More New Garage
Back in 2004 I wrote a white paper titled “The New Garage” which forecasted the evolution of Cloud Computing. The ideas in the paper were derived from basic economics. I thought that the cost of software, maintenance and service were so out of line that it was only a matter of time before the paradigm shifted and a new one — Cloud Computing — took its place. I am not responsible for the name and I don’t even think I offered one.
The concept of a new garage is that innovation had gotten away from innovators and entrepreneurs typically spent a lot of time raising money rather than building products. To raise money, these people often had to give away a significant chunk of their idea which resulted in a disincentive, in my mind. Better, I thought, if entrepreneurs could go back to the garage to build whatever new gizmo they could.
To do all that entrepreneurs would need vastly less expensive infrastructures from servers and real estate to systems that ran their businesses. Software and services delivered from the Cloud would enable that, I thought, and the result would be increased innovation not only here but around the world. It looks like it’s working.
One of the less well known parts of The New Garage is the idea that when the need for SI services goes down as it inevitably has done, services companies would need new ways to deploy their people. My thought was that this would mean more hands on help running the business using the software available on the Web rather than so much work installing operating systems, databases and all the rest.
With that in mind I was happy to see a press release this week from Market2Lead a Cloud-based marketing automation company based in Santa Clara, CA. The company launched marketing operations services, an offering that will among other things run campaigns for newsletters, manage invitations and registrations for seminars and events and the like.
To be sure this is not the high level strategy work, it’s more grunt work execution but it comes at a very good time. Corporate marketing departments may be somewhat depleted by the recession and before hiring people they may elect to take on a service provider like Market2Lead in an arrangement that provides a known service for a quantified cost.
I expect the idea will catch on and with it comes a down side. Companies might be a bit more reluctant to hire marketing people in the future even in a good economy and perhaps that means more people working for themselves as consultants, often in situations that may not provide benefits like health insurance or vacations. Of course that also means an opportunity for entrepreneurs who might see a chance to build an agency. That’s where we get into unknown unknowns — the consequences you can’t predict which are the ultimate drivers of economic activity.
Good luck with all of that.
Thanks, Mr. Voltaire
This is very interesting. Oracle introduced Oracle VM Template for Siebel CRM. You almost don’t need to know what a VM template is — OK, it’s a virtual machine architecture that enables customers to reduce the number of real servers they have. But that’s not the big news — the big news is that Oracle is positioning this innovation as a GREEN idea.
Yes, right in the press release they say, “By helping to reduce the number of servers needed through deployment in a virtualized environment, Oracle VM Templates for Siebel CRM effectively promote green computing and can dramatically cut costs on server purchases and maintenance, as well as energy use.
Kudos to Oracle, I say. They’ve taken on Green ideas as an important part of CRM and begun making products that reflect most people’s concerns about global warming. Fewer servers means less power to run them, air condition them and all the rest.
Of course, the greenest approach to server reduction is SaaS where a small number of very robust servers support millions of users a la Salesforce.com. But this is no time to make such comparisons and a great time to drag out one of my favorite quotes from Voltaire, “The perfect is the enemy of the good.” (This proves my liberal education was really worth it.)
Simply put, running past good and seeking perfection is akin to reaching a level of diminishing returns. It would be great if SaaS took over the world and it might but not today. Meanwhile, wouldn’t it be really cool if every major corporation at least got on board with a virtual machine architecture?
Taking Cloud Computing to Main Street
Late on a summer morning recently I got a call from my wife saying “On Point,” a public radio program, was doing a show on about cloud computing. “Isn’t that what you write about?” She said. “You should listen or call in.”
Well, I tried and all the lines were jammed but I was able to make a comment on the Web site. It was a funny show in some respects, though short on laughs. The guests were a Harvard Law School Professor, Jonathan Zittrain, author of “The Future of the Internet — and How to Stop It” and Kara Swisher technology columnist for The Wall Street Journal. Quite a group, they had many credentials but the show struck me as shedding more heat than light.
Much, but not all, of the show was dedicated to the dangers inherent in cloud computing such as data security — something that we dealt with several years ago with the introduction of SaaS 70 audits. But this was a show aimed at Main Street where cloud computing sounds exotic and the Internet is barely trusted.
Interestingly, part of the discussion revolved around what big corporations like Google, Microsoft and many others would do if they got their hands on our data and let the government have its way with it. Salesforce.com, a company that I believe started a great deal of the cloud discussion, only received a footnote, lucky them.
The show, its callers and, especially the people who left comments, provided some great insights though you really need to read between the lines to catch them. For me the show revealed how early we are in the process of converting to cloud computing. I often forget that because, heck, I have been studying and writing about various aspects of the cloud since the beginning of the decade.
I came away from the program wondering if the public is really ready for cloud computing and concluded that, yes, we’re ready but no, all of the kinks are a long way from being worked out. The no part is far more interesting to me because it is so typical of a new paradigm, which cloud computing certainly is.
A new paradigm really gets going when people ask a lot of “what if” questions and conclude that there might not be enough adults in the control room, it matures when the most obvious holes have been plugged and we are reasonably able to trust the paradigm to do its job. If that’s true, the audience response tells me we have not reached nirvana yet.
This all reminds me of the introduction of standard time keeping. Prior to standard time, and the time zones that we take for granted, every town and village set its clocks by local mean time which simply meant taking a reading from the sun and setting your watch at noon. Local mean time resulted in a huge number of local times and caused needless complexity for train schedules. When the railroads adopted standard time in late 1883 most states followed suit, as did the federal government — fifty years later.
From what I heard of the radio show, cloud computing is at the same spot standard time was in 1883. We might understand cloud computing fairly well, we might even over look some of the thornier issues it represents assuming the vendors will produce the needed technology to make everything right. But the person on the street, who will ultimately determine the success or failure of this innovation, still needs to be convinced.
The comments list for the show revealed concerns about Internet throughput and spotty coverage as well as data security and cost. So far we in the industry have been good about touting the virtues of cloud computing but a bit slower in dealing with the less sexy issues these concerns represent.
Perhaps the next item on the cloud computing checklist ought to be not so much selling the idea as assuring the market that it will work and no one will be disadvantaged. So far our industry has stayed out of politics and it’s hard to fault a strategy like that. But it might be wise for some of us to begin endorsing common sense ideas like the Obama administration’s proposal to significantly enhance the high speed Internet backbone in the U.S. using it as a teachable moment for all things cloud related.
Our failure to educate the market leaves too much room for books with titles like “The Future of the Internet — and How to Stop It” and that’s the last thing this technology movement needs.
The video frontier
Rolling sustainability into business development isn’t just a marketing ploy. In the CRM arena it’s an effective way to communicate with more customers and prospects at a lower cost.
Last summer, when a gallon of regular peaked above four dollars per gallon, Beagle Research published a white paper on sustainability and CRM. I am happy to report that there are many signs in CRM and elsewhere of industries taking the first steps toward more sustainable business.
We began to see changes in the ways we organize our society and work when gas hit four dollars — Americans drove more than a hundred billion miles less in the year ending in November 30, 2008, for example. But, too often, reducing travel frequently means falling economic activity. Airlines were nearly crippled when businesses began curtailing travel. An economic recovery and unrestrained demand will likely mean that the price of oil, and the gasoline and jet fuel from which they are derived, will again rise — beyond four dollars. With global demand rising and supply peaking it’s hard to see otherwise.
All this went into our thinking last year and one of our conclusions was that front-office business processes needed to become more energy efficient. Face-to-face sales calls would be curtailed and replaced by greater reliance on Web-meetings and Web-conferences, and enhanced reliance on in-house produced video.
Our ability to make documentary-style (Ken Burns) videos using desktop technology has accelerated very quickly in the past year or two. While there is no set standard for these clips — and there shouldn’t be — there are numerous examples of CRM-oriented videos coming into the market. We believe that video production needs to reach down to the sales and marketing departments in the same way that desktop publishing has. Why?
Giving marketing people the ability to produce professional looking video will not replace the need for travel or product slicks, brochures or even white papers. But video will begin to provide valuable content in a format that is easy to absorb supplementing sales by conventional means.
There are numerous examples of CRM vendors already turning to video as another way to get a message across. Microsoft, SAP and Oracle all have produced video content that touts their products. It’s very effective, especially if it is kept short and moving. A short video might not replace a brochure or a white paper with all the additional detail that only print can provide. But video can deliver a message quicker and more clearly when an impression is what’s needed.
Video can exist independently on the Web and it is a medium better suited to viral transmission than print. How many times each day or week do we get some clip passed along to us? The number might vary, but our experience says it’s increasing. And what are you more likely to do, read a white paper or watch a video?
The next step is for CRM customers — in all industries — to become fluent in desktop video development, a big step for sure. We’ve grown accustomed to building and sitting through PowerPoint presentations, most of which are not that good according to Garr Reynolds. In his book, “Presentationzen,” Reynolds writes about what’s wrong with what used to be called slide shows — too many bullet points, too few pictures to engage the mind, droning voices, and dark rooms. Worst of all, Reynolds says, is when someone sends the slides or a printout expecting you to derive meaning from all those cryptic bullets.
Better to build a documentary video out of stock photos and voice animation, and then stick it on your Web site or on a public sharing site like YouTube so that the video can sell for you when customers are receptive. A simple condensed URL or “turl” makes a video viral in ways that slide shows will never be.
I work on a Mac and all of the tools I need are on my computer. I have not checked Windows lately, but perhaps the latest version has similar tools, if not, they are available and inexpensive for Windows users.
Some might object to widespread video use because letting salespeople develop video can take away too much selling time. I agree. Video should be the province of the marketing team and it’s a great way for them to reclaim responsibility for message creation and maintenance. When salespeople got the ability to make slides, it inevitably led to message degradation — time for marketing to reassert itself.
Out of the last recession we got on-demand computing and Web meetings, each of which became great successes because they save their users a lot of money without degrading their ability to do business. From this recession Web conferences and in-house video are showing good signs of life. In a recovery, the high cost of travel will demand alternative solutions. Video is the next marketing frontier, a natural content carrier for ideas that have to stand on their own. Early adopters are already engaged; it’s time to familiarize yourself.
Netbook or Ultralight? Premise or SaaS? Paper or Plastic?
Microsoft CEO, Steve Ballmer told analysts recently that ultra-thin PCs will be the answer to the growing popularity of netbooks. I doubt that but I can certainly understand Ballmer’s interest in backing the ultra-thins and this obviously has implications for larger issues like Cloud Computing.
By now, the sides have been clearly marked out in the debate about on-demand vs. on-premise. One side says everything will go to the cloud the other manages to carve out a plausible scenario wherein conventional computing continues into the indefinite future. I have a third view, namely that we are in a transition state between a past that was all about licenses and premise-based computing and a future that will be all or mostly in the cloud. But that future could still easily be a decade away.
In a recent piece I wrote about how revenues for the on-premise vendors still look good. Some of the biggest premise-based suite vendors continue to score impressive deals and even in a recession they show revenue gains or at least show that they are keeping up with the prior year. That’s all good, but when do you know you are on the down side of the curve and that the new paradigm will eventually win out?
There are many answers and a stubborn realization that most people faced with decline or at least paradigm shift, refuse to believe it or do much to avert the inevitable. I think there’s some of that going on in Redmond with regard to netbooks.
Netbooks, I should say, are small computers that don’t do much on their own. They have small screens and small disks, smaller processors and memory — just enough to get their users to the Web where they can access applications and data stored there. Netbook computers represent a new style of computing that harmonizes nicely with cloud computing.
Netbook owners use these appliances for a purpose such as email and other office tasks as well as accessing cloud-based applications. Tien Tzuo CEO of Zuora told me recently that he runs his whole company from the cloud. They use Google Apps for office productivity tools, Salesforce.com for CRM and their own cloud based billing system to send our bills and receive payments. There might be some premise based accounting applications in the mix but the point is that Zuora is a cloud computing company in many senses of the word. Tzuo’s story is interesting to me because he still uses a conventional computer — a MacBook Pro and not a netbook.
I think Microsoft has misunderstood the market. Microsoft’s approach with ultra-thin devices coming to market later this year is to provide high-end processing power in a lightweight package that travels well. There’s nothing wrong with that, I am certain there is a market for this kind of device. But these devices will replace older, heavier laptops, not netbooks. Promoting ultra-thins as netbook alternatives says a lot about Microsoft as a company worried about losing its franchises in Windows and desktop applications like Office to stripped down operating systems like Google Chrome (if and when it sees the light of day) and Google Apps. It is also a serious misunderstanding of the market.
A new market is opening up that is situated between conventional computing and handheld devices like BlackBerries and iPhones. The new market represents a computing paradigm shift. Whenever paradigms shift, you can bet the establishment paradigm will do what it can to extend itself and kick a little sand into the face of the new guy. Ultra-thins as netbook beaters strike me as this kind of paradigm extension.
At the same time, Microsoft is positioning itself to profit from a cloud paradigm. The company is beginning to offer SaaS versions of its CRM, ERP and Office solutions, for example. But even if these offerings are eventually successful, there will be a significant adverse impact on this company’s top and bottom lines because monthly service fees are inevitably smaller than one-time licenses. That’s what makes paradigm shifting so difficult.
Wall Street has expectations about public company revenues. Changing a business model with the result that revenues dip — even if the change has long-term positive implications — is not well tolerated. Microsoft has done a great job over many years at delighting Wall Street and central to that record is the company’s portfolio strategy of innovating in multiple directions at once. So while the CEO talks about ultra-thins as netbook beaters, the company is also building a cloud infrastructure.
But this time could be different. Regardless of the product mix, Cloud Computing will cost less and unless that swells the market significantly it’s hard to see how revenues will not dip. It’s hard to construct a scenario in which Microsoft doesn’t thrive but as consumers it’s important to keep a bigger picture of the whole market in mind.
