Pattern Finder

A SaaS Downside: No Forklift Upgrades

Part of the sales pitch of a Software as a Service (SaaS) solution is that updates and upgrades are included in the pay-as-you-go price. There's no separate support fee to pay (for software, the annual support fee is typically around 20% of the license fee) and you don't need to pay for major upgrades (e.g., from version 3 to version 4). You pay your monthly or annual fee and the solution just runs. This is in contrast to software, where every couple of years there's often a forklift upgrade--there's a new major release, it's usually expensive, and you need to buy new hardware or go through a painful migration process to get on the "new and improved" version. Compared to software, what's not to like?

Actually, the fact that there isn't a forklift upgrade. Think about it. The pain and cost affiliated with a forklift upgrade is usually what causes an enterprise to reevaluate the value of the solution. "They want $2 million to upgrade, and it's going to take us a year to do it? Geez, that's a lot of money. Is it worth it? I mean, are we really going to get our money's worth? Maybe we should look at competing solutions."

To take a real world example, some enterprises move from Lotus Notes to Microsoft SharePoint when confronted with the cost and complexity of moving from Lotus Notes 6 to Lotus Notes 8. The upgrade was going to be painful anyway; those companies seized the opportunity to move to a competing solution.

In other words, the forklift upgrade is what causes an enterprise to step back from the daily grind and decide whether to continue with a solution. It's a discontinuous function that grabs the business's attention. There's no corresponding attention-grabbing blip on the SaaS side--and that's a problem. Many businesses will continue with a suboptimal SaaS solution because they pay a relatively small fee every month and will never ask themselves several years down the line, "Is it still worth it?"

So here's the lesson. Enterprises that are using SaaS need to create their own artificial forklift upgrade moments. Every once and awhile, they need to ask, "Over the next three years, we will spend n millions on this SaaS solution. Is it still worth it?" Otherwise, they may end up going with the flow when they shouldn't. 

Some Stats from Tom Jenkin's Presentation

Image via CrunchBase

Today I'm attending the Open Text Analyst Day in Boston, an annual event where Open Text goes over the past year and talks about its plans for the future. Tom Jenkins, the Chief Strategy Officer, started things off, and he served up some interesting statistics. At this point, he says there are:

• 100,000+ original films
• 40 million+ original books
• 1 million newspapers
• 1.5 billion e-mail users
• 3.5 billion texters
• 4 million+ original songs

A Twitter Traffic Example: Gartner Buys Burton Group

The recent purchase of Burton Group by Gartner (purchased on December 30, announced on January 5) offers the perfect opportunity to watch how an announcement travels through Twitter. Below is a chart from Trendistic that shows the rocket ride of tweets that occurred Tuesday morning (the search is for tweets that included both "Gartner" and "Burton Group"):

 

You'll notice that the height of tweeting was around 9 AM ET, when the deal was announced; it then took five hours to subside to a steady, low buzz.

Interview with Google CIO: He Gets It

There's an interesting article on CIO Insight entitled, "Google It: IT's Competitive Advantage." In it, reporter Brian Watson interviews Google CIO Ben Fried (formerly an infrastructure architect at Morgan Stanley) on his view of how IT should be run.

When viewed as an IT vendor, Google continues to make product strategy mistakes. But its internal IT strategy is spot on. Here are some quotes from the article followed by my comments.

At Morgan Stanley, we were very early customers of the Google search appliance. A lot of the young people there had their first exposure to productivity applications via Google Apps. That’s what they wanted. We gave them something else, which was more expensive and not what they wanted to deal with. It made me think: How do you deal with this, because there’s only so long you can give them the tools they don’t want and expect to get out of them everything they’re capable of.

He's right. The bottleneck is now no longer technology, but rather people. If you don't give tools to workers that they enjoy and can leverage, you're hampering their creativity and productivity. Ben goes on to say,

It’s hard for CIOs to accept that people feel strongly, passionately and personally about the technology tools they use to work. It’s almost insulting to people when they hear, “We know better than you how it’s best for you to work.” It’s tough for people who came from a generation where they weren’t empowered and technically capable of making choices.

This is definitely a generation thing. When I started in business, you were thrilled just to have access to a computer. If it was difficult to use, that was the way it was: you adjusted to the machine. These days, with machines a dime a dozen, the machine needs to adjust to you.

A common approach to driving costs out of customer support is rigid standardization—the thinking there is, we’re choosing only one tool for each job and, in so doing, we’ll make the support very easy and low cost. People have all kinds of great metrics for measuring this. But those CIOs end up getting painted into a corner. They take a standardization approach, which is ”all or nothing” for the organization and do things all one way; it may be a Socratic extreme, but it describes the philosophy by saying, “By not doing, we’ll knock costs out of the system.”

When talking to clients, I see this "we're going to standardize on one thing" strategy all the time. This made sense when the technology was expensive and complicated; however, now that people are much more tech savvy, some apps are web-based, and many apps don't break--demanding standardization to make IT's life easier is usually wrong. This is why a number of clients I talk to are looking to use more than one productivity suite. Microsoft Office will continue to have a place for power users; but many employees don't need--or get overwhelmed--by that much (relatively expensive) functionality. In this case, if a company says, "There will be two supported productivity suites: Microsoft Office and Openoffice.org"--while the support complexity will go up slightly, the licensing costs will decrease significantly. Ben goes on to say, 

We try to give people some measure of choice that we can support and build an ecosystem around. We support Macintosh and two versions of Windows and Linux on the desktop. We obviously like and prefer when people use Google Apps, but we also have Microsoft Office, OpenOffice and iWork in the environment. So there’s a lot of choice, and we’ve made an investment to do this.

Read the entire interview. Ben Fried gets it.

Using Twitter to Do "Real" Work

Image via CrunchBase

While the media continues to talk about Twitter as a social phenomenon, I'm struck with how people are starting to use it as a replacement for longtime standbys. For example:

• Product Support: Back in June, I talked to an IT manager at a small financial services firm in the UK. They'd moved to Google Apps and were quite happy with it. As he noted, "It's refreshing to have relatively happy users." When I asked him about support, he said, "Nothing has been broken. When you're looking for information it's easy to find; if you're unsure, one Tweet will get you the info." It's been my experience that enterprises are less than thrilled with Google Apps support--it's difficult to get Google on the phone and you spend a lot of time trolling through forums. This IT manager didn't seem to have that problem, I suspect because he had a relatively small installation (eight employees). However, he also was completely sidestepping the normal support procedure. He'd moved beyond dealing with the vendor; he was quizzing the users via Twitter.
• Product Intelligence: SharePoint 2010 is currently in beta test, and enterprises are pounding it and poking it to understand it. If you go to Microsoft and ask how the beta is going, they'll give you the party line that things are going well (which I think is accurate, as far as it goes). However, that's the 50,000 foot view. What you really want to know is, "What are people doing with it, what are they trying out, where are they running into trouble?" With Twitter, that's easy to find out. Just do a search for "#SP2010." (On Google, do a search for "#sp2010  site:twitter.com"; on TweetDeck, add a column and search for "#sp2010". That tag gives you a realtime pulse on what's happening with SharePoint 2010.

A Reminder of How Bad Things Can Be in IT--And How They're Improving

Image via Wikipedia

On Tuesday, Martha Coakley, the current Massachusetts Attorney General and a college classmate of mine (Williams '75), won the Democratic nomination for U.S. Senator from Massachusetts. (For you trivia buffs, here's what she looked like--and I looked like--freshman year in college.) Given Massachusetts' strong Democratic leanings, she'll probably win the election in January, taking Ted Kennedy's place.

Her win reminded me of one of the most depressing conversations about IT I've ever had. I don't see Martha that often--maybe once every couple of years--but back around 2002 she called me up to give her advice on what to do about her IT department. At the time, Martha was Middlesex County DA, and she was trying to figure out what her options were for improving IT support for her office. She sent her car around--nice touch, I thought--and we spent an hour going over her current systems, what she was trying to do, and her budget.

While the specifics escape me now, I remember being horrified at (1) what she needed to do and (2) what she could do, given her budget. She had an IT department of one. He was doing yeoman's duty, but was seriously underpaid. It was just a disaster. I helped her with some terminology and gave her some good questions to ask--Martha would be the first to admit she's not high tech savvy--but I really couldn't help her that much. All the money was going to keep the current systems running, and there was no money left over for improving things. It was the classic case of being on a treadmill and not being able to get off.

If we had the same conversation today I think it would go a bit better. Some of the money that she had to spend for infrastructure could be re-routed to a SaaS service. Given the confidential nature of the work in a District Attorney office, I'm not sure everything could be SaaS-based, but perhaps a few things could be offloaded. Her big issue was helping her attorneys find and track information. Search technology has certainly improved, and the cost of collaboration software has gone down. For example, SharePoint is less expensive than some of the KM systems of the time.

So while we're all still struggling with how to use SaaS effectively and what IT's role should be in today's world--should it continue running the IT engine room or should it become more of a coordinator?--I think things aren't as bleak as they were back then. At the very least, there are more options. And that's a good thing.

Opening Keynote at Gilbane Conference

Following are my notes from the opening keynote at the Gilbane Conference yesterday. The panelists were: 

• Susan Parker, Director, Mass.gov, Commonwealth of Massachusetts
• Michael Edson, Director, Web and New Media Strategy, Office of the CIO, Smithsonian Institution
• Luuk de Jager, Senior Director, B2C Organizational Empowerment, Central Marketing Office Online, Philips Consumer Lifestyle

Parker: Mass.gov

Before Mass.gov, a lot of different web sites. Mass.gov came along in 2001.

Goals of Mass.gov:

• Brand: Simple, recognizable brand name
• User-Centric: Content organized according to users, not government structure
• Consistency: Same look and feel
• Consolidation: From hundreds of individual web sites to a handful of sub-portals

Mass.gov came out of an e-government task force chaired by Governor Celluci. Vision was high level. Over time has evolved into “a single face of government.”

Did an analysis of a consolidated web site; reduced the number of people needed from 20-30 to 5-6 people.

We want to deliver info to where people live, such as on Facebook. We have a long way to go to do that. We've just started on a Massachusetts Open Data initiative.

We have had a problem with being dependent on expensive consultants to keep our systems running. For products, we use Interwoven Team Site and Vignette.

Statistics:

• Mass.gov gets 2.5 million unique visitors a month; there are 200 content authors.
• 104 individual web sites in the Executive Branch before Mass.gov. In December 2009, 36 total sites.
• Before Mass.gov, 157 separate sites in all Mass government. Dec 2009 is 89; goal is 30 in June 2012.

Edson: Smithsonian

Used a process of "workshops to wiki." Time was the enemy. Used a public-facing wiki over the course of 6 weeks. To find information about the project, search for “Smithsonian Web Strategy.” Recorded the workshops on the wiki.

We’re a red ink business. We want to lose less money but involve a lot more people.

Build your APIs first; we want to have people reuse our content.

De Jager: Philips

Statistics:

• Philips has $30 billion annual revenue.
  
• 15,000 active SKUs, 52 countries

Four pillars:

• .com: The marketing site
• .shop: Used for consumer intelligence
• .live: User-generated content
• .org: Global scale, local flavor

Information Intelligence: Watching How Decisions Are Made

Image via Wikipedia

My colleague Mike Gotta recently put up a blog post entitled, “Social Analytics: Another Front For Business Intelligence.” In it he talks about Socialcast’s announcement of its Social Business Intelligence platform, and the fact that “the need for comprehensive analytics when it comes to social activities is very real.” I agree.

However, I think it gets a lot more interesting when it’s seen as part of a larger capability that I call Information Intelligence. The idea is that tracking digital content—where it’s created, where it goes, who consumes it, what it’s about—supplies enterprises with insight into how they’re creating and consuming information. We’ve done this for years with physical goods--ERP systems monitor production plans, inventory levels, shop floor status, and distribution pipelines. By understanding how physical goods move through the factory, we’re able to optimize the process. It’s about time that we did the same thing for information. After all, we are inclined to call this the “information economy.”

We’ve created islands of analysis for digital content; now we need to start building the bridges between them. We need to integrate mechanisms such as:

• Web Analytics: monitoring user behavior on web sites
• Blog Analytics: tracking posts and linkbacks on blogs
• Search Analytics: watching what users search for and the results they get
• E-mail Monitoring: analyzing e-mail flow (e.g., Gist and Xobni)
• Social Network Analysis: documenting which users link to and correspond with other users

It’s only when we start connecting these dots that we’ll start to understand how ideas flow, where the bottlenecks are, and where the experts reside. Put another way, we’ll be able to watch how a specific enterprise makes its decisions—the first step to optimizing the process. We’re a long way from having an integrated system—but we should at least start thinking about how to create one.

Adobe Buys Omniture: The Long View

Image via Wikipedia

On September 15, Adobe announced that it was buying web analytics vendor Omniture. This solves some short-term issues for both companies. Adobe’s revenue is down, and Omniture’s annual revenue of $300+ million will bolster that; Omniture wants to call higher and leverage Adobe’s many offices as a way to increase sales.

The financial analysts were all aflutter over the short term implications. Some weren’t quite sure where the synergy was (“OK, explain to me how a company that sells Dreamweaver needs web analytics.”); others felt Adobe paid too much (I’m inclined to agree, but knowing Josh James, I’m not surprised he got a good price); and others said Microsoft, Oracle, and others might top Adobe’s offer.

However, assuming the deal goes through—and I think it will—what does this mean in the long term? It means that we’re finally starting to see some market movement towards content analytics: that is, creating a feedback loop that monitors content creation and consumption as a way to help enterprises create more relevant content at a lower cost.

I discussed this concept in a Burton Group report three years ago: Content Analytics: Assessing the Value of Corporate Content (Burton Group subscription required). In the analyst call announcing the planned acquisition, Adobe said their customers were telling them that while they could monitor what parts of a web site or Flash application users were clicking on, they needed this analytics capability to be better integrated with the content creation process. Customers, Adobe, and Omniture typically discuss this integration work within the context of web site content—not surprising, since both Adobe and Omniture focus on this area.

However, there’s nothing to say that this integration work couldn’t expand to other areas, such as Adobe’s SaaS solution (Acrobat.com), digital images, documents. And in fact, in a call I had last week with Adobe and Omniture last week on the acquisition, they said as much to me. Both companies have a much broader vision of where this will ultimately go than was apparent in last week’s news coverage. This is the real long term value of this deal—expanding the creation/analytics integration work so that all digital content types are instrumented and monitored as a way to deliver the most relevant documents at the lowest cost. Put another way, in the long run, Adobe could use real data to tell you whether it’s worth spending three hours honing this project report—or whether you should spend only  20 minutes on it so you can move on to other work that will have a better payoff. That’s the path that Adobe is starting down, and that’s a good thing for enterprises.

Free Google Apps Goes Away: Why This Is Good for Enterprises

Image via CrunchBase

Google made a splash yesterday by burying the sign-up hyperlink to Google Apps Standard Edition (free) and pointing people instead to the $50/user/year version: Google Apps Premier Edition. The title of TechCrunch's article about the move ("What The Hell Happened to the Free Version of Google Apps?") hints at the general reaction. Several commenters said they felt that Google was violating its "Don't be evil" mantra with this move.

At a superficial level, this is about Google's plowing ahead with a different pricing strategy, leaving some miffed users and prospects in its wake. However, at a deeper level, this announcement signals a major organizational change at Google.

Think about it. Google has been following this dual pricing strategy for 2.5 years--it could have easily kept on a steady course. Why did it change? My guess is that upper management told the Enterprise Division that it would have to start paying its own way--it could no longer live off of ad subsidies.

In other words, this is Google saying, "Let's figure out if we have a viable business here: let's stop treating Google Apps like a lark and get serious." (A hint of the "get serious" attitude is that yesterday Google also removed the beta status from Google Apps.) If the supposition that the Enterprise Division is being told it has to stand on its own two feet is correct, that implies something else: that the Enterprise Division will be able to call its own shots. With its own money coming in, it will be able to develop the apps it needs, rather than making do with hand-me-downs (such as Google Apps) from the consumer side of the house.

In my view, the Enterprise Division has been sort of hamstrung by being a hobby at Google. (Not completely hamstrung--the Google Search Appliance, derived from Google's web search expertise, has been a big hit and a money-maker. However, Google Apps hasn't taken off with enterprises because Google hasn't made the necessary feature changes that enterprises need.) Living or dying based on paying customers will concentrate the mind of the Enterprise Division wonderfully, and that will be good for enterprises. 

The $64,000 Question: Google Docs, Acrobat.com, or Other?

A week ago, ReadWriteWeb published an interesting poll, entitled, "Poll: Which Web Office Suite Would You Pay For? Adobe or Google?" At the moment, out of 519 votes cast, 22% (114 votes) were for Adobe, 38% (199 votes) were for Google, and the greatest percentage, 40% (206 votes) were for neither. A number of commenters took the article to task for failing to point out ThinkFree and Zoho, two startups that offer productivity suites. ReadWriteWeb replied, "...we intentionally left them out so as not to dilute the vote between the two companies that are arguably industry giants as opposed to (awesome!) startups."

The problem with such open polls is you never really know the survey universe--it could include some Adobe or Google employees, hoping to tilt the results; it could include many respondents from SMBs, rather than large enterprises; and so on. Probably the more interesting part of the article is the comments, as they highlight many of the viewpoints I hear from clients. Here is a sampling:

A week ago, ReadWriteWeb published an interesting poll, entitled, "Poll: Which Web Office Suite Would You Pay For? Adobe or Google?" At the moment, out of 519 votes cast, 22% (114 votes) were for Adobe, 38% (199 votes) were for Google, and the greatest percentage, 40% (206 votes) were for neither. A number of commenters took the article to task for failing to point out ThinkFree and Zoho, two startups that offer productivity suites. ReadWriteWeb replied, "...we intentionally left them out so as not to dilute the vote between the two companies that are arguably industry giants as opposed to (awesome!) startups."

The problem with such open polls is you never really know the survey universe--it could include some Adobe or Google employees, hoping to tilt the results; it could include many respondents from SMBs, rather than large enterprises; and so on. Probably the more interesting part of the article is the comments, as they highlight many of the viewpoints I hear from clients. Here is a sampling:

The Shifting Sands of Product Archetypes

It's taken me a long time to figure this out, but I recently realized that clients often view and describe products via archetypes. Rather than recounting a long laundry list of desired features, they'll say, "What I want is something like SharePoint, but with an additional capability." Initially, I classified this common way of talking as a time-saver, but I've come to realize its also a very useful market analysis tool--because the archetypes shift over time.

Let me give some examples. Way back when--40 years ago--if you wanted a really deluxe typewriter, you dreamed of an IBM Selectric. It looked cool, it had that nifty rotating ball, and made beautiful copies. When I entered college, my mind's eye was on a Selectric--but I made do with a Smith Corona. By the late 70's, people's mental image of the Selectric was replaced with a Wang Word Processor; which in turn eventually got replaced by a PC running Microsoft Word. Another example in terms of portable entertainment is the Sony Walkman; it got usurped by the Apple iPod. If your product is the archetype, you control the market conversation--your product is the baseline by which other products are described and evaluated.