CloudAve Launched – and Thank You, Harry

Blogging, Collaboration, Enterprise Software, SaaS, Social Networking September 15th, 2008

(OK, I sinned. Mea Culpa.  I’ve just cross-posted an entire article, which is not the best behavior. But it’s not every day that I launch a new group blog – so consider this my shameless self-plug, and please subscribe to the feed.smile_wink)

We must be a crazy bunch on a suicide mission.  Why else would we launch a new blog focused on Cloud Computing and Business, when it’s just a fad that will collapse in two years?

Harry Debes, CEO of Lawson Software is a respected Enterprise Software industry veteran, but I’m afraid for all his achievements he’ll go down in history as the man who grabbed headlines with a fatally wrong call.  Of course not all wrong calls hurt one’s reputation: IBM’s Thomas Watson is still an industry legend despite the famous quote incorrectly attributed to him:

” I think there is a world market for maybe five computers“

The small difference is that what Thomas Watson could not fathom in 1943 ended up putting IBM on an amazing growth trajectory,  while Harry Debes’s view may just turn out to be fatal for Lawson – or to quote my Enterprise Irregular friend, Vinnie Mirchandani:

“That’s what American and Delta said about SW. And GM and Ford said about Japanese cars. And Sears and Wards said about WalMart.”

Another quote by Vinnie, closer to our industry:

“Dun & Bradstreet, which GEAC acquired for a song, was one of the most spectacular slides in the software market. In less than 5 years it went from dominant position to a distress sale as it missed the client/server wave in early 90s.”

I’ve seen that one close, fortunately for me from SAP’s side – the winner in that round.  We’re witnessing another tidal wave now, the shift to Cloud Computing.  It won’t happen overnight, but those who completely ignore it will vanish.  Some of my fellow Enterprise Irregulars elaborate more:

  • Vinnie Mirchandani points out that SaaS is what more and more customers want, and those who stop listening to customers inevitably hit the wall sooner or later.  Need proof?  How about this 100% SaaS customer, showcased at the recent Office 2.0 conference?
  • Jim Berkowitz  of CRM Mastery fame agrees,  adding that calling people, potential customers “stupid” never leads to any good.
  • Bob Warfield makes the case that even if we ignore what customers want and only consider profitabilty, Debes is wrong, Salesforce.com is almost as profitable as Lawson, but grows much faster, while Conquer, another SaaS success story is actually more profitable than Lawson is.
  • Jason Corsello adds that Lawson actually launched a SaaS offering last year, but experienced lackluster customer response largely to pricing and deployment issues … so now that they couldn’t pull it off, the declare the entire market doomed.
  • Josh Greenbaum concludes: “SaaS isn’t collapsing, it’s only just getting started“.

I can live with that… it’s only starting… so we’re not a suicidal bunch, after all.smile_wink But thank you, Harry Debes, for sparking a great discussion.

If you read just the few articles I’ve quoted above, you get a fairly good picture of the many benefits the Software as a Service model offers.  Let me add a few of my personal favorites:

  • Extended reach – small businesses can now have business functionality previously only available and affordable for large enterprises.
  • Commoditization of the software market – commoditization hurts most companies, except the few who drive it, but guess what – it’s great for customers.
  • End of Bloatware  – for the first time SaaS vendors can run stats and observe what features are actually used by customers, so they can cut out the fat and enhance the in-demand features.
  • New Business Models, like benchmarking – based on anonym aggregate data provide your customers with performance metrics.  Even newer business models we have not even imagined yet.
  • Dramatically changed Sales and Marketing model: pull vs. push.  Instead of the traditional sales model it’s all about transparency, information, letting informed customers find you.  The Product sells itself and your Customers are your Marketing team.

We’ll be writing about these and more. I’m a “business application guy”, so I mostly talk about SaaS – but our name is Cloud Avenue, not SaaS Avenue, for good reason: fellow blogger Krish will talk about it soon.  By the way, Krish and I got to know each other through our blogs – just like my fellow Editor, Ben Kepes, and just about all other contributors. We also have our CloudLab – for product / service reviews.  Yes, we will report on products, but do not strive to be a mini-TechCrunch: we have no intention to report about everything new.  We’re not a news-blog.  We’d rather sit back, analyze a market, find key players, then produce a series of reviews / comparative analysis.  Quality before quantity or urgency.

We’re believers in Cloud Computing, but  not over-zealous cheerleaders.  Just as I’m finishing this post, another SaaS debate erupted, which prompted Anshu Sharma to note: “there must be a Sky is Falling Support Group“.  The really notable part of the Cloud-Filled Debate @Forbes is Nick Carr’s responses: not because of the Big Switch author’s unquestionable “cloud-bias”, but because of how realistic he is:

Forbes.com: Is cloud computing over-hyped?
Nicholas Carr: At the moment, yes, and that’s typical for technological advances.

What’s your imagined time line of the adoption of cloud computing? Will it take years? Decades?
If you’re talking about big companies, I would say it will be a slow, steady process lasting maybe 15 to 20 years.

On what Gartner Research analysts call “the cycle of hype and gloom,” where do you think cloud computing is currently positioned?
It’s definitely near the peak of its hype. The doom period, when the media and IT managers realize the challenges ahead, is likely coming soon. But regardless of hype or gloom, the technology will only keep progressing.

Overhyped, slow process, doom is coming… has Nick Carr switched sides?  No, he is just being realistic – and that’s what we need to do here  @CloudAve, too. We will talk about integration problems, security issues, privacy concerns, even legal ramifications – many of these I don’t claim to know much about, which is why it’s great to have a diverse team of authors with complementary areas of expertise. And our door is never closed: we welcome guest posts, and who knows, you may feel inclined to join us as as a regular writer…

Finally, we could not afford to bring you CloudAve without sponsorship.  My regular readers know I’ve been an advisor to Zoho for years now – I’ve found them to be a showcase for a lot of my ideals.  Zoho stepped up as exclusive sponsor of CloudAve.  This does not make us a Zoho PR outlet, in fact they can expect less coverage here than they got on my personal blog.  We enjoy complete editorial independence.

What we do not have, and will not have is any form of advertising.  None of those flashy banners, boxes, making the site close to unreadable. Just pure content.  And since we are not dependent on page views, we can afford to offer our content under a Creative Commons licence.  Yes, it’s all yours, take it – just don’t forget attribution.

So here we are – welcome to CloudAve. We hope you will follow us.   And once again, thank you, Harry, for all the attention to Cloud Computing.smile_wink

P.S.  The CloudAve platform  is not exactly in nice order yet. It’s work-in-progress.

So for now, all I can do is apologize for the shabby appearance, like I did at a previous move – that one turned out quite well, didn’t it?

And talk about move – I am not abandoning this blog either, so I hope you continue to follow me both here and on CloudAve.

Tags: , , , , , , , , , , ,

3 Comments

SaaS and the Commoditization of the Software Market

Business, SaaS September 14th, 2008

Office 2007 Reaches a New Low – reports Joe Wilcox @eWeek.  He means low prices:  while Office Standard is still above $300, the Home and Student Edition can be purchased for as little as $89.99.

He then speculates on the reasons for this “Crazy Eddie”  pricing, with percentage of likelihood:

  • “It’s end of the back-to-school buying season, when Microsoft and retailers often discount consumer Office (50 percent).
  • Microsoft is seeding the consumer market with the Home and Student Trojan horse for supporting Web services such as Office Live Workspace (25 percent).
  • The low pricing is way of psychologically preparing the consumer market for $69.95 Office Equipt, which packs 12-month subscription versions of Office 2007 Home and Student Edition, Windows Live OneCare, Mail, Messenger and Photo Gallery. (20 percent).
  • Microsoft is shoring up marketshare as proactive response to freebees like Google Docs. (5 percent).”

I strongly believe in the last one, which is way underrated at 5%.  With freely available OpenOffice, Google Docs and the Zoho Suite, people have little reason left to purchasing Microsoft Office.  I’ve said this before, while discussing the perfectly rightful clampdown on piracy:

The danger for Microsoft is not the direct financial impact of these users turning away from their product, since the never paid in the first place. It’s losing their grip; the behavioral, cultural change, the very fact that millions of people – students, freelancers, moonlighters, small business workers,  unemployed – realize that they no longer need a Microsoft product to work with MS file formats.  Microsoft shows these non-customer users the door, and they won’t come back – not even tomorrow when they are IT consultants, corporate managers, executives.  That’s Microsoft’s real loss.

But this post is about commoditization, and there’s more to it than putting price-pressure on Microsoft. Yes, SaaS disrupts the traditional software market, but there’s another equally important trend happening: some of the early pioneers who evangelized SaaS but retained a 1.0 business model are being squeezed by more nimble competitors. 

Days after my post on SaaS and the Shifting Software Business Model I received an email from Salesforce.com, announcing new, promotional pricing for Salesforce Group Edition.  The promo was supposed to end July 31st, but I suspected this would become a permanent price cut.  Why?  Group Edition is where Salesforce.com feels intense price pressure – see the comparative matrix here.  Today I checked again, and what a surprise (not really) -  the promo deadline is now gone, Salesforce.com silently turned the promotion into a permanent price-cut. 

No wonder there wasn’t much fanfare: price cuts are a red flag for the Street.  Commoditization can be a death-spiral to businesses – except for the few that drive it. But it is beneficial to customers, and in the end, that’s what matters.

(Disclaimer: I am an advisor to Zoho, the company with a mission of Deflating IT).

Tags: , , , , , , , , , , , ,

5 Comments

SaaS and the Shifting Software Business Model

Collaboration, ERP / CRM, Personal Productivity, SaaS May 28th, 2008

Barely two years ago we debated whether little-known Zoho was worth paying attention to. The majority view was that their Office applications were weak contenders that would never challenge the Microsoft suite’s position. I think I was in the minority stating that I really did not need more than 10-20% of Word or Excel’s functionality, but online-anywhere access and collaboration made the switch worthwhile.

Today Robert Scoble reports he is seeing online applications wherever he turns:

Today I’d say the skill set is shifting once again. This time to something like Zoho Writer or Google’s Docs. Because if you visit Fast Company’s offices in New York, for instance, they want to work with you on your copy in live time. Fast Fast Fast is the word of the day. It’s in our title, after all. Now some people still use Word, but last time I was there one of the editors told me he was moving everything over to Google’s Docs because it let him work with his authors much more effectively.

These are no longer yesterday’s wannabe applications. Zoho Sheet recently added Macro and Pivot Table support , going way beyond the average user’s needs (and certainly exceeding my spreadsheet skills, which are stuck somewhere at the Lotus 1-2-3 level). Zoho Writer today added an equation editor and LaTex support. Heck, I don’t even know latex from silicone, what is it doing in my editor? smile_wink
As I found out it’s important for Zoho’s academic and student users, once again, going way beyond an average user’s needs. (the other update today is mass import from Google Docs: nice, special delivery for Dennis, but I still would like to see a list of all my online docs, be it Zoho or Google, open them, edit them, and save to whichever format (and storage) I want to.)

Online applications have arrived, they’ve become feature-rich, powerful, and are the way software will be consumed in the future. They also change the business landscape.

Software margins choked by the cloud? – asks Matt Assay at CNet, pointing out a shift in Microsoft’s tone about cloud computing, recognizing that in the future they will host apps for a majority of their customers, and that their margins will seriously decline:

There’s not a chance in Hades that Microsoft will be able to charge more for its cloud-based offerings–not when its competitors are using the cloud to pummel its desktop and server-based offerings. This is something that Microsoft (and everyone else) is simply going to have to get used to. The go-go days of outrageous software margins are over. Done.

Matt cites Nick Carr who in turn recently discussed

…the different economics of providing software as a Web service and the aggressive pricing strategies of cloud pioneers like Google, Zoho, and Amazon.

This is fellow Enterprise Irregular Larry Dignan’s key take-away from the Bill & Steve show, too:

Microsoft CEO Steve Ballmer acknowledged the fact that a lot of computing is happening in the browser and not in applications. He also said that the future of software will have “a much more balanced computational model” and that Microsoft will have to compromise.

Of course it isn’t just Office. The obvious business application is CRM, where Salesforce.com pioneered the concept and delivered the first On-demand product. But now a funny thing is happening: the pioneer is increasingly being replaced by more inexpensive competitors, including my Client, Zoho. Yes, SaaS disrupts the traditional software market, but there’s another equally important trend happening: the commoditization of software.

Commoditization is beneficial to customers, but a death-spiral to (most) vendors. Except for the few that drive commoditization. Zoho makes no secret of doing exactly that.

Related articles

Zemanta Pixie

Tags: , , , , , , , , , , , , , , ,

10 Comments