Archive for February, 2008

Thoughts on Google Sites, IT department threat?

Published by Ben Kepes on February 29, 2008 in Efficiency, IT, SaaS and Strategy. 5 Comments

Google released Sites today, a centralized repository for sharing information and collaborative workspaces. There’s been much commentary around the blogosphere on whether Sites is a threat to Microsoft’s SharePoint product, MiramarMike gives an excellent comparison over here.

There’s been so much discussion post launch that I wasn’t going to comment. However a post over on RWW by Sarah Perez gave me some motivation to comment on her perspective. Sarah’s perspective is that, while Sites might be a reasonable product for Ma and Pa operations, it’s not suitable for enterprise, and in fact Google’s strategy for encouraging enterprise users to adopt their product is counter productive and somewhat sneaky.

Sarah quotes Dave Girouard, who runs Google’s enterprise unit, as saying this about what his company is doing: “We’re wrestling over who should have ultimate authority of the technology people use in the workplace. There’s no right or wrong answer so we have to respect everyone’s view.”

She then goes on to draw a stark conclusion from Dave’s words, saying:

Let’s read between the lines of that last statement…Google doesn’t think IT should have the ultimate authority about the tools people use to do their jobs. There’s “power to the people,” and then there’s a total coup-d’etat. Google’s opting for the latter.

I have to say I can’t agree with Sarah, Google is clearly empowering operational level employees within an enterprise. In the event that their IT department hasn’t the funding (although given the fact that GApps is free this is a non starter anyway) or the time resource, operational and team level personnel can deploy the broader GoogleApps products to make the most of their collaboration potential. The way I see it, if IT departments were doing their jobs (and some are) there would be no need to be having this discussion. They would be sufficiently user-centric to decide on the best product for their users needs, be it MS, Google or anything else.

In all this discussion around circumventing, or not, corporate IT departments, people seem to have lost sight of the real issue here. Corporate IT’s role is to assess and implement solutions that provide the functionality to the users that those suers require. It isn’t to build empires or create silos. Any success Google has within an enterprise setting (and I’m not going to wade into the argument about whether or not Google apps is having enterprise level success) would seem to be to be a comment on the efficacy of the IT department itself.

For too long CIOs have been technology centric on the one hand and compliance driven on the other. Between cuddling up to the big software vendors and spending time worried about the skins with regards Sarbanes Oxley compliance, they’ve lost site of the fact that their existing offering to the business are lacking.

Rather than finding ways to block their users making individualised and decentralised decisions, they should be partnering with the business units to truly asses their requirements and the best solutions to fulfil their needs.

Sarah quotes Joel Hruska of Ars Technica as saying “…IT administrators tend to fervently dislike the sudden appearance of unapproved applications, even if said software package promises world peace, actually delivers all those free iPods, and periodically spits gold doubloons out of the CD-ROM drive. Google’s approach seems predicated on the old adage that it’s always easier to get forgiveness than permission. One the one hand, Google Apps Team Edition could help facilitate group-level communication on projects, but the program could also engender a significant backlash from IT managers who aren’t at all thrilled at its sudden appearance. This is particularly true of companies with strict(er) IT policies, or companies already in the middle of deploying an alternative work collaboration system…Google seems to be betting that if it can build enough grassroots support for Google Apps, IT departments and corporations will have no choice but to embrace it as a provider. Such an approach may work beautifully in the consumer market, but there’s no guarantee corporations will be as flexible.”

And then decides that:

If anything, this strategy will drive enterprise IT even further from Google Apps, keeping the Apps program the sole province of the SOHO and small-medium business market.

And herein lies the rub, if enterprise IT continues to be prescriptive and protective of incumbents, it will eventually start to erode the value of the organisation as younger, leaner, more agile and proactive organisations utilise whichever tools satisfy their needs.

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On SaaS, security and perception…

Published by Ben Kepes on February 29, 2008 in Efficiency, Governance, IT, New business, SaaS and Strategy. 1 Comment

I wrote a day or two ago about the issues around security of SaaS products. I suggested a number of strategies that SaaS vendors could use to ensure that their product was sufficiently secure.

Comments pointed out a duality of issues here. Kaila said;

security is usually less about security than it is about the perception of security

Bwooce commented that;

Security has many meanings, including providing a “security blanket” to make people feel safe

While Marc dismissed the concerns saying;

Online banking, online broking, online pension/super fund management are SaaS services. All transact money, in theory higher risk than just the management of financial records or CRM information. Yet, they are widely adopted by the same people citing security as a concern

All of these comments (and they’re great guys, keep them coming), reiterate the fact that technical solutions are easy, the hard part is all about changing people’s perceptions of the risks of moving to SaaS. So lets look at the perception issue. Kaila said that;

I recently signed up for SugarSync, a service that lets me back up and sync to the cloud. A gig of free space, simple interface — it all looked good, until it came time to hit the ‘Sync’ button. Suddenly I thought, ‘Who are these guys that I’m sending my files to?’ I didn’t hit the button.

OK – Picture got. We’ve got a perception issue here. Let’s look at ways of removing this barrier.

The big buddy solution

This is all about leveraging off the credibility of an existing player. Think tagging on with an existing application provider (SAP, Oracle etc), a platform player (Telco, Google, Yahoo etc) or a real world body (Chartered Accountants). Benefits of this model include instant credibility and marketing clout, however there are some risks in tying ones boat to a big immovable object. When the disruptive tsunami comes you might just be sunk alongside them.

The business structure solution

This involves creating a business model with the intended purpose of creating credibility. High profile advisory or formal boards, becoming publicly listed ASAP and well known serial entrepreneurs all build credibility for a business which in turn rubs off into credibility for the product. Xero have done this par excellence, they IPOd, they have a super high-profile board and a well known CEO and have even hired ex sports stars to be “ambassadors”. It’s a great strategy but unfortunately not everyone can pull it off (and given the equity markets of late I’d be pretty apprehensive IPOing anything right now)

The safety in numbers solution

Those who spend time reading my blog know that the terms “platform play” and “value of the network” are recurring themes for me. There’s a reason for that – it is my contention that the money to be made out of the internet in the next few years (and if money doesn’t rock your boat then think “the paradigm shift in the internet in the next few years”) will come from those businesses that create platforms where diverse and disparate clusters of users can congregate, inform, advise and transact.

This being the case it makes little sense for a small start up SaaS player to go it alone – what makes total sense however is for them to band together with other complementary players and create a cluster of products, ideally with an underlying community theme to create value above and beyond that of the individual SaaS solutions. Think aggregation.

Summary

Credibility is all – it matters little how that credibility is achieved however some strategies have secondary benefits that can prove hyper-valuable on an ongoing basis. The power of the network should never be underestimated.

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Crowdsourcing cleantech…

Published by Ben Kepes on February 28, 2008 in Business and the Environment, Cleantech, New business and Strategy. 2 Comments

Yet another high-flying Silicon Valley entrepreneur is planning to capitalize on the growing popularity of “green” technology, and to do it, he’s tapping the wisdom of crowds as well as their cash.

Steve Newcomb, a co-founder of search startup Powerset, is in the early stages of launching a venture-capital fund that would accept green investments as low as $100, with a maximum investment of $1,000.

Cool. I posted yesterday about cleantech in general and NZ Windfarms lts in particular. I got a reply which indicated some stumbling blocks for cleantech investment, namely poor investment targets and limited ROI. While a crowdsourced VC targeting cleantech won’t solve these issues per se, it will give cleantech startups the impetus to become more realistic and chase both the green nirvana and business viability.

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Zoho introduces new features to writer…

Published by Ben Kepes on February 28, 2008 in Design, IT, SaaS and Strategy. 1 Comment

It’s a battle all right – Buzzword vs Zoho writer vs Google apps vs MS office.

Zoho upped the ante today by introducing a host of new features;

  • DocX Support – ho hum, whatever. No relevance to me but I guess it makes for ease of use for those working in an MS Office/Zoho mixed environment
  • Thesaurus (in 10 languages) – cool, I use a thesaurus a fair bit and having one built into an on demand office app just removes another barrier to use
  • Enhanced Endnotes/Footnotes – maybe useful for academic or legal writing but not overly useful for me
  • Enhanced Headers/Footers – as above
  • Sharing with Groups – killer app. The biggest area that on demand office productivity apps will prove corrosive to installed incumbents is in collaborative environments. This new functionality allows one to;

…share documents with groups. This makes it a lot easier to share documents with multiple people avoiding entering of multiple email addresses each time you share a document. To share a document with a group, click on ‘Share’ and select the ‘Share with Groups’ tab. You can create new groups in your ‘My Account‘ section. These groups will be visible across all Zoho Applications.
sharegroups.png

All in all some great extra functionality and amazing considering that Zoho is primarily a free product without the funding behind it of a behemoth. It’ll be interesting to see what happens with ownership of Zoho over time – methinks the sharks are already circling.

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Why Etsy works (Platforms 101)

Published by Ben Kepes on February 28, 2008 in Design, IT, New business, Strategy and Web x.0. 0 Comments

In recent days much has been written about Etsy, the online community for craftspeople. I thought it opportune to give my perspective.

People have already talked about mass customization and emergent business networks in relation to Etsy so I won’t go there. My perspective is somewhat simpler (and has less syllables too!) – Connection.

We live in a dichotomous society. On the one hand we are connected like never before – able to communicate globally 24/7 and obtain whatever our desires want (and wallets can cope with). On the other hand we are, individually, becoming more isolated, these mass connections have removed somewhat our day to day connections, the “discussions around the water well” type things.

So how does this anthropological assessment relate to Etsy? Well…. Etsy recreates the connections of days gone by, instead of sitting around a craft group physically knitting, spinning and weaving. Communities of people have the ability to meet, chat, create and learn in a virtual environment. The business model of Etsy is, to my thinking, an aside, a very desirable, yet somewhat collateral result of community building.

The creators of Etsy have first and foremost created a community, and thereafter given the members the ability to perform what is a natural extension of their community activities within the community itself.

Etsy therefore has created both horizontal and vertical models of interaction. On the horizontal plane, craftspeople and people interested and crafts can utilise a wide and varied number of functionalities to inform, advise and entertain. On the vertical plane individuals can perform their entire experience from informing to seeking to assessing to choosing to purchasing all in one place.

So – winning Diversity tip for startups is to think both horizontalisation and veticalization contemporaneously when creating an offering.

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SMEs rate security a barrier to SaaS adoption…

Published by Ben Kepes on February 27, 2008 in Design, Efficiency, IT, SaaS and Web x.0. 11 Comments

A new research paper from Fairfax Business Research has the following worrying statistics;

  • 79% of respondents gave security concerns as one reason to not sign up for a SaaS product
  • Almost 50% site concerns that data could be hacked or accessed in transmission
  • 32% state the data is too important to be held offsite
  • 35% site SaaS as a bottleneck given potential internet downtime

It’s a real issue that software vendors need to provide answers to, and preferably before the questions are asked. Looking at each of these issues in turn;

Security concerns 

This should be an easy one. There’s a few things that need to be done here;

  1. Vendors need to invest in absolute best practice technologies for encryption both in data centre and in transmission
  2. Vendors need to invest in independent security audits on a regular basis to ensure client data is sacrosanct
  3. Both vendor and client should work together to ensure security remains tight both onsite and offsite
  4. Vendors should provide real time reporting of security protocols front and centre to ensure clients data is safe
  5. Vendors should invest in independent research to prove to customers that data hosted offsite but in world class facilities, is more secure and robustly held than data stored onsite

The connection bottleneck

This is more difficult relying, as it does, on third party infrastructure. Much has been written by luminaries such as Rod regarding the poor state of broadband connectivity in New Zealand. It would be interesting to read his comments on the connectivity concerns regarding SaaS, especially so considering the fact that he is CEO of a SaaS vendor. Clearly Google gears and similar products will ease the connectivity concerns in terms of short and infrequent outages. Similarly good development will ensure that page loads are as quick as humanly possible.

Beyond these two strategies however it has to be agreed that connectivity is a potential issue and one which;

  1. individual customers need to assess given their own particular circumstances
  2. will only get better as infrastructure and technologies improve

Overall AI have to say that the majority of the concerns expressed in the survey are overstated at best and baseless at worst. Given time and increasing SaaS adoption, these concerns should dissipate.

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SaaS gives startups their own barrier to entry…

Published by Ben Kepes on February 27, 2008 in Efficiency, IT, SaaS and Strategy. 0 Comments

An excellent comment over on Smoothspan regarding differentiating factors for SaaS vendors. Bob says;

…SaaS is such a corrosively disruptive business model that the incumbents generally can’t adopt it when an upstart comes along.  For all intents and purposes a SaaS and Perpetual License Vendor may as well be in completely different markets.  The Perpetual License company has to slit their own wrists to win by accepting monthly revenue instead of the big license payoff that is all recognized the month the software is sold.  It’s all but impossible for these companies to do it it.  The short term pain in order to achieve long term success is simply too great.

…..but having decent barriers to entry, especially from big established companies, is hugely important for startups.

It’s a great point (as Bob’s generally are), all start ups know that they need to gain market share to succeed, a SaaS delivery strategy insulates them from the competition and creates a reverse barrier to entry – one where the incumbents are blocked by their own strategies but new entrants are free to exploit the potential.

It’s a strong reason why a SaaS delivery model makes total sense for a startup – even before any discussion around SaaS being the way of the future.

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Here’s an investment bargain…

Published by Ben Kepes on February 27, 2008 in Business and the Environment and Cleantech. 3 Comments

Clean tech is the big thing of the future. It’s also (relatively) insulated from the sub prime woes as no matter the economy, Kyoto continues.

Strange then that WindfarmsNZ share price has slumped so markedly of late. Especially so given the good performance just released. Windfarms is poised to leverage both gains made by its sister company Windflow New Zealand, and also to make significant gains from the coming to prominence of clean and renewable electricity generation sources.

Diversity’s advice would be to buy on these ones (but bear in mind that Diversity’s advice comes cheap (well free) with all care but nix responsibility!)

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Rod Drury and Eric Schmidt – soulmates?

Published by Ben Kepes on February 27, 2008 in IT and Strategy. 2 Comments

The Unreasonablemen draw an interesting parallel between our own Rod Drury and Google’s Eric Schmidt in this post.

Quote of note from Schmidt;

As more and more people conduct online searches and interact with applications like Gmail, Google Earth and YouTube, we’ve had to think outside the box to create a more scalable, affordable and easy to manage network that meets our users’ needs worldwide. One of the biggest challenges we face is staying ahead of our broadband capacity needs, especially across Asia

Buy shares in infrastructure companies people – they’re the winners of the future (that and cable and hardware manufacturers).

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Our trading partners lack faith in us too…

Published by Ben Kepes on February 27, 2008 in Economic Development, New Zealand and Strategy. 4 Comments

News this morning that a NZTE survey of some of New Zealand’s main trading partners show that they consider us unsophisticated when it comes to business accumen.Interestingly enough Australia took a differing point of view but then again they generally do.

Seems timely given the recent opening of the Labour Party Auckland University (that’s a very in-house to New Zealand joke) business school that Deborah Hill-Cone wrote a somewhat acerbic piece about yesterday.

To paraphrase Deborah, glitz and glam doesn’t build business skills, experience and mentorship do. Instead of focusing on exciting buildings, CEO pay packages and the like, what are our big businesses doing to give young entrants the world view, varied experience and reach that will allow our businesses to excel?

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