cloud – Page 11

The New Software Industry: Timothy Chou

The morning finished with Timothy Chou, author of The End of Software and the former president of Oracle’s online services group, discussing the radical changes in the software industry due to software-as-a-service. Anyone who entitles his talk “To Infinity and Beyond” and has a picture of Buzz Lightyear on the title slide is okay with me. 🙂

He looks at the economics of why the transformation is occurring, and encourages becoming a student of the economics in order to understand the shift. Considering a sort of Moore’s law for software, traditional software (e.g., SAP) costs around $100/user/month to licence, install and support in various configurations; SaaS (e.g., Salesforce.com) costs around $10/user/month; and internet applications (e.g., Google) are more like $1/user/month.

He makes the point that the SaaS revolution is already occurring by listing nine SaaS companies that have gone public (including Webex and Salesforce.com); these nine went from just over $200M in revenues in 2002 to $1.4B in 2006.

Chou gives us three lessons for the future:

Specialization matters. Think Google, which was originally an insanely simple interface for a single task: searching. Or eBay, which just does auctioning. This isn’t just a product functionality or distribution issue, however; the software development process has fundamentally changed. It’s now easier to become a software developer because of the tools, and this drives the development of niche applications. In a world where Citibank has more developers than Oracle, we’re not just buying software from the “professionals” any more; we’re creating it ourselves or buying it from much smaller players.
Games matter. Chou uses World of Warcraft as a collaboration example, and it’s a great one. People from all over the world, with different languages and ethnicity, come together for a common goal, then disperse when that goal is achieved. WoW makes specialized skills and skill levels transparent, so that you immediately know if another player’s skills are complementary to your own, and how good he is at that skill. In general, you can’t do that now in business collaboration environments, but it would be great if you could. Also of interest is the world of currency within these games, and how that currency is valued in the real world.
Service matters. The service economy is not just about human labour; service is information. Consider the information that Amazon has about books, from finding them to other user reviews to recommendations. The information is there, but some of it is hard to find/analyze. The “surface web” of approximately 100TB is what you could find on Google, but there’s a much deeper web of more than a million TB, mostly inside corporate firewalls. How much better service could we have if we had access to more of that information in the deep web?

The New Software Industry: Ray Lane

I’m at the Microsoft campus in Mountain View attending the New Software Industry conference, put on by Carnegie Mellon West and the Haas School of Business. I interviewed a few of the people from CMU West a few months ago about the new Masters of Software Management program, and ended up being invited to attend here today. Since I’m down here for TUCON this week, it was just a matter of coming in a day early and fighting the traffic down from the city this morning (although I left San Francisco at 7:30 this morning, I still arrived late, around 9:15).

Unfortunately, I missed the brief opening address which, according to the program, featured Jim Morris, Dean of CMU West, and Tom Campbell, Dean of Haas, so my day started with Ray Lane of Kleiner Perkins (formerly of Oracle) talking about the personal enterprise, or what I would call Enterprise 2.0.

Lane started with a discussion about how the software industry is changing, including factors such as packaging (including SaaS) and vertical focus. I found it interesting, if not exactly surprising, that he has a very American-centric view of the industry, so that he’s really talking about the software industry in the U.S., not the global industry; he spoke about India and China gaining market share in software as some sort of external force as opposed to part of the industry.

He had some interesting points: a call to action, which including leveraging community power via mashups and other collaborative methods; and a look at how platforms are moving from monoliths to clouds (i.e., services exist in cloud and are called as required). He covered some basic about Web 2.0 and web-driven capabilities. Since I’ve been so immersed in this for such a long time, there wasn’t much new here for me, although he had some interesting examples, particularly about collaboration and user-driven content.

He talked about the “personal enterprise”, where consumer web applications inspire new enterprise applications, or what many of us have been talking about as Enterprise 2.0. He makes a great point that somehow, being at home allows us to just try something new online, whereas the act of going into the office makes us want to spend a year evaluating rather than just trying something, and how we need to change that notion.

He gave seven laws for Enterprise 2.0 applications:

serves individual needs
viral/organic adoption
contextual personalize information
no data entry or training required
delivers instantaneous value
utilizes community, social relationships
minimum IT footprint

I’d love to expand further on each of these, but I’m trying to get this conference blogging back to something like real-time, so that will have to wait for another post.

He finished up with some examples of personal enterprise applications, with some discussion about what each of them contributed to advancing software industry business models:

Services: Webex, Skype, RIM, Google
Applications: Salesforce.com, NetSuite, RightNow
Collaboration: SuiteTwo, Visible Path

Access to the Microsoft guest wifi is tightly guarded and requires an hour or so turnaround to get login credentials, so this first post is coming out late and the other will trickle along throughout the day. All of the posts for this conference are available here.

Appian Anywhere revisited

I’ve been meaning for a while to to go back and add some detail to Appian‘s software-as-a-service offering, Appian Anywhere. I mentioned the release last month when it was announced, but since then, I’ve had a chance for a conversation with George Barlow, GM of the Appian Anywhere unit, I saw it in action at the Gartner BPM summit a few weeks ago, and Phil Larson discussed it briefly on our BPM and Enterprise 2.0 panel.

Appian has taken their software code base and created simplified sign-on and admin (and presumably some multi-tenancy functionality) to create Appian Anywhere, but will be keeping their enterprise product and the SaaS offering in synch. Since their entire BPM suite is already browser-based, this appears to be more of an issue of adding on some functionality rather than having to rewrite significant portions of the existing product.

In alpha this quarter, in beta in Q2 with a few selected partners and customers, it’s scheduled to be generally available in Q3. There will be a couple of pricing options: an entry level for around $15/user/month, running within a shared instance and with some storage limitations, and a level that runs within a separate instance and has more storage available for $25-30/user/month.

Appian Anywhere is currently hosted on Amazon EC2 (which provides computing capacity) and Amazon S3 (which provides storage), which gives them a lot of flexibility in terms of scaling: as more customers come on, the Amazon services scale up seamlessly, and Appian just pays them on a utility model, like buying electricity. This is smart: Appian recognizes that although they do want to be in the business of running a SaaS operation, they’re not in the business of owning hosting infrastructure, and they can just buy cycles from Amazon (or wherever they end up with their production hosting) instead of buying gear.

They’re working on some ideas similar to Salesforce.com’s AppExchange, where there will be a marketplace of add-on applications (created by Appian or third parties) that can be purchased on a subscription basis as required by Appian Anywhere customers. Customers can also build their own applications from scratch or using a wizard, or modify one of the pre-built applications included as templates. If you want to link any of your in-house applications together with Appian Anywhere, you’re going to do it via web services calls, same as we’re seeing with most other SaaS applications. I’m wondering — although with no data for or against — whether or not this is going to provide adequate performance for user-facing steps within a process.

I did see Appian Anywhere briefly at the Gartner conference, although it was still early days for demos, and we were mostly seeing the latest version of their enterprise product. I was watching their über demo god hold court with a small group when he looked over and saw my eyes riveted on that new little RSS icon on their interface. Oh my god, after all these months of nagging lobbying vendors about adding feeds to their BPM products, someone finally did it, at least for process models. Our eyes met across the crowded booth. He smiled, and said “we wanted to surprise you with it”. I think I’m in love (with process feeds).

LucidEra launches today

I had the chance last week for a chat with Ken Rudin and Alex Moissis of LucidEra, and a preview of their SaaS business intelligence offering aimed at the SMB marketplace that is being released in general availability today. Rudin, LucidEra’s CEO, was previously with Salesforce.com, Oracle and Siebel CRM OnDemand, so you have to assume that he knows something about both BI and SaaS; Moissis, VP of Marketing, had a long run at Business Objects in product marketing and product strategy.

In most BI projects that I’ve seen, ROI comes quickly — usually less than a year, sometimes less than six months — since it allows analysis of costs, revenues and risks in ways that just aren’t possible using spreadsheets and paper reports. Once the patterns in the data are made visible, companies can act on these trends to cut costs and increase revenues, either in a manual or automated fashion. This is great if you have hundreds of thousands of dollars to spend on a big BI solution, and an IT team to put it in place and get the initial reports up and running, but not so great if you’re smaller, with less money to spend and little or no IT support for a BI project.

What LucidEra showed me will help to address that issue for SMBs: a very Web 2.0-looking hosted BI application, supporting multiple data sources, and easy enough to use by anyone familiar with a spreadsheet. In short, they’re trying to simplify BI enough that a smaller company with little IT infrastructure can adopt it and start to reap the benefits. There’s a basic BI platform with pre-built solutions on top of the platform; some of the solutions, like their initial forecast-to-billing one, are included in the base price, whereas others may be at an additional cost, especially those created by third parties. The base price will be around $3,000 per month, which includes 100 users, 3 different data connections, and the aforementioned forecast-to-billing application. It seems like a lot of money, but think about it: the per-user price is about halfway between Salesforce.com and Blueprint. Welcome to the world of paying for your “enterprise” software monthly on your American Express card, and stopping it at any time that you’re not happy with it.

Setting up a new company in LucidEra is a self-service activity, and LucidEra doesn’t even offer professional services to assist with this, although they do provide telephone and online support. Typically for their beta customers (of which there are about a dozen, ranging in size from less than 50 to several hundred employees), this takes up to five person-days spread over as much as three weeks, and is mostly about getting the data sources properly hooked up and doing some data cleansing on the results. Although I didn’t review this process, it sounds as if you’re not going to need professional help for this one, just someone internally who understands your data sources already.

We spent quite a bit of time looking at the forecast-to-billing application, doing some slicing and dicing on the data. In the sample that we looked at, the customer data (expected revenue) came from Salesforce.com, the financials (booked revenue) came from NetSuite, and the quota information came from an Excel spreadsheet. These are just three of the data sources that LucidEra can support in any combination: for example, the financials could have come from Oracle Financials instead.

The really cool thing is that there is no distinction between the design and view environment: if you’re viewing a report, you can change it interactively. We added fields to the report, filtered it, grouped by fields (creating the equivalent to an Excel pivot table) and viewed it as a graph, all through dragging things around on the screen. If we didn’t like our changes, we could undo them one at a time, or revert back to the original report.

A few technical notes: the client is purely browser-based, and will run in IE or Firefox on Windows. Ken was going to confirm whether it ran on other platforms (Mac and Linux) but I haven’t heard back yet. They developed their own back-end database based on the Broadbase data warehouse source code and some open-source technology, then rebuilt for multi-tenancy, ease-of-use and to optimize for the SaaS environment. All of this was put together in about 15 months, a timeline that they could not have accomplished except by using the code bases that they started with.

The press release isn’t up on their site yet, but you should be able to find it, and all the other information, there later today.

BI isn’t a field that I usually cover in depth, but keep in mind last week’s themes at the Gartner conference: visibility and agility. BI combined with BPM is one of the ways that visibility into business processes is being realized.

Blueprint webinar now available for replay

I hosted a webinar — now available for replay — with Colin Teubner of Forrester and Jim Rudden of Lombardi on Tuesday this week, discussing collaborative process modelling and on-demand BPM in the wake of Lombardi’s beta release of Blueprint on Monday.

I have to say, the conversation that we had in the 20 minutes following the presentation portion of the webinar was so much fun, I told Colin and Jim that next time they only get one slide each, and we spend the rest of the time on open discussion. It was great to host an analyst like Colin who is great at off-the-cuff answers, even when I ask questions totally out of left field, and Jim was very up front when I quizzed him on his competitors (Appian‘s SaaS announcement on Monday, which I’ll write more about later today) and interoperability (yes, you could take the BPDM output from Blueprint and import it to any BPMS that supports BPDM).

We didn’t get to half of the audience questions, but obviously the conversation was compelling, because the number of attendees in the webinar didn’t drop off during the Q&A portion as usually happens.

Savvion enters the brawl

Nothing like a good old-fashioned vendor smackdown. In response to the software-as-a-service announcements by Lombardi and Appian on Monday, Pat “Fighting Irish” Morrissey of Savvion threw in his two cents worth:

Yesterday’s announcements are a beautiful snapshot of on-demand’s reality and hype in practice. Appian’s solution is a good Web-only application – and we applaud their effort to focus on BPM for the small and medium market (SMBs). Lombardi, however, is trying to use SaaS as a way to divert attention from the fact that they now have a beta modeling tool with PowerPoint export – it’s not on-demand, it’s BPM modeler ‘light’.

Pat is right about one thing: Lombardi’s Blueprint is BPM Modeler Lite — but that’s exactly the intention. I had a chance to talk to Pat today, and I’m not sure that Savvion, and most likely other BPM vendors, are really understanding what Lombardi is doing, and how they’re pushing into a relatively new part of a very crowded BPA/BPM space. Although Lombardi talks up the easy-to-use high-level process “sketching” view in Blueprint, what I think is so hot about Blueprint is the collaboration functionality: presence and the shared whiteboard paradigm. Not “collaboration” by virtue of a shared repository where multiple people can serially access a process model, but a true interactive collaboration. You can be sure that there will be a lot of scouting around the vendor booths at the Gartner BPM conference in a couple of weeks as people try to figure out what this all means.

Morrissey went on to say (in his press statement yesterday):

Savvion has offered a full-featured process modeler as a free download on our website to help business and IT users get started with BPM for more than two years. 75,000 users have downloaded our modeler and we welcome Lombardi’s move to adopting our market leading strategy.

Interesting, but I think that this misses the point: regardless of functionality, what Appian and Lombardi are offering is zero-download software as a service, and what Savvion is offering is a downloadable desktop application. Apples, meet oranges.

In a post last April, I talked about the wave of free, downloadable modeling tools, and the big problem with them — the installation restrictions on many corporate desktops — that made this solution my least favourite of the ways to distribute process modeling to the masses. In short, a few vendors, such as Savvion (who pioneered the concept) provide a free downloadable version of their process design tool, which can be installed and run standalone on your desktop without connecting to a server. Although I like the idea of process design for the masses, and this type of solution enforces standards and provides some degree of process validation, it has a major flaw that I find to be a show-stopper in most of my customer’s corporate environments: it requires that the user be able to download and install an application on their desktop. If you are a business analyst at, say, a large bank, you almost certainly can’t do that because IT policies prevent it through some sort of desktop lockdown security. Even if you could, the process of downloading and installing software is not something that a lot of business analysts do regularly, so could be a bit of a barrier in itself, but that’s a moot point if the user doesn’t even have the ability to install software locally.

At that time of that post in April, I gave the edge to Visio together with an add-on like Zynium’s Byzio to model a process in Visio, optionally using a BPMN template, then export it as XPDL for import into a vendor’s BPM design tool. This alternative, used by Fujitsu among others, has the huge advantage of using a tool that is already on the desktop of virtually every business analyst, and easing the learning curve as the business analyst moves into process design and starts to learn BPMN. The disadvantage is that Visio is a general purpose tool that creates “dumb” process models: it doesn’t enforce standards such as BPMN, doesn’t prevent the analyst from adding all sort of nonsensical things to a process model, doesn’t provide any sort of validation against the process server, and doesn’t provide higher level functions that you’ll find in a BPM vendor’s process designer, such as direct hookups to rules engines or web services.

In the past several months, however, I’m leaning towards the browser-based approach, especially after seeing what’s possible in a full-featured process modeller from Appian, and Lombardi’s new process mapper.

As I’ve been predicting for a while, this will be the year of SaaS BPM, and the only way to accomplish that is with a fully browser-based solution like Appian Anywhere. And as I’ve also been predicting, this will be the year of Web 2.0 colliding with BPM, of which Lombardi is giving us a taste.

Appian also offering on-demand BPM

Late in the day today, likely after they saw my Lombardi Blueprint post, I received a message from Appian announcing that they had released an on-demand, subscription-based BPM service. This appears to be a SaaS version of their BPM suite, although it’s hard to tell since they only sent me the press release and a package of six screenshots in their email, most of which appear to show setup and admin screens (look! you can change colour schemes!).

The big difference between this and what Lombardi announced today is that this is the full BPM suite, not just a high-level process modeller. I’ve posted previously about Appian’s killer browser-based process designer, so it’s straightforward (although by no means trivial) for them to convert the whole shebang to a proper SaaS offering. Unlike Lombardi, it’s not clear whether they’ve added any Web 2.0/social software concepts such as collaboration, or whether this is just a straight-up deployment of their existing product. Since they didn’t brief me in advance, I don’t have a lot more information about it, but they’ve promised me a phone call sometime real soon. [Note to vendors: if you want analyst/bloggers to write about your stuff in any amount of detail on the day that it releases, it’s a good idea to do that briefing ahead of time.]

I’ve been saying for some time that SaaS is coming for BPM. There have been a few attempts at this in the past, such as the Global 360-funded Process Factory, but nothing has really made any impact in the marketplace, not like Salesforce.com has done for sales automation. Appian, as an established BPM brand, could be the first to see some success in this area.

Naked Process Modelling with Lombardi

“Naked blogging” is a term that’s applied to living your life transparently on the web through your blog and other social media, like Flickr, del.icio.us, Skype, LinkedIn, Library Thing and Facebook. Most of my friends around my age are appalled at the amount of information that I expose out there, although the younger crowd that I hang with at TorCamp see it as perfectly normal, and I truly believe that if you’re going to get benefit from the network effects of Web 2.0, you need to contribute every bit as much as you expect to get back.

Two weeks ago, when I had a chance for a preview of Lombardi’s new Blueprint Web 2.0-like, software-as-a-service process modeller, my first reaction was “Cool! Naked process modelling!” After all, if you could model your processes online and invite people from within or outside your organization to collaborate on the design of those processes, wouldn’t you expect to see some benefit from that collaboration?

Blueprint addresses some of the issues seen in current process modelling tools: too much complexity for the casual user, and too little ability to collaborate. They call it “process discovery” rather than process modelling, host it as software-as-a-service, and let you get started with a free version (limited to one process and two users) to try it out before you spring for the monthly subscription. Just go to the site, start sketching out your process, then invite others to participate in the design. Like a wiki, everyone who you invite to collaborate on your process can make edits, and you’ll see their edits right away — a true shared whiteboard paradigm. Last September, I used the term “process wiki” in a post and at a couple of conferences where I was speaking, and that’s pretty much what Lombardi has done here.

They’ve also integrated presence into the application using the Google Talk instant messaging client: you can see if your process collaborators are online (notice the “4 Other Users Viewing” indicator in the top right of the first screenshot below), and chat with them through Google Talk. You can also use your Google Talk buddy list to invite people to join the collaboration. As a big Skype user, I’m hoping that they add other IM clients eventually.

Given what I’ve been doing lately around Enterprise 2.0, and seeing how Web 2.0 impacts BPM, this is one of the most exciting things that I’ve seen in BPM for quite a while. I must disclose that Lombardi is a client of mine, but I’d be saying the same thing even if they weren’t.

The visual paradigm is that of outlining a process by specifying the main high-level activities, then the sub-activities within each activity. In fact, you see both the flow diagram and the outline view:

Notice anything weird about this screenshot? That’s right, it’s taken on a Mac. In fact, the Lombardi product manager who gave me the demo came into the meeting room toting his MacBook, which was not something that I was expecting to see. I’ve also seen it on Firefox on Windows. What better way to demonstrate platform independence? The Web 2.0 style interface is very slick, and there won’t be much of a learning curve for anyone who is comfortable with other web-based applications.

You can then specify a lot more detail for the process, including participants, inputs and outputs, impact analysis information such as potential failure points and likelihood of occurrence (very Six Sigma-like), and documentation.

You can also drill down into a more detailed BPMN view of the process for detailed workflow modelling:

You can generate a PowerPoint presentation from the process model, which includes all of the additional parameters specified, for presenting the business case of the process further up the management chain. The demo that I saw generated a 60-page PowerPoint presentation with every possible bit of detail; I think that the problem would be cutting it down to size rather than the usual problem of having to find information to add to the presentation.

Once the collaboration has gone as far as it can, the process model can be exported to Lombardi’s TeamWorks, using (soon-to-be-released) BPDM as the serialization format — with Lombardi’s CTO chairing the BPMI steering committee at OMG, which oversees the BPDM standards, this isn’t a big surprise. You can even round-trip the processes from TeamWorks back to Blueprint when they need another round of collaborative design.

I think that their pricing is too high — $500/month for 10 users, whereas Salesforce.com is around $165/month for a 10-user team, and is currently discounted to half of that — but that will sort itself out in the marketplace. I suggested that their free version be ad-supported, much like the freemium business models of other Web 2.0 applications like Flickr and LinkedIn; I got a few weird looks from around the table at that point, but who knows, I may have put a bug in someone’s ear.

They are almost certainly going to have requests from companies to host the application on internal servers rather than Lombardi’s software as a service, although the success of Salesforce.com (especially in maintaining privacy of data) means that there’s a lot of companies out there are that starting to trust the SaaS model. Looking in a completely different direction, I would love to see Lombardi make Blueprint open source, which would drive collaborative process modelling into places that they never imagined. Although it could negatively impact Blueprint revenue — it’s still possible to have revenue-generating open source, it just requires a bit more imagination — it could serve to drive more business to Lombardi’s core products.

In a year-end emerging trends article in December, I predicted both “modelling for the masses” and “Web 2.0 hits BPM”. Lombardi’s Blueprint delivers on both of these, and I look forward to seeing how they take it forward from here. If it’s like all other good Web 2.0 software, it will adhere to the principle of constant improvement rather than monolithic release cycles.

There’s a lot more to it than what I’ve discussed here, and if you’re interested, check out the webinar that I’m hosting tomorrow entitled Are You Ready for On-Demand BPM with Colin Teubner of Forrester Research and Jim Rudden of Lombardi, in which Jim talks a lot more about Blueprint. You can also sign up for the beta program if you want to try it out for yourself; as of the end of April, it will be available to everyone. I signed up this morning, but received the following email back from Lombardi a short while later:

Dear Sandy,

Thank you for your interest in Lombardi Blueprint. Unfortunately, due to the overwhelming number of requests for Blueprint accounts, we are unable to activate your account at this time.

We will keep your registration information in our database and will contact you when we can provide you with an account.

I’m hoping to be able to pull some strings and get in the beta program sometime soon. 🙂

For those of you who did manage to get a beta account, go on, get out there and expose your processes!

The Other Four Misperceptions of Outsourcing

Almost six months later, part 2 of this Gartner podcast arrives. Linda Cohen talks about the second four of the eight myths:

the myth of sourcing independence;
the myth of service autonomy;
the myth of economies of scale;
the myth of service management as self-management;
the myth of the enemy (i.e., setting up the vendor as an adversary);
the myth of procurement;
the myth of steady state; and
the myth of sourcing competency.

Good discussion, especially on how procurement needs to get a better handle on how to negotiate long-running services contracts in a non-adversarial way (myths 5 & 6). As a long-time service provider, I know how important it is that you start a contract with both parties not feeling like they just got screwed, because that can damage the relationship for months or years to come. Organizations that are used to using a heavy-handed approach with product vendors might want to consider that they’re now negotiating with another company that is going to become an integral part of their operations for a long time — the mentality needs to be more like hiring an employee than buying a product.

Myth 7 (steady state) is also interesting, although pretty obvious: business changes, and the relationship between an organization and its outsourcer needs to be able to adjust accordingly on a fairly regular basis.

It’s probably worth going back to the podcast covering the first four myths and listening to them together.

SaaS and doppio macchiatos

I just received the latest copy of Roger Sessions’ ObjectWatch newsletter (direct link to PDF), and there’s a great article in it explaining SaaS in terms of making your own doppio macchiato instead of going to Starbucks, then later gives an IT cost-avoidance example for SaaS that lines up perfectly with the espresso-making analogy.

He also discusses the two models of SaaS revenue: pay-as-you-go (like Salesforce.com), or watch-as-you-go (ad-supported, like Google, and like most mashups). There are many Web 2.0/SaaS services out there that have a watch-as-you-go free version, and a pay-as-you-go premium version — Flickr, Mollyguard and Nuvvo all come to mind — so the two models are definitely not mutually exclusive for one provider.

If you want a quick and easy way to understand SaaS, or to explain and justify it to your organization, some great ideas in this newsletter. Worth reading.