Archive for February, 2008

Office productivity apps, a rebuttal…

Published by Ben Kepes on February 26, 2008 in Design, Efficiency, IT, SaaS, Strategy and Web x.0. 4 Comments

A recent discussion on RWW got a number of people hot under the collar. To summarise, a post was written detailing why the author believed that Google apps was a serious threat to Microsoft office. In a fairly vitriolic response, a commenter left a message titled “Google Docs is full of fail”. His litany of alleged shortcoming for GDocs were mainly functionality ones - apparently GDocs doesn’t do what he needs it to, things that MS Office does. We have, dear audience, a debate on our hands. To this end here follows my thoughts;

Ladies and Gentlemen,

Our previous correspondent told us that Google docs is full of fail. While his grammar would suggest otherwise, the substance of his comment deserves response. Without wanting to mix metaphors here, I think we have a combination both of failing to compare apples with apples, and not seeing the wood for the trees.

Apples with Apples

Google docs is a very new offering that is trying to primarily be a collaborative tool. Contrary to what the previous comments would have you believe, it doesn’t intend to recreate MS Office in all its bloated functionality, rather it seeks to create a quick, intuitive and easily utilised offering. It is also SaaS and as such has the ability to be upgraded on the fly, with new features rolled out at will.

Compare this if you will to MS Office which has been in existence for decades, is primarily about creating the purty-est docs possible rather than collaboration, has a relatively steep learning cycle and has multi year release intervals. Get my drift here? They’re two different beasts entirely. Fact is that at this point in time people may well utilise both solutions, one where speed and agility are paramount and one were feature bloat is needed.

While I’m guilty in the past of having prophesied GDoc’s ascendency at MS Office’s expense, I need to clarify that my contention was based on GDocs gaining more functionality to put it in a position where it provided everything imperative that MS Office does, but in a collaboration-enabled setting.

The wood for the trees

Now hyperbole comes to the fore. We’re talking culture shift here. Paradigm change. This one is big.

GDocs is an example of where the future of computing and collaboration will be - that’s not a functionality discussion, it’s an existential one. While it is entirely valid to argue for or against GDocs based on functionality, this is a completely different argument from the one broached by the original poster: namely why Google docs is a serous threat to MS Office. It is NOT a threat because of what it does or doesn’t do at this point in time. It IS however a threat because it embodies the agility, speed, flexibility and, dare I say it, organic-ness of what will become the norm in the computing future.

For all these reasons ladies and gentlemen, I can only but concur with the original author. Google docs IS a serious threat to Microsoft Office.

Thank you

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The impact of Scale and Economics on SaaS and broadband

Published by The Unreasonablemen on February 25, 2008 in SaaS. 0 Comments

NOTE: this is a mirror post of my unreasonablemen.net blog. There have been a few posts recently about broadband in NZ, some well thought through, others not so. The crux of this issue is about scale & economics. This of course is massively applicable to SaaS too. So in the interests of clarifying things I thought I’d do a laymans explanation of scale the impacts of economies of scale & pricing.

First up, lets accept the premise that any company, public or private is in business to make money. To that end they aren’t going to do things for ‘free’ just because people think they should have better services. Secondly lets clarify what we mean by ‘scale’. Scale as its used here means having a lot of use or users on a system, platform or service. The more scale you have, the larger you subscriber base.

Scale is very important when you are doing infrastructure based services because your capital investment is normally very large and directly affected by the amount of scale you have to build for. It also impacts the potential returns you will get and the price points you can charge.

Simply put, when you are preparing to invest or build some infrastructure like a broadband network or a SaaS application / platform you have to outlay enough to support scale while betting you actually will get that scale.

I’ll illustrate this with a couple of diagrams. Lucky enough in this example, the infrastructure can scale to well over 1 million users :-)

scale-1.jpg

In the first diagram the infrastructure provider has not achieved scale. What this means is that their only customer will effectively end up paying for the entire infrastructure bill. To keep it simple i’ll use round numbers. A $1m investment in infrastructure then gets transferred to that one customer (this ignores infrastructure running expenses, overheads, margins and other expenses which must also be covered). So the price is $ 1m and the market size/ opportunity small. Not many can afford it.

scale-3.jpg

In the second diagram I am showing 10 customers subscribing to the service. This means that the price to them is only $100k. If you get 100 000 customers the price is $10. If you get a million customers and the price could be a dollar, but why would you? If the market is willing to pay $10 why wouldn’t you hold it at that level and aim for a million subscribers. This illustrates pricing for infrastructure perfectly.

This is the power and paradox of scale. If you get it right you can make good profits which is economically reasonable because you are taking large risks initially. Get it wrong, then you’ve spent a huge sum on a piece of infrastructure and you don’t have the income to cover your costs.

How does this affect broadband & SaaS in NZ? Having a small population definitely impacts our chances of getting scale. Having huge cities like Tokyo and LA where there are circa 30 million people living in the nearly the same geographical area as Auckland’s 1 million simply means that the Telco’s and SaaS providers there can get scale benefits easier. Added to that, these providers don’t have to worry about providing services the length and breadth of the country to get that scale, in fact they either ignore them or use the huge metropolitan based scale to fund the rural program. NZ doesn’t have that benefit. This isn’t a “tired old excuse”, just economics at work.

SaaS does have one potential key scale advantage over broadband. The internet isn’t geographically limited, so we could sell to these larger populations. In this respect Xero has it spot on, going after AU and the UK markets. The reason for this is scale, pure and simple.

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On enterprise 2.0…

Published by Ben Kepes on February 25, 2008 in Design, IT, Strategy and Web x.0. 1 Comment

This morning I had a thoroughly entertaining chat with Michael Sampson. Michael’s work, from his own website, is all about improving the capability of teams that can’t be together, to work together. Or more simply, on collaboration.

Michael’s an interesting chap, he sees the reality within enterprise, and appreciates the fact that moving from incumbent solution providers to a wholesale adoption of “in the clouds, bleeding edge” technology is a difficult ask for corporate IT departments given the regulatory situation within which they operate.

There were two main thrusts of our conversation, firstly the challenge to morphing an enterprise into a collaborative structure and secondly whch vendors will win the war in terms of solution development and deployment. I’ll talk about each on in turn.

A roadmap for change.

Enterprise 2.0 is as much, if not more, about culture change as it is technology deployment. I discussed with Michael the fact that all the solutions in the world are worthless if the organisation implementing them hasn’t embraced the cultural shift required to do so. Reflecting upon this I’m pretty much of the opinion that rather than spending time developing new technical solutions, vendors should be sweating the integration/deployment issues, ensuring that their existing solutions work within the enterprise.

My perspective is that there is an aspect of lead and wait coming into play here. Clearly the developments in terms of collaborative tools and community building platforms that exist already are far n advance of what the vast majority of enterprises use. As such I contend that development should all be around enabling those solutions to be used by enterprise rather than rolling out new ones.

Technical providers need to find a forum to combine the technological advances, along with the dialogue around culture shift that will be needed to gain the value from those advance. Their role is as much one of handholder/facilitator as it is of solution provider.

Who will win the war?

Moving on from previous posts where I discussed the possible winers in the war for the 2.0 marketplace. Michael and I discussed who would most likely be the provider par excellence moving into the 2.0 world. As I see it, the first possible scenario is that the legacy providers will slowly move the market place into the 2.0 world (introducing solutions slowly and developing via M&A activity). The second scenario is for the great disrupter - someone creating such momentum that they overcome the incumbency of Microsoft.

The (sad) reality is that myself and, I surmise, those reading this blog, are on the bleeding edge of tech-uptake. MS captures a massive chunk of the market (both consumer and enterprise) and so, to a certain extent, can dictate the terms upon which the marketplace develops. I’m still rooting for the disrupters to win, but have to admit that in a world still mired with the requirment of having an OS on computers, and with the market share MS has with OSs, it’ll be a hard struggle.

So what do others think?

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In the clouds DB gets VC funding…

Published by Ben Kepes on February 24, 2008 in Design, IT and SaaS. 0 Comments

Blist, the in the clouds database solution for dummies, just got USD6.5mill in series A funding.

The Blist product looks nice - full of Flex goodness. I’ve been having a play with it at home on my 256k, miles away from the exchange, DSL link and it seems surprisingly speedy. Given my connection situation I’d say it’s be usable for all but the most data intensive DB situations.

I’m not a massive fan of Flex UIs per se - they seem a little bling bling to me - but Blist is a good solid offering as far as I can see - it’ll be interesting what their recent funding brings in terms of development.

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