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Cloud Computing and Open Source are Not Enemies

Posted on September 29, 2008 ·
Richard Stallman at DTU in Denmark 2007/03/31

Image via Wikipedia

Are Open Source and Cloud Computing anachronistic enemies? You’d think so, if you read GNU creator Richard Stallman’s interview in The Guardian:

Cloud computing was simply a trap aimed at forcing more people to buy into locked, proprietary systems that would cost them more and more over time.

"It’s stupidity. It’s worse than stupidity: it’s a marketing hype campaign," 

Sure, there’s a lot of marketing hype as it is typical with any major technological advancement, especially as it reaches the peak of its hype cycle.    But I think Stallman loses sight of who the “enemy” is.

Read more here…

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Cloudy Fusion

Posted on September 28, 2008 ·
El número 14

Image by wicho via Flickr

The Enterprise Irregulars took over CloudAve… well, sort of, forcing us to release an article early.  Eran Kampf had a post lined up for Monday morning about Larry Ellison’s Cloud Envy, when all of a sudden fellow Irregular  Anshu Sharma had a humor attack and came out with a hilarious post. All he did was replace Cloud Computing with Fusion in Larry’s famous rant, and voila!:

"The interesting thing about Fusion is that we’ve redefined Fusion to include everything that we already do. I can’t think of anything that isn’t Fusion with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?"

"We’ll make Fusion announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of Fusion other than change the wording of some of our ads. That’s my view."

Wow.  This variant of Ellison’s speech makes a lot of sense, referring to his own elusive Fusion applications.   Even Vinnie Agrees. smile_wink

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“SaaS as Recession-proofing Software” Theme Picking Up

Posted on September 27, 2008 ·

It looks like I may have started ( actually, just re-started) a trend discussing How Software Can Be Resilient to Recession.

Sramana Mitra @ Forbes talks about ‘SaaS-ing’ Back At The Economy:

Some of the robustness of SaaS companies comes from the fact that the sector caters heavily to small businesses….

Fellow Enterprise Irregular Ismael Ghalimi makes the case that:

Some will gain, but most will lose, and some to be really affected by the downturn are enterprise software vendors selling expensive perpetual licenses for their products…

He than takes the oppurtunity to turn the analysis into a cocky offer to his competitors.smile_wink

Read more here…

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How Software Can Be Resilient to Recession

Posted on September 23, 2008 ·

Are we heading into Recession?  The “Big R” talk of early this year quickly subsided, economic growth returned, the markets appeared to vindicate the optimists.  US Presidential Candidate John McCain repeatedly said the economy was fundamentally strong… until just days ago, when he quickly switched to declaring a crisis.  The Wall Street Journal says we’re in the Worst Crisis Since ’30s, With No End Yet in Sight.

I don’t claim to be an expert economist, so whether the Big R is looming is not my call – but if you believe we’re in a strong economy, I have a bridge to sell you.  Let’s just focus this discussion on how Software businesses can survive in a financial crisis, which is undeniably here.

Not all will survive, and it’s probably healthy they won’t.  Tim O’Reilly, Father-of-all-things-Web-2.0, asked the question at the Web 2.0 Expo last week:

Global warming. The U.S. losing its edge in science and technology. A growing income gap. “And what are the best and the brightest working on?” O’Reilly asked, displaying a slide of the popular Facebook application SuperPoke, which invites you to, among other things, “throw sheep” at your friends.

“Do you see a problem here?” he posed, showing another slide of the popular iPhone app “iBeer,” which simulates chugging a pint. “You have to ask yourself, are we working on the right things?”

The poster-child of the Web 2.0 boom may very well become the symbol of what went wrong:

  • useless
  • consumer-only
  • ad-driven

Actually, the problem is not what they do, but how seriously they were taken.  Will Price, a very smart VC said long ago:

It may well be that Slide raising $55m from mutual fund companies at $500m+ pre-money will be the “what were we thinking” moment of the current cycle.

I’m glad they did not go public, at least not a lot of people will get hurt holding the bag.   But enough of what’s wrong, here’s what works:

  • go where the money is, and that’s businesses (“Enterprise” vs. consumer, even if it means small business)
  • deliver value – useful functionality that improves business
  • charge for it – companies actually prefer to pay for reliable, good service.

The last point brings up the price issue.  Credit will dry up. Whether we’ll officially declare Recession or not, the fear of the Big R is enough for corporate budget cuts, the disappearance of any CAPEX spending. Even worse, an entire sector almost disappeared as IT buyers.  Did you know that Lehman Brothers spent over $300M on IT in just the last quarter, right before declaring bankruptcy?   How do you sell in this environment?

The after-bubble nuclear period of “no IT spending at all” found me at a startup in 2001-2003. We did not exactly hit it big, but did not go under, either, and that’s because our model allowed us to get in the door way below the threshold that would have required higher authorization. Not classic SaaS, rather SES (Software Enabled Service), we were essentially data providers and often got into an “enterprise” account at $3k for the first month … eventually ramping up to annual $60-$100K.   Anyone familiar with Enterprise Sales knows the term Economic Buyer:  typically getting involved later at the sales cycle, approving or nuking the deal.  Well, we saw no Economic Buyer: being under the threshold, we sold to the User directly.

Of course my little business is not the only proof: Salesforce.com & WebEx thrived during the last recession. The secret is the business model: pay-as-you-go.  SaaS offers lower risk to enter, no initial cash layout, the subscription fees come out of OPEX vs. CAPEX, and is often approved by the User, not the mysterious Economic Buyer.  The barrier of entry is much lower: once you’re in, it’s up to you to grow.

In fact I suspect the looming downturn will accelerate the structural changes in the software industry: SaaS players will thrive,  traditional on-premise vendors will shrink, many will disappear.

That leaves a final point to discuss: financial solvency.  For startups, it will be increasingly hard to find investors.  For larger businesses the lack of late-stage investment, the credit crunch may be a serious impediment to expansion.   Discover the beauty of bootstrapping – you actually get to do what you believe is right for your business, not what your Board tells you.  Do less, take small steps.  Frugality is key to survival.  Small is beautiful will get a new meaning.

In summary, Software businesses that combine good old business sense: frugality, spending wisely, delivering value to businesses and getting paid for it, with a new business model, SaaS are likely winners in the downturn.  The rest are playing musical chairs. (Oh, and the bridge is still available)

(This post originally appeared on CloudAve.  Keep informed by grabbing our feed here.)

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CloudAve: the First Week

Posted on September 21, 2008 ·

Ah, the end of the fist week!  The new baby, CloudAve is 7 days old!  (..and I’m alive…smile_wink)

We launched with a discussion on Harry Debes’s famous prediction, i.e. the imminent collapse of the SaaS market in two years.  I doubt he realized just how much he re-energized the entire SaaS business, analyst obeservers – he certainly sparked a healthy discussion, even including Software Icon Dave Duffield, who refuted Debes’s argument.  He should know, having been on both sides of the fence. (The podcast is available on CloudAve).

On my personal blog I don’t have to be as politically correct as on CloudAve, so here’s my summary: they tried SaaS, could not crack it, so concluded the market as a whole did not matter – a strategic mistake.. or… well, as they say, a picture says a thousand words.  Ironically, the collapse of the US financial markets may just put things in a new prospective … more on this soon.

Ben compares the advent of Cloud Computing to corporate cars being replaced with allowances, while I present frustrating personal experience that could have gone smoothly using On-Demand tools.

We often talk about Cloud Computing and Software as a Service interchangeably, but are they really the same?  Krish answers in a mini-series discussing the differences, i.e. segmenting out Infrastructure/Hardware as a Service (HaaS), Platform as a Service (PaaS) and Software as a Service (SaaS).   In the second part of his mini-series Krish goes on a myth-busting mission, clearing up several common misunderstandings.  His piece on Governor Palin’s email hijack episode could very well be considered myth-busting, too.

Dan Morrill addresses why Anti-Virus in the Cloud can offer more efficient protection and is also major relief to owners of slower computers, whose resources can be completely bogged down by the frequent Av updates and scans.

Ben, so far the most prolific author reviews Oprius, an online productivity tool for sales professionals, then proves that the second “S” in SaaS is the most important, presenting two service / help desk oriented services: Zendesk and HelpStream.  He discusses NetSuite’s launch in Australia, then starts a discussion on Channels, largely triggered by another NetSuite related move – this may very well become an ongoing thread.

Talk about threads, next week we are launching a new daily feature, CloudNews – the title says it all.smile_wink

If you’ve been reading CloudAve, thank you, if not, why not head over and try … or perhaps just grab our feed.

See you on Cloud Avenue next week.

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3-year Old Millionaires

Posted on September 17, 2008 ·

No, not talking about babies here, but two Tech icons who both reached the Million milestone around their third birthday.

TechCrunch, launched 3-year ago as Mike Arrington’s hobby blog had 1 million Feedburner subscribers for the first time last week.  Of course it’s no longer a hobby blog, but a blog network run by a professional CEO, supported by a growing blogger team.  Mike himself has become a Silicon Valley institution, his Atherton home Web 2.0 Central.

Congratulations, Mike!   And Congrat’s to the other 3-year old millioinaire:  Zoho.

When Zoho Writer launched three years ago it was the underdog compared to Writely (which later became Google Docs). But it improved week by week, was soon joined by Zoho Sheet, and one had to be blind not to see the benefits of a complete Suite on the Net.  Today Zoho has a million users, is recognized as a leader along with Google, has made inroads to the Enterprise (400K users at GE?  Not bad…), The Economist calls them the force that will Deflate IT… a lot of achievements in three years.

Once again, congratulations to both… and now the race is on: who will reach the 2 Million mark first? smile_wink

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CloudAve Launched – and Thank You, Harry

Posted on September 15, 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.

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SaaS is an Ancient Model

Posted on August 28, 2008 ·

Lots of talk today about how the SaaS market will ‘collapse’ in two years.  I don’t get it: if it survived 40 years, why would it collapse now?  Yes, that’s right, SaaS has been a successful model for 4 decades now. Need proof?   Check out Technorati linking to my post on the NetSuite IPO 11119 days ago.  That’s 38 and a half years, give and take a few weeks. smile_nerd

Oh, well, that was the fun part, for real analysis check out my fellow Enterprise Irregulars:

Jason Corsello, Anshu Sharma, Vinnie Mirchandani, Bob Warfield, Josh Greenbaum.

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Project Management 2.0 – What’s Wrong With 1.0?

Posted on August 28, 2008 ·

Let me quickly state that I don’t really know what the consensus definition of PM 2.0 is, but I do have a feeling based on my very 1.0-style experience.

In the 90’s I worked on a number of fairly large scale SAP Projects in a variety of roles, including Project Manager, and supervisor of several other projects.  The standard tool was Microsoft Project.  It was used for:

  • Planning a Project (initial Scoping)
  • Selling it
  • Periodic reporting to Steering Committee during the actual projects

What’s missing from the above?   Well, how about using it to help the actual daily work of project team members?

Project  team members did not even have access to MS Project, it only existed in a few copies on the PM and Team Lead’s computers.  Information-flow was one-way: feed the beast to be able to occasionally print charts that look impressive (scary) enough that Steering Committee members won’t question it.

Ok, I am admittedly sarcastic, but the point is:  PM 1.0 was all about planning, reporting and it served Management but did not help actual Project Execution.

My expectation of PM 2.0 would be that it helps all team members involved who can share information, collaborate on it and actually get clues from the system on where they are, where they should be, what their next step is, instead of just feeding the beast.

Is this the real promise of Project Management 2.0?   I hope to find out from an excellent set of panelists that I have the honor of moderating at the Office 2.0 Conference next week:

  • Andrew Filev (Wrike)
  • Bruce Henry (LiquidPlanner)
  • Mark Mader (Smartsheet.com)
  • Guy Shani (Clarizen)
  • Dean Carlson (Viewpath)

Of course this is just one of many exciting sessions – if you haven’t registered yet, you can grab a $100 discount by registering here.   Oh, and don’t forget to visit us at the Zoho Party – the address is #1 Cloud Avenue. smile_regular

(This article is cross-posted at the Office 2.0 Conference Blog)

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Office 2.0, a Most Irregular Conference – Get Your Discount Here

Posted on August 25, 2008 ·

Nothing about the Office 2.0 Conference is even remotely ordinary.

Start with the organizer, Ismael Ghalimi, CEO of a VC-funded startup, Intalio.  That’s normally a full-time job – not when it comes to Ismael: he is also a scuba-diving instructor, a pilot, launched Monolab|Workspace, (is that Incubator 2.0?), launched the Extreme Productivity Seminar series, oh, and have I mentioned the annual Office 2.0 Conference?  ( I actually know his secret, he has two body doubles, I just haven’t been able to prove it yetsmile_wink)

Pressed for time he is turning a necessity into a virtue: year by year the Conference is a showcase of creating a successful event out of nothing in only two months. I remember the first event in 2006, when a couple of us Enterprise Irregulars were helping him plan the sessions only weeks away from the start.  A few days and a few blog posts later Ismael got flooded with request for sponsor and speaking slots.  This year history repeats itself: just a month ago the conference site was a placeholder and one could only wonder if … then a new site was born overnight, based on Jive Software’s excellent ClearSpace platform, and now it’s alive with user participation, sponsors, registration..etc.

What’s a Web-focused Conference without wi-fi?   It’s a joke that in 2008 conferences, including brands like Web 2.0, Gnomedex …etc.  still fail to provide sufficient connection.  Ismael’s solution includes laser beams to the top of the building, another one down to a terrace, then inside – making it happen with Swisscom was quite a project in itself.  Office 2.0 set the standard once and for all, anything less at major conferences is a failure.

Then there’s the issue of The Gadget.  I believe the iPod at the first conference was just more-then-generous swag.  The iPhones handed out at the second conference had an integral part at the event: several applications released specifically for Office 2.0 allowed participants to interact with each other, navigate the schedule and find sessions.  This time all paid participants will receive a the HP 2133 Mini-Note PC.

Yes, the conference swag is not pens, stickers or t-shirts: it’s a mini-computer, which cost about half the registration fee.  It will clearly raise eyebrows, and many would prefer to skip the gadget and pay reduced fees.  I think handing out such an expensive gadget will have an interesting effect on the conference demographic: we’ll likely see an increase of corporate employees, who can expense the entire conference and are less price-sensitive than startups and freelancers – the original Office 2.0 crowd.

But that may very well be what the conference needs.   There’s a reason why this year’s theme is Enterprise Adoption.  The Office 2.0 movement wouldn’t go very far with only the early pioneers, evangelists talking to themselves, dissmissing enterprise requirements.  For the principles to become practice in business, we need a more balanced mix, and in a twisted way the gadget may just help achieve that.

Those who can’t afford the full registration are not entirely locked out: Socialtext CEO and top evangelist Ross Mayfield will facilitate Un-Conference 2.0 the day before the official conference, at a cost of $50.

Finally, startups have a chance to present the attending VCs, media, bloggers at  LaunchPad – Ismael announced this event over the weekend, and already has 10 particpants – get in there while you can.  Note to my (numerous) VC readers: I hope you will be there, too.

If you’re still hesitating, check out the Agenda, the list of Speakers,  Media representatives,  and if you haven’t done so, register now.

I’ve saved the best for last: don’t use the standard registration, save $100 by registering here.

Update: while I was typing here, fellow Enterprise Irregular Dennis Howlett explained why this is an Irregular (pun intended) Conference in more than one way.  Update to the update: see Susan’s excellent summary.

(cross-posted on the Conference Blog)

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