Believe it or not, that was a piece of "advice" that I discovered while trying to fix a problem with Google Chrome. The question was about a browser, but the answer was about an operating system. It was clearly not helpful, at least in dealing with my immediate problem.
On the other hand, pseudo-advice like that is very useful if you want to understand the state of the technology industry in 2010. It's the subject of this autobiographical psychodrama that I might entitle, Personal Computers Are Not Appliances. If you decide to read on, let me warn you: it's a terrifying tale of reasonable people at the mercy of unreasonable levels of complexity and unreliability. During this exposition, you'll encounter interesting characters like the Apple iPad, Google's business plan (of sorts), Marc Benioff, and our evil cat Kelly.
When Chrome Lost Its Shine
Yesterday morning was crunch time at stately Grant Manor. The quarter was coming to a swift end, which meant all kinds of deadlines for research documents, expense reports, client projects, and a variety of other tasks. Regular activities, such as phone calls with technology companies about their latest product and service offerings, still happen during these hyper-busy periods, when time becomes so compressed that it fails to serve its basic purpose of, in the words of Richard Feynman, preventing everything from happening all at once.
Technology innovation and business disruption are changing the software market today. Cloud computing is blurring the line between applications and services, and smart solutions are combining hardware with software into new, purpose-engineered solutions. We are happy to announce that we have launched our Forrester Forrsights Software Survey, Q4 2010, to predict and quantify the future of the software market and help IT vendors to tap into the insights from approximately 2,500 IT decision-makers across North America and Western Europe.
The survey will provide insights on the strategic direction and spending plans of enterprises from very small businesses to global enterprises, segmented by industry and country. In comparison with last year’s survey, we significantly boosted the sample size this year for the energy (oil and gas, utilities, and mining) and healthcare industries; we’ll be able to provide an in-depth analysis for these industries along with retail, financial services, high tech, and other industries.
Key themes for this year’s software survey include the following topics:
Cloud computing. Besides a 360-degree overview on current and future adoption rates of software-as-a-service (SaaS) for different software applications, we are going much deeper this year and have asked IT decision-makers about their cloud strategy for application replacement as well as for different data and transaction types.
Integrated information technology. Purpose-engineered solutions combining hardware with software are promising higher performance and faster implementation times. But do IT users really buy into single-vendor strategies?
On September 15th between 11am-12pm EDT Forrester held an interactive TweetJam on the future of cloud computing including Forrester analysts Jennifer Belissent, Mike Cansfield, Pascal Matzke, Stefan Ried, Peter O’Neill , myself and many other experts and interested participants. Using the hashtag #cloudjam (use this tag to search for the results in Twitter), we asked a variety of questions.
We had a great turnout, with more than 400 tweets (at last count) from over 40 unique Tweeter’s. A high level overview of the key words and topics that were mentioned during the TweetJam is visualized in the attached graphic using the ManyEyes data visualization tool.
Below you will find a short summary of some key takeaways and quotes from the TweetJam:
1. What really is cloud computing? Let’s get rid of 'cloud washing!'
I’m beginning to prep for a future report on a new breed of tools designed to help companies manage complex social media accounts, relationships, communications and internal roles. If you have some experience, know some tools or just have some questions you’d like answered, please weigh in!
In the old days (of 2009) many brands had just one Twitter account and one Facebook account maintained by one (or a small set) of people, so the brand’s social media presence was relatively easy to maintain. Today, the challenge is much greater—some brands have dozens of accounts in multiple languages focused on geographies ranging from the entire globe to individual countries and cities. At the same time, demand has increased with a greater need to listen and respond to the growing audience in social media, and to handle that inflow, marketers are involving more and more employees.
None of all of these tools offer the same set of features, and we'll see a great deal of change in the next couple of years as consumer demands, enterprise needs and social networks change. For now, effective social media management requires a combination of:
Have questions about cloud computing and the top challenges and opportunities it presents to vendors and users? Then join us for an interactive Tweet Jam on Twitter about the future of cloud computing on Wednesday, September 15th, 2010 from 11:00 a.m. – 12:00 p.m. EDT (17:00 – 18:00 CEST) using the Twitter hashtag #cloudjam. Joining me (@hkisker) will be my analyst colleagues Mike Cansfield (@mikecansfield), Pascal Matzke (@pascalmatzke), Thomas Mendel (@drthomasmendel), and Stefan Ried (@stefanried). We’ll share the results of our recent research on the long term future of cloud computing and discuss how it will change the way tech vendors engage with customers.
Looking through the current industry hype around the cloud, Forrester believes cloud computing is a sustainable, long-term IT paradigm. Underpinned by both technology and economic disruptions, we think the cloud will fundamentally change the way technology providers engage with business customers and individual users. However, many customers are suffering from "cloud confusion" as vendors' marketing stretches cloud across a wide variety of capabilities.
To help, we recently developed a new taxonomy of the cloud computing markets (see graphic) to give vendors and customers clear definitions and labels for cloud capabilities. With this segmentation in hand, cloud vendors and users can better discuss the challenges and benefits of cloud computing today and in the future.
Recently, I published a report about a small software-as-a-service (SaaS) vendor, Dimdim, which is having success in the crowded Web conferencing market. Like many small vendors, Dimdim provides a free service tier, generously allowing up to 20 participants into the free meeting, to help drum up business. The report, though, did not simply highlight the number of users that Dimdim has captured in four short years of existence -- over 5 million -- but also its success in attracting partners like Intuit, Novell and Nortel CVAS. Why? For new vendors entering crowded markets, attracting partners is vital for two reasons:
Partners open doors to new markets. In crowded markets, incumbent vendors and new entrants jostle to serve customer needs. For the new entrants, the customers that can be wrangled through media hype and analyst buzz is minimal. Mass appeal comes from firms with strong working relationships with a range of buyers in a number of markets -- e.g., oil & gas, healthcare, government -- embracing a small vendor's offering and introducing it to their clients.
You might be surprised to find out how worked up I can get about an issue like switching costs (a.k.a. lock-in). It's a question worthy of at least a little emotion, since it affects the fortunes of technology companies: Under what conditions would a customer switch to a different vendor for the same product or service?
The question has returned with a vengeance with the increased adoption of SaaS and PaaS technologies. Tech vendors are happy to use the cloud as an easy way to attract customers, as long as it doesn't turn into an equally easy way to lose customers.
What gets my dander up is the simplistic, puerile way in which people sometimes discuss this issue, particularly in regard to SaaS implementations. Here are a couple of examples.
Cost Of Switching
How do the switching costs of an on-demand solution compare to an on-premise alternative? Clearly, the cost of switching from an on-demand solution is not zero, and yet you still find in some discussions of SaaS the assumption that customers will leave willy-nilly. Nor is the cost of switching the same as an on-premise solution, but you'll find people speaking about the two as if they presented the same migration and implementation challenges.
On July 27, 2010, Parallax Capital Partners announced that it was acquiring Daptiv, a SaaS PPM vendor. Forrester customers who are current Daptiv customers or are considering Daptiv as a PPM vendor should not be deterred. As a $20 million vendor, Daptiv provided a strong work group for project portfolio management, performing well at the departmental or divisional level, but had limited capabilities in areas that were attractive to enterprisewide implementations, including functionality (i.e., resource management and financial project management) and ability to scale development or support - a typical problem for smaller vendors. Prior to the acquisition, the company had started down the path toward enterprise viability, but the vendor was still seen as best suited to small to medium-sized standalone implementations.
Acquisition by capital investment firms can mean prepping a company for sale, but with Parallax operating Daptiv as a wholly owned subsidiary, Daptiv’s future looks much more positive. Having Parallax’s backing, the vendor will now be able to:
Increase R&D funding to further develop the connectors for ERP integration as well as extend connectors to other demand management or portfolio management tools.
Provide resource management functionality that supports forecasting and capacity management.
Increase support capabilities for larger, more complex implementations in order to compete at the enterprise level.
Extend its Daptiv platform to encompass more work-related data and reporting.
Provide increased financial modeling at the portfolio level and project actual capture for financial reporting.
As a consequence of the ever-rising popularity of CRM solutions deployed through the software-as-service model (SaaS), I get a lot of inquiries about pricing and contracting with vendors like Microsoft Dynamics CRM Online, NetSuite, RightNow Technologies, and salesforce.com. Sage CRM products (Sage CRM and Sage SalesLogix) are now offered through “the cloud”, and specialty CRM players in the life sciences sector, such as Cegedim Dendrite, StayinFront, and Veeva Systems, also offer this deployment option.
The individuals responsible for choosing to deploy a CRM SaaS solution are often business users, not IT people or solutions sourcing professionals — the director of sales and marketing, vice president of sales, and director of customer service, for example. These business executives are often unfamiliar with the more technical and commercial aspects involved in choosing a SaaS application. Obviously getting a good price is important, but there are additional considerations to keep in mind. Here are some guidelines to help you to negotiate a sound agreement:
Strive for a price lock-in at renewal time. Firms are often able to negotiate substantial discounts when signing initial contracts with SaaS vendors. But these companies don't always consider what happens at the end of the initial contract term. A discount of more than 50% might be offered, but once the contract is up for renewal, you may be in for a surprise if the discount is no longer available. Make sure to have renewal pricing rules stipulated in your contract.
This week, I was at the Microsoft Worldwide Partner Conference in Washington, D.C., and it was all about THE CLOUD. Now, many colleagues argue that Microsoft will be the second-to-last major vendor to show a 100% cloud commitment, saying that “it’s too embedded in its traditional software business,” “it doesn’t understand the new world,” and “it’d be scared of cannibalizing existing and predictable maintenance revenues.” But I remember Stephen Elop, president of Microsoft Business Systems, tell me with a mischievous grin that he’ll probably earn more money from Exchange Online than the on-premise version — “firstly, it’s mainly new business from other platforms like Lotus Notes, and second, I even generate revenues by charging for things like the data center buildings, the infrastructure, even the electricity I use.” That was in Berlin last November. I suspected then that Microsoft did get it but was just getting its platform ready. This week, I am convinced — Microsoft is “all in,” as they say.
And at the Microsoft Worldwide Partner Conference, it was driving its partners to the cloud as aggressively as any vendor has ever talked to its partners at such an event. All of the Microsoft executives preached a consistent mantra: “MOVE to the cloud, or you may not be around in five years.”
Microsoft’s cloud-based Business Productivity Online Suite (BPOS) is already being promoted by 16,000 partners that either get referral incentives for Microsoft-billed BPOS fees or bundle it into their own offerings (mainly telcos). There are nearly 5,000 certified Azure-ready partners. This week, Microsoft turned up the heat with these announcements: