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?
Cloud computing and multi-tenancy
Cloud computing is breaking through to the general public. Unfortunately, it’s only the most watered down version that the public is hearing about.
Last week I listened to a program on NPR that briefly discussed the cloud and some ‘expert’ who worked for a general circulation magazine was happily telling the interviewer that cloud computing was all about servers in the sky. That’s it, just servers in the sky. It’s as if the only important idea of cloud computing is the obvious commoditization that comes from renting a bit of processing power. The reporter was even able to muster the names Amazon and Microsoft to define the market. But if cloud computing is just servers in the sky, then how is it different from servers down the hall?
Unfortunately, these cloud advocates have settled for the low hanging fruit, the cloud computing that says if you host an application in the cloud you won’t incur the overhead of ownership. Fair enough. But if that’s all you’re doing, you are leaving money on the table.
This definition of cloud computing amounts to running a conventional application in the cloud which is not much different from running it down the hall. Especially in those cases where a company insists on having its own segregated disks and CPU, there is no difference save how you pay for what you use. Has everyone forgotten about what has driven us to this point? The bad old days of client server applications that cost outrageous sums because armies of consultants had to cobble them together?
Back then we talked about the simplicity that comes from multi-tenancy and the ability to deliver something to the end user that simply works. Today’s definition of cloud computing takes a couple of giant steps backwards to focus on infrastructure with the assumption that a server is a server and one application running in a browser is the same as another.
But of course, that’s just not so. How the application gets to the browser matters, how and where the data is stored matters and how the application is built matters. The evolving definition of cloud computing as simply a delivery device for conventional applications doesn’t work and I think it will slow down the movement to ubiquitous connectivity and lower cost computing.
As luck would have it, I spent a very enjoyable hour on the phone with Mark Jensen last week too. Jensen is Managing Partner for Deloitte’s U.S. Venture Capital Services Group and U.S. Audit & Enterprise Risk Services (AERS) Technology Industry Sector Leader. We discussed a number of things including the future of computing (think about security), venture capital markets (sharply reduced exit activity is depressing capital formation) and cloud computing (the key is multi-tenancy).
It was nice to hear Jensen’s perspective on the cloud because I’ve been at it so long that a fresh perspective is most welcome. But instead of a fresh set of ideas, Jensen simply reinforced my thinking about multi-tenancy. After ten years of deployments, success and rapid growth, cloud computing still has to earn its stripes and convince people that multi-tenancy is safe. Companies still demand separate storage architectures for the information they store and use in the cloud.
This doesn’t surprise me so much as it disappoints. There is no doubt in my mind that cloud computing, and before it SaaS, is part of a long term computing trend and that the current effort to define cloud computing is a retrograde movement that will result in preserving the status quo even while adopting some of the more obvious parts of cloud computing, like the name.
Multi-tenancy is at the heart of all this. Multi-tenancy gives every user a unique part of the architecture to work in and store information. But no matter how many years of success we have the skeptics remain who simply don’t trust the systems in place to keep everyone’s data separate. Imagine if we still applied this attitude to banking, we’d be a nation of people with tin cans buried in the back yard and metal detectors would be banned. But I digress.
Multi-tenancy isn’t a fad, it is the reason to do cloud computing. Multi-tenancy raises a simple application from a one-off island of technology to a standards based business tool capable of being deployed, accessed and maintained almost anywhere. What you give up, if you want to call it that, with multi-tenancy is both the low level responsibility for ensuring the system remains up, and the unnecessary overhead that goes with it.
All this notwithstanding, there are still customers out there who will insist on clouds that can do this but not that. And unfortunately, when they discover, several years from now, that their systems have all of the problems that their current legacy systems have, they’ll blame the technology.
Sell specific benefits
I was in a conversation with the CEO of a CRM company the other day discussing the latest moves in the industry over ideas like SaaS, single tenant and multitenant deployments. It has occurred to me and I said this to the CEO, that we spend far too much time and brain matter on the delivery model and too little on how we provide value to the customer.
It’s a problem that you see a lot if you know what to look for. It happens whenever one vendor or even an individual comes up with an idea that seems to attract customer attention. Once that happens, the competition is all over the idea like flies on a fresh meadow muffin and the whole competition moves to one dimension. I’ve seen it on numerous occasions in my ten years covering CRM and the single tenant vs. multitenant debate is just one example. Other examples include the customer experience and social CRM.
Now, to be sure, all of these ideas are important but they also hit wide of the mark. The mark ought to be how I as a vendor deliver value to you the customer and whether that value is sufficient to warrant a purchase. Ideas like low cost and fast implementation or improving the customer experience are, by their nature, designed to appeal to the buying influences in the complex sale of CRM. They appeal to the CFO or the CEO. Customer experience may appeal to the VP of sales or the VP of service and so on. But you can’t take any of that to the bank.
There is an implicit assumption in all of this, that a CRM product is in all other respects the same as all others in the market and that this single idea is the one worth contending over. That’s a road to disaster if you ask me because only one company can be the best at the attribute in question and then everyone else is scrambling for second place. That’s a path — no, make that a short cut — to commoditization.
It’s a harder sell to talk about the customer’s needs and what makes them unique and deserving of unique treatment — often the customer doesn’t know and the sales representative might not have the training or knowledge to help figure it all out and sell to those needs. Too often in early markets customers buy market leading products regardless of their merits and vendors accommodate this need by bragging about market share.
If we could focus more on how we deliver specific value, the sales and marketing conversation would be richer and you might actually see one vendor competing for business based on a specific need as well as other vendors competing on delivery model or price etc. But that’s a scary place to be if you are a sales person. Your customer wouldn’t necessarily be comparing you with the other guys in an apples to apples way so how would you know if you were winning?
Selling has always been a numbers game meaning that sales people needed to see as many people as possible, have as many contacts and opportunities as possible in the hope of closing some of them. That was the original assumption of CRM. But if you are at all cognizant of the marketplace these days, tightness in the credit markets has caused a significant amount of demand destruction and that has changed the terms of selling.
We don’t have full pipelines because of demand destruction or, if we do, there are many more suspects who can’t buy for one reason or another tied to budget. In this world selling the advantages of your delivery model or your low cost may not be as valuable as telling your customer specifically how your product can help make money or save it.
We’re in a cross sell/up sell market today in which we’re trying to sell something else to a customer that has bought from us before. In that climate it should be easy to talk about using products that enhance a specific business process or function.
