May, 2009

  • May 11, 2009

    • I am in Nashville through Wednesday this week at the beautiful Gaylord Opry Land.  Call me at 617-901-2072.

    Published: 15 years ago


    I wanted to write a piece about the wisdom of crowds for a long time but I needed a clip from Monty Python’s “Holy Grail” to make it work.  After a lot of procrastinating I went to YouTube, did the hard work of reviewing all of the Python clips and found the right one.  There is no limit to the effort I will make to write a piece — this research was physically demanding and my sides still ache.

    If you are a Python fan you might want to review the clip for sheer fun and even if wacky British humor is not your cup of tea, watching the clip will enhance your understanding of what I am going to say.  So, go ahead, take a look.  I will wait.  Really, it’s OK, there’s a recession on and I have the time.  It’s a little over four minutes.

    Ok, welcome back.

    If you cheated and just forged ahead without the benefit of Michael Palin and the gang, the clip is a medieval mob scene in which the mob, convinced that a woman is a witch, asks permission from the local knight to burn the witch at the stake.  The knight is skeptical of the claim.  The mob has dressed the poor woman in a witch’s costume and given her a conical hat and fake carrot nose.

    The whole scene is contrived and at first you expect the knight through tortured reasoning with the crowd to convince them that the woman is not a witch.  I will leave it to you to watch the clip to find out how the woman is nonetheless condemned and the gods of comedy are served.

    My point for a long time, which this clip illustrates, has been that the wisdom of crowds is only as good as the crowd.  That’s because you can’t get new information by asking what people already know.  Those people believed in witches, even the knight, so it was easy to proceed from that error to a burning at the stake.  New information and, hopefully truth, comes from research including setting up an experiment, collecting data and then careful and dispassionate analysis of the data.

    Monty Python’s mob simply illustrates that a crowd can pool its existing knowledgebase to provide accurate feedback of group-think.  It also cleverly illustrates Mark Twain’s brilliant observation that “It ain’t what you don’t know that gets you into trouble.  It’s what you know for sure that just ain’t so.”  At least by Twain’s time we weren’t burning witches.

    My point is that in our rush to embrace all things social we run the risk of acting — with all good intentions — like that mob and that’s especially unhelpful because no one has been given the knight’s job of playing devil’s advocate.  I think we can take too much as fact just because it comes from a community of customers, especially if that community has no controls. 

    To be sure, there are valid and useful things to be gleaned from customer feedback but feedback is only the first step.  Ideally, feedback should give us some testable hypotheses from which we can extract true knowledge.  All the testing in the world would not have helped the woman in the movie, but that’s the essence of comedy.

    The film clip, and the wisdom of crowds, shows the difference between feedback and discovery.  We can run our companies pretty well using feedback most of the time but unless there is a little discovery mixed in and unless the lessons of the discovery process are put to use, we can find ourselves in trouble.

    Last week we saw an example.  Chrysler got ready for a bankruptcy filing and GM is not far behind.  In their histories, both companies spent prodigious sums gathering customer feedback.  It showed how much customers liked big cars (maybe that’s all they knew?) and the car companies used the information to justify building even bigger cars and trucks.  I wonder if these companies bothered to ask what people felt about climate change or the high price of fuel.  Since public perception and opinion can change much faster than a company can design and develop cars with higher fuel efficiency, it might have been good to know those things.

    Customers can tell us an awful lot but we have to ask the right questions and we have to step out of our contemporary biases.  Technology can do a lot to automate and speed up the asking process but the human element is still important.  We still have to ask the right questions and not flinch when we get the answers.

    Published: 15 years ago


    I had been skeptical of the on-demand ERP market for several reasons; the biggest is that ERP is a very different animal than CRM.  You can sequester CRM in the front office where most processes have been manual until recently and if something goes wrong with CRM you can always fall back.  The same is not true of ERP.  As we have seen again and again in the last several decades, if ERP doesn’t work or doesn’t install cleanly, you will need to change your name and move to Texas.

    So in ERP the idea of providing it on-demand somehow looks like adding a layer of complexity rather than taking one away as is the case with CRM.  All that may be changing now as NetSuite appears to have gotten its game on.  The company offers a soup to nuts array of ERP, CRM and eCommerce delivered on-demand and after some early stumbles — and despite the recession — appears to be pulling itself together very nicely.

    From my vantage point, it appears that one of the big success factors is that the company is doing a better job of picking its customers.  When it was founded as NetLedger, the company had a decided bias toward the SMB market.  And while the executives might still point to that virtue the financial reports show a move up market to a place where customers are big enough to have staffs that can take on an ERP implementation and where budgets have enough room for the training and services necessary for success.

    NetSuite also has taken on the cloud computing trend with gusto and though they are much smaller than Salesforce.com, they have aggressively gone in for a culture of building and customizing within their tool set.  They have also brought to market several industry tuned versions of their whole product line.

    Yesterday, NetSuite announced its Q1 2009 numbers and they were good overall though the street will be expecting more soon.  Q1 is the second quarter in which NetSuite declared a non-GAAP profit though by GAAP standards they are still manufacturing red ink, but that’s improving.  There was a respectable revenue increase (up 22% to $41.6 million) and an eye-popping 542% sequential increase in non-GAAP operating income.

    To be fair, these are not the kinds of numbers that make you a household name but given the state of the marketplace, the economy and the time in its life-cycle, you have to tip your hat to Zach Nelson and his team for going strong.

    Actually, you need to tip your cap to Larry Ellison too, if you want to.  It’s Larry’s company and his imprimatur is all over it.  The idea of a suite of end-to-end products and the move to take things up market are two strong indicators of Ellison’s approach. 

    What’s especially interesting to me is that Ellison has put so much into building a mini-replica of Oracle’s applications suite approach for the SaaS market with NetSuite.  If I didn’t know better, and who says I do?, I would say that NetSuite is an attempt to build an applications business on-demand that could some day be the obvious transitional choice for thousands of Oracle application customers who finally get the on-demand religion. 

    NetSuite is a public company with Ellison as the principal shareholder and the day could come when Oracle absorbs NetSuite and operates two divisions, one for the database and one for the applications.  That’s not very different from the way things are but it does offer the benefit of building up a new applications division that is based on on-demand computing while keeping the on-premise business humming until the time is right.

    Time and circumstance will tell if my thoughts are even remotely in line with what is really in the offing.  For the time being, NetSuite is on schedule to make money and prove its mettle as a free standing company.  They’re moving up market and bringing out the kind of additional functionality they would need to become part of a more elaborate plan. 

    The people are nice too and they’re fun to watch.

    Published: 15 years ago


    I was wondering the other day about who really represents the technology movement these days.  Not that long ago there were multiple colorful personalities vying for the unofficial title of Chief Nerd (CN), now the office seems vacant.  It’s an important question and maybe it says a lot about the technology world.

    For example, I called it a movement but is there really still a movement?  Was there ever a movement?  I can trace the term High-Technology to the late 1970’s but Wikipedia finds the first use of the phrase “high tech” in a New York Times story from 1957 (about two years before the integrated circuit was patented) about atomic energy in Europe.  

    In the ensuing decade the phrase was used on average once per year in the paper.  Then, in 1968 there was an article about Route 128 outside Boston that used “high technology” in what I would call its modern sense.  Shortly thereafter the phrase became associated with investment, venture capital and the party was on.

    Ken Olsen, founder of Digitial Equipment Corporation, was one of the first personalities to speak for or about the movement and he was eventually followed by Larry Ellison of Oracle when databases were the hot topic, then a cascade of overlapping Chief Nerds arrived on the scene.  Scott McNealy at Sun talked up reduced instruction set computing, Bob Noyce at Intel and a host of others led the charge for the microcomputer.  Steve Jobs became known as a visionary for the user experience and Bill Gates played Henry Ford knitting together hardware, operating system and software thus making computing affordable to the masses.

    I know this summary is too brief and leaves many people out but I am not writing a history of the times.  My point is that each era of what should be called the high-tech epoch had at least one personality who embodied the age, more or less spoke for it and laid out the vision.  In this, the high-tech epoch was no different from the industrial revolution or the Gilded Age of the late nineteenth century.  In a sense, high-tech seems to be the culmination of those eras like the New Stone Age follows the Old (Neolithic and Paleolithic, respectively).

    Perhaps one reason that no single person commands the stage today is that high technology itself has fragmented in so many directions.  People like Marc Benioff speak for the SaaS computing movement and I suppose there are be others in security, mobility, back office, and social networking but there’s too much to know for any one person to either write about it or to be the CN. 

    The other possibility, and the two are not mutually exclusive but overlap, is that high-tech is over.  It’s not that technology is ending and we are entering a dark age, but the movement may simply have become mainstream enough that it has been absorbed more or less into the culture.  There is no high-tech movement anymore because we now live in a highly technologically dependent culture. 

    This recession, like many before, may mark the end of eras, some trivial and others important.  On-demand computing appears to be strengthening its grip on the imagination inversely proportional to the waning attention given to conventional computing.  Other ideas are still on the horizon and include electric cars, robotics, nano-technology, competitive alternative energy, carbon sequestration and much more.  Some will work well and others will be dead ends or die out like the cell phone mounted in a car.  They are all in some sense high technologies but they take us further and further from enterprise computing and they have not yet produced a catalyzing personality. 

    So the question remains, Who’s our daddy?

    Published: 15 years ago


    Effective May 1, 2009 and with a 60 day grace period, Salesforce.com will begin charging its developer partners for support.  I have not seen a press release but I have a data sheet on the offering. 

    Some people have questions, mostly of the “Is this appropriate?” variety.

    I think it is provided there is adequate value exchanged and that remains to be proven.  But generally, developers and partners are usually well versed in the basics of the technology.  Their questions tend to go deep into the bowels of the beast and for that reason a company like Salesforce needs to staff up with smart professionals who know the product and its limitations at a deep level.  That’s a service worth paying for.

    The grace period starts today and the fees start July 1, 2009.  There will be three levels of service — Partner Premier, Partner Basic, Single Cases and Community.  Fees range from free to $24,000.

    As a practical business issue, the charge for this kind of service is simply a cost of doing business and the target audience, ISVs and Systems Integrators/Consulting Partners will use the information they receive from the program to serve customers and generate revenue.

    I suspect that there will be some complaining about the new fees, but who wouldn’t charge for such a service?  I can see a point if a small partner needs fast turnarounds on some questions but doesn’t have the ability to pay the premium price.  Some pricing brackets may be needed simply because larger partners are likely to use services more frequently than smaller partners.

    These fees are ultimately a good idea and they may encourage the target audience to get training for their personnel.  Perhaps they will be able to lower their dependence on support services with more training and that would be a good thing for all parties.

    Published: 15 years ago