The Kiwi network and SaaS

I had the opportunity to catch up with Troy Wing yesterday, he's the CTO of a SaaS startup called Forcelogix  a company that does sales performance management and the author of the Software as a service solutions blog . I had hoped to do a Bob Warfield style interview with Troy, but time didn't permit.

Even though the meeting was brief, I was struck by a couple of things. 

  1. How much of a community builder the blogsphere is, let alone social networks. Troy is the second such encounter for me and both have been really enlightening and enjoyable relationships. (Thanks once again Troy for fitting me into your holiday plans!!!)
  2. Kiwi's, (New Zealanders) and how alike we are. What I love is the way we self network and the automatic trust that being from home engenders. Our conversation went something like, " i've found another kiwi and we've got a start up, looking for others…" All good fun
  3. I love the fact that some of us are beating the tall poppy syndrome. Troy was another like minded individual in that respect.
  4. Aspirations – Troy is the 4th Kiwi i know that is actively working in the Saas sphere, building companies to do this stuff. For me thats incredibly valuable for a lot of reasons. Theres another bod to run ideas past, Troy's skill set and back ground is different from mine and I believe we got to a point where we found mutual synergies. It was a piece of a puzzle my partner and I have been trying to solve for a while and it was really heartening to hear Troy voice similar things.
  5. Experience – Troy has been thru the process of building and funding a SaaS startup. His  insights and experience in this was great (and he admits he's only done it once todate). Some of his comments echoed some of my own experiences, some were new. Like having to be in Silicon valley to get funding and credibility…
  6. Networks – mutually sharing of these is invaluable. As kiwi's we tend to do this from the cradle, but its still immensely valuable. (For those who don't know why, when there are only 4 million of you, you tend to either know each other, know someone who knows you or need to pool resources to get anywhere in the world). Something that hit home as Troy and I had coffee and an old work colleague of his (a new one of mine) walked in!  A bit different from New York i'm sure.
  7. Energy – those of us who are working on new ideas or in start ups have a vibe thats different from the rest of the world. Troy's got it in spades and i recognised it instantly

It was a great to meet Troy, again i appreciate him giving up some of his holiday to spend time with me. I also look forward to working him in the future. This global collaboration thing has legs…

Merry Christmas to you all. 

 

Another theory on IT recruitment

I had the opportunity to catch up with a friend who lives and works in Sydney. Like me he’s in the IT industry so I always like to catch up with him about what is going on in Australia.

In a pretty laid back manner we were discussing a bunch of stuff families and friends and of course work. It became pretty obvious that we shared a couple of views on the year that’s been. Firstly how hard a year its been and secondly how difficult it is to find and recruit staff.  He used the comment “we are taking the least worse candidates” currently. Bad England but you get the gist.

 
He then through out his theory. He believes that recruitment in IT will not only NOT improve, it will get worse and here’s why.  The kids of IT professionals are seeing their parents work so hard and long that they are saying “bugga that, I’d rather be a builder”. The allure of the money isn’t enough, its actually not that sexy (geeks n all) and the gratification levels aren't as good (do we actually make a difference).  He goes further. In IT companies (all of them that I’ve worked for anyways) they all talk about this thing called ‘work life balance’, in building and plumbing and other industries, they have work life balance.

Gavin’s example was a builder who fits work around his life. Starts at 7, finishes at 3.30 and is surfing by 4pm (he is Australian after all). Whereas in his (and my case) we try to fit life around work, play with the kids after work, go to the gym what ever.

I’m a big believer in individual choice, and I know that this is what I choose. But it Gavin’s point did resonate and the ever declining numbers of graduates doing IT might be a leading indicator that things have got to change.

I know (apparently) the money’s good, but if you worked out your REAL hourly rate, it might shock you some, especially when you factor in travel, late conference calls, etc…

Tales from a customer who’s implemented SaaS

I recently caught up with a friend who is responsible for one of the larger Salesforce.com  deployments in the southern hemisphere. He had some real pearls of wisdom. I’m a big fan of the Smoothspan SaaS company interviews but this is different. This is distinctly a customer point of view.

 
His organisation went through an RFP process to select their CRM vendor. The key criteria for hit company was speed to market. The senior exec wanted 1 consistent view of pipeline and then some secondary benefits like contract management and seamless customer views for support and order management. To this end this (like a lot of SaaS) was a business driven technology decision, by passing IT altogether.

 
I asked him what worked. His answer was fast delivery to the primary business driver. The system was working within 6 weeks with over 1000 uses. His approach at having a dedicated team of experts who had the freedom to iteratively enhance the solution with fast release was fantastic. He also thought that the SF flexibility has provided business improvement options that no-one in the evaluation team really appreciated. So the long term viability and health of going SaaS is well proven.

 
What didn’t work. . . . The senior exec had the concept that they were buying a ‘web page’ (rightly or wrongly), therefore there was no consideration of cultural change management and no allowance for user training. This has affected user adoption rates and in his opinion limited user depth (they aren’t using many functions and they have limited appreciation for the scope of the solutions potential).

The other key take out was the business led approach significantly annoyed the IT department (there's an understatement). So when it came to integrating SF into other systems they’ve made life very difficult.

His view was that traditional 1.0 IT is very linear. And this is significantly at odds with the iterative, fluid 2.0 approach. This conflict came up several times in our discussion.

 
His views on why customers are choosing SaaS.

Speed to market as mentioned above in that this is the primary goal.

He also believes that many customers considering SaaS are doing so because of poor data. Potential customers are seeing SaaS as a panacea to cure their data (and by extension) business intelligence woes.

He also thinks that companies going through the process of buying CRM Spend so much linear time on requirements, RFP and data management/ migrations that when it comes to implementation the business demands an outcome in a timeframe that means SaaS is the only option left. Interesting take.

 
His views on the implementation.

He was amazed that SF didn’t really have a consulting ability or focus. Apparently this is changing but at the time he said that in dealing with SF it became apparent that they were an SME focused business. He literally had to sell them on continuing the consulting engagement past 6 weeks. They also had to provide significant support to the local partner who in his opinion where nothing more than a front for SF themselves.

 

Going forward he is not looking forward to the prospect of continuing his battle with the internal IT function. Their process driven ‘linear’ approach to enhancement and integration are in his opinion one of the key inhibitors to the future success of the solution and it delivering business benefits. Some of this could be helped by senior exec sponsorship But the largest hurdle is adoption by other senior managers (and them being advocates) and the cultural step change needed in the IT department.

 

All pretty interesting insights. Anyone else been here and have anything to add?

 

 

Software has to be usable

There’s been a bit of tit for tat on the blogsphere between Nick Carr and ZDNet blogger Michael Krigsman. Essentially, Krigsman took exception to a rhetorical question by Robert Scoble

Any of you have any ideas on how to make business software sexy?”.

Saying that Enterprise software is functional and therefore has no requirement to be sexy. Nick Carr says that is nonsense,

“all that Krigsman is doing is giving enterprise vendors cover for continuing to produce software that's difficult and unpleasant to use”

 I’m with Nick Carr on this one. I acknowledge Krigsman’s point about the amount of the worlds economy that runs through their systems, BUT I would say that this could be a whole lot more if they’d bothered to make the software even mildly usable. (we have SAP here)

Here’s a statistic I used to love banding around, only 19% of mySAP  CRM buyers actually user it. You’ve got to ask yourself why adoption is so low.

My guess is that figure is only as high as it is because customers figure they have sunk so much money they may as well use it.

At a recent MS Titan event (their version of CRM), they acknowledged user adoption as the greatest inhibitor of take up.

Given this, surely spending some time on the form, function and usability of the application would spike adoption of even SAP’s sales?  Its not like they don’t have their challenges now given the Oracle buy up, MS focus on enterprise apps and oh..of course SaaS.

Now SaaS application vendors understand this stuff. Mashup’s, customisable fields, business driven adoption (ie people use SaaS because it works, not because they bought it). If on prem vendors don’t get this, and more usable, nimble and functionally rich SaaS applications come along that make use adoption easier, they are going to be in trouble.

I would also like to add that increasingly users are driving businesses to provide equal services to those that they use as a consumer. IDC here in NZ state that web 2.0 workers have a low tolerance for business software lagging they’re consumer life. Global Neighborhoods agrees. If you look at IM, iPhones, Mozilla, Mac notebooks even VoIP. These have all been introduced by users, not IT because that is what they expect.  So, if they like me, stumble across SAP R3, and they too find it hideous… they are highly likely to run to the nearest SaaS / ISV who does provide a intuitive interface that suites them and use that.

That didn’t take long – Facebook call me button

A couple of days ago i posted about the potential for Facebook to do the classic Telco triple play of Voice, Media and Gaming.

It wouldn't be very difficult to add IM, VoIP and video facilities. They already have gaming ….why wouldn't they deliver the third part of the triple play, media.

 Lo' and behold i see this post on ZDNet by Russell Shaw describing how Truphone has launched a 'call me now' app for Facebook.

I'd continue to watch this space closely. 

Will SaaS go the way of of ASP’s

I subscribe to the searchCIO email notifications. It was with some interest that I read the an email from the editor with the same title as this post.

The basic synopsis was  ASP used to be the latest industry hype. That industry went south, leaving customers in the cold. Some people draw parallels between ASP and SaaS.

 At a Babson College Executive Education session on SaaS last week, attendees voiced their concerns regarding the potential life span of the SaaS vendor market and whether they should wait for an industry shakeout — similar to that in the ASP market a few years back — before moving toward adoption

Apparently at this event Jeff Kaplan of ThinkIT Strategies spoke and addressed this by saying, as with any company you deal with. You should do your due diligence on them. Good advice, damn good advice.

My personal view is that SaaS will survive the hype cycle. I think this for several reasons.

  1. The ASP value proposition was much more limited than SaaS. People are buying SaaS for the value it adds, ASP was always an outsourcing deal designed to cut costs
  2. The decisions on buying SaaS are in the business mostly, meaning people buy SaaS because they use it, most other software purchases are different, people use software because they've bought it.
  3. The flexibility of the subscription model allows a much more fluid adoption approach. You can add or  subtract subscribers as you  want.
  4. Finally, ASP's were undifferentiated, SaaS providers actually have different propositions, fulfilling different needs even within the same segment

There are always risks in any IT deal. Mr Kaplan's advice is about as good as i've heard it put. You are accountable, even beholding to your shareholders, to make good decisions based on a decent review of any proposed vendor.

 

Some industries need a kick in the pants

This is a bit of rant… BUT forgodsake Banking! Wise up.

My EFTPOS card, the one I use every  week, expired on the weekend. I know this because I had the uncomfortable experience of it being declined at the supermarket. My bank had neglected to send me out a replacement card, something so basic in the customer service world that its astounding!

Then I call up the card helpdesk (you can't do this online!), to order a replacement. Here's the advice they gave me. "Go into a branch".  This it turns is is pretty reasonable advice, because if I did order the card over the telephone, i'd not only be charged $15 for the pleasure of providing this bank more electronic fees revenue, it would take 2 weeks to arrive. God forbid…. 

So now this mob of incompetents have inconvenienced me yet again by making me go to their highly expensive real-estate to obtain something they should have just provided in the first place. Thats crap…

In a 2.0 world, what would be different here? Well, my new card would have just arrived. It would come with a recommended banking plan based on a good analysis of my card usage.  It would have the ability to purchase services online (like a credit card). It would tell me that if i only made 2 more transactions a week, i could get a discount. It would be so slick that I would want to move my other business and personal accounts to this bank….i could do ALL this over the internet, i would never have to go to a branch, deal with a person and accordingly my fees should go down. This is obvious because in dealing with me, they save loads on personal and building costs….

 

 

Is Facebook doing a triple play

It makes sense to me that Facebook would go down the classical Telco triple play route. They are after all a massively consumer focused organisation.

If you examine their features, they have email of a sort.It wouldn't be very difficult to add IM, VoIP and video facilities. They already have gaming, even the nirvana of gaming, Gambling apps on the platform. So it was with interest that is saw this post on mashable about federated media. Now I know this is an advertising deal, but it triggered the thought, why wouldn't they deliver the third part of the triple play, media.

They have some advantages over traditional telco's in this respect. They have a pretty well defined demographic, they have addicted users, they have global reach and they have no barriers to entry. This is all upside for them.

Interesting. It could be one avenue that the finally make some money from. 

Telcos at the heart of business social networks?

 

In an interesting piece by Mural Ventures, Matt Howard claims that Telco’s will be creating value, or new revenue streams off the back of business advertising to social networks. Matt’s view is that Telco’s are were pretty well placed because they held a strong position in directory businesses.  Matt says that Telco’s can learn from the success of Facebooks valuation to prove this model.

 
To my mind there are a few other things going on here. I personally still struggle with the value of Facebook. Sure I know MS bought a stake, but my personal view as that this was to give them the bargaining power to bridge the MS social network (xbox) with Facebook. Because of this, MS saw more value and hence overpaid (either deliberately or inadvertently).

 
To me, Telco’s should absolutely be moving their directory business to a 2.0 model. I think Matt and I would agree whole heartedly on that. I think we would agree that those, like Telecom NZ that have sold their directories are short sighted.

 
I think the advertising model, is misleading. This report shows that Facebooks advertising isn’t actually that successful. So what is their value. To me the real value that News Corp and MS and even the market are seeing in the social network empires is the directory.  The millions of end users that they have some tie too.

 
I think that advertising is just one potential monetisation strategy. I also think that Telco’s who are embracing SaaS, coupled with a directory system (which Tradespace is a good example of) have an unprecedented opportunity to drive real value. Imagine if they aggregated those SaaS services provided by their advertisers to their user community. Imagine if they created new forms of commerce in a very web 2.0 mashupable way,  linking needs together rather than classical advertising.

I’m not convinced the future for Telco’s in the business market is advertising.