and Palm to catch up with a better device in the future. And to be fair I use both a Blackberry and an iPhone but I almost never use the Blackberry browser functions, they're just not as good an experience. Alright, my last prediction for this blog post, I believe that Android is the "next big thing" for Google and will quickly grow into a strong revenue source second only to their adwords / ad business.

Salesforce.com introduces the world to the Collaboration Cloud

Today at Salesforce.com's Dreamforce conference CEO Marc Benioff announced a new "mystery" product called Salesforce Chatter. Calling the category "collaboration cloud" is technically accurate but frankly understates the product, which is in reality a very strong offering in the category of social software. Chatter, which will be available early next year, is a social platform that brings together content, apps and people. In other words this offering capitalizes on the concept of "people as the platform". Built on the Force.com platform, Chatter is of course integrated with / embedded into the Salesforce Sales Cloud and Service Cloud. It goes much way beyond just a collaboration tool for CRM though.

Designed and built in a "Facebook"-like paradigm, the platform produces a "news" feed of enterprise information and other social information. Chatter is open with an open API, and can connect to Twitter, Facebook and other public social networks in real-time, but the platform also can connect to other apps and content. The apps and content can then interact with or update the news feed. So what's included in the Chatter social platform? There's a profile that users can build and update much like Facebook including status updates. The news feed is the core of the platform and all the status updates including the apps update there. A user can create ad hoc groups of people and apps as well. Content from any connected app can be shared in your feed or to a group. Because it's built on the Force.com platform, it has the same level of security, which is enterprise class of course. Chatter is also tightly integrated with Google Docs through the Google Data API's.

From a business model standpoint the current plan (which could change by the time of release) is to include Chatter for all CRM users no matter which edition they use for no additional fee, and to sell stand-a-lone Chatter for the same price as the current Force.com price, $50/user/month. There's also been some public discussion of the possibility of a freemium model but nothing concrete was announced.

So why do I think this announcement is important. Well, first, this is an example of a social enterprise app / platform (a very good example) and exemplifies what I posted here. I am convinced that what we need to enable the transformation to a social business is this type of embedded social platform that can openly connect the companies other apps with the people in a seamless fashion and in real-time. The focus with Chatter moves from the app itself (like most enterprise apps today) and instead focuses on the people...people become the platform of the new social business.

Cloudsourcing, new options in the cloud

As we go into the week of Salesforce.com's Dreamforce conference I was thinking back to last year. I remember walking over to the conference center and feeling a little annoyed that there were "clouds" on almost everything, buildings, buses, cars, people, bus stops...you name it, it had a cloud stuck on it. Now that is good marketing hype I guess but at the time that was about all it was for me. I mean I did understand what the "new" words meant (actually nothing really new, just new ways of saying things). A year later there probably will still be a bunch of clouds on my walk over but I have to say I'm getting used to the term. Ther are finally some new things that I think we should talk about when it comes to "cloud" (and if you know me, you know that it is still a little hard to say the actual word).

Before continuing the discussion let's define a few things just so you know what I'm talking about (and that my definitions may not be exactly like some of the other ones you'll hear). First let's talk about what I use the word cloud to describe (when I'm not talking about something fluffy in the sky). For me, cloud is simply the computing infrastructure need to do some computing work (servers, storage, plumbing to connect to the Internet) but sitting somewhere in a data center. It's essentially computing power served up as a utility (think electricity or cable TV). From that simple thought then, there are 2 basic types of clouds (not cumulus & nimbus), I mean classified based on location: !. Public cloud and 2. Private cloud. The public cloud is, well public (duh), like Amazon Web Services or Salesforce.com Force.com platform. You can pay a fee and use the computing power offered by the public "utility" provider. Private clouds are restricted to some specific individual or group use, like GE's datacenters. You can't call GE up on the phone and buy computing power from them (well, at least not yet). The folks at Appirio put together a very cool interactive map of the Cloud Ecosystem today. They do break out 3 types of clouds, public, private and vendor but for me, I'd just call vendor the same as public (yes, I realize you're buying actual applications in the vendor segmentation but I just don't really see a fundamental difference, I'm still paying for the use of some computing resource AND the use of an app). In all these cases you are essentially using the cloud to deliver some cloud application or other cloud service (like storage or security). You might pay for the use of the cloud app + the computing power underneath but the concept is still the same. The real value to a business with this cloud concept is flexibility, adaptability and potentially cost savings. (there's a whole different line of thinking that I have around the effect of utility computing or perhaps I should say commodity computing on pricing. If it's a commodity and scalable then the pricing should be driven down...anyway, that's not what I wanted to talk about today)

So the new thing that I'm starting to see, or perhaps it's not exactly new but actually the extension of a concept. The idea is something that I've heard called software in a service or cloudsourcing. Its really an extension of the business process outsourcing (BPO) business that exists today. There could be significant value generated to businesses by combining the two concepts, cloud computing and outcourcing a business process to a 3rd party. It takes cloud to the next step and offers the valuable combination for business of leveraging cloud computing + a cloud app (or cloud service) + business process execution in one bundle. The concept is still forming but I think it will be one of the big trends for the next few years as more offerings emerge and businesses look to offload non-core processes to less costly solutions.

Cloudy days

Oracle OpenWorld's done for this year and I'm now spending the weekend trying to catch up from a week at the conference and get the post-conference write up and analysis started. As I think back on the week one of the most entertaining events was listening to Larry Ellison at the Financial Analysts briefing rant about cloud computing (for the 2nd year in a row). Its a well known fact that Larry is not fond of the term (frankly it took me over a year to get comfortable using it myself so I can empathize here). Last year's rant (again at the Financial Analysts briefing at OOW) yielded one of my favorite Ellison cloud quotes: "the technology industry is the only industry that's more fashion conscious than women's fashion, I'm telling my marketing people to put cloud on everything"...a classic. This year the much quoted sound bite is "cloud computing is the future, it's also the present and the past". As I was thinking back on these quotes and giggling (which I suppose could cause a scene as I'm sitting in my local coffee shop, Phil'z, really awesome BTW, you should check it out if your in San Francisco...and no I didn't get sponsored to say that) it occurred to me that there's an important point lodged somewhere inside these funny lines, have we clouded (sorry couldn't resist) the SaaS message to much with all of the hype and jargon and are we obscuring the goodness in to much marketing? Do customers understand what we mean by cloud (actually do we all understand too)? And what about the other "technical" marketing things we keep seeing like multi-tenant / single tenant (sorry to bring this up again, but it's key to my point, here's my take on that subject), do they help prospects understand and adopt SaaS or are they in the way?

SaaS applications are growing ahead of the rest of the software industry, that much we can clearly see. But why? Personally I see lot's of benefit to consuming software in the accepted SaaS model and I think that the customers that are buying it do as well. I'm starting to think though that this may be in spite of our marketing instead of because of it. OK, maybe that's not completely fair, the important messages are also there, things like pay for what you consume, easier to implement (my post on that), faster time to value, lower TCO (although that one's up for debate), don't need to maintain your own infrastructure, simpler upgrades, easier to access from mobile / multiple devices, etc. But I do think our fascination with clouds and technical jargon is doing some damage to our overall messaging. What are SaaS or cloud applications anyway? In my definition cloud apps are SW applications that are sold on a subscription basis (so the software is leased rather than purchased), maintained by the vendor (patches and upgrades are installed by the vendor or the vendor's partner) and the app is available over the internet. The SW can be located at the SW vendor's data center, a partner's data center or even the clients datacenter by the way, but the customer pays 1 fee (not 1 to the vendor and 1 to the hosting partner). As far as I'm concerned that's it, nothing else is required.

Do customers want multi-tenant over single tenant? I don't think so, although some recent IDC survey data came up contrary to that point. On drilling into that more though, I think that survey helps prove my point, we've marketed multi-tenancy so much customers have started to think it's important to them, but can they tell us why...I doubt it. Multi-tenancy is only good for the vendor unless the vendor passes the cost savings on to the end customer...do you think that's happening? Oracle's Anthony Lye has very openly stated that Oracle prices multi-tenant and single tenant deployment the same for on demand apps (and the new Oracle Fusion Apps are architected so that they can be deployed in either model, customer choice is a good thing). Given the same pricing structure which do you think a customer would choose, a shared database with other customers (and yes, I know that it's very secure) or their own database? With their own database they get more flexibility. Alright, enough on that line of thought, you can read what I've already said about that if you want. My real point is that we need to look at the messaging again and focus on the value, on the benefit to the customer, not on technical jargon that doesn't really matter to the customer. I suppose that's a good marketing lesson no matter what your product for that matter. It's very important right now to SaaS or cloud vendors though, because I believe we've over marketed things that are not important to the customer and the real message is getting lost. Let's start spending more time telling customers that consuming apps in the cloud model has all sorts of goodness that comes along with it and no more time on cloudy messages about architecture (OK, you can save those slides for the IT organization briefing part of the sales process).

Oracle OpenWorld update #3, Fusion Apps

After several years of anticipation the curtain has finally been lifted on Oracle Fusion Apps yesterday during Larry Ellison's keynote. During the keynote the announcement was very upstaged by a lengthly (and repetitive) look at Exadata v2 and the IBM performance challenge but at least the embargo is lifted and I can now talk about what I've learned about the apps during several detailed reviews of the software over the last 6 months. Frankly I think the apps should have gotten higher billing during the keynote based on what I've seen of them, as they are quite good but I guess that's left up to the analysts that have been a part of the pre-launch reviews. The apps are code complete and in testing with an expected general release next year.

The underlying design principal was to use the best of breed processes from all of the brands but to keep backward compatibility for ease of upgrade by rationalizing the data model from EBS, JDE, PeopleSoft and Siebel. That decision was critical as it prevents having to change the data structure of any of the Apps Unlimited customers as they upgrade to Fusion Apps. In general Fusion has:

• Modern user interface based on Web 2.0ish design concepts
• Embedded analytics
• Native SOA built in Java completely on Fusion Middleware
• Event driven architecture for automating decision making where practical
• Role based use

Here's an example of the UI:

Fusion Apps are architected to be deployed in three models, on premise, single tenant SaaS and multi-tenant SaaS to allow customers to choose their licensing and deployment approach. At release Fusion will have all modules available as SaaS. For current CRM On Demand customers Oracle will initially offer customer choice but gradually migrate all customers to Fusion.

So what's in the suite? The release includes 43 modules across 7 product families (including 6000 database tables, 6,500 objects, 20,000 views, and 10,000 task flows). The Pillars are:

1. Fusion Customer Relationship Management
2. Fusion Governance Risk and Compliance
3. Fusion Enterprise Project and Portfolio Management
4. Fusion Financial Management
5. Fusion Human Capital Management
6. Fusion Supply Chain Management
7. Fusion Procurement

In the initial release there is no support for manufacturing (discreet or process) and public sector.

Here are a few screen shots from the release:

CRM:

EPPM:

HCM:

SCM:

When available next year, Oracle believes that customers will consume the apps in 3 models:

1. Add 1 or several biz processes to their current deployment of EBS, PeopleSoft, JDE and/or Siebel (or SAP, Microsoft Dynamics, etc.)
2. PIllar level upgrade, replacing an entire module like HCM or CRM
3. Single instance migration to the complete suite

The Fusion Apps also add quite a bit of embedded social software functionality throughout many of the modules. This is the start of what I believe will be a rapidly growing trend to make social concepts scaleable for the enterprise by providing tools inside the enterprise software solutions.

Overall from what I've seen, the Fusion Apps are very well designed, extremely usable, modern and offer significant value for customers throughout the different modules. They also support Oracle's strategy (articulated clearly for the last 3 years) by offering interoperability with existing brands and the chance for customers to choose what and when they want to move to Fusion while continuing to get value out of previous purchases with Oracle still investing in existing brands for the foreseeable future.

Predictive is the new black

I was having a chat last Friday with my friend and fellow blogger Michael Krigsman about crowdsourcing and wisdom of crowds and our conversation turned to predictive capabilities and the idea that in the near future businesses will start to use social data to predict behavior. That conversation sparked some more thought about the whole concept of predictive software (versus reactive software). Earlier this Summer I participated with a group of analysts and CRM experts in an exercise with CRM Magazine and DestinationCRM to look at the next 5 years of evolution of social CRM in the CRM Maturity Model. In looking at the future of sales and marketing for example, I can clearly see the promise of getting to a place where a business had created such a close relationship with its customers that it could "know" what the customer was going to want in the future and how they would want to be marketed to (the when, where and how concept that I've used in talking about social customer support works the same in this model too). Forgetting for a minute the slightly uneasy feeling that might conjure up for you, think of the value and experience of having your needs and desires met seemingly as you think of them. OK, we're not quite to that point in our use of social software and social concepts but we are moving in that direction.

I've talked about the progression of the development of application capabilities before, that is the progression from transaction (data creation) to analytics (information creation) to automation of events based on the information created. The automation is based on a software concept called event driven architecture. I suggest that with social software we have another level of progression beyond event driven architecture to prediction driven architecture (and yes I just made that up, I doubt we need another meaning for PDA at this point but you get the idea). Predictive capabilities could be implemented for sales, marketing, customer support/service, product marketing / strategy, even internally for HR (how about predicting an employees true motivators and build rewards and perks to meet those desires). We're just now seeing the movement of social concepts into enterprise software with the merging of social platforms with enterprise platforms (like the RightNow HiveLive acquisition I wrote about recently). In discussion with the RightNow / HiveLive team last Friday I asked about their take on social analytics and where they are looking next. The response, tie social data to RightNow's already robust artificial intelligence (AI) capabilities. That's just a whiteboard discussion today but probably not that far off as they move to quickly integrate the two platforms. We're not there yet by any means but for me, predictive is definitely the new black...

RightNow to acquire Social Software Platform Vendor HiveLive

Today SaaS CRM vendor RightNow announced its intent to acquire HiveLive, a full featured social software platform for ~$6M in cash. OK, this isn't Oracle announcing that it's buying Sun and I suppose it would be easy to skip over this one but I think this move by RightNow is interesting on several levels. There's the obvious good news that HiveLive's solution adds robust social CRM capabilities to RightNow's already strong customer service offerings...more on that in a minute. The other not so obvious thing though is the nagging thought that this could be the start of an acquisition frenzy among established software vendors that need to add significant social capabilities to their products or risk losing an edge with emerging social businesses and their need for enterprise class social solutions. There's a lot of innovation happening in the many enterprise social software start ups that I've looked at recently, the same kind of innovation that end users are starting to look for. Some of the larger software vendors are starting to build out some social capabilities but for a real jump start they will most likely look to the current innovative start ups which are, I might add, very reasonably priced in our current economic environment (and not likely to get any cheaper).

So what does HiveLive bring to RightNow? It should be no surprise to anyone who reads this blog that I think enterprise social solutions are rapidly gaining in importance and creating a real opportunity for businesses to transform the way they do business. This opportunity is especially strong and provides high potential for value to businesses in the customer facing functions from sales and marketing to product marketing / management and customer service. The social web is bringing about a sorts of changes in consumer / customer behavior that are today outside the boundaries for most businesses. Conversations happen about brands in online destinations but can you listen or respond to them? Customers are relying on their trusted social networks for product and support advice. Their turning to Twitter, Facebook, YouTube, etc. to express themselves. RightNow has the opportunity of integrating a social platform tightly into its customer service, sales and marketing CRM solutions so that the social world of the web can be linked to a companies CRM processes. If the integration is complete (the press release sets November '09 for the availability of the "tightly" integrated solution) the new solution could be very interesting to businesses who are looking to change and improve the way they interact with their customers. HiveLive's platform could enable:

• Customer communities for customer to customer support
• Communities for creating innovation: crowdsourcing or ideasourcing new product ideas and product improvements
• Incorporate blogs and wiki's as a part of the customer experience and to foster dialog and engagement
• Use wiki type functionality to enhance RightNow's knowledge base offering through incorporating user generated content
• Facilitating a customer loyalty program that could include communities or social networks
• Self-managed customer groups
• Content sharing
• Social analytics tied to CRM analytics

It will be interesting to see the new, integrated CRM solution as the integration is completed. I also suspect we'll be seeing many more announcements in this "space" in the coming months.

Netsuite makes a move to gain additional share in the SRP market by acquiring QuickArrow

Netsuite today announced the agreement to acquire SaaS professional services automation (PSA) vendor QuickArrow for $20M. Todays announcement comes a little over a year after Netsuite acquired SaaS PSA vendor OpenAir. Prior to that acquisition Netsuite had released a vertical solution aimed at the under-served project-based business market. Last Fall Netsuite took that vertical offering deeper with the integration of OpenAir and announced a full SaaS services resource planning (SRP) solution, the first end-to-end SaaS SRP offering on the market. I wrote a post on that announcement here so I won't rehash all of that now. With the acquisition of QuickArrow Netsuite gains additional customers and additional IP that can be leveraged into the main product offering over time. In the more limited PSA market the combined QuickArrow / OpenAir customer share would make them one of the market leaders with over 80K subscribers. The current plan is to leave QuickArrow as a stand-alone product but customers will have the option of migrating to the deeper functionality of the combined Netsuite / OpenAir SRP suite. Netsuite's SRP strategy continues to be:

-move up market with larger enterprise project based businesses

-expand its international SRP footprint

-offer deep vertical functionality with the combined Netsuite / OpenAir suite

The SRP market, even in these tough economic times, has held up as a bright spot in the overall Applications Market.