social – Page 18

Enterprise 2.0 Camp: Anthony Williams

I’m at Enterprise 2.0 Camp today, and Anthony Williams is the first breakfast speaker. He’s giving the Wikinomics lesson in short — how we’re undergoing an economic transformation because of the collaborative nature of value creation that’s happening due to both Web 2.0 internet applications and social networking principles being introduced into the enterprise. He covers the four basic principles: peering, openness, sharing and acting globally; since I read the book fairly recently, this is all still pretty fresh in my mind and it’s great to hear it from the author.

I like his discussion of openness, where he shows the move from companies hiring all their own talent internally, to outsourcing of some business processes, to a true open market for talent. This is a critical area of overlap between BPM and Enterprise 2.0, since BPM has been enabling business process outsourcing and will continue to be a key technology for supporting an open market: if you can find a grope outside your organization, whether local or a half a world away, that has superior skills to deliver some aspect of your business process, you need to be able to easily include them in your value chain. He also talks about organizations creating an ecosystem for others to add value to their base products: everything from SalesForce.com’s AppExchange to Facebook’s new application platform. In some cases, there’s a more active collaboration with other companies; in others, it’s the prosumer doing their own thing and giving it back to the community.

He talked about Science 2.0 in the context of sharing, with the Human Genome Project and other similar projects pooling data and computing power. Open source development also falls under the sharing part of wikinomics, with companies like IBM contributing developers to Linux development that is turned back to the community. It’s not completely altruistic: a more robust Linux community benefits IBM because they sell more hardware and services to run it on, and the amount that they contribute to Linux development is about 1/10 of what they would spend developing and maintaining an equivalent proprietary operating system (say, OS/400).

Williams described how to get started with Enterprise 2.0 internally, through the use of internal blogs and wikis, which put me in mind of the Avenue A|Razorfish intranet wiki that I heard about last week at the PCC conference. It’s a good way to get people used to the concepts, while at the same time working out the governance issues before any of this information is exposed on the public internet.

Tom Purves put today together mostly as an unconference, with a few minor changes: first, there’s some “name” speakers at breakfast, and second, we all had to pitch in $50 for the day, but we’re at the Toronto Convention Centre so I wouldn’t expect that we’d be getting everything for free. Still a great deal, and I’m looking forward to the rest of the day.

Shared Insights PCC: RSS in the Enterprise

My session on the changing face of BPM went pretty well, except for one guy who said that I was wrong about pretty much everything 🙂

Today finishes early, so I’m at the last breakout session, Colin White discussing using RSS in the enterprise, and the broader subject of using web syndication to deliver content to users. It’s a bit distracting because he has exactly the same English accent as someone on my wine club board; I keep looking up and expecting to see my friend Bernard (who doesn’t even know how to spell RSS) at the front of the room.

White is looking at this from an architectural rather than implementation viewpoint, and focussing on enterprise rather than internet data sources: a standardized and lightweight XML-based integration protocol. He spent an undue amount of time explaining generically what RSS feeds are and how internet syndication works in various RSS readers; is there anyone in this fairly technical portal-savvy audience who doesn’t already know all this? He then moved on to the differences between RSS and Atom and the specific tags used in an RSS feed; 30 minutes into the presentation, we still haven’t yet seen anything to do with RSS in the enterprise.

Eventually he does get to enterprise uses of RSS; no surprise, one big use is to have it integrated into a business portal, although the XML can also be consumed by various search tools, including ETL to capture the data and load it into a data warehouse or content management system — something that I hadn’t thought about previously, but can be done with tools like Microsoft Integration Services. He points out how RSS is one piece in the integration puzzle, which is essentially what I’ve been saying with respect to using RSS feeds of process execution data as one way of providing visibility into processes.

White covers the different types of feed servers: external, internal, and hosted SaaS. Interestingly, NewsGator is now in all three areas, with both an enterprise server and an on-demand solution that can aggregate and syndicate internal as well as external content, as well as their well-known external internet version. That gives a variety of ways that a feed server can fit into an enterprise environment: either an external feed server providing only the external feeds, or an internal/hosted feed server that can handle both internal and external feeds. This has the advantage of reducing network traffic, since the feed server caches the feeds, as well as providing filtering and monitoring of content that is consumed.

I’m really aware of a push to give PCC a very Enterprise 2.0 flavour; having not been at any of the previous PCC conferences, or even the first half of this one, I don’t know if this is a new bandwagon that they’re leaping on, or something that’s a logical progression of where this conference has been in the past.

Shared Insights PCC: AvenueA|Razorfish intranet wiki

I skipped this morning’s taxonomy/folksonomy smackdown featuring Seth Earley and Zach Wahl — I just wasn’t up for that much testosterone this early in the morning — and went to the best practices track to hear about how AvenueA|Razorfish implemented their internal wiki. I’m speaking next, so if this session isn’t sufficiently riveting, I’ll duck out early to review my notes.

Donna Jensen, their senior technical architect, took us through how they use a wiki as an intranet portal. She spent some amount of time first defining wikis and discussing benefits and challenges, particularly when used inside the firewall. She made a crack about how Ph.D. dissertations will be written on many of these points, which isn’t that far from the truth: things like encouraging active versus passive behaviour. And, although she claims that they’re breaking down behaviours tied to organizational silos, she admitted that no one can comment on the CEO’s blog although all others are open territory. At some point, even the top level executives have to learn that if they’re going to commit to Enterprise 2.0, it has to permeate to all levels of the organization: no one should be exempt.

The platform that they used was MediaWiki (the software used to create Wikipedia) on a standard LAMP stack, giving them a completely open source base. They also use WordPress for internal blogs, maintaining the commitment to open source. Although they did do some customization, particularly in terms of creating templates such as project pages, they took advantage of many freely-available third-party extensions for functionality such as tag clouds, calendaring and skins. They use Active Directory for security, and allow access only internal or VPN access: no external access or applications.

AA|RF put in the wiki with only a technical VP and a part-time intern, pretty much out of the box, and found that it wasn’t adopted. They did another cut with Jensen as technical architect (part-time) and a couple more interns, and arrived at their current state: no project management oversight, no content management system, and no creative designer, with the whole thing implemented in about 2,000 person-hours. As a web technology consulting company (although with little Web 2.0 experience), they can get away with this, but you may not want to try this one at home. They used agile scheduling, and eventually brought in some rigorous QA. Jensen feels that their only real mistake was not bringing in a create designer earlier, since the wiki is apparently pretty technical looking. They haven’t yet put a WYSIWYG editor so everyone still needs to work in WikiText, which is likely a bit of a barrier for the non-techies.

Jensen talked about a few byproducts of the wiki adoption, such as the incremental upgrade model that tends to come with open source or SaaS products, rather than the monolithic (and often disruptive) upgrades of proprietary software. She also talked about how many IT departments won’t use open source because it makes them unable to turn to someone who is compelled to help them — in other words, they have to take on the responsibility of finding a solution themselves. Another byproduct is the shift towards open source, and the savings that they can expect by replacing some of their current software platforms and their hefty maintenance fees with open source alternatives.

In their wiki environment, any kind of file can be uploaded, all pages (except the home page) are editable by everyone, and any content except client-confidential information can reside there. I really have to wonder how this would work if they upload a massive number of files: at what point do you need to add a content management system, and how painful is it going to be to do that later? Their wiki home page shows del.icio.us and Flickr feeds, internal blog feeds, Digg items and recent uploaded documents. One audience member asked if that meant that if anyone in the company tagged a public web page, that it would be included on the home page; there was general shock around the room and wonderment that you could do this without having some centralized body approving such content before it was surfaced to the rest of the company. I tried not to laugh out loud; is this such a radical idea? Obviously, the last year of being immersed in Web 2.0 has changed me, and I start wondering which of these things that I would adopt if I were still running a 40-person consulting company. As the session goes on, the same question about how user tagging on the internet drives their intranet home page keeps coming up from the audience over and over.

What I found interesting (and I’m probably blowing their whole game by publishing this), is that they’re using public Web 2.0 tools to feed part of the home page: if something is tagged AARF on del.icio.us or Flickr, it shows up there. For Digg, however, you have to be a friend of AARF to have your items show up. Jensen said that she’ll be changing the AARF tag to something unguessable, although if you know how to track items and users through del.icio.us or Flickr, it wouldn’t be that difficult to figure out their new tag. She also said that they had run some analytics on whether these tags gave away any secrets about what they’re currently researching, and found that the mix is too varied for any patterns to emerge.

The wiki is a portal in a very real sense, which was a bit of a revelation to me: I didn’t previously think of wikis as portals. Everyone has their own people page which they can format and populate as they wish, and which can include their recent file uploads and blog postings. On any page, adding a “portlet” is just a matter of copying and pasting a snippet of PHP code, including copying snippets of code such as the <embed> code provided by YouTube for every video on its site.

They’ve done some cool things with blogs as well, such as having mailing lists corresponding to blogs, and sending an email to that mailing list will auto-post it as a blog entry on the corresponding blog.

Jensen had some great ideas for wiki adoption, often centred around “wikivangelists” getting out there and helping people. I especially like the idea of the “days of wine and wikis” events. 🙂 And they’re getting some great adoption rates.

I had to leave just before the end: she was running 7 minutes overtime and I had only 15 minutes between sessions to get to my own room to set up. It was hard to tear myself away, however; I found both Jensen’s presentation and the audience feedback to be riveting.

Shared Insights: Two-Day Wrap-Up

Apparently there was no wrap-up session yesterday, so the last session today wrapped up the past two days. Colin White, who has been running this conference for 8 years, was joined by three of his regular presenters: Shawn Shell of Consejo, Tony Byrne of CMS Watch, and Zach Wahl of Project Performance. The discussion was pretty open; I’ll try to attribute to the correct person as I document it.

In looking at what has changed at the conference recently, White found that 2/3 of attendees were building external-facing rather than internal-facing, which he feels to be influenced by Web 2.0. Shell found the audience to be more technical and tactical, and very focussed on building portals to connect with customers and employees. Byrne commented on how layered that portals are becoming, sometimes with several portal products being used simultaneously, and how the sheer diversity of integration technologies is making a more complex portal ecosystem. He feels that many organizations are out-growing some of the lightweight tools provided by portals, such as document management, and thinks that traditional portal vendors are having problems figuring out how to do Web 2.0 in their products. Wahl mentioned a higher caliber audience (by which it appears that he means “more technical”, however frightening the implications of that statement), and sees that the outward-facing portals that are being developed provide a stronger tie-in to ROI.

They then moved on to audience questions, and I can’t attribute the responses to any of the four participants.

Q: How are organizations using blogs?

Attend the Razorfish session tomorrow for a case study. [I did]
It’s still a “cautious” activity for organizations, and is often still a top-down corporate communications “fake blog” from C-level executives rather than true blogs.
Blogs are useful for technical organizations [I scratched my head over that one, although I admit that one of the most successful organizations that I’ve seen using blogs internally is IBM]
Many people inside corporations “don’t have anything to say that’s universally consumable”. [This statement made me cringe; it totally misses the point of blogs]
A corporate ethos of content sharing can provide the right environment for blogging.

My conclusion: half of the 4 speakers don’t get blogging.

Q: How much of Web 2.0 is hype versus reality for the enterprise?

A: “There’s some organizations for which this isn’t going to work”. [The speaker quite erroneously equated Web 2.0 in the enterprise with publishing corporate content on the public internet]

Q: What are the future directions in PCC?

There’s an increasing diversity of products rather than consolidation in the market, leading to more competition.
Major vendors, such as Oracle and BEA, are leapfrogging technologies to meet new standards and stay competitive.
The dynamism in PCC right now is in the add-ons, such as BPM, rather than the underlying portal technology. [This resulted in a specific discussion about how BEA’s BPM is driving portal sales, although I’m not sure that’s true]
Portal vendors are moving into the add-on market to take more of the enterprise pie.

There was also a discussion about getting started with search and taxonomy: for example, using the Google search appliance as a starter for search/taxonomy, and the need for a simple start to taxonomy in particular. We finished with a brief discussion about the perceived dilemma of SharePoint proliferation: is it out of control or a necessary state of departmental document collaboration?

BEAParticipate: Adrian McDermott and Jay Simons

The general sessions finished with Adrian McDermott and Jay Simons from BEA engineering and product marketing to talk about — no surprise by now — the new Enterprise 2.0 products. This conference is starting to look like one big launch party for Pages, Ensemble and Pathways, although I can understand their excitement.

They describe Pages as “Studio on steroids”, which would make much more sense if I knew what Studio does. It’s a tool for easily building static web pages, but also allows the inclusion of more dynamic content via RSS feeds. It can be used to create blogs, wikis and other situational applications. (I just got a mention from the stage — obviously, someone’s been reading my blog this morning.)

We then had a demo of Pages; I’ll have more details after a more in-depth demo that I’m expecting to get at some point, but this shows some of the capabilities. Demo’d in Firefox, I’m pleased to say.

To start, you can create a new DataSpace, using data from back-end systems, RSS or web services, or using some pre-defined templates such as a blog DataSpace. The blog functionality looks pretty basic: a WYSIWYG editor, but it’s not clear if there’s support for categories (for auto-tagging) and other more complex blogging constructs. Cute, they just create a new DataSpace from an RSS feed: my blog is now live in their demo. Fabulous way to score points, guys, I’m loving it. What’s interesting is that they can take my posts and augment them with other unstructured information, although by replicating my posts in their entirety onto their own site, they’ve violated my copyright and the principles of fair use. 🙂

He demonstrated a nice quick mashup between a Google map and addresses of employees from an internal database, then added in the blog that he created originally and filtered the blog posts by the expertise of the employees.

Next in the demo was Ensemble, which is for creating mashups (although I’d consider what he did with Pages to be a mashup), and handling authentication, provisioning and analytics for web applications and portlets that were built without those necessary bits of IT deployment services. They showed an event calendar application built in Ruby on Rails, then showed how Ensemble can be used to create a wrapper around that application to turn it into a portlet (or pagelet): it created a friendly URL, added security (authentication, access policies, auditing), and made it accessible for including in mashups and portal environments.

They finished up with Pathways, which is a social bookmarking/tagging environment, like del.icio.us within the enterprise. It also allows for people to be tagged as well as content, making it act a bit like a social networking environment like LinkedIn or Facebook. All of this feeds into searches, so that results can be ranked based on it either being authored by or linked to by experts in a certain field. It uses tag clouds to display tag relevance (you can read my friend Tom’s opinion on why tag clouds suck and how they’re both a hallmark of Web 2.0 applications and a “sordidly abused miscarriage of functional information design”), but I’m sure (I hope) that’s not the only way to display tag relevance. There are a number of controls over how search ranks are calculated, based on both the content and people involved.

These products are all in beta now, and will be released in GA in July.

BEAParticipate: Mark Carges

Day 1 of the BEA user conference in Atlanta, and we start out with a morning of general sessions hosted by Ira Pollack, SVP Sales at BEA; the remainder of the 2-1/2 day conference is all breakout sessions. There’s wifi around but I seem to be missing the conference code necessary to get logged on, so posts will be delayed throughout the conference as I’ll be gathering them up to publish at times when I can get internet access. There’s also not a power source in sight, which could mean that the last parts of this are really delayed as I transcribe them from paper. 🙁

BEAParticipate is a new user conference dedicated to portals, BPM and social computing with tracks for business and developer-focussed audiences. My focus has only come on BEA with the acquisition of Fuego a year or so ago, so I’m not sure what they had in terms of user/developer conferences prior to (or in addition to) this, although I talked last night with a web developer who has been a Plumtree customer for years and has transitioned from the Plumtree conference as it was rolled into this conference.

We started out with Mark Carges, EVP of BEA, (who many years ago helped develop the source code for Tuxedo) with a high-level vision of how these technologies can create new types of agile applications, and how BEA is delivering BPM, SOA and enterprise social computing (Enterprise 2.0). He talked about the difference between traditional and situational applications, the top-most point of which is that traditional ones are built for permanance whereas situational ones are built for change: exactly the point that I made last week in my talk at TUCON. He covers other comparative points, such as tightly- versus loosely-coupled, non-collaborative versus collaborative, homogeneous vertical integration in application siles versus heterogeneous horizontal integration, and application-driven versus business process-driven.

He walked us through a few examples of their customers’ portal applications — purely intranet, customer-facing, and public — and one example of BPM in a customer, before moving on to talk about BEA’s strategy and product development, particularly in Enterprise 2.0. He made the point that enterprise applications are having to learn from the consumer-facing Web 2.0 applications by allowing for different types and degrees of user participation. Instead of just listing consumer Web 2.0 applications, however, Carges makes analogies with how the same sort of technology could be used inside an enterprise: Digg-like ranking used for ranking sales tools internally; social bookmarking and implicit connections for internal expert knowledge discovery (much like what IBM is doing with Dogear, which I’m sure that they’ll turn into a commercial product once companies like BEA prove the market for it); mashups for creating a single view of a customer from multiple sources including product, support incidents and account information; and wikis to capture competitive intelligence. This is where their new product suite fits: AquaLogic Pages (to create pages, blogs and wikis), Ensemble (for developers to create mashups) and Pathways (for tagging and bookmarking). All of these mesh with IT governance such as security and versioning, but the content isn’t controlled by IT.

Interesting that the focus of his talk has really been on their new Enterprise 2.0 products rather than portals or BPM; they obviously see this as a strong potential growth area.

TUCON: Technology Buzz Panel

Next up in the general session is the technology buzz panel, where “journalists, analysts, and industry experts square off on buzzwords of the day”. The moderator was Gary Beach of CIO Magazine, with panelists Frank Kenney of Gartner, Jason Maynard of Credit Suisse, Rob Strickland of T-Mobile USA, and Aaron Ricadela of BusinessWeek. Their initial goal is to eliminate four tech buzzwords (one per panelist):

Maynard picked “Web 2.0”, apparently not only because he thinks that it’s a bad term but because he doesn’t like social networking. There was discussion around the stage: Kenney railed against the term Web 2.0 but then used the ever-overused “paradigm shift”; Strickland said that he thinks there’s too many bugs in Web 2.0 and he’s waiting for 2.0.1; Ricadela commented on the new business models coming out of this, although he didn’t use the term “Bubble 2.0”.
Strickland picked “the business”, in the context of the dichotomy between IT and the business; as a CIO, he sees himself as an integral part of the business. I wonder if T-Mobile’s business users feel the same way; Maynard said that he felt that his IT department was actually a detriment to productivity sometimes, and admitted to using his own MacBook Pro and Gmail (interestingly enough, a Web 2.0 application) because IT wasn’t focussed on some of the business requirements. Kenney and Ricadela both talked about aligning IT and business, which of course just points out that the divide does exist.
Ricadela picked “business process management”, because he believes that it’s become a catch-all term for anything to do with business improvements enabled by technology. He blames the analysts and vendors for the confusion: given that Gartner helped to promote this term in its infancy and created a tremendously confusing landscape that in turn allowed vendors to promote everything as BPM, I’d have to agree to a certain extent. Kenney feels that the term BPM is overused but should still exist; Maynard doesn’t appear to understand the distinction between BPM and packaged applications.
Kenney picked “enterprise”, saying that it’s not used consistently and is often just applied as a marketing buzzword: sometimes it means “within the four walls of a company”, sometimes it relates to scalability or other features of a system. Maynard points out that adding the word “enterprise” to a software product allows vendors to charge more it, and thinks that it applies only to large companies.
Beach finished up by picking “virtualization”, which I identified yesterday as potentially just being an overused buzzword, so I’d have to agree.

They moved on to a discussion of several magazine headlines: “Is your company fast enough”; “No future in tech?” (which veered sharply into American protectionist rhetoric); various open source headlines (Maynard pointed out that open source is fundamentally changing the software industry, even those companies that are not open source); software as a service (nothing new here); and finally, can you trust analysts’ opinions given that they’re all sleeping with the vendors.

They finished with a lightening round with 30-second opinions on Web 2.0, gigabit everywhere, SOA, AJAX, and the future of enterprise applications.

All in all, a more entertaining panel than I’ve seen for a while.

The New Software Industry: Investment Opportunities Panel

Jason Maynard of Credit Suisse moderated a panel on investment opportunities in the new software industry, which included Bill Burnham of Inductive Capital, Scott Russell (who was with two different venture capital firms but doesn’t appear to be with one at this time, although his title is listed as “venture capitalist”), and Ann Winblad of Hummer Winblad Venture Partners.

This was more of an open Q&A between the moderator and the panel with no presentation by each of them, so again, difficult to blog about since the conversation wandered around and there were no visual aids.

Winblad made a comment early on about how content management and predictive analytics are all part of the collaboration infrastructure; I think that her point is that there’s growth potential in both of those areas as Web 2.0 and Enterprise 2.0 applications mature.

There was a lengthy discussion about open source, how it generates revenue and whether it’s worth investing in; Burnham and Russell are against investing in open source, although Winblad is quite bullish on it but believes that you can’t just lump all open source opportunities together. Like any other market sector, there’s going to be winners and losers here. They all seem to agree, however, that many startups are benefiting from open source components even though they are not offering an open source solution themselves, and that there are great advantages to be had by bootstrapping startup development using open source. So although they might not invest in open source, they’d certainly invest in a startup that used open source to accelerate their development process and reduce development costs.

Russell feels that there are a number of great opportunities in companies where the value of the company is based on content or knowledge rather than the value of their software.

SaaS startups create a whole new wrinkle in venture: the working capital management is much trickier due to the delay in revenue recognition since payments tend to trickle in rather than be paid up front, even though the SaaS company needs to invest in infrastructure. Of course, I’m seeing some SaaS companies that are using hosted infrastructure rather than buying their own; Winblad discussed these sort of rented environments, and other ways to reduce startup costs such as using virtualization to create different testing environments. There are still a lot of the same old problems however, such as sales models. She advises keeping low to the ground, getting something out to a customer in less than a year, getting a partner to help bring the product to market in less than two years. As she put it, frugality counts; the days of spending megabucks on unnecessary expenses went away in 2000 when the first bubble burst, and VCs are understandably nervous about investing in startups that exhibit that same sort of profligate spending.

Maynard challenged them each to name one public company to invest in for the next five years, and why:

Russell: China and other emerging markets require banking and other financial data, which companies like Reuters and Bloomberg (more favoured) will be able to serve. He later made comments about how there are plenty of opportunities in niche markets for companies that own and provide data/information rather than software.
Burnham: mapping/GPS software like Tele Atlas, that have both valuable data and good software. He would not invest in the existing middleware market, and specifically suggested shorting TIBCO and BEA (unless they are bought by HP) — the two companies whose user conferences that I’m attending this week and next.
Winblad: although she focusses on private rather than public investments, she makes Amazon is a good bet since they are expanding their range of services to serve bigger markets, and have a huge amount of data about their customers that allows them to . She thinks that Bezos has a good vision of where to take the company. She recommends shorting companies like CA, because they’re in the old data, infrastructure and services business.

Audience questions following that discussion focussed a lot on asking the VCs opinions on various public companies, such as Yahoo. Burnham feels that Yahoo is now in the entertainment industry, not the software industry, so is not a real competitor to Google. He feels that Google versus Microsoft is the most interesting battle to come. Russell thinks that Yahoo is a keeper, nonetheless.

Questions about investments in mobile produced a pretty fuzzy answer: at some point, someone will get the interface right, and it will be a huge success; it’s very hard for startups to get involved since it involves them doing long negotiations with the big providers.

Burnham had some interesting comments about investing in the consumer versus the business space, and how the metrics are completely different because marketing, distribution and other factors differ so much. Winblad added that it’s very difficult to build a consumer destination site now, like MySpace or YouTube. Not only are they getting into a crowded market, but many of the startups in this area have no idea how to answer basic questions about the details of an advertising revenue model, for example.

Burnham had a great comment about what type of Web 2.0 companies not to invest in: triple-A’s, that is, AdSense, AJAX and arrogance.

Winblad feels that there’s still a lot of the virtualization story to unfold, since it is seriously changing the value chain in data centres. Although VMware has become the big success story in this market, there are a number of other niches that have plenty of room for new players. She also thinks that companies providing specialized analytics — her example was basically about improving financial services sales by analyzing what worked in the past — can provide a great deal of revenue enhancement for their customers. As a final point on that theme, Maynard suggested checking out Swivel, which provides some cool data mashups.

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?