Oracle v. SAP
Oracle won its lawsuit against SAP in federal court. Oracle had complained that a now defunct subsidiary of SAP had unlawfully used its intellectual property to provide third party support to Oracle customers and the jury agreed.
There are so many levels in this situation that I can’t get to all of them but one that interests me is the idea of a third party disintermediating the primary party (Oracle) to deliver a service that costs less. This kind of thing happens all the time in the economy and the issue, as far as I can see, is that the third party made use of Oracle property without paying proper license fees.
I get all of that and I agree with the decision—you have to pay for what you use. On the other hand, though, the existence of the third party in the first place poses an interesting question for everyone and casts a shadow on the conventional software business model. Support fees are often calculated as a percentage of the license fee and both are rather steep with enterprise software, in part because of vendor lock-in. So there’s a built-in incentive for customers to seek out any way they can find to lower their costs.
The idea of lowering costs is as old as capitalism because margin is, well, margin—the difference between what it costs you to deliver a product or service and what the customer pays for it. But enterprise software customers have been complaining for years about high prices, especially the price of support and those costs suggest to me another example of the unsustainability of the conventional model.
Back when the addressable market for software was a relative handful of companies that could afford big iron, high prices made sense, if only because the cost of development, maintenance and all the rest had a smaller base to amortize the costs against. But today computer hardware is cheap and abundant and it can even be rented from the cloud. Software has become much more complex and labor intensive—and costly—in part because the addressable market has grown but so has competition.
If you compare the high costs of enterprise software with what’s on offer with cloud computing you see some big differences. For years SaaS vendors have touted the advantages of a single monthly fee that includes not only hardware and software but all of the labor associated with service, maintenance and ongoing development. It’s this model that is catching on in emerging markets in part because those markets simply cannot afford to support the old model.
So while I see the Oracle v. SAP verdict as just, I also see it as a milestone in the march to cloud computing. The conventional enterprise software paradigm is hugely expensive and unsustainable in the long term, not only for customers but sometimes for vendors too.
Anticipating Dreamforce
Dreamforce, Salesforce.com’s annual user meeting and thought leadership confab, is two weeks away and the anticipation for this event is palpable. In a tough economy people are looking for the company to do some magic and lift our spirits.
The company did a smart thing by turning on its new collaboration product, Chatter, for any attendee wanting to communicate, synch or share an idea. The result is a Facebook-like storm on Chatter about Dreamforce. In the process, thousands of people who had no familiarity with Chatter are educating themselves.
It’s a no brainer to me that the Chatter coverage coming out of Dreamforce will be a bit better for all of the familiarizing. This is quite different from how we all came out of Dreamforce (was it just last year?) when the company introduced the idea. The problem was that the description had to be done in terms that many people were not expert in. What a difference a year can make.
Dreamforce has taken on an aspect of secular saturnalia with quasi-religious undertones as people comment that it’s late this year, as if they were describing Easter. And it is late, so late that the December date will do little to help any exhibitor finish the quarter well but it may prove to be a good injection of enthusiasm for the year ahead.
Unlike Easter though, which is calculated by a lunar calendar, Dreamforce is calculated according to the Moscone Center. I suppose you could contemplate a Dreamforce in New Orleans, Orlando, Chicago or Las Vegas, but salesforce.com has such a strong tie to San Francisco, that it’s doubtful it would ever move the event. So the wait for space on the Moscone calendar is what determines when Dreamforce starts.
Like the company that sponsors it, Dreamforce is many things and it morphs from year to year as products roll out and company marketing plans and market demand changes. Salesforce has been careful over the years not to simply extend its CRM product line but to add new lines of business. Dreamforce reflects this and consequently it will resemble multiple events rolled into one. Just as Oracle Open World has major tracks for its applications, database, Java and Sun for instance, Salesforce will feature tracks for CRM, its social technologies — especially Chatter, its platform and its development tools.
The Salesforce product line has spread out so much that two people could easily go to Dreamforce and see two completely different events—especially if one of them is a developer who gets sucked into all of the sessions about the platform and its related parts. And it’s assumed there will be more parts to talk about once the show starts.
I expect important announcements in most areas. CRM is perhaps the most mature part of the company’s offerings in what has become a mature market but the introduction of the Sales Cloud and Service Cloud combined with the re-think of the associated business processes will provide opportunity for many new ideas.
Chatter offers a fresh perspective on collaboration and I hope there will be more discussion about how to use it effectively than about how to implement it. From what I’ve seen implementation amounts to turning it on. It’s like calling people to Thanksgiving dinner, you don’t really need to teach the how to eat. So stories from some of the sixty thousand companies now using Chatter is all that’s needed.
Then there’s the platform. In the last two years the rest of the vendor community has played catch up with Salesforce in cloud computing. Everyone has a flavor of it today and most vendors straddle the fence offering single and multi-tenant implementations that deliver on the literal interpretation of SaaS but leave the benefits of multi-tenancy to discretion.
Perhaps that’s as it should be, we can’t expect a wholesale change to multi-tenancy over night for two important reasons. First, many customers can’t or won’t contemplate the idea and second, many vendors can’t contemplate the business model change. For them, multi-tenancy will happen in about ten years, the next time they discover that their cloud computing paradigm didn’t really protect them from obsolescence.
But back to the platform. Salesforce has always had a lead over traditional vendors that varied in length but was always centered on its platform. There have been important platform innovations in the last year or so including the VMforce effort but I think it’s time for something else. So it might be that the biggest new product announcement will be in the platform area. That would make sense because it would give the company time to consolidate its Chatter rollout on the application side of the business.
Other things to think about for Dreamforce: Bill Clinton and Stevie Wonder. There’s no moss growing on Bill Clinton. Since leaving the Whitehouse he’s been a tireless worker for humanitarian causes and his keynote, “Embracing our Common Humanity” is eagerly anticipated. Then there is the incomparable Stevie Wonder who will bring his hefty songbook to Dreamforce. To me, there is no one in modern music who combines the musicianship and lyrical dexterity of this man and I predict there will be dancing in the aisles.
So that’s what I think about Dreamforce going in. I will post more comments from the event and hope to get some pics to share as well. Meanwhile, have a great Turkey Day and Go Patriots!
Further Illumination
I don’t like ambiguity and there was some in yesterday’s post so let’s get to it. Yesterday I wrote:
Microsoft is confidently offering replacement systems that have been the beneficiaries of significant investment over the last several years. These systems also run on cloud infrastructure, though cloud does not necessarily mean multitenant.
Microsoft and others — with the notable exceptions of companies like NetSuite and Salesforce.com — have decided to kick the can down the road with regard to multitenancy. While multitenancy might have advantages, it is not advantageous enough yet to push the issue. As a result, it may have to wait 10 more years — until the next wholesale replacement cycle — until multitenancy becomes more of a standard.
The “can” in this case is a metaphor referring to how vendors address the issue of single tenant vs. multi tenant cloud-based systems, and I thought the second paragraph did an acceptable job of illuminating the metaphor.
Not that long ago cloud and multitenant went together but a revolution in the last couple of years by major software vendors including Oracle, Microsoft and Sage among others, has changed the complexion of the situation. Many vendors have adopted a strategy that leverages a single code base that can be deployed either as single or multitenant. Moreover, the single tenant versions can still be housed in a common, cloud-based datacenter to deliver cloud services that are almost indistinguishable to the user. But no conventional vendors are pushing multitenancy as the wave of the future. They are letting the customer decide.
It’s still true that you need to work with your vendor to establish the right balance of cloud services to go with your cloud infrastructure. For instance, do you want to manage your system from afar or do you want your vendor to provide management services including configuration, backup and upgrades? The choices are numerous. So when I spoke of kicking the can down the road, it was about the choice of deployment—as in letting the customer decide the deployment approach—rather than saying that any vendor did not possess the ability to deploy in multitenant mode.
Clear, right?
Beatles Songbook Gets New Life
Baby Boom Flexes Muscles on iTunes
Tuesday’s announcement that Beatles song tracks are now available on iTunes has been one of the biggest positive announcements in music in some time. There are so many threads to tease apart that starting an article like this is challenging.
For once the industry doesn’t have to report declining sales figures and there is no record company suing its customers over intellectual property. Ironically, the songs in question are the darlings of the one population that still buys CDs and does not get involved (much) in pirating.
According to Apple Corps., the parent organization of the Apple Record company that the Beatles started all those years ago, the Fab Four sold about 600 million records, tapes and CDs prior to the Tuesday announcement. So the estates of John Lennon and George Harrison are not lacking and neither are the coffers of still rocking Paul McCartney and Ringo Starr.
No doubt, availability on iTunes will bring out many Boomers as well as their children to buy up songs that make up part of the sound track of a generation. Boomers will seize the opportunity to go digital and fill out their collections. But younger people seeking to learn about the roots of modern music have an avid interest in these chart topping songs and the albums they spring from.
The Beatles invented a brand of mainstream rock ‘n’ roll and the approaches and techniques they used are still invoked. The albums stand on their own and, so far, stand the test of time. They are works of art filled with audio sophistication that took then current day technology to the brink and energized the technical side of the music industry to up its game.
Better technology for recording and mixing as well as deeper thought about how to create a theme for and produce an album were inspired by iconic albums like Sergeant Pepper’s Lonely Hearts Club Band. In retrospect, in the 1960s, the Beatles were to the music industry what the space program was to the budding high technology market.
No wonder then that as of Wednesday morning six Beatles songs are once again climbing the charts—this time the iTunes top one hundred downloads.
But this announcement also serves as a bookend for the Boomer generation. On the opposite end of the shelf was a concert in a rainy, muddy cow field in up state New York in 1969. Woodstock showed demographers and corporate America how much market power the generation commanded and for decades marketers would tap into that power to generate sales and profits. iTunes’ capture of the Beatles song book is, on one level, simply the latest example of that market power.
