CloudForce San Jose
Tell them what you are going to say, say it and then tell them what you told them. The rule of three, that’s the Salesforce.com approach to its market outreach and it has served them well over the last decade. Tuesday was part three of the Chatter cycle in which the company culminated nearly a year of activity by announcing general availability of the product. Today they’ll start working on what to say at Dreamforce something they’ll be talking about for 2011. I can summarize the importance of the announcement, which was held at the San Jose Convention Center, can in several points.
First, the timeline of Chatter’s development is an important proof point for Force.com. In only eight months, Salesforce went from concept to general availability. There may be other companies that have delivered a product in eight months or less but the importance here is that Salesforce was not building a common database application and they were not simply deploying something that was already built.
They were iterating and, in part, inventing a new style of application so I expect there was a lot of iterative prototyping going on. That’s a bit more overhead and speaks well to the platform’s robustness. I am surprised no one made a big deal about the platform during this announcement. Maybe it was a missed opportunity or maybe something had to be left unsaid or we’d still be there.
Second, while Salesforce had other social applications to cull ideas from such as Facebook, Chatter is different because it is focused on the business organization as opposed to personal relationships. Chatter enables a higher degree of collaboration than earlier purpose built tools or earlier product categories like email. At lunch press members asked CEO Marc Benioff if he had hard numbers and we were told that numbers would be forthcoming.
That’s not surprising given that Tuesday was the first day of general availability. But the company said it was eating its own dog food and that six thousand companies were now Chatter enabled so I would expect some data soon. Caveat: like they say about mileage, yours may vary.
The interesting thing to me and the real power of Chatter is that as a collaboration tool it integrates — no intercalates — itself with a business application. Rather than asking you to use a separate piece of software for the purpose of collaboration, Chatter is built into the application and thus brings collaboration to the user. The impact is clear. Collaboration can now be something that’s an accepted part of business practice rather than something you formally do with a separate tool at a prescribed time. The result should be the savings we asked about at lunch.
I think collaboration has a strong role to play in sustainability — not for green reasons but because better communication leads to better understanding and if you can drive understanding through software it makes other forms of communication less necessary. Ever since humans domesticated the horse the preferred mode of communication and collaboration — which literally means working together — was to be face to face or in the same room. With collaboration tools it’s now possible to work together apart, if you follow my drift.
The benefit this provides to modern business is huge, of course. But it also means a renewed emphasis on mobility which Salesforce was only too happy to promote. Salesforce has done a lot to ensure its applications — including Chatter — run on popular mobile platforms including BlackBerry devices, iPhones and now the iPad. Not content to simply run in a browser on the iPad, Benioff announced and showed an iPad native application to be available later this year.
Of course, with mobility and collaboration workers can be anywhere as long as they have Internet access and they can participate and be relevant to any internal business process and that will be increasingly important if and when we see fuel prices head north again.
So forgive me if this seems like it’s rambling but if you’ve been here before you know the themes. There are a lot of ideas to sum up. Chatter is released, it represents the start of the collaboration era, not because Salesforce was the first to bring a product to market but because it was very early to figure out how to embed it in real business processes. Collaboration is essential to making our business processes more sustainable and that’s a theme we’ll be living with for the rest of our lives.
Let’s get our terms straight
Sage’s introduction of SalesLogix for cloud computing has caused me to do a lot of thinking. The operative terms we use in the industry for software functionality delivered across the Internet is SaaS or now cloud computing and numerous vendors find themselves twisting themselves and the definition into barely recognizable forms. Enough of this I say, let’s do a re-think.
If SaaS and cloud computing are mysterious to you, let me provide some background.
I started covering the field (it wasn’t a market yet) in 2000 and I devoted my practice at Aberdeen Group to it. In those early years other terms dominated the discussion, notably, hosted, on-demand and ASP. All applications were hosted and available on-demand but the earliest distinction, one that persists today, was between ASP’s and multi-tenant solutions.
Briefly, ASP’s or application service providers offered client server products like Siebel served from a central location across the Internet. It was slow going and each customer had a single instance of the software running out on the Internet. It didn’t work out well and many VC funds took goose eggs on their report cards from the ASP’s.
Multi-tenant was another matter. Salesforce.com was a pioneer but so were Salesnet, RightNow and UpShot. Ironically, only Salesforce understood the power and value of its proposition (RightNow got religion a little later) and most treated the multi-tenant on-demand solution as simply a delivery model and not much more. UpShot was bought by Siebel, Salesnet by RightNow and the debate about superiority abated because Salesforce and RightNow (which hardly competed then) had prevailed.
Then something interesting happened. Vendors like Oracle (which bought Siebel) started dabbling in on-demand services and began delivering application services that hybridized the on-demand and ASP models. They did this by re-architecting away from client-server and supporting applications in browsers. They then began hosting their applications in a have it your way scenario. The re-architected applications had been retrofitted to support the multi-tenant model but multi-tenancy was strictly voluntary. Customers could elect to run their applications as single instances in their IT departments or from a remote data center.
With multi-tenancy everyone shares a single instance of the application and through metadata configures and customizes their instance. All data in a multi-tenant system is stored in one server farm with metadata again serving to segregate it. Some people worry about this virtual segregation but so far it has been resilient to corruption and hacking. Nonetheless, some vendors offered single tenant solutions to assuage jittery nerves.
But wait there’s more.
Terminology evolution continued and SaaS or software as a service and cloud computing have been front and center for several years (in the case of SaaS). In its quest to differentiate multi-tenant from conventional single tenant, the industry keeps adding differentiators. SaaS has usually meant multi-tenant and cloud usually refers to a plethora of computing services available on the Internet. So, raw computing power is also called Infrastructure as a Service (IaaS), there’s still SaaS and cloud seems to refer to platform — the whole computing stack of hardware, operating system, database, middleware, applications and more.
So where does this leave us?
In a word, confused.
The relative dearth of terms has caused us to re-use what we have in ways that have confused the market. I also do not leave out the possibility of savvy marketers hitching a ride on a popular term to bend it to mean whatever they need it to, which lead me to my opening paragraph.
So I propose the following.
ASP is the new term used to describe a single tenant implementation in some remote data center that serves applications across the Internet. A vendor that serves multiple customers with this architecture would be said to be delivering an application service in single tenant mode. Full stop. No need to apologize for it. If that’s what the customer wants then sell it to them. It doesn’t have all the advantages of multi-tenant cloud computing but some people clearly don’t see these things as advantages anyhow.
SaaS refers to multi-tenant application delivery across the Internet.
Cloud computing is an umbrella term encompassing ASP and SaaS as well as IaaS and Platforms. ASP’s and SaaS providers may very well use infrastructure from other cloud providers as Sage is doing with SalesLogix.
My whole point in doing this is simple. I think the industry and the market are mature enough for us to develop some new terms or possibly adapt an old one. Since there are obviously several models for delivering software as a service, why not differentiate enough to give concreteness to them? Calling everything SaaS without qualifiers is not helpful to the market or the customer and the confusion it can cause can only slow down a sales cycle and who needs that?
Sage SalesLogix for the cloud: The return of ASP
Perhaps the most interesting CRM development to come out of Denver this week was Sage’s unveiling of its SaaS or cloud offering. But now that the initial hoopla has died down (mine included) it’s time to take a more measured look at what is being delivered.
As I mentioned in an earlier post on my blog the announcement means that Sage is offering a hosted version of SalesLogix but not one that has been re-architected to take advantage of multi-tenancy. The company still legitimately claims a better total cost of ownership profile for SalesLogix because the arrangement off-loads from the partner the need to support a physical installation and from the customer, the cost of most infrastructure. The usual configuration and modification cycle remains the same however.
So is this good or not? I say both.
First, let’s ‘fess up, this is not SaaS or cloud computing, except in the broadest possible definition you can imagine. Amazon’s EC2 compute services, which delivers infrastructure as a service (IaaS), provides the cloud aspect. It’s really ASP or application service provider, a model that waned away in the last decade for competitive reasons. ASP is back because the applications are no longer client-server and thus have lower server overhead; that single change should make the model much more competitive.
Sage is betting that this change is enough to help its partners battle against NetSuite, Salesforce and RightNow (and others) by enabling them to check off the SaaS box in any bake-off and that’s a good point. In fact, in briefings with SVP Larry Ritter and EVP and GM Joe Bergera that scenario came up. Sage partners can continue the discussion about CRM and business issues with prospects once they’re past the SaaS beauty pageant and for them it’s a good thing.
Sage’s secret sauce has always been its partners. The channel may be hard to administer at times but one thing you have to admit is that partners get right into the shoes of their customers in ways that software sales people simply cannot. No wonder then that most SaaS companies are trying to breathe life into a channel solution. Microsoft has sold through a channel for a long time, NetSuite is building one and even Salesforce has its version with its AppExchange developers who sell seats as a matter of course.
Sage’s strategy from here is to enable a hybridized approach to its solutions by offering the choice to customers over core CRM functions but increasingly to also offer complementary SaaS solutions that leverage customer data wherever it happens to reside. That may represent an optimum for this business model, at least for now.
On the other hand, though, Sage seems to be taking its time bringing out complementary solutions and appears to regard that as its domain. It would be better if the company opened up this space to more competition and contribution from partners and ISVs. A more open approach would enable Sage to stock its catalog faster and make the promise a reality sooner. The company’s statement so far is that it’s going for quality over quantity but I have a mild disagreement here. I think it’s better to look for quality by letting a thousand flowers bloom and picking the best, rather than by over controlling the process.
SalesLogix in the cloud takes the company a long way to delivering lower cost solutions but Sage still has work to do. Its customers represent a market very much oriented toward operational efficiency as opposed to, say, customer intimacy. It needs to deliver low cost, easy to implement and deliver solutions, a quest that never ends. Now that infrastructure has been dealt with Sage can focus more attention on business processes and vertical deployments, which is always on its roadmap.
So to net it out, Sage was the odd man out in the hosted services derby but that changed this week because Sage is now in the hosted services game. It’s a solution that might seem odd to a SaaS purist, but it fits the special circumstances of a channel operation. I think we need a new name to distinguish multi-tenant SaaS and cloud computing from solutions that simply use IaaS, something that is assertive rather than pejorative. ASP anyone?
Sage’s first Cloud offering
At Sage Insights, Sage North America’s annual partner conference being held this week in Denver, the company announced its first cloud based CRM product. This is a significant event for the company for a couple of reasons. First, until this point Sage did not have any cloud offerings and second Sage sells through a partner channel which sometimes lags over adoption issues. In this case, over 50 partners are participating in a pilot program for Sage SalesLogix which is an indication, perhaps, of the interest in the partner community.
The offering is hosted on the Amazon Elastic Compute Cloud™ (EC2™) infrastructure which gives partners the chance to sell a hosted offering without most of the deployment issues that would be associated with a conversion to a SaaS offering. According to the press release this offering will be available in June at $65 per seat. Most of the attributes of the conventional SalesLogix offering will be maintained because the deployment will be single tenant. For instance the architecture maintains segregation of company data and control over update release cycles.
This is a big deal for Sage and its partners. For several years the partner community appeared to be lagging the general market in acceptance of the cloud model but recent economic conditions may have convinced some to take the chance. Partners that offer SalesLogix as a cloud-based service will be able to offer a lower total cost of ownership solution and the possibility of additional connected services such as Sage’s email marketing service and other services in the pipeline.
This announcement needed to happen and it is another manifestation of Sue Swenson’s leadership as she tries to update all aspects of the company and products.
The terminology wars
I had the pleasure of attending two events last week, Microsoft Convergence 2010 in Atlanta and the Salesforce-VMWare VMForce.com announcement in San Francisco. Each event was useful and informative in its own way and I am pleased to have witnessed each first hand. I have written exhaustively — at least I’m tired — about each of these so rather than another recitation of events, I want to spend this piece drilling into one aspect.
Terminology was common and different in the two events and it’s worth looking at. The term de jour is cloud computing and it has been current for at least ten minutes — more like about two years. We know it’s the “in” thing because until very recently both Salesforce and Microsoft were using it albeit in very different contexts.
A couple of years ago, Salesforce and a few other intrepid vendors began using cloud computing to describe the confluence of SaaS applications, increasingly available infrastructure and the ability to “mashup” components to make novel solutions. Cloud computing meant Infrastructure as a Service (IaaS), SaaS or software as a service and PaaS or platform as a service. For instance, Google Maps, running on Google’s server farm, plus your prospect list in SFA, running on Salesforce’s farm, could yield a map or satellite photo of a territory with markers indicating prospect locations. In one vivid and visual screen a person could see and strategize a set of sales calls, for instance.
Cloud computing was fun and it replaced SaaS, more or less. To be SaaS seemed to imply an application ran for the benefit of those who were earthbound in a building or within the constructs of the enterprise. To be in the cloud was to let your imagination soar, to combine and recombine in limitless ways to produce new functionality, to go where no man has…er, you get the idea.
Cloud computing was fine and wonderful until many vendors either entered the space with their own ideas or when they discovered that they couldn’t exactly do it without serious reconfiguration of their product sets and business models. Cloud computing was a disruptive innovation.
Not to worry, the inevitable commoditization of the term then began in earnest. Like watching the sky on a windy day clouds could morph into wonderful shapes and thus cloud computing could be many things. That’s about when Microsoft entered the fray with Steve Ballmer’s famous quip that “we’re all in” meaning that the software giant was making the biggest bet that it could on cloud computing.
“All in” for Microsoft means that their vision of cloud computing is essentially infrastructure as a service (IaaS) — the ability to tap into a server in the sky on which you’ve bought space to run a conventional application. With Microsoft’s market power it is likely that cloud computing will come to mean whatever the company wants it to mean and that means cloud computing will look more like time-sharing than a mashup.
This brings us to last week. While Microsoft was all in, in Atlanta, Salesforce was way out on the west coast announcing an alliance with VMware. You’ve seen the news no doubt, that the Force.com platform is being enhanced to provide Java runtime services for legacy applications through this association. It demos well and if it runs that way I think we’ve got another important brick in the wall of new-fangled IT.
In his introduction, Salesforce CEO, Marc Benioff, called the alliance the beginning of a new era in “Mobile Internet Computing”. When he uttered those words my ears pricked up and it made me wonder if we were witnessing the birth of new terminology yet again.
Salesforce and its close allies and partners have managed to stay one step ahead of the terminology commoditization curve for the last ten years and it wouldn’t surprise me if we were about to get another new term. In this way, Salesforce has managed to use accelerating terminology commoditization to its benefit saving its marketing budget for more important things and always managing to pigeon hole its competition as retrograde.
I have only heard Mobile Internet Computing once and it may not stick but I wouldn’t be surprised if it did. The thing I don’t understand though, is why Microsoft continues to fall into the same trap of letting someone else name a trend and then spending lots of its own money popularizing it.
An alternative for Microsoft might go like this. Microsoft has four ERP systems and one CRM system and you could make a good argument that it is an ERP company and that ERP ought to be an on-premise application except in rare cases. I am not saying I agree with it because there are other benefits of cloud computing we’re not talking about here.
But the ERP worker is usually someone who works in the finance or a related department. This worker does the job at a desk in an office and has little use for a SaaS application. So why the big push to call this cloud computing? Selling infrastructure services isn’t really cloud computing so why call it that? Why not define yourself in terms of what you do rather than in terms of what others make up?
If Microsoft wants to compete in cloud computing CRM that’s fine. It could easily develop a hybrid model for integrating front and back office applications and not have to fight an uphill battle with its ERP customers over where their data is stored. It would be a novel position and one that is immediately appreciated by its ERP customers.
