Open World most resembles Forrest Gump’s box of chocolates in that there is such variety that you never know what to expect. At any moment there is equal probability that you will be dazzled, challenged, delighted and perplexed.
This being journalism, perplexity reins as a dominant topic and perhaps the most perplexing thing about the meeting is the show floor which includes large booths from the heavyweights in the industry a.k.a. Oracle’s greatest competition and greatest customers, for example, SAP and Microsoft. Salesforce.com’s booth sits long and narrow moored on the show floor like an aircraft carrier in a crowded harbor.
By the time most of you read this Marc Benioff will have spoken and we will at last have an answer to the question haunting the halls of the Moscone Center. Why would Benioff speak at Open World, the user meeting of one of his staunchest competitors?
You can make all of the arguments you want about how Salesforce relies on the Oracle database to serve its millions of customers, you can invoke arcane game theory to explain this apparent cooperation among competitors if you like – after all the Nobel Prize in Economics was just awarded to two social scientists who studied this phenomenon. Still you are left with an irreducible Why?
Benioff speaks at one today and may have an answer.
In CRM kudos have go to Anthony Lye and his team for their top to tail work with the Siebel and CRM On-Demand suites and the dogged determination to prove the necessity – even desirability – of hybrid premise-based and on-demand approaches to CRM. I will not digress into a discussion of my oft repeated belief that this is a transition state on the way to full Cloud Computing in deference to my hosts and I only wish they would give up the sophomoric assertion that cloud computing is simply vapor.
The CRM team is bristling with innovations for large and small customers –announcing twelve new products, eighty customer driven enhancements, thirty-one new features, a REST API, CRM availability in Microsoft Outlook, and a new Siebel version coming this year. I think there’s more but maybe my note taking is not so good.
Larry Ellison spoke on Sunday night — a cameo in Scott McNealy’s keynote. Ellison made the expected and highly believable statements that rather than letting Sun sink into the, uhh sunset, once the merger is completed, Oracle would increase its investments in Sun systems beyond the hefty investments that Sun had been making.
Oracle’s stewardship of PeopleSoft, J.D. Edwards, Siebel and fifty-five other acquisitions (according to Safra Catz) provide the needed street cred here. Ellison even had fun poking IBM about an internal program they call Sunset reminding all that one man’s sunset was another’s sunrise. He then proceeded to announce significant benchmark superiority over Big Blue. Some things don’t change, benchmark competition is one of them.
But Sunday was McNealy’s time to shine. The justifiably proud Sun CEO rattled off a slew of Sun’s leading innovations in CPUs, memory and file management, operating systems, and, of course, JAVA. Many of us forget how many devices run on JAVA code — without any “JAVA inside” branding — but it’s a lot and McNealy was happy to provide a glimpse.
Ellison will speak on Wednesday to conclude the meeting and my contacts keep telling me that my questions such as those about integrating the sprawling software suite will gain clarity then. We’ll see.
Perhaps the most interesting moment of the show for me so far came on Sunday at the end of McNealy’s speech. He showed a slide meant to sum up his experience at Sun as well as the operating philosophy the company has been run by. The slide said we (Sun),
- Kicked butt
- Had fun
- Didn’t cheat
- Loved our customers and
- Made money
(I am not a hundred percent on the last bullet, note taking again.)
McNealy concluded by saying of the merger of Sun and Oracle, “Larry’s going to like his new toy.” The statement immediately put me in mind of Newton’s famous summation of his own career when he said near the end of his life:
“I do not know what I may appear to the world, but to myself I seem to have been only like a boy playing on the sea-shore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me.
I can’t think of a better description of why these very bright people work so hard to make electrons dance. Sure, it’s profitable but at the end of the day it’s even better if the ride has been fun.
As luck would have it, I knew nothing about Larry Ellison’s rant at the Churchill Club on September 21 about cloud computing when I wrote last week’s piece on cloud computing. I saw it on YouTube.
You have to admit that Larry is a heck of a showman and the video is fun to watch. But whenever someone in that kind of situation starts to nit pick over definitions it says to me that they’re hoping no one will notice that they might be a bit threatened by a next generation technology.
Various analysts have pointed out the cloud is really an amalgamation of several technologies including Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). I can’t disagree with any of that though it is a rather mechanistic summation, but my reaction to all this parsing of nomenclature is, so what.
Really, so what.
My take on cloud computing is different, it’s part cultural and part historic and the two are twisted tightly together. The history of the technology industry is one of overcoming shortages and cloud computing is part of that progression.
When storage and memory were in relative short supply we kept data on tape and programs on punch cards. We responded by building more and denser capacity until the shortage went away and we found ourselves with extra capacity at greatly lower costs. We had capacity to spare and instead of wasting it, clever individuals built the relational database.
Computing power has always been short but once we got into Moore’s Law the curve kept delivering new capacity to burn every eighteen months or so. Did we waste it? Some did, but enterprising souls built the graphical user interface of GUI and graphics cards and they changed computing.
Along the way as these improvements became ubiquitous and cheap — then something magical happened. We started branching out and the improvements didn’t stay in the confines of enterprise computing. They leaked out into a plethora of unimaginable products. Consider the iPod, for example, nothing but a tiny computer with a baby-sized disk. Talk about unintended consequences, I know some people were thinking about these devices but there weren’t that many and look at the effect this one device has had on our culture.
iPod is only the best known example but there are many others. For example, our cars are now bristling with processors and memory for fuel injection, ABS brakes, navigation systems (probably with a DVD in your trunk) and more.
But we are not done.
Then it was bandwidth. Ethernet was an interesting standard but it was slow. Bright minds turned their attention to networking, changed the way our applications use networks so that they use less bandwidth and others made more of it available culminating in the ultimate consumer bandwidth, the Internet. Tell me that hasn’t changed your life.
What’s different today is that we have a relative abundance of everything. If it comes to us as a service we no longer think about all of the provisioning and cost that was once part of our calculus. Platforms and applications coming in as a service ensure that bright minds can dream big and who knows what they’ll come up with?
So far all of that abundance has enabled us to build not artificial intelligence, that appears to still be in the future, but artificial, or should I say synthetic, relationships. I mean social media here. The relationships we maintain through social media are available to us because the cost of maintaining them in time and effort and real dollars is so low that it might as well be free. And the power of these relationships is that at any time, for the right reason, they can become full blown active relationships that provide friendship, information, help or anything you might expect of a friendship. And, of course, physical distance is much less of an issue than ever.
Our advances in technology have been the sometimes-surprising results of efforts to overcome scarcity and other adversities. Social media is a child of the ubiquity delivered through the Internet and it is still in its precocious early years. And logically, social media is not the only advance we should expect from this ubiquity, though I can’t say what the next things will be.
So when I hear someone, even kiddingly, say that cloud computing is nothing new or that it’s just water vapor, it makes me think that someone isn’t getting it. We only have a few faint ideas about what cloud computing will ultimately yield and that alone is why it is so important.
I have an on-going conversation with an industry executive about the nature of on-demand, SaaS and Cloud Computing. The central question is what is it exactly? Our conversation is always thought provoking and I come away from it with at least some additional perspective. Some times I think the discussion is incredibly philosophical like the question about a tree falling in the forest — does it make a sound if no one is there to witness it?
I was always flummoxed by the tree question. Of course it makes a sound I thought. But then my kids, who are musicians, explained to me that sound is the perception of certain energy waves emitted by the falling tree. Kids! When the tree falls it certainly makes those waves but unless an ear and therefore a person or some other animal is there to hear it the energy is never converted into sound.
So my conversation with the executive goes like that. Is SaaS just application hosting with delivery through the Internet? Is it SaaS if the hosting service is completely within the company? Can a company with such an infrastructure support remote sites that way and claim to have its own cloud?
These are all good questions and they are issues that we are still dealing with. The SaaS and Cloud Computing market is still so new that there are many issues like this that have not been nailed down yet to everyone’s satisfaction and they may never be.
It is my belief that you can’t separate SaaS or Cloud Computing from a multi-tenant architecture. Over the years, and as I have written before, the difference between SaaS computing and conventional applications that are hosted have dwindled to a small core largely consisting of the multi-tenant issue. Initially, conventional applications were client-server and hosting them meant using virtual private networks and high server overhead. They were definitely not SaaS.
Vendors have done a good job of bringing those client-server applications into the Internet age — the user interfaces run in browsers like SaaS applications do, and some even offer the capability of multi-tenancy. Some vendors have become good at offering a choice of hosting options to customers, so are then truly SaaS? Are they candidates for Cloud Computing?
The answer is complicated, like the issue of sound and the falling tree. First things first. As long as a customer has the option of multi-tenancy then I think it’s not possible to call a solution SaaS or Cloud Computing. In an optional setting like that the vendor still has to manage and maintain multiple versions of the application and with that comes all of the overhead and complexity of conventional computing.
Ironically, a vendor who offers the same software as both single-tenant and multi-tenant instances straddles definitions. A customer using that software as a service in a multi-tenant mode is using a SaaS solution. But a customer using the same software tucked behind another company’s firewall in single tenant mode is simply using a conventional solution and the same can be said of a company using a single-tenant solution in some other data center — that’s just facilities management.
As for Cloud Computing, I think it’s not possible for a company to have a private cloud. A private cloud is like an old cell phone gathering dust on a shelf somewhere. The very idea of the cloud is of a network, a communally accessed resource for accomplishing a growing list of personal and business pursuits.
I suppose a company could have and make good use of a private section of the cloud but there is a big difference here. Private clouds imply many incompatible little networks and what good is that? Recall that Metcalfe’s law says that the value of a network is proportional to the square of the number of connected users.
But I think the best way to come to terms with SaaS and conventional computing is through the business model. True multi-tenant SaaS leaves the user completely unconcerned about the nitty-gritty of system ownership — the licenses, the versions, the compatibility, the hardware capacities — all of that is hidden and immaterial to user decisions about provisioning.
The multi-tenant SaaS business model is simpler and much less costly and for that reason it is catching on globally, especially in places where infrastructure costs are simply not affordable. More importantly, though, it’s clear that multi-tenancy is the new standard because the business model is a better fit for the times and for the growing world market.
I expect that single-tenant solutions that look very SaaS-like will be around for a long time for several reasons. Most importantly, there is customer demand — some customers are still not on board with the idea of multi-tenancy either for personal reasons or because of various restrictions. Second, many vendors have not yet converted their technology and so they will continue selling what they have. Third, some vendors’ business models can’t stand the strain of converting — it may still be too early to try to convince investors that a business model shift makes sense.
Business model conversion may prove to be the biggest obstacle.
I am looking forward to the fall user group meeting season. Name a company and they’re having an event for customers and/or analysts. I can easily count Salesforce, Oracle, Sage, RightNow, SAP and Microsoft having events before then end of the year and there are many smaller companies hosting them too. Personal commitments are preventing me from going to all of them but nonetheless the frequent flier miles will add up.
I heard a delicious rumor that Marc Benioff will be speaking at Oracle Open World. In fact, it’s more than a rumor but I will believe it when I see it. Of course, Benioff at Open World makes perfect sense, it’s as natural as HP being there but I know what you’re thinking. Why?
I think it’s a great example of that old word, “co-opetition”. On some levels you compete and on some levels there might be a vendor-client relationship. For example, Salesforce uses the Oracle database heavily and is one of a small group of companies on the planet that gives Oracle a heavy duty workout. No disrespect to others, but Salesforce occupies a unique place for while other companies might have more users in, say, an e-commerce setting, Salesforce operates a very different paradigm that we all know is becoming the center of the IT universe.
I am looking for big things from all the majors — announcements that I hope will propel our industry and the economy as a whole as we gear up to get out of this recession.
- Oracle has to deliver on some of the promises made during its acquisition phase a few years ago.
- Salesforce can easily announce some new initiatives in CRM and Cloud Computing.
- Sage announced recently an initiative in cloud computing and I am looking forward to details.
- RightNow made a play for HiveLive thus getting into social CRM and they’ll no doubt have more to say late in October.
- SAP has been quiet lately so it would be a natural for them to break out with an announcement in December in Boston.
- Finally, Microsoft is having an annual analyst event in November and I expect them to keep up the momentum of recent CRM announcements.
- On the next tier several companies are also planning smaller events and it will be interesting to see what they do too.
The smoke signals suggest an industry that is planning an early breakout from the recession. I wish them luck and hope their timing is on target.
I have been writing for a while about the tough times in the publishing industry, especially newspapers though the pain extends to magazine publishing too. The nub of the situation is that the boring but predictable revenue streams that papers and journals get from advertising is quickly drying up. Add to that the challenge that younger readers gravitate to on-line (read “free”) information sources and you have an industry with transition pain. Though newspapers still distribute plenty of copies daily many analysts, myself included, have concluded that printing is a sunset technology for much of information transmission.
The road out of this conundrum is for papers to sell electronic subscriptions profitably but the infrastructure doesn’t really exist and the papers have shown little interest in building it. Sometimes it’s like watching a drowning man refusing help.
Since buying a newspaper can safely be characterized as a micro purchase, some mechanism that is efficient and very low cost must be found to make it all work. But even a completely frictionless transaction will not provide a paper with a revenue stream that compensates for the dwindling ad revenue and there’s the rub.
Since most big papers are owned by an even bigger public corporation, the idea of losing money or even making less of it for a time — while a new paradigm gets established — is anathema. Rather than continuing with an increasingly out of date paradigm, a smart paper might want to consider planning a transition from print to electronic distribution and with it an on-demand billing and payment system.
As you can see there are many competing needs for any solution that will rescue the newspaper business and for once, a government bailout will not do much to fix these structural problems. No doubt about it, this is a tough nut to crack but today at Demo in San Diego, Zuora announced a new product that might be the missing link to the eventual solution.
Zuora Media Edition is a billing and payments solution that can provide as close to frictionless product billing as possible and it delivers its solution from an on-demand system in the cloud. Most importantly Zuora Media Edition has capabilities that can enable a newspaper to better configure its products for individual customers. Here’s how I envision it working (and no one at Zuora told me I was wrong).
A paper has multiple brandable components. Traditionally the way a paper makes money is to sell ads and content to its subscriber base in a physical geography and papers can also sell their components through syndication to other papers. Editorialists and cartoon creators are the two most recognizable kinds of syndicated content providers that come to mind. But what if your sports section is in high demand in other cities because ex-patriots follow the team or because they’re in the playoffs? Or what if your book review section (we’re talking about you, New York Times) was highly regarded in its own right? Often the only way to get that section is to buy the whole paper if you can get it.
With electronic distribution though, and a billing system that can manage high-volume small transactions, a paper could think about selling single section subscriptions. Depending on the section the revenue might be enough to replace some of that advertising revenue that went south.
But wait, there’s no reason that a paper with a streamlined billing and payments system can’t compete for the ad business again. People went to online job ads, personals and classifieds not because they hated papers but because those sites were better than conventional printing. There is a reasonable chance that, if a paper could be competitive with other advertising media, that it could win back some of the advertising it lost.
You can make a similar argument for magazines though many are still selling many, many pages of advertising. Just look at Vogue, for example. But all magazines are not as fortunate as Vogue. What’s the cost of sending out multiple renewal reminders for a twelve-dollar subscription to a monthly magazine? And does anyone else see the irony in asking the customer to mail in a credit card number to complete the transaction?
As I see it, there are two keys to a “print” renaissance. First, the publishing companies need to get into the current century and adopt a business model that makes and distributes content rather than one that processes paper and ink and distributes from trucks. But they can’t do that without a business model supported by modern technology. That’s where electronic billing and payments come in and that’s why I think Zuora makes so much sense. But what do I know? I’m just an analyst.