technology must complement human behaviour

I like reading Bob Warfield’s smoothspan blog, some of his postings really get my neuron’s firing, today’s more than most. Paraphrasing, Bob was talks about how good search (and recommendation) technology was overcoming the strength of brands. In itself quite insightful, but to me the more interesting theme was human behavioural elements outlined in the post.

It got me thinking. With all the advances and uses of technology we see today, are the only successful ones those that complement existing human traits. In Bob’s post the he mentions two.

First, the traditional behaviour of his kids was to go to brand restaurants. They did this because they knew what they were getting (what the brand stands for), and they got a some brand transference (what they thought they got from being seen in those places).

In the second example, Bob talks about Yelp and its rating engine. I would hazard a guess (and only Bob can answer this) but search, even with the geo-awareness, would have been meaningless without the rating feature. Why? Well the majority (not all) of people don’t like being first…it’s a security thing. In general the unknown unnerves us. Luckily some people are natural first movers, and the rest of us (the thundering herd) need them to show us its safe. I see Yelp as a technology that complements (actually addresses an issue with) human behaviour.  Its kind of surreal in a way. Basically some people you don’t know, have been down this path before and taken the time to do a rating, and that is good enough.

(As an aside, Imagine a system where people you did know and trust did this. How powerful would that be? Interesting.  )

Other examples, mobile phones. Sounds weird, but the change from fixed to mobile telephony was at one point in time, an epiphany. Suddenly folks could call you, no matter where you were…. and we liked that.

Cisco Telepresence is another. Because the experience is so realistic, you get all the nuisance of conversation that is so innately human that it renders travel obsolete. And in this context, getting up early, queuing to check in, herding through security and then being penned in a vehicle for hours on end without moving around….isn’t naturally human.

Instant messenger, was next on my list but that is incorrect. Presence based communication is. Apparently humans like to know that the person they are communicating with is… well there.

SMS is different, I think it fills two requirements. If fills a gap that voicemail doesn’t address.  You open a message and you get the content. Most vmail solutions just tell you you have a vmail, and then you have to do something else  to get the message!  SMS also allows for clandestine type communications, your phone becomes a substitute for other tools of communications… like email and IM.

Unfortunately there are some flaws with this thought. In fact IT is littered with them. The fact that I’m typing right now is a dramatic case in point.  In my life I’ve learned to communicate in three ways… I learned to speak, then write, then type. The absurdity of that is boggling. Speech recognition surely isn’t that difficult? Using writing to text conversion isn't a brilliant system yet either and its the second best alternative! The process of adding a Contact  in outlook is farcical. Why should I have too? You telling me this can’t somehow be automated?

Therein lies the rub. We normalise these absurdities, become desensitised to it everyday.  

So, this post finishes then with a challenge and a hypothesis. Look at the technology you use everyday, if it isn’t human centric, why are you using it ( if you are reading this you are human). I would also suggest to you that making this process or the application of the technology more human centric is an opportunity. We tend to pay for things that we deem valuable.



SaaS is here to stay.

Ok, lately I’ve been grumpy, a curmudgeon by Smoothspan’s definition. Apologies, two kids under 3 can do that to you. So in a new vein, I wanted to point out a few things to the SaaS naysayers.

This 'thing’ isn’t a fly-by-night phenomenon. It is a trend that has been underway for nearly a decade. Take a look at the formation dates of, Netsuite etc. Same as Google near enough! No one’s saying search & online advertising are flights of fancy.

SaaS companies are making serious money these days. is the largest, right now they are a billion dollar company. That puts them inside the top 25 largest software companies in the world (interesting that SFDC doesn't show in that list). I’m guessing, but I would say at 43% they are the fastest growing of those 25 too…. By the way, just for those who think SAP is growing annually by the entire SaaS market. They are only 8 x bigger than & last I heard I struggling in these ‘tight’ financial times. The same times that grew by 43%.. . .

The market as a whole is going gangbusters. Growing at 20% CAGR according Gartner, and is currently a $6bn industry. An industry that big isn’t an ephemeral thing.  Size matters. Market penetration matters. This report shows just how much it matters in he US market.

Some key findings include SMBs spent USD 3.2 billion on SaaS applications in 2007, compared to USD 5.3 billion on packaged software; by the end of 2008, more than 55 percent of businesses based in North America will have deployed at least one SaaS application, with Europe close behind at more than 40 percent; and the SaaS market in Asia will reach USD 1.6 billion by 2010, with a CAGR of 66 percent.

Hype Cycles are often used against SaaS, “oh look, you are just on the peak of inflated expectations”. My answer, no… more like on the  slope of enlightenment. How? Well the much maligned (and deservedly so) first iteration of SaaS was the ASP play. Yip, that was the first crack at this market, and yes it did disappoint. BUT technology and business models have moved on, and are now at the point where the faults of the ASP model aren’t valid anymore. Some purists are likely to take issue with this whole statement, but think about it… it is the evolution of the business model.

Investment in SaaS is an indicator of its maturity. There are oddles of cash being thrown at the SaaS market. Even more compelling is the movement of incumbent software companies into the space (Microsoft, IBM, Siebel, SAP, Symantec, CA – all in that top 25 by the way). When these guys move you can assume that the market is mature and becoming mainstream.

Momentum is changing in the blogsphere too. I use Google Alerts as a tool to catch stuff I don’t normally subscribe too. I’m amazed how many posts I see defining or describing SaaS, trying to pin point why it’s a winning proposition, or what makes SaaS so different. Things that were going around 18 months ago are being re-litigated much to my  frustration. The imperturbable Ben Kepe ’s helped me to see that this was the journey, mainstream or even laggards catching up. Now these alerts say something different. To me they mean momentum, to me they mean mass acceptance, collective awareness of SaaS is happening.

But the most compelling factor in this whole diatribe, the one irrefutable truth is that customers believe in SaaS and are voting with their dollars. The proposition may vary slightly, but the appeal of rapid deployment, low up front costs, and lower ongoing costs and for what you use is just too compelling.

So to the SaaS detractors, check the facts, you cannot argue with those. SaaS and on-prem will co-exist. I don’t believe that you will ever eradicate on prem software. But when you take emotion, job preservation and ‘doctrine’, SaaS is an easy choice for many applications. For that reason, SaaS here to stay….

Has SaaS become what it disrupted?

I read a piece about 2 weeks ago that gave me one of those moments. You know, when a whole lot of pieces fall into place and your mind races. I was entitled 

You Become what you disrupt

 Since that moment i’ve become increasingly aware of this trend in the SaaS world. (Its like when you buy a new car, suddenly all you see is the same car). Its my contention that SaaS has itself fallen foul of some of the very (bad) traits it set out to remove. All for sound economic reasons, but the proof is there.

Lock in – ,,  (plus a whole bunch more ). Here’s a list of the glittering stars of SaaS, internet and PaaS. All going after lock in. Tim O’Rielly comments on the Google App Engine.

Keeping the internet as an open platform is a choice. We didn't understand what was happening to the PC ecosystem, but we've seen this movie before, so we should recognize and fight this plot line when we see it happen on the internet. We need to keep our cloud services vendors honest, and tell them we want an open, interoperable platform, not one based on lock-in.

 Bob on Smoothspan suggests that Amazon should more aggressively move toward lock in to further its financial success. Hmm,  I thought lock-in was so last decade? Isn’t one of the tenants of SaaS the way you can change vendors easily?

 Interoperability. Hey software vendors, get this. We want our applications to work together!  Have a quick think about why Microsoft desktop applications are so wildly successful. They did two things – 1) they made it simple to use. The leap from DOS to GUI was massive in making PC’s mainstream. Secondly they made all the programmes you commonly use work together on the same platform. Its my understanding that way back when they brought the various services like word and excel together one at a time (the argument about how successful this was done is irrelevant for most people). They made it easy to do.

Fast-forward to Monday, SaaS commentator Phil Wainewright went into overdrive about the SFDC / Google Apps integration. Saying a bunch of stuff including.

This is a showcase for on-demand integration. Salesforce for Google Apps is a close integration of two distinct on-demand application stacks, in which both applications can continue to follow their separate upgrade and evolution paths without breaking the integration.

(In the interests of honesty & integrity, so did I about Salesboom .)

But think about that. So basically your saying wow, you can integrate two apps together. Ummm so like integrating your SAP GL with CRM from Seibel. Or how about Payroll with Accounts. Ok, i’m assuming it happened a bit quicker, but the mere fact that Phil is trumpeting this as a major event is…well sad.  This isn’t new, way back it used to be called EDI, then that became unfashionable so it became integration, then webservices and the latest mashup. Sorry, but I would have thought in a 2.0 world this was EXPECTED.

Identity, look at what is going on here. The fact that OpenID exists is to address the same issue users have been fighting since application silo’s were in nappies. The nirvana here is single sign-on. IMHO Google’s suite of products is so useful because i’ve got identity federation across them. This still isn’t addressed. Take the iPayroll / Xero example above. They got database integration, no identity bit. To the best of my knowledge none of the vendors allow for single sign-on (does Does anyone?)

 Proprietary systems – ok here (with one large noticeable exception) SaaS providers seem to be doing quite well. The ability to create customisations (widgets or whatever) seems to be quite universally applied. My question is (and the point of this post), for how long? Using history as an indicator, this free for all can’t last. For a couple of reasons. 1) Vendor share, someone will dominant and change this. You’ll be able to write customisations, but for one company not many. Then you’ll see a bunch of small companies writing auxillary apps for the core… anyone? And 2) Commercial pressures, freeware just don’t cut it. Ad funded apps, well for the time being ok. But the relevance of Adwords is declining, surely that makes that model questionable?  Sooner or latter the market is going to come under pressure. That means a couple of things, consolidation and pressures to retain (lock in) customers…

So has SaaS failed in becoming like the old established players? Who has it failed? Was it all inevitable? Am i way off base?


Scale benefits in action

I’ve been thinking a bit more about SaaS. & scale. One of the assertions I made in my previous post was that companies that achieve scale get more profit.  I wrote a piece previously on SaaS provider profitability in it I put this diagram from Mckinseys


The key element to note here is that both traditional and SaaS businesses are less profitable by a factor of 2 until they reach a certain revenue point, in this instance $1.2b.

If you look at the recent financial announcement from, they are clearly getting into the Economies of Scale (EoS) zone. As a snapshot, PROFIT is going up faster than revenue. This could be from a lot of things, all benefits of scale

  • ·        Brand recognition. People, a lot of people have now heard of SF. That means selling and marketing expenses should come down. By they way, having lots of people know who you are is scale in marketing terms
  • ·        Partner programs. SF are now so topical, they have others selling for them.
  • ·        PaaS, the interesting thing about EoS, its driven by volume. PaaS has given its providers a commercially viable way of increasing their volume very quickly
  • ·        Reduced development. I know SF put out a new release every quarter, but after 9 years or so you would have to assume that they a) have cracked the architecture and b) broken the back of their development..i mean how much more CRM functionality can you add?


To me this diagram graphically reinforces the benefits of a scale and particularly the PaaS and potentially gives a huge advantage.

What isn’t clear is if PaaS drive scale and profitability benefits to its other subscribers. For instance, Bob at Smothspan really takes SF to task on its PaaS pricing

I don’t think, of all players, “gets” some aspects of the Business Model.  If they did, they would radically alter the pricing on the Platform-as-a-Service offering, because the current pricing, even the radically revised pricing, is completely off target for a SaaS vendor.  The service is priced at $50 a month in its normal configuration.  Let me explain why that’s crazy. ….. Salesforce themselves get by for a lot less. ….Most SaaS players charge $50 or less each month for their service, so this math will almost never work. 

What struck me at the time was the assertion that SF could do this at a lot less than $50. My reasoning went like this, the SF marketing folks would know their costs, be charged with making some profit and hence do a mark up on the price. I did wonder if  this meant that SF themselves hadn’t actually achieved the scale benefits? Perhaps they are playing a strategic game here. Giving others an ecosystem that allows them to subsist but marginalises their profits.

I searched for the pricing of other platform providers to see if this SF price was way outta wack but didn’t find anything. Anyone in the PaaS game that reads this is welcome to comment.

As a final comment, two things strike me. 1) the PaaS provider market is about to heat up – just look at the number of SaaS companies coming online… they all need a platform and these guys could do very well out of this and 2) SF shares should be in high demand . Why? they look like they are at a profit inflection point,  they don’t really have a SaaS or PaaS competitor of note within any sort of striking distance and finally i referr you back to the diagram. Large software companies (showing clear signs of EoS ) simply make more EBITDA.

(The unreasonablemen are not share brokers, you should consult a professional before purchasing any shares)

Thoughts on SaaS aquisitions

Over on Smoothspan, Bob asks the question “when do the SaaS acquisition games begin?”. This got me thinking, about the why, who’s, how and impact of acquisition on SaaS.

Firstly, I agree with Bob, the market is young & fragmented. The impact of this on acquisition is quite profound. People will acquire for position rather than to consolidate because the market is still growing. In a new growing market there are only two strategy plays that really matter. A race strategy (get the most customers as first as possible). is doing this with its PaaS play. If you win the race you can turn the strategy into a position strategy (we dominate, have the most customers, are the most attractive to partners, new entrants, or have deep pockets for acquisition etc, have the most differentiation because of this is hence retain the position). Microsoft runs a position strategy for desktop apps.

Back to acquisition.  If you are already in the SaaS game, you are probably in a race strategy. Therefore if you have achieved a lead (to some degree) you may be looking to acquire to get further in the lead. Effectively buying customers or technology that will give you more customers (has a wow factor or fills out your stack & removes an objection). buying Kieden is an example.

If you are a SaaS player & haven’t got a lead, then you should be looking to be bought or you need to think about specialisation. You are loosing the mass market horizontal race so stop trying.

If you aren’t in the SaaS game, otherwise known as ‘being disrupted’, then you are looking to acquire a horse already in the race. The rumoured Oracle tie up is a good example of this.

If you subscribe to my two strategic views above, none of the acquisition moves are surprising. 

To me the most interesting part of the acquisition trend is what the acquirers do with the acquiree when they’ve got them. That is how well do they use the new asset to deliver on the strategy.  Both have they’re challenges.

If you are a SaaS provider on your own infrastructure (platform) then you are going to be forced with the challenge of integration. This is different from ’making them work together’ which should be fairly easy given that AJAX & webservices are cornerstones of SaaS & there are many instances of this around. But integrating two applications & databases onto the same platform is a big challenge to me. Identity management, billing, reporting, management ,  the DNA of the code itself make this a challenging task.

If you are a SaaS provider on a platform like Apprenda or then the integration task is easier, markedly easier. All (ok most) of those technical details go away because you are already integrated in the backend.These two plays also have the benefit of culturally being aligned behind SaaS, having a channel & billing model that is optimised for SaaS perhaps most importantly management. & remuneration models that support SaaS.

Legacy providers have a different set of challenges once they have acquired. Do they integrate it into the they’re legacy product like the S+S by Microsoft play? how do they run the business, how do they sell it , how do they manage the cannibalisation or disruption of the legacy business if they’ve bought an app in they’re existing space (Siebel & for instance). Perhaps even more importantly, how do they maintain focus on SaaS while running a legacy business.

Those who read my blog will know that I’m very hot on this. In my opinion if you don’t run the startup separate from the legacy, then the mothership will negativity impact the new entity.

Here is the analogy. Farming. Farmers know that the game is cyclical, that the tree’s that provide the most produce now are only good for a limited time and that they need continuously have new crops or replacement tree’s coming on board.  Those tied to cash crops for survival understand that they are in big trouble. Over farming means that eventually the tree will wither. If you continue with this behaviour, you will turn your land into a dessert (the Sahara is an example). Continuing on with this analogy. Those farmers that do have replacement tree’s usually grow them in a separate paddock. They do this so that the new plants have the best chance to thrive. The seedlings get the appropriate attention and aren’t shaded by the large trees.

Not rocket science and yet business continuously fail to adhere to this most basic wisdom. They often throw their innovation centre in with the rest of the business and expect it to survive (read the innovators dilemma for examples). When the harvest comes due (i.e. reporting season), these companies  run to the big revenue levers and neglect the startup, so it fails to hit its numbers and disappoints. Why? The people who know how to look after big tree’s often don’t know how to look after seedlings, or even worse see the seedling as a threat and actively work to stunt its growth.

All of this points to the obvious decision not to integrate the new SaaS acquisition into the legacy business. If the legacy business is serious about winning the race in the SaaS game, leave it alone. Let the SaaS business come to you with they’re requirements & give your legacy business targets & remuneration models that support this race.

Netsuite IPO: I don’t get it.

Ok, i’m the first to acknowledge that when it comes to the share market, I’m not an expert. But even I can see that something doesn’t add up on the NetSuite IPO.

Problem number 1. The company hasn’t turned a profit in 9 years of operation. If it isn’t making a profit, how then will it fund its product development, support and sales and marketing costs let alone repay the debt it now has to it’s shareholders?

Problem number 2. The segment it’s targeted at is highly competitive and given that the offering is essentially the same (except for the delivery method) Netsuite doesn’t have a bunch of differentiation. Ben Kepes discussed this some time ago.

Problem number 3. economics. Recent commentary would indicate that the US is heading into a recession. Bob at Smoothspan writes a great piece on the effects of a recession. And while the annuity revenue of SaaS affords NetSuite with some protection, Bob’s number 1 rule of flight to quality doesn’t. That would go to MS, SAP, Oracle and possibly Intuit.

Problem number 4. SaaS revenue takes time to grow. My experience with SaaS is that you cannot spike your revenue. Even signing up large customers you are still subject to the rule of 78. So for an unprofitable enterprise who obviously hasn’t got the scale advantages to yet cover its costs (and is still subject to marginal cost per user increases unlike companies that sell CD’s) it would seem to be a long haul to profit and hence dividends. The numbers just don’t stack to me.

Problem number 5. Hype. If you are in during the early days of hype good on you. Unfortunately its quite damaging for others who are in it later or for the long term. The Successfactors IPO combined with this one have set a trend. I’m old enough to remember the heady days of 1998-2001, I remember 2002 very well too. I wonder how many investors have long memories too.

I’m not bagging Netsuite, i’ve never seen their product or had any dealing with them at all. What i am questioning here is the apparent valuation the market has given them and wondering about the soundness of that valuation.  I guess only time will tell….



Disruption is a funny thing

Its not just the core construct that gets disrupted. If we take SaaS as our example. I’ve blogged before about who else besides SaaS ISV’s will disrupt on-premises ISV’s. But in an interesting way the auxiliary services are also disrupted. I’ll deliberately use this example from IDC because of its relevance and irony. IDC state that integrators are going to be affected by SaaS, that is disrupted.

Here's where the irony kicks in. Ben Kepes blogged about the absurdity of this piece of news by IDC. And what has struck me is that the research houses themselves arc being disrupted.

I remember dealing with IDC here about 2 yrs ago. At that time IDC didn’t even have a taxonomy that included SaaS. They were calling it hosted application management or HAM. If you’ve ever worked with a research house you will know that if something doesn’t fit the taxonomy it creates a major panic. I think that world is gone, I think we are entering an era whereby online citizen journalism is going to usurp research or even the news. The analysis and insights provided by the likes of Bob at Smoothspan , Will Price and all the others out there are providing more timely, more accurate information than these research houses. I personally rely more on the blogging community than the annual, out of date documents put out by these places now. The only thing lacking (and I mean no disrespect) is the credibility that these houses have, it is very hard to know if numbers put up by Bob or Will are accurate. Unless these companies embrace web 2.0 and revise their methodologies they are in for a rough ride in the future. The speed of change is too dramatic, the pulse of the market is out here on the net not in spreadsheet.


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More on Customisation

Like I said in my last post, customisation is a fascinating subject when it comes to software. A couple of regular readers have both held forth on the subject (I hope more will follow otherwise this blog suffers from the same issues as Techmeme!! I know, ironic link). Ben Kepes appreciates the concept, recognises the value for non-competitive applications being consistent but holds to the view of customer centricity being infinity valuable. Ben does make the statement that.

doesn’t it start us down a slippery slope to mass-homogenization where there really is nothing different between one enterprise and another”

 Bob at Smoothspan thinks that this isn’t a mutually exclusive scenario. Some things can be commoditised and some things can't. Bob also states that taking things vanilla breaks the rule of IT adding value by not introducing change.

Here’s my two cents on it. According to
Michael Porter, there are basically 3 ways companies compete:

  1. They can build a differentiated “best” product in the market.
  2. They can serve a niche better than the “best” product leader.
  3. They can be the low cost provider.

If what I say is true, that a business can take code vanilla (BTW I actually agree with Bob this isn’t a universal truth) they will accrue savings. They will save on code, customisation and implementation. They can choose the low cost provider (by now you’ll see where this is going) they can in fact BE a low cost provider or use the EBITDA savings to invest in other things. These other things could be differentiation of their own product or building a niche channel.

Ben’s version of mash-ups plays to either a (1) differentiated best product but that would be quite expensive to do on a mass scale so it’s more likely to be (2) a niche play. Where’s Bob's example is more likely to be (1) mass differentiation. Simple customisation on a mass scale (sounds a lot like

So where does this leave us on the debate? I think for consumers and producers of SaaS alike the answer is know your business and your business model, in particular know thy customer. When you do, you can pick any of the above plays to suite your scenario



Customise the code or change your business?


There have been quite a few blogs ( Smoothspan, SaaSWeek and SaaSblogs comments ) over the weekend about just this topic and to me its fascinating topic. It seems to me that it shapes SaaS’s future. Let me explain.

Its my belief  (not experience) that one of the major drawbacks of on-premise software, especially in the ERP  / CRM market, is that the time to install massive. When I was dealing with SAP in the UK it was close to 2 years for many customers. And the reason for that is that ERP deals were more an exercise in business process modelling than software. That is, the customers would take the software and then force it to be tailored to their specific business after undertaking a large and expensive consulting exercise. This of course is closely followed by an ever costlier customisation and implementation exercise. The end result is that the customer usually got something fairly closely resembling what they wanted (sic) and effectively had THEIR version of the code, which of course THEY had to support and upgrade and basically…they could never leave because of the massive investments (both in money and customisation).

So we move to SaaS, in this instance the customisation can happen but all of the customisation tends to happen on the front end and the complexity is dealt with by the provider. They have to build a system that allows for customistation per customer while still operating on a single instance of the code. But by doing customisation, businesses do delay the time to benefit in a SaaS world. For example, we’re 9 months into a rollout here!

So my question is, why don’t business’s just take the code vanilla? If you did a TCO on an on-prem software installation and compared the cost of customisation and lifetime cost of ownership with the cost of changing the way you do business to suite the code what would you find? If you took the SaaS vanilla wouldn’t that speed up your time to benefit? Wouldn’t it make the SaaS providers job easier and therefore the code service should be cheaper???

I know every business believes their unique, its a universal mantra, At a recent spat of focus groups I must have heard this 20 times …“my business is different”, “that might work for them but we do things different”. I think its wrong. And believe me, at the end of one very insightful group, the businesses there got that too….

So my question is….If you took you’re on-prem code vanilla, wouldn’t that attack one of the core value propositions of SaaS – speed to market and easy upgrades? I could finance all the bits and give you a monthly rental. I’m being provocative but am genuinely interested in the answer… please if you’re a lurker give me you’re comments.

In a SaaS world, Its ALL about the platform

SaaSweek just posted with provocative title, is PaaS a passing Fad?  The answer is hell no.


If you buy into the rudimentary definition of SaaS that Ben Kepes, Smoothspan and I got to recently, then the whole SaaS ecosystem will be dependant on platforms. And logically, it doesn’t make economic sense for every SaaS vendor to create their own.  (I know this gets into shaky ground because I still don’t believe there is a good understanding or even consensus of what a platform is.)

If every SaaS vendor were to build their own platform, then literally there is a cost transference from the on premise business to the SaaS providers and the only people who will win out are the hardware and storage vendors. That just doesn’t make economic sense. There is already a bunch of data (here and here) showing that its harder to get to profit for a SaaS business. Why would you want to lump the expensive costs of setting up your own datacentre, operational framework, billing, backup, site diversity etc when you can just buy that?

Would a SaaS company build another “internet” to connect to its customers? Again, no. SaaS companies use the internet as its network because of sound economic reasons (name another globally ubiquitous network, with understood standards – loose as they are – that’s cheap?).  The infrastructure, diversity cost are provided by other platform providers (ISP’s) and they can do this through economies of scale.Platform providers, those doings PaaS, offer the potential for the same basic economic advantages.

SaaSweek raises a couple of valid points about why PaaS isn’t globally accepted.I’d counter those with the following comments.

  • Apart from, none are approaching scale so the benefits aren’t really there. But they will be.
  • Expertise, its really hard to build a good SaaS application, let alone build a good datacentre, operational framework, back up and restore environment, internet connectivity.
  • Speed to market. Given that SaaS is sold on a subscription basis, it is subject to the rule of 78. the sooner you hit the market the soon you’re revenue starts compounding. Also the faster you develop the less costs and that’s a good thing too.
  • PaaS brings its own community and the associated advertising, social networking and open source development mantra. This helps you with speed of development, resources and of course customers.
  • Funding, what is to stop a PaaS provider supporting a great idea on its platform in a VC capacity?
  • PaaS is still in its infancy, the models, rules and mores of how to be a PaaS provider aren’t 100% formalised. Smoothspan talks about being Switzerland and questions whether can pulls this off. I’d agree that you do need the neutrality. I’d also say watch this space. It’s my prediction that will become wholly focused on PaaS, and be more than willing to let the CRM business fight its own fights. Why? Well CRM only solves part of a business’ needs. is solving the rest.  And this is what platforms are all about, more services from same infrastructure.

I’ve said before Telco’s do SaaS, they also do platforms really really well. Don’t believe me, well check out this. They’ve taken one core asset, or platform (copper) and sold at least 3 core services down it. Voice, access / rental and now data. They are doing the same with mobile networks. Voice, SMS, data, and content.  They’ve also sorted out sales, provisioning, billing and support (to a greater or lesser degree I).

These traits are the mark of a great platform provider. Telecommunications is a $1.2 trillion dollar business built on platforms. If you want to know what the future looks like, do your history.