PaaS moves on with Cloud Foundry

Yesterday, VMware announced the launch of Cloud Foundry. This is a big step in the evolution of Platform as a Service.

What is profound, is that this allows you to build applications in a private (your data centre), public (Amazon’s or Rackspace’s cloud) or hybrid environment (a combination of both). It scales from your laptop, to the hundreds of servers in the data centre.

Finally Cloud foundry is Open source. This is important to you guys out there because this should in theory allow you federate (or connect) clouds together. The theory being that as you have a known code base and API set, you can readily do this task.

In the cloud space, this is big news. PaaS is going to be the most critical enabler of Cloud applications going forward, but todate the execution on this vision by potential leaders like Microsoft (Azure) and Salesforce.com (force.com) has not quite been there…

For some more coverage of this move check out

Krishnan at Cloudave.com http://www.cloudave.com/11714/vmware-disrupts-paas-space-with-cloud-foundry/

The results of the CRM poll are up

A few weeks ago, Lauren at Software advice ran a survey on the on-demand CRM market. Well she’s just posted up the results which clearly show that  Salesforce.com is the percieved  the market leader.

If top of mind position is any indicator of future success (and marketers will vehermently assert that it is) then Salesforce.com clearly have the wood on their opponents.

The analysis about whether or not Oracle will acquire Salesforce.com is quite interesting.  The consensus opinion being that this won’t happen.

All in all I think this is great stuff for the Cloud industry. I know its only a small sample and probably screwed by online centric folks, but it does point to the coming of age for SaaS CRM. Something @benioff has probably known for  a while… Salesforce.com is not only a comparable enterprise ready product…. in many instances its a far superior offer.

An interesting side question: Is this superiority specific to Salesforce.com or generic to the SaaS model?

Would the CRM leader please stand up: Oracle vs Salesforce.com

Lauren Carlson over on Software advice is running survey on the on-demand CRM industry. Asking a few questions about the state of the CRM industry and has some decent research to boot (further up the page). She's put a shout out to the industry to get a wide catchment. It takes about two seconds so if you can, fill it in

 Lauren will run the survey for a couple of weeks and then do a follow up post later with the results .

 At a personal level I think this topic is very interesting in that you have Larry Ellison, one of the great detractors of SaaS, being seriously touted as a buyer of the SaaS leader. This is a major endorsement of the industry as a whole.Personally I can't see it happening, but its interstesting none the less.

 

Is attitude more important than technology?

I’ve been thinking for quite some time about what you have to do to be successful in cloud computing and SaaS. The more I think about it, the more I think that the attitude of the company is this defining characteristic.

The technology, while no small feat to get right, just seems inconsequential when compared to the attitude of a company.

The attitude defines how the company behaves, it gives it focus and unity. It gives clarity about what that company will and won’t do, and how it does it.

I personally think that the {mosimage} logo Salesforce.com used defined SaaS, especially as they strived to make the market. By taking on the entrenched software model they gave their staff a clarity of vision the majority of vendors lack, their sales channels knew who and what they were selling against, their clients knew what they were offering.

{mosimage} ProWorkFlow,   while also being SaaS, are different. The small amount of dealings I’ve had with them struck me by their clarity of purpose. They are proud of their lean model, they were crystalline about their direction and what they would and would not do technically. 

When you compare this to the clumsy attempts of Microsoft, Google or SAP you have to wonder what is holding them back. It’s not for want of clever people, or money, or mindshare. 

I believe its their attitude, they're either trying to do this ‘cloud stuff’ on the side, or their hearts aren’t really in it.  

Thoughts?

How you define your business has large impacts

Let me frame this with an real life example.

My partner and I own two small businesses, configure express woman’s gyms. Like all small traders, we often have to put a lot of trust in our staff. Occasionally this doesn’t work out, the classic case being when someone doesn’t turn up to open up for business (gyms start early!)

Now, if they are the only person on shift (which happens), we currently have no way of knowing that the business isn’t open which is absurd because we pay a company to monitor it for break in’s etc. But, THEY WON’T OFFER US A SERVICE TO TELL US WHEN THE PLACE INSN’T OPEN despite us asking.

Why not? Well they answer thus, “we’re a security company, that isn’t what we do”.  Which is true, but they have a system on premise already that can tell when people are in the building, their system will alert them when the alarm hasn’t been set at the right time of night, their system will even tell them to call the premise if the alarm is unarmed at an odd hour.

If they simply redefined their service offering as “we’re a monitoring and alerting company” then bingo, whole new market proposition, market differentiation and even more important, more money for virtually no extra work.

To me there is a strong lesson here for all businesses, even our gyms. Think about how your collective definition of what you do shows up. Is this still relevant? Can, with a small tweak you create even more value.

Some examples for you,

We’re in the weightloss industry  OR  we’re in the beauty industry or the health industry

We’re a CRM company  OR we’re in the PaaS industry, or we are a hub for SaaS applications (salesforce.com)

We’re a search company OR we’re in the  business of ordering the worlds information (Google)

 

Which is more powerful, relevant and commercially sound?

So what industry are you in?

Social media adding value to corporations

I know, there’s been a lot of detractors of social media. Questions like “how will this stuff help us?” being top of mind. Well today Salesforce.com announced its service cloud initiative.

I may not be doing it justice to describe it, but to me it looks like a great Mashup between Facebook.com (just facebook.com at the moment) and SFDC. Effectively your CRM instance is ‘listening’ in on Facebook.com for questions or comments about your products.

When the API ‘hears” a conversation, it populates the helpdesk module and the customers knowledge base. This effectively turns the user community and their VAST knowledge into a support desk for the company. Perhaps more importantly, because the user community is more responsive, has the same culture and language it is probably a better support function.

Think about how you the user get support for items, especially opensource. If you are like me you tend to Google it, or search forums and product wiki’s. Imagine if all that data and knowledge was replicated into the vendors website or straight into the contact centre applications. Extremely powerful.

There are myriads of uses for this, think about reoccurring issues, think about prototypes and how they can evolve, the language of FAQ’s, acquisition targets (frequently suggested widgets that go with) etc etc

Very cool, and potentially paradigm changing. 

How to make Money from SaaS #3

 This is the final installment on my series, "how to make money from SaaS". (Links to Part 1 and part 2 , this series also carried on Cloudave.com)

 

Step 7 Think about your channel model

How are you actually going to sell your service to end customers is something you need to think long and hard about. A lot of it will depend on what service you have and who you are actually targetting.

There are several models going at the moment, all with merit, all with one thing in common. You are going to spend loads on sales and marketing (if you didn't click through to, check out this graph from McKinsey's on my original post)

There are ways around this, all classic marketing… well actually not classic but well known marketing principles. Things like;

  • Know your customer inside out
  • Know who you won't sell too (just as important, avoid elephant hunting if it's not right for you)
  • Using the Internet, get some viral marketing going.
  • Think about how your service can help another company out. Think about leveraging their marketing spend to your benefit, here is a good example

In terms of actual sales channel, the way I see it they aren't any different from traditional channels.

  1. Be an Internet company – have a really really slick website that gives customers everything they need. Do all the right things in terms of online advertising, customer referrals, social media etc. I would also strongly emphasise giving free trials as a proof point in the sale
  2. Be a face to face sales company – get leads (somehow) but send in the sales guys to close the sale.
  3. Have a channel – think Microsoft, build a brand and let others sell the product for you (and perhaps wrap services around it too)
  4. Some hybrid of each of these based on who the prospect or segment is (salesforce.com)

The key element here is getting the mix right for your product and understanding your costs and how new sales translate into profit. A good post from Phil Wainewright details one providers experience.

I would also say that you have got to understand sales remuneration models and the impact on the business you drive and the costs you are incurring.

Step 8 Know thy customer

You have to stay close to your customers in any business, but SaaS (supposedly) is much easier to swap out. To me that means involving customers in your product development and enhancements is vital. If you can make a tweak based on sound feedback and have it out in a day or a week, imagine how powerful that is. But to do that, you have to be listening and you have to have the ability to include such feedback into your build.

Step 9 Be open to all clouds

At a fundamental level it seems to me that one of the major irritations of on premesis software is its proprietary lock in. Why replicate that?

But it's much more than that. These 'clouds' have thousands or millions of potential clients, why exclude yourself? Actually take this openness one step further and aggregate, try to be a traffic hub. I believe that aggregation is power. The reason for this is that others who are later will use this aggregation power for their benefit, that means you entrench yourself in their value chain…and that means money.

Step 10 It's a never ending journey

This service you have is never complete, technology doesn't stop changing and neither do your customers requirements.

The technical stuff will come when it does, the marketing stuff is up to you. Things like

  • Think about other ways you can sell your service. Niche's that can be addressed if you change your proposition and tweak your offering.
  • Think about roles within your existing customers. Who else can you sell the too within clients who have made the leap
  • Think about your customers channels, can you federate up or down the channel. What does that mean to your

So, that's the end of this series. Hope you enjoyed it. Merry Christmas

How to make money from SaaS #2

This is the second part in a series on how to make money from SaaS. If you missed it, here is Part 1 (It also appeared on Cloudave here)

Step 4 – Create a plan

This is the critical step in the metamorphosis from idea to actual start up. Why? Because it's the bit that describes the "how", and that information is really really important to investors.

No matter what your product does, you are going to need money to make it real. If you can articulate the process by which you are going to build and operate the product. How you are going to sell and market the product, how the business is going to run, and hence how you are going to turn a profit, you are in a good position to get funding. IPO, private Equity or Angel…. understand which is best for you and go with it.

The plan will also help you focus your staff, there should be one clear message that you can tease out of the planning process. 'Get Big Fast' (Amazon) or 'A PC in every home' (Microsoft) are good examples.

Step 5 – SaaS companies should buy SaaS

For goodness sake use your own software, and take SaaS every other way you can, bar one application (and I'll get to that). You have to live and breathe this, experience the highs and lows from a customer point of view. That way you keep your upfront costs down, know first hand what a pain in the butt an outage is, and understand interoperation and single sign on from a customer point of view. I repeat Live and breathe it.

But, keep one on premises application. For a similar reason, so that you'll understand the highs and the lows and have a balanced view. Your sales people can use this… "we deliberately kept our XYZ application on premise so we'd remember…"

Step 6 – Think long and hard about how you will build your service

Sinclair Schuller of SaaS Blogs (and CEO of PaaS provider Apprenda) wrote an excellent dissertation on the many acronyms of cloud computing platforms. The key here is speed, economics and reliability.

I refer you to point 5 above. Be a SaaS company. In my opinion, there is no way you should build every element of your service, that would be fiscally irresponsible given the plethora of platform offerings available today.

This opinion is especially true of the underlying infrastructure that delivers your service. Think about what goes into building a geographically diverse, robust operating environment. You also need to think about how and where you are connected to the internet because it can significantly affect the end user experience. All of this costs and absorbs time. Why even do it? A good PaaS provider has also thought through such things as billing, API interoperation (Salesforce.com and Amazon) etc. All very important, and sometimes easily forgotten.

If you are going to build stuff you have a lot of different choices depending on what you have as a service

  • Build it all in house – do this in a proprietary system or opensource
  • Go PaaS and only build the 'special sauce' part.
  • Go IaaS, build the OSS/BSS layers plus the special sauce

Any approach you take is going to have its pros and cons. To me the most critical part is to understand your costs and cash burn rate. Then look really hard at the numbers and seriously, in your heart of hearts, ask…. can we make money doing it this way. If the answer comes back positive go for it, if the answer is negative or marginal, consider the alternatives above.

 

Salesforce.com proves that actions are better than words

I’ve just had the opportunity to catch up on the events of Dreamforce, I must say i am surprised about the lack of attention that their announcements are getting in the blogging community. I dent get it because all of their initiatives are at the forefront of cloud computing. They also have significant ramifications for their competitors. (incidentally who ARE their competitors is a interesting questions.

Lets quickly recap what was announced. Firstly a mashup with Facebook. Secondly integration with Amazon so that SF.DC becomes the orchestration layer to E2C. And the Google Apps integration.

What’s really important to understand her is the evolution of SFDC business model. The facebook ( & LinkedIN) tie up allows them to move from a B2B business to a B2C. They are effectively providing their infrastructure policy & orchestration layers to their customers. This does several things. It makes them very sticky. It drives enormous scale. It gives them access to the mother of all Identity stores. Most compelling is that the viral nature of the social web enables them to make you, the FB user their headhunter, lead finder or product evangelist. It makes them a huge transaction hub , and once you’re there you effectively cant be displaced. The reason for that is you become the centre of gravity (or you get to dictate terms!) check this out for much more detail.

The second powerful theme is the evolution of PaaS. This is a much more mature play in that it effectively leverages the AAA, policy , rules and control layers that SFDC invested in for their own platform, to provision services in other cloud platforms. This is clever for a number of reasons. Firstly the customer is owned by SFDC in so far as they are the primary provider. Secondly it effectively relegates and controls where the other cloud play. Thirdly they *could* become the default start position for cloud services as ubiquitous as ‘Google’ is when you think of search.

This is a massively powerful position that SFDC are aiming for. If they are fast (and this is a race strategy) and don’t scare partners too much with the degree of control then this is a ambitious and winning play unfolding…

SaaS in nappies

 

Think people, think…

 

Ben Kepes posted on cloudave.com about how both Salesboom and Netsuite are both aggressively targeting Salesforce.com’s customer base. This is bad strategy people, you need to think this through. Here’s why.

Firstly, think about who your competitor is? SaaS accounts for only 14% of the total CRM market. To me that clearly states that the SaaS competitors are the on-premise crowd. The ones with 86% of the market…. or the other $9bn dollars.

Secondly, think about what you are doing to the collective profit pool. Both propositions are cost based. So not only are you not growing the total SaaS profit pool by growing the market, you are cutting your own throats in  a price war that doesn’t need to happen yet. There is enough growth potential left in SaaS CRM for you to happily maintain your margins! If you keep this up you are forever trashing the profit pool. 

Thirdly, think about the global economic climate. Think about the recent announcements from SAP and how they are hurting, think about how the SaaS market could benefit from this perfect storm (I said it, Gigaom said it, Zoli said it). You have a fantastic opportunity to win SaaS Greenfield customers here, don’t pass it up.

Business strategy is a lot more than figuring out what your customers want, especially in a growth market. Looking at your peer (as opposed to competitor) organisations pricing should be done, but not only with a view to competition. Also to a view as to what signals are they sending here. If they put out a price that is seems high, it can mean they are saying we reckon there is a load of profit here, lets keep it that way. 

To this end I am sometimes of the opinion that SaaS companies are in their infancy in terms of maturity of thinking, let alone market position. This just seems a like a beginners error to me…