A Disruptive Moment
It is very hard to pinpoint a disruptive innovation and the moment it hits the market and I have said this many times before. It’s easy to know that you use this or that technology today and couldn’t imagine living or working without it but, really, can’t you imagine the time before you started using this stuff? Social media might be a good example since most of today’s users still kind of remember what life was like before. Today is one of those days, I think.
Today Ayasdi came out of start-up stealth-mode and announced itself and you can see an article about it here in the New York Times.
So what is it in a nutshell? It’s only the first really new and different way to analyze big data since we started collecting it. Ayasdi uses something called topological data analysis and here’s one place where it’s different. Rather than type a query or ask for a report from a big data set, Ayasdi just looks at the whole data set and tells you where the interesting clusters of data are — clusters in places you may not have thought about.
So that means you no longer have to more or less know what you are looking for to use analytics, you simply need to know that you want to understand the interesting clusters. That’s a disruptive moment if you ask me — presuming it works as well as the early hype says it does. To me this sounds more like advanced data mining than business intelligence but I am not an analytics guru so this is simply speculation.
So what’s it good for? Well, if you’ve collected a lot of data about a molecule you think might have beneficial pharmaceutical properties, rather than performing a lot of screening tests, you might first examine the data topology and then investigate where the data says there are interesting relationships. And, yes, substitute customer for molecule in the above and more interesting things happen.
As with any disruption, it’s hard to think of what the world will be like in the aftermath, but if this works as advertised a few years hence we might all be scratching our heads trying to recall what life was like before.
Lesson learned from LucidEra
LucidEra’s unfortunate announcement that it was suspending operations hits the SaaS industry hard. The on-demand sales analytics company had a good record of providing valuable solutions for sales organizations and managers interested in better understanding their pipelines and deriving meaning from their SFA data. But ceasing operations highlights one of the chief risks inherent in adopting a SaaS solution namely, that an application can become unavailable.
Fortunately, the people at LucidEra are classy people and they have spent the last week or two trying to ensure that their customers could migrate their data to another on-demand provider. They called it an “orderly transition.” That’s about the best you can expect and if every SaaS provider that goes out of business in the future did that we would have the rough equivalent of the scenario when a conventional vendor goes belly-up or stops supporting a version.
The conventional software model leaves you with the software that will run as is regardless of whether its vendor is solvent. Support and upgrades are a separate issue and they do not materially differ in either case.
So to the voices that have said LucidEra’s demise is proof of why conventional software is better, I say not so fast. Throughout the SaaS era — roughly ten years — the SaaS industry has had to cope with numerous similar situations where there were no precedents. Up-time, security and disaster recovery all had to be re-thought for SaaS and vendors invariably found solutions. LucidEra is providing another example of a SaaS provider figuring out a solution to a tough problem and I think they should be applauded.
Nonetheless, the SaaS industry should not act like this kind of thing could not happen again and it would be wise to consider contingencies for a SaaS company going down in the future. It may be wise for customers to consider requiring that SaaS providers carry insurance against failure or, more precisely, insurance to cover the contingencies associated with shutdown.
Surely some big insurance company would be happy to underwrite the risk in the same way that multiple insurers already provide business insurance against all sorts of calamities including errors and omissions. Such insurance might not have been feasible ten, five or even three years ago. But the popularity of SaaS and the business advantages it offers clients says that the risk pool is reaching critical mass if it has not surpassed that threshold already.
Let’s say insurance against a SaaS company’s demise costs a dollar per month per seat declining for really big implementations or customer bases. Who couldn’t or wouldn’t afford that, especially in this market? A dollar isn’t much but given the market I can’t see how it wouldn’t be a profitable business.
I don’t expect that any SaaS company will rush out and advocate for insurance and, as is often the case, demand for such insurance will have to come from the customer. But all of the pieces seem to be in place and, like mirrored data centers and SLAs (service level agreements) I expect transition insurance in the event a SaaS company goes out of business will become standard fare in this still evolving industry.
