Thursday, December 28, 2006

Web 2.007 (Web two dot oo seven)

And of course – in the typical spirit of Silicon Valley – here are some more predictions:

- YouTube will have much more users then MySpace
- Web 2.0 will enter the business world
- LinkedIn will go public
- Investments in traditional software will be next to nothing end of 07
- The number of Internet users: 1 Billion
will become the "number of the year" for all marketers
- World of Warcraft may be another IPO candidate
but may be purchased by Sony and runs on the “cell”
- Xeequa will have more customers by end of 2007 than SFDC
(just kidding – but you get the ambition)
- Second Life will become the leading virtual business party spot
- TV and print adds will further plunge to total none importance
- Relevance as measured by Technorati, Alexa and others
will become the market cap index for private companies

Let me know what you predict :-)

Thursday, December 21, 2006

Xeequa receives first award

What an honor - the company is not even launched yet and we get our first award. On Zolis block you can read:
And the Winner of the Weirdest Company Name Award is: Xeequa
I couldn't help to get some explanation. But hear the whole story on the 15th when we launch the company.
In any case, thanks Zoli.

Monday, December 18, 2006

Xeequa Company Launch

For many this this will come as a surprise. Only a hand full of people and a team of engineers knew about it. Today we declare end of stealth.

January 15th 2007 I will launch an new force in the collaboration space and particular Indirect Business. Xeequa, the new company is in business to help companies instantly create and manage profitable partner alliances. Unlike today’s channel management solutions, which are owned by one vendor for “their” channel, Xeequa allows instant Cross-Company Collaboration for all companies with all partners simultaneously. All based on Web 2.0 technology.

Tanooma, the SaaS directory, will also early next year come out of Beta. We already changed the advertising mechanism to Adsense by Google which allows us to simply interact with Google to leverage our ad space. SaaS companies can self register; self service their profile so that Tanooma is pretty much a fully automated - self supporting entity. Registering a company or searching through the SaaS industry on Tanooma is completely free of charge and we have no intention to charge for being represented there. That allows us to have the most complete directory in the SaaS space.

Thursday, November 09, 2006

SIIA OnDemand Conference

An interesting conference – somewhat competing with Saascon in San Francisco. While Saascon was directed to SaaS End Consumer and bringing SaaS closer to the broader public, "OnDemand" was a conference for industry leaders discussing the future of SaaS.

The first few presentations reflected the clear trends and expectations that SaaS is going mainstream and many speakers and panelists predicted that SaaS will replace many on premise applications in the next few years. However some on premise applications like global large scale ERP implementations will remain behind the firewall for quite some years. An analogy was drawn to the 80's when PCs replaced terminals - yet today - 25 years later - mainframes and even terminals are still in business. The SaaS future seems to be in the hands of the new generation software companies who are built for SaaS from ground up. Discussions made obvious that companies who need to change from a license product business to an on-demand model will have a very hard time. While some predict that most license software companies will fail to make the move, others put the example of Concur up, who successfully made that transition in a two year effort.

An interestingly large portion of the conversation on the podium and on the floor was around indirect channels. While sales organizations are not large enough and marketing budgets are limited, SaaS vendors need to find ways to attract partners to spread the word and help implement their solutions. Some companies present their successes with channels.

Monday, November 06, 2006

2 month Sabbatical

Wow - 2 month through the US from coast to coast. Yes, this was a very educational, interesting and relaxing tour. Never in my live I had 2 month off - and yes it is hard to get back into business mode. On the other hand this was so helpful to better understand the country, the diverse cultures, peoples, challenges and opportunities. We came back thinking "California is an island".

Software as a Service is big - in California. But in the rest of the US? We talked probably to more than 100 different folks in Bed & Breakfasts, Hotels, Motels, Restaurants, Gas Stations, Supermarkets, in Parks or elsewhere - not a single person had an idea what Software as a Service is. Hmmm - so how are we doing in terms of SaaS marketing?

We visited computer stores: "What is hot these days?" "Multimedia in any way or shape." Videos, photos, MP3... Any business around Internet? Cable Modems, better screens, faster machines, a laptop for grandpa. On software? Antivirus programs. Microsoft? Hmm don't know nothing hot.

Now we are back and totally recharged

Friday, August 18, 2006

Interviewing Channel Thought Leaders

I interviewed several channel thought leaders from within the SaaS industry and share the details in my other blog "Channel-Excellence".

The essence so far:
The SaaS Channel is finally coming into existence. It is not so much the traditional VAR and Reseller now moving to SaaS, but much more completely new companies that form a business specifically to fill the gaps of the SaaS industry. These catalysts do basically 3 things right - that truly enhances the value of the SaaS vendors:

1) They connect (integrate) multiple SaaS applications to a complete information infrastructure (Implementation Services).
2) They provide additional ongoing services including content creation, modification or improvement in very many shapes (Recurring Services Model) .
3) They help smaller local businesses to overhaul and improve their very individual business processes and leverage the fast to implement SaaS application to provide tools to actually service those improved processes (Consultative Services).

The SaaS channels are true catalysts to the SaaS industry. They work in a very different way than traditional VARs and resellers did - and exactly that is the value they provide. SaaS Catalysts accelerate the SaaS industry and will become a true cornerstone to our future.

Thursday, August 03, 2006

1,000 podcasts

Podcast has been in interesting topic for many people in the last few years. One person how ever took it to a new extreme: Eric Mattson. His own goal: Conducting 1,000 podcasts, interviewing marketers, innovators, entrepreneurs and other interesting people. I was number 68. Check it out.

Monday, July 24, 2006

Channel Excellence - the book

After 25 years in indirect business - growing channels for Rockwell International, building my own global distribution organization (Computer 2000), today part of Tech Data, successfully growing yet a new channel during the DotCom boom (Infinigate) - while the saying went "The internet eliminates the middleman", then building a new category of Channel CRM Software as founder and CEO of BlueRoads and lately helping the SaaS industry to create a whole new channel structure, I decided to write a book about "Channel Excellence".

I'm pretty far and plan to publish it in about 12 weeks. In the meantime I will interview channel chiefs, channel workers and people who helped shape the indirect channels in the high tech industry. Any inputs are very welcome!

To support that project I created a separate blog ay

Tuesday, June 20, 2006

Channel Sales & SaaS

Much is written about how Software as a Service will kill the indirect channel. SaaS vendors flip a switch and the application is live. It seams that the 250,000+ US based VARs and resellers go out of business any soon. But wasn’t that the story when the Internet came into existence? Or earlier when CDW opened their doors? Or… 1850 when the industrial revolution started?

N O – the channel isn’t going to die!
I recently talked to a few executives in medium and larger size organizations. And there was 1 single question that makes it so obvious what role a channel needs to play in SaaS: “Who has the capability to help us put it all together” – “Who can help me composing my new IT world which may consist of multiple vendors for different jobs i.e. Sales, HR, Expense Management and so forth”. The channel business simply hasn’t really started yet. But here are already several cases with great success stories.

B U T – the new industry needs a new type of channel.
There is no need for a warehouse, for technicians to install and configure software. The new world needs business savvy and business process aware people. There is no margin to be made from reselling but money from consulting, implementation, integration and ongoing maintenance. Feel free to download my whitepaper at Tanooma.

SaaS is not only no danger for the channel – it may actually be the biggest business opportunity in IT history. About 1 Million early adopter started with SaaS so far. About 750 Million will join the party in the next 10 years or so. That requires 1 – 5 Million Channel partners to act as catalysts for that new industry; it may turn out an even bigger channel than in the traditional IT industry.

Friday, June 09, 2006

TCO for SaaS Applications

SaaS is all different and so is their TCO discussion!
The discussion about the total cost of ownership for SaaS solutions is on the rise. In my last 5 years of selling SaaS solutions into corporate America – customers range from multi billion dollar global enterprises where we installed truly global solutions spanning multiple continents and even multiple external legally independent but connected organizations – the question of TCO was present, yet the conclusion may come as a surprise.

Let me start with the “good old days of IT”. Total cost of ownership was the “sum of all fears”. And they came in various flavors and shapes. The calculation typically started with server systems, backup capacity, network infrastructure, routers, hubs, cables, then of course the respective software, the operating system, the database, the applications itself, the tools, update cost, migration cost, maintenance contracts for software and hardware. Then we got more sophisticated and included air-conditioning, the floor space, energy, related facility cost and of course the personnel to run the whole show. Lately there is even more cost involved such as rising security cost, disaster recovery management related cost and also all the management overhead. As we try to customize the solution more and more – sometimes we customize us to death – we have cost that is even harder to calculate. With all that, financing the whole structure became another none negligible cost item.

To get even more sophisticated we added opportunity cost, downtime cost, resources that needed to be available in case something goes wrong. In the 90s we learned that the actual software for instance is actually just some 15% of the total cost (depending which calculation you use and which consultant you ask). And at the end we even had to purchase software that helped us to calculate the TCO which came on top of the TCO.

After about 20 years of TCO discussions it is interesting to note that there is still no generally accepted method or formula to calculate TCO in a way that we can compare values, benchmark ourselves and our vendors. Even worse – TCO became a ever more fuzzy marketing weapon with no real value associated that either financial analysts can build a judgment on, executives can base decisions on or purchases can be measured by.

Now let us look into the TCO calculation for a modern software as a service based information system: Let me take the same buckets: Server, backup, software, operating system, database, updates, migration, aircon, space, infrastructure, support, services, teams, financing and all the rest of it. Isn’t it interesting that we get all that for $20-$200 per user per month from a SaaS provider depending what we are using? What do we do at BlueRoads,, Tanooma or who ever in the SaaS space for customers large or small, regardless whether it is a multi billion dollar Avaya or a 10 Million Dollar medical device startup. We, the SaaS providers, own and run the data center. We do OS upgrades; we manage the database servers and build the application around the database we choose. We do not need to worry about compatibility with 3 database vendors and their 50 different versions. We deployed the application, we provided the update, we manage the data migration at major updates, we support the user because we ARE the technical back end, we pay for energy, the server space. We do the system financing, the depreciation, the planning, the disaster recovery. The monthly software fee BECOMES the TCO unless we do something that is simply yesterday IT – we force the vendor to deploy it behind the firewall, customize it, put it on the customer’s server, and ensure compatibility to their database…
But that is NOT Software as a Service – this is an in-house web based application server, no different from any client server application.

Now the magic question: How on earth can a SaaS provider do that all for 60 bucks a month? Well if you think of it, spreads their IT cost over 20,000 companies – not 1. But also for smaller SaaS companies – IT cost is may be still 1/1,000 of the cost of an internal IT organization simply by spreading it over 1,000 customers.

My conclusion – put the TCO discussion to rest (Sorry Gartner) – and may be worth mentioning there is no OWNERSHIP of the application, it is a service.

Thursday, May 18, 2006

Tanooma Beta Phase 1

This is a little bid like my first child was born. Even so it is still closed Beta, we are out! Already fixed first bugs and collected first feedback.

After a presentation yesterday at the SIIA conference and the SaaS Workgroup - we feel pretty confident that we hit the right buttons. The SaaS industry needs a place to go. And while the larger vendors will build their user communities we are building a hub where all the users and communities will find each other. We will soon provide ways to not only expose applications, solutions, companies, people and expertise but also local and vendor bound communities.

One of the amazing things in Tanooma is our Genetically Networked Architecture (GNA) which went also live today. Rather than having endless attribute fields and complex related tables for those attributes we invented a whole new method of dealing with the DNA of people, products, companies, skills, possessions and other objects. We literally took the biological DNA concept and implemented it into software. Every attribute is a BASE, every serious of attributes becomes a GENE and all those attributes together become a Chromosome. Nothing a user or anybody other than us has to worry about. It is deep in the inner architecture of Tanooma but it does what we couldn't do in traditional methodologies: Manage an enormous amount of attributes for all sorts of people, companies and products and expose them in any variety quickly over the Internet. For those of you who are interested in that particular topic: I run a special blog for "Genetic Computing".

Saturday, May 13, 2006

First semi public presentation of Tanooma

I posted a lot about the change the SaaS Methodology will have to the software industry. Also I discussed with may of you the challenges every SaaS provider has and how we could make a quantum leap at times where budgets are small and global trade is increasingly complex.

In times where marketing budgets are extremely tight, sales cost need to be reduced to the max – yet – a global market with over 750 Million PC users (our current installed base) need to be addressed in order to successfully compete. We all need to find new ways to market. The old idea of a market place didn’t really work, we need to think differently. Let us show you next Wednesday what we mean.

Tanooma is already the world largest SaaS directory even before we go live in a closed Beta May 18th. Today we have over 350 SaaS vendors, over 150 SaaS focused consultants and solution providers, about 100 SaaS focused investors, SaaS enablers, SaaS analysts, SaaS Experts and other industry contributors listed. The company is founded with the mission to help grow the SaaS industry to about 100 Million Internet Software Service users in the next 5 years.

We are going to collapse a complicated global industry business network into one fast accessible “Virtual Economy”. Users will find more vendors, more partners and more expertise in one place than in any other industry. Customers will be able to make educated decision in a fraction of the time compared to traditional solution evaluation. SaaS users will find a rich set of services such as Single Sign On, License Tracking, User-Supports-User Networks and more – all for FREE! Consulting partners will be able to rapidly build their vendor portfolio like in no other industry before and vendors will have almost instant access to hundreds of potential partners and daily growing. And this is only the beginning.

With Tanooma’s new “Human Interaction Model” (HIM) we rewrite the book of collaboration. As Denis Pombriant (Beagle Research) said after a briefing: “This is SO NEW, I really wonder where this can lead us”.

We will present Tanooma for about 20 Minutes at the SaaS Workgroup meeting on Wednesday May 17th. You need to register with SIIA for the workgroup meeting at

Wednesday, April 26, 2006

First Tanooma Progress Report

We are having great traction in our development effort. The application is shaping up and we are still on plan to launch "Closed BETA" on May 18th. It is amazing to watch how fast development can be done these days by using smart tools. Creating a virtual economy isn’t easy. No place to look and see how others do it. No technology to read about and no processes to learn from other than abstracting how the physical economies were built – like in the US 250 years ago or Germany after complete distraction post WWII. But creating a whole new thing is such a rare challenge - it is a blessing.

The biggest challenge we were facing was the fact that users in Tanooma have by default multiple “lives”. There is the desire to manage personal applications like online bank accounts, access to financial services, online tax and other services. But there is also a need to mix that with the business applications such as CRM, accounting, marketing, research, HR applications and so forth. So for the first time the personal world and the business world has no longer clear boundaries. We needed to develop an architecture that ensures a single point of view but at the same time administrative separation for business and personal data. Even more difficult: if a user leaves a company. Business assets need to be cut while personal assets shall remain – and soon new business assets (applications and services) will be acquired. That new degree of complexity how ever should be completely transparent to the user – we promised simplicity! By looking into nature we began to copy genetic and motoric mechanisms and learned how to keep all that in the background. Like we don’t “think” we have to breathe and contract our heart mussels, a Tanooma user will not worry about the complexity of a virtually connected world.

The key focus of the Tanooma development is on its "Human Interaction Model" (HIM). Making it easy to search, find, identify, decide, relate, contact, connect, disconnect, communicate, learn, build and grow. The Tanooma world tries to eliminate boring tabulated data and get more interactive than any business application today. Even so we are far away from our vision – we will be able to show the path.

May 18th companies such as SaaS vendors, consultants, investors, enablers and other industry contributors will get access to the system and start configuring their outlet – so that June 20th when we allow users to beta test the new world, will find not only company names but details about their products and services.

We aggregated about 360 SaaS vendors, 85 SaaS focused VCs, 40+ Industry Analysts who track the SaaS space, a few new SaaS Enablers (companies like OpSource) and over 100 SaaS experienced consulting forms. All in all close to 700 companies dealing within the SaaS industry. The industry is not only slowly maturing – it is becoming VERY big – already.

Saturday, April 15, 2006

SaaS and Rapid Development Technology

As we progress with our prototyping effort it was time for us to decide what kind of technology we will use for our final application. So I had several conversations with executives from Macromedia trying to understand their strategy around ColdFusion, I explored Ruby on Rails, considered an Ajax/JavaScript pure play and obviously the traditional Java world. I learned a few interesting things: the most prominent community and also one of the top 10 sites in the Internet: is built on ColdFusion. I noticed that my Bank of America online banking application is a vast ColdFusion site. I was reminded that Java and JavaScript are two very different things and Ajax is a JavaScript based environment/methodology. Yet the richest and most widely used user interface outside HTML is Flash. The world is not as homogeneous as it was. It is no longer Java versus .net like it was C++ versus Basic.

Clearly Java is a very powerful development environment and a developer can pretty much do anything - but also make any possible mistake and take for ever to debug their code. It very much reminded me at the assembler days. Assembler was this powerful, development environment which produced lighting fast code. How ever development took for ever, mistakes were difficult to debug and changes to difficult to implement.

In the fast moving SaaS and Web 2.0 world we are at a similar crossroad. Do we go with the traditional Java code or do we rethink even that. In Tanooma we came to the conclusion that we choose speed over secure tradition.

The soon to be ready for Beta of Tanooma is a multi tenant multi organization cross communication application. Meaning multiple accounts such as SaaS vendors will use it, unlimited users will look at the respective offerings, consultants will be able to connect with vendors but also with users and investors will be connected with any company they are invested in or interested in. A technology which I call "Account Bridge" supports that cross organization cross communication. The development environment needed to allow that kind of complexity, support clustering to support a large amount of users to be simultaneously logged in and perform their activities. While Java seamed to be the logical choice - we decided to go with ColdFusion, AJAX, JavaScript, ActionScript and Flash. It took only 3 month to develop a functional prototype. The application is richer than pretty much anything on the market today - but at one price: There is no longer this one "language" we use. It is a collection of best of breed tools which all promised to interact - and we are very lucky: they do. But Tanooma is not the only company that questions Java as a development platform. Many of the new apps whether they come from Google, AjaxLaunch or many others avoid the long and rather complicated development cycles and leverage the rather new and much more user attracting Flash and Ajax world.

Saturday, April 08, 2006

Single Sign On for SaaS

Single Sign On seems to be one of the hot items when it comes to SaaS application usage. While traditional software resides on your PC and you just load it - Internet Software Services need to be securely accessed over the Internet. The need for SSO (Single Sign On) becomes pretty obvious. As users have more and more SaaS applications in conjunction with other online services, the user-ID/Password handling becomes kind of ugly. Yes you can store them on your PC, but that doesn't feel too save either. In particular when you think of all the applications you access outside, BlueRoads, Recruitmax, RightNow and you name it such as etrade, schwab, bankofamerica, ebay, amazon...

Now - SSO is not that easy. There is either integration work to be done so that each and every software vendor is good with the service or there has to be whole new ways to be developed. We are working on various options within Tanooma and will provide some alternatives when we come out. But there is not only a technical challenges to overcome but also legal issues in regards to contract definitions. Some vendors for instance - such as LinkedIn, have very specific definitions in their contract regarding how you access the application.

So the SaaS industry has to overcome 2 battles when it comes to SSO - a technical acceptable solution and a legally respected way of doing it. We will work on both and welcome any input or concerns.

Friday, March 31, 2006

Yet another rapid change in the browser world

I remember the days where Internet Explorer was 97% of the used browsers. Right – that was after the time where Netscape was 90% and IE was 5%. But if I look at my stats today IE is down to 62%, Firefox is 23% and – check this out Opera is 10%; others 5%.

Now a related dynamic: new Web 2.0 products like AjaxSketch or AjaxWrite are only available for Firefox. Isn’t it a bold move to develop something and ignore the dominate technology? Well there is stuff out there that is simply not possible in IE.

Talking about Web 2.0. I found a great chart at oreilly's site, explaining Web 2.0 versus Web 1.0:
Web 1.0 Web 2.0
DoubleClick --> Google AdSense
Ofoto --> Flickr
Akamai --> BitTorrent --> Napster
Britannica Online --> Wikipedia
personal websites --> blogging
evite --> and EVDB
domain name speculation --> search engine optimization
page views --> cost per click
screen scraping --> web services
publishing --> participation
content management systems --> wikis
directories (taxonomy) --> tagging ("folksonomy")
stickiness --> syndication

Also checkout it's a great site to be up-to-date with Web 2.0

Monday, March 27, 2006

Patent on Lead Management

One of the innovations I was working on the last few years was a better way of getting sales leads to resellers. Rather than pushing them out and hoping somebody will follow up, I developed a pull methodology where Partners can pull them from a pool to make sure that the lead will have a follow up. Several rules, a well thought out process flow and an automatic tracking made it work. I applied for a patent which was awarded patent number 09,514,997 by the United States Patent and Trademark Office last week.

Thursday, March 23, 2006

OpenSource 2.0 -- Monetizing success

Many people think about OpenSource and where it goes and so do I. One comment stroke me in particular at one of the recent conferences where somebody stated that OpenSource is good for lot of things but there is no TRUE innovation. “OpenSource projects today are pretty much improving what others did before – but there is neither a new technology, no new methodology and no truly new functionality”.

Past 10 years OpenSource
In the past 10 years OpenSource has come a loooooong way. But still people are not sure about the relevance for the business and how opensource engagements can fuel the industry other than how it does today. The fundamental issue - it seams - is the reward system. Clearly it is rewarding to see how software evolves. There is a reward for contributing by using code others contributed and there is a reward by recognizing increase in quality through the respective contribution of all kinds of expertise. But like one developer stated "I love it but it doesn't feed my kids".

OpenSource and SaaS
With Software as a Service a new question pops: How do you deal with OpenSource distribution license when there is nothing to distribute - other than the service over the net? Will OpenSource dry out when no code is distributed any more?

Rewarding Contribution
Let me contract the above issues all together and think:
-- How about bringing opensource developer together to contribute to innovative and new projects that will be delivered over the net, regardless of the fact that there is only one instance of the code?
-- How about a reward system that includes some monetary opportunity by incorporating the contributors into the success?
-- How about creating an OpenSource Contributor Option Plan that gives out shares of the respective company for those contributors who truly contributed to the success of that company?
This is not a cash reward like with an employee but rewarding contribution to innovation. Would’nt that be one further step towards individuality where at some point in time a company is really a “company of people” with their respective contributors participation in the success – still maintaining the fundamental concept of capitalism? I will work on that idea further and I am really interested to know what you and others think. Feel free to comment and let me know.

Friday, March 10, 2006

Next Level of Technology

Lot's of discussions around the technology model (single tenant, multi tenant, hybrid model). Some say only a multi tenant architecture is a real SaaS play. I'd like to challenge all of us (at least the technologists) with some thoughts:

Let's look at today’s multi tenant architecture. The easiest way to do that is to check out the literature which exposes the architecture for developers. What we find is a data model with the traditional hierarchy of an account, organizational structure and users. We find objects such as leads, opportunities, cases, documents etc. and we find some basic processes to manage those objects based on certain criteria or events. Every new tenant is bound to this architecture (which is well thought out) and is therefore able to use the application very quickly. All it takes is an underlying or overarching model that allows every tenant to use the model in some variations, add custom data fields etc. without interfering with other tenants. demonstrated that it works, is pretty secure and flexible enough to have many companies using the application and still have some freedom for customization. So far so good. As long as we continue to think in our boxed world (our companies’ 4 walls) that is all fine.

Now - outside this box: It's no longer just the company but there are partners who deal with us, and also with other companies. There are suppliers who provide us with additional material, resources and other services. And oh - there is this thing called "customer", in case you forgot - it is the entity that pays the bills (mostly). Customers deal with us, with our partners and of course also with other companies and competitors. And here is the challanging question: What role is the customer playing in this new multi tenant architecture based SaaS model? Today: None!

How will we integrate partners, customers and other constituencies into a meaningful information and process flow? It's not a question of whether we will do it or not - but how and when. Multi tenancy still works inside the box - for one corporate entity. But as soon as multiple legally independent entities need to collaborate, we’ll hit the wall. Yes, we can use SOA, WDDX, XML and what have you, but we are back to square one – like in the previous stage of software we relay on interfaces, APIs and the big hope that it’ll work together. Of course it is much easier but still time consuming and risky. Architecturally Multi Tenant Architecture is a very economic model to drive efficiency and I don’t want to belittle it in any way – it is a major step forward yet we need a new model.

Rather than thinking from the inside out we have to begin thinking outside in. We will need to make it MUCH easier for customers to interact with companies and for partners to do business with their vendors and their customers. Suppliers need to be able to collaborate with all sort of customers without the need to interface all those applications with each other. CommerceOne failed by trying and others didn't even get there. People asked me whether Tanooma will build interfaces to connect all the SaaS players. The answer is “no”. 400 vendors today – 2,000 in may be 2 years from now. And even if we would, it would still be an "internal vendor play" - it would still only represent the old way of thinking in integrations. So to build interfaces with all those companies would be the wrong approach. We all need to elevate ourselves and our respective technology to a higher model where we think and more importantly ACT outside our 4 walls. The challenge is to move from or skip a multi tenant architecture and develop a truly networked interaction model where tenants are no more an encapsulated entity but an organism like cell that is able to seamlessly interact with others: customers, partners, suppliers and must importantly: we need to begin thinking of the "user" not the "account".

Creating this new model - or architecture may go beyond what a single company can do. It may be an "open mind project" (like opensource). It may even require cross technological expertise that goes beyond the knowledge of our own industry. I decided to start this in the next few days.

Sunday, March 05, 2006

The Enterprise Software Chasm

The SaaS Summit in Napa Valley this past week was a very interesting and well organized event by OpSource. I'm sure Amy Wohl and others will cover it and you may also want to read Rather than providing redundant viewpoints, I'd like to comment on 1 particular topic: I call it
"The Enterprise Software Chasm"

Tien Tzou from made a very clear statement about the On Demand world and the death of the enterprise software sales model. He said, and pretty much everybody nodded their head agreeing that this new world is a "Google World" - an inbound world where inside sales people are the heroes and the traditional and very expensive direct sales model is vanishing away. VCs in a later podiums discussion at the same conference agreed and pointed to the successes in the SaaS world with short sales cycles and large number of users. The traditional enterprise sales model with their traditional long sales cycles is something investors would no longer accept.

Future software investments go into those companies who build a product, bring it to the market and if people pick up on it - this is considered success. No more outgoing sales and definitely no long sales cycles. If you need to mess around with a customer for several weeks - stop it and find customers who buy it because they like it. Well, a very logical and from an investors point of view very economical strategy.

This, and previous discussions with various investors lead me to believe that there are only 2 companies on the planet that will continue to invest in the enterprise software model: SAP and Oracle. That also tells me that with no other engagements and investments, SaaS for the enterprise market is at least 5 years out - enough time for both SAP and ORACLE to reengineer their respective companies and make them ready for a SaaS oriented enterprise business. New innovations for enterprise software will therefore not be seen on the market before 2012. Since 2003 almost nobody invested in enterprise software anymore - despite the fact that enterprises still exist (and I'm sure we do not expect enterprises to go away any soon - but read on). This development will create a big chasm between enterprises and smaller more agile companies who will be able to use latest Information Management tools (on demand and omnipresent). The SMB part of the world may actually catch up more than normal simply because of tools, systems and methodologies which are not available for a complex enterprise.

The point I'd like to make is that this interesting development may change the face of our business society in a rather unexpected way. It is not because the technology couldn't be available - it is because there is no investor who is interested in an enterprise play, dealing with the fact that enterprises have different needs to modernize their business and need people who have the patience to work with 10 different departments at the same time and analyze business impact of a software that may be run within a 20 Billion $ company and be used by 20,000 people in very different capacities. This has nothing to do with "stubborn and old sales guys who can not adopt", it also has nothing to do with “IT old timers” who are unable to take on new technology. It is about the complexity of an enterprise and in order to reduce complexity for the users and increase simplicity of processes - the tools to make it happen will most likely become even more complex - and at least right now nobody want to invest in it.

SaaS is becoming a demarcation of a growing chasm between enterprise software and any other software.

Regardless of the reasoning - the SMB market has an unparalleled opportunity to grow and compete with the dinosaurs. I use the word dinosaur not as an often used term for something old – but to draw a parallel to evolution where larger and more complex beings were replaced by smaller, highly agile and flexible ones. If a company spends $20 Million every year on IT in order to run it and customizes those solutions so far that it is no more economical to update, did that company reach a point that sheer size made it less competitive? Is it a point even so operations and production is highly optimized, the brain of that entity is no longer capable to evolve any further? Is the Enterprise Software Chasm an early warning indicator that super complex global enterprises after decades of mass consolidation by acquisition are in great danger? Did the gigantic acquisitions in the Automobile Industry here in the USA that ended by having only 2 massive and barely profitable companies left over, proven to be a mistake? The reason for the car industry consolidation was the believe that so many car manufacturers have no chance to survive because they don’t have the critical mass. Today we have more car manufacturers on the planet than 1950 – and today there are percentage wise way less US cars in the country than 1950. Porsche is one of the smallest car manufacturers on earth – yet one of the most profitable.

The Enterprise Software Chasm can not be crossed for quite some time. I wonder what dynamics and evolutionary effects it will have on the SMB space – and the "Porsches" of the other industries.

Sunday, February 26, 2006

Technology Free IT

Information Technology without Technology?

I wrote quite a bid about the disruption, the growth and the strategic values of Software as a Service. I shared with many of you my vision about this industry and where it can go. In an earlier post I stated that we may run a business with nothing but SaaS. Today I'd like to take you out into a near future office environment (a few calendar quarters from now).

OK - So our new office needs some basic communication with internal and external people. We need something for our bookkeeping and write invoices. We need to do some HR work, payroll and expense management. Our sales team need to manage customer contacts, our marketing team needs to manage campaigns and initiatives as well as partners and alliances. We also want something to manage our service teams' requests and cases. And finally will need to manage our products, projects and entire logistics and warehouse.
So let's put up our sleeves and start:

Communication: We may start with Yahoo email and calendar. It is free and allows us to work in a team and see each others calendar. We may then select Webex to communicate with our customers and partners in a more communicative way.
Office: While checking out Webex we find their office products and actually find the necessary office software to run our day to day documents, lists and data tables. And in the future we may consider Office Live from Microsoft.
Customers & Marketing: The obvious first name is But there are others like RightNow and Sugar CRM and already many more. Let's pick SFDC for the fun of it and take RightNow to mange service requests. To write optimal proposals, we may consider Offermatica. If we now want to better plan out marketing campaigns we may come across Eloqua and take them to do the campaigns - may be we also choose ResultsMail to do the sending and tracking of email blasts and manage the ones who want to opt out. And if we want to integrate our partners we go with BlueRoads for channels and Loyalty Lab for retail customer loyalty management. Our call center may be entirely distributed across the nation using Five9.
People: To mange HR related activities we may see EmployEase and may be Expenseit to do the expense reports. To better manage personnel development we may use Successfactors. Additional hiring may be supported by LinkedIn.
Bookkeeping, Orders & Logistics: Now when we get orders we want to choose a complete ERP solution and may stumble over Intacct or NetSuite. We may track all our contracts with Encover. We may also choose one of the project management systems, SCM tools and other products out there for our specific needs.

As you can see we pretty quickly are able to replace every single software today with SaaS solutions. And guess what, all of the above can be done already today. I found over 300 vendors in some 30 categories who all can make this a reality. There is not a piece of software that I need to put on my computer other than a Browser and an OS of course.

But walking through this new office environment I discovered some totally new challenges: My SaaS applications are sometimes so cheap that I may need to connect with other users to find out the best usage - hard to call the Yahoo hotline and ask for somebody to come in and help us optimize the use of yahoo mail in a team environment. Another issue I'm facing in that office is that I don't just start the software - I need to login and provide a password and do so for 20 different applications. Also I may need some tool - at least an online spread sheet - to track all the licenses and keep up with expiration dates. And when I begin to put this all together I would welcome some knowledgeable person to help me find the best solutions for me TODAY (since I don't worry about tomorrow - because I simply switch if I need to).

The advantage how ever are big enough to go forward: We don't need to mess with servers, with backup, with software upgrade and updates. We don't need an engineer who puts this all together for us. We don't need to allocate $250,000 capital expense for software and hardware. We don't need to worry about service and maintenance contracts and we don't need to plan amortization and think about what software is right for us today and how this decision may affect us in a year or two from now.

Tanooma will soon be a showcase for a completely SaaS based business - we have no software that runs on our servers (hence no servers). Tanooma is running a completely "Technology Free IT" environment. Simply because it is less expensive, requires no investment, requires no staff and allows us to pick and choose what is best for us TODAY and end of the year we may switch to what ever makes sense then.

Competitive advantage: We have the most flexible office IT infrastructure and can afford to pick the best possible solutions that fit our most current needs. While others may be limited by the investments they already made - we will have the best solutions for us when ever they are available.

P.S. Ismael Ghalimi, another fellow blogger said it this way:

Saturday, February 18, 2006

The beginning of a new software economy

From 1 Million to 100 Million SaaS users in 5 years

I guess we all pretty much agree: The SaaS Industry will grow fast. How fast - we will see in 5 years from now. But a few interesting indicators show where this all goes:

1) Investors
On conferences publicly and in individual conversations privately we hear it over and over again: "We will invest in SaaS but we will probably do no more investments in traditional license software". For investors it is the recurring revenue model but also more and more the underlying technology. I may be totally off - but I can see more investments into SaaS in the next few years than into Internet in the crazy days. Why? When the railroad boom slowed down with it's crazyness in the old days - the real investment started in building the transportation infrastructure.

2) Technology
When it comes to Rapid Software Development, SaaS certainly outperforms any other software model. Deploy it now - get feedback - fix it on the fly - mature to a product that is not build for an audience but actually with an audience. SOA, Web Services, open source are just a few key ingredients to build a software so fast that no other technology can compete on a time to market scale. With the speed comes more variety and more diversity.

3) Economy
SaaS is cheap - period. Even so we all hear from the legacy software maker that SaaS is more expensive in the long run - I just hope that who ever says that has a calculator handy. We all agree that the actual software and hardware cost is less than 40% of the overall IT spend. And we also agree that a SaaS vendor is able to split their operations cost amongst 1,000 and more companies versus only one IT organization. Enough said.

4) Popularity
SaaS is simple in the first place and vendors have an unparalleled interest to keep it that way. This will motivate less computer savvy users or industries to investigate software and IT solutions. SaaS will go way beyond application software. Any kind of Tools, Games, Hobby and Entertainment Solutions will get into the market. Manage your wine cellar online, keep your library online and get additional information about the author, play games online and develp your identity and earn points in a new gaming world, begin not only filing your TAX online but actually interact and communicate with your insurance and everybody else in an online home office infrastructure where you find all your documents even if your home burned down.

500 Million PCs (our todays installed base) will use SaaS partly or entirely one way or the other. It may be 100 Million already within the next 5 years.

Saturday, February 11, 2006

SaaS – Mega Disruption

The least significant feature of SaaS is that it is a new software delivery mechanism. That is only a side effect. Unlike the Time Share system in the 70’s or Mainframe based application delivery in the 80’s, SaaS has several disruptive elements that will change the face of the software industry like no other development before.

10 Strategic Aspects of Software as a Service

1) Time to value
With average implementation times of 1 day to 6 weeks, SaaS software is an order of magnitude faster productive than any traditional business application. While traditional business software needed to be installed, configured, embedded in existing IT infrastructure, adjusted to fit with other software and mostly customized not only to fit the customers needs but simply to put to work – SaaS applications in contrast go live immediately and can be used from day one. An ROI can be expected in a matter of months – not years. Even so customization capabilities may be limited – updates and usability will immediately increase.

2) Perpetual service model
SaaS vendors have no other chance than provide excellent service to their respective customers on an ongoing base in order to stay in business and ensure the renewal of the service. Support is typically provided on a 24x7x365 basis – at no extra cost. There is no “product delivered – thank you very much”. SaaS is based on a perpetual service model, versus a perpetual license model.

3) Major transformation in usability and support structure
Since SaaS companies are build on the premise of a perpetual service model, a large amount of creativity goes into usability and serviceability of their products to ensure a profitable operation. Substantial investments go into user interface design, intuitive process design and more or less bug free applications. Since support contracts are no more separate line items – there is a big interest on the vendor side to drive support down; next to zero.

4) Financial predictability
Traditional IT cost was a collection of cost items such as software license, software maintenance, software support, hardware cost, hardware maintenance, up to date hardware to support the software, adjustments in server infrastructure, other operational expense including space and air-conditioning. While this was very hard to plan and predict, SaaS licenses include all of the above – including personnel and support. This is a rather simple to plan per user, per org, per what ever unit over time expense.

5) Leveraged Administration, reduced cost
In the traditional IT environment every update, every upgrade, every data migration is done one by one for every single company individually. SaaS providers by contrast do the same job for hundreds or even thousands of companies over night. Also here the motive to make this error free and as cost effective as possible SaaS providers invest strategically in operations efficiency and leverage the critical mass of customers to always outperform an individual IT center infrastructure in cost, availability and scalability.

6) Data security and reliability
As we learned from various studies, between 70% and 90% of security fraud happens within a company by internal personnel. Data access to not only mission critical but also personnel and other sensitive data need to be granted to a variety of people internally. SaaS providers in contrast invest in security mechanisms and typically operate their systems by people who have no interest in the individual data of the respective clients. By risking the integrity of an entire company SaaS providers have a much higher motivation to ensure data protection than many IT organizations.

7) Meta Data - Business Benchmarks
As our business world is more and more focusing on efficiency, process optimization and improving operational infrastructure we are in the need for benchmarks and data points to actually measure effectiveness in relation to our respective industries and to other industries. A currently very underestimated side effect of SaaS is the ability to collect “Meta Data”, information from all sorts of businesses about sales process times, average lead closure rates, average marketing campaign response data, personnel churn and hundreds of other data points. Even so the business ethic of a SaaS provider would suggest to keep that information highly confidential on a per customer bases, it is of enormous value to our business society to understand the aggregated results and averages. While this is extremely difficult to aggregate with customized and behind the firewall application software, it is a huge treasure of the SaaS methodology. It will take quite some time for some companies to appreciate the benefit of benchmark data vis-à-vis contributing with their critical and sensitive information but as the old saying goes “what you can measure, you can manage and what you can manage gets done”.

8) Technology Free Information Management
Companies, primarily flexible organizations or start-ups may go with Technology Free Information Management and entirely word with SaaS providers. No capital expenditure for the back office, no IT service team, no backup, no update, no data migration, no software installation, no security management. Not only will those companies have a competitive advantage in their operational flexibility and reduced cost but more importantly in their ability to switch to most current technology and most appropriate applications for their respective business.

9) User Integration
In the 60’s computer users where primarily programmers and operators. In the 70’s some educated and trained business administrators joined. In the 80’s and 90’s more and more all employees of a company were integrated in the internal Information Architecture of a corporation. The “last mile” is the integration of legally independent business partners and customers. In a traditional software model this goal is limited to EDI and some dedicated and individual system integrations. The SaaS model how ever also here opens a new world. The combination of Internet Technology, Webservices and the SaaS model allow applications and connectivity that partners and customers can be integrated in a homogeneous business process while maintaining their independence. From dedicated host software to standardized PC software to SaaS reflects the evolution of user integration and user centricity.

10) Explosive Growth.
In the next 10 years, over 500 Million PC users will use SaaS one way or the other, partly or exclusively. If a main stream application cost $50 per year and reaches 30% market share, the respective vendor would make $7.5 Billion annual recurring revenue. He may lower the price to 50Cent per year and still make $75Million. Software will become so cheap – we almost wonder whether it is even possible. Unlike predictions that the industry will consolidate after a few years like the current IT industry, SaaS will grow in variety like any other consumer industry.

Plus the obvious tactical advantages such as omnipresence of the respective application on a global scale, ever faster technology improvements with less hassle of update processes, lower cost if implementation and experimenting with new solutions, new application and other reasons. It is not the software delivery model that makes a SaaS application it is the disruptive service structure, meta data and explosive growth potential.

Monday, February 06, 2006

Tanooma - building a new world

Tanooma - A new world a new engagement
As you know I'm working with a partner on a next generation Software as a Service engagement.

Dr. Timothy Chou (former president of Oracle on Demand) and I decided to continue pioneering the SaaS industry and contribute to its growth. We are currently developing the underlying infrastructure and software architecture for our new solution and also work on definitions, business model and go to market strategy. Please stay tuned for a few more weeks. If you are interested, you may register at the Tanooma site at and we will automatically inform you prior to the launch.

Both, Tim and I are working within this SaaS industry from day one. And we both share our view with many others - this industry will be more disruptive to Information Technology then any other innovation before. The interesting part about Software as a Service is, that it is more then just a new technology - it is actually more a new methodology and more importantly a new business life style.

Selling Software comes to its end. We are at the beginning of providing software based services. A SaaS company can not leave once a deal is signed - the engagement actually just begins at that point. SaaS is a new world with new aspects, new thoughts and new behaviors. SaaS provides new benefits, more simplicity but as markets grow there are more and more questions - I am currently tracking over 300 SaaS companies - end of last year I encountered about 200.

This is going to be one of the most exciting times in our industry!

Monday, January 30, 2006

2006 Enterprise Software Summit

Enterprise Software will experience dramatic changes ahead. SaaS is the primary driver for those change. It is not the new delivery model, but three key elements: Benchmarking, User Experience and Reach and Cost & Efficiency advantages.

The 2006 Enterprise Software Summit circles around those themes. I look forward to it.

Sunday, January 08, 2006

The Service Economy

2006 may become the most important year for the Software as a Service industry. I recently heard people talk about "Hardware as a Service". Wouldn't it be cool to get a washing mashine in a HaaS (Hardware as a Service) model? We enter an annual contract and pay $25 per month. If it breaks, it will be replaced, if a new model comes out we'll get it. And how about our $20,000 home theater for $690 per month? If we wan't a bigger and better one - no problem! And may be our....

Seriously - our economy will change. Leasing and full service leasing will morph to Hardware as a Service as Software as a Service makes further progress. It will be an exciting yet very challanging development for most of us.