So Microsoft has announced its “Echoes” project, a unified communications platform for telcos that, via the windows live service, seeks to;
Sync Address book contacts over the air
Ensure that IM messages work seamlessly with SMS
Windows Live Messenger contacts get local numbers
Voice calls from Messenger on PC to mobiles
Give some sort of presence verification
Mary Jo got down with some hyperbole, saying that this was an attempt by Microsoft to eliminate phone numbers (in her defence she was direct quoting Bill Gates). Zoli returned with a well reasoned retort saying that Echoes, rather than eliminating phone numbers, simply makes it more convenient for people to use them. He also touched on the fact that these services are already offered (in part or in full) by a number of other players.
And therein lies the rub – for unified communications to be, well unified, it needs to be all inclusive – MS Echoes lock-in plus Skype lock-in plus Grandcentral lock-in does not equal unification by any measure I’m comfortable with.
No what is really needed is for a third party to offer the unification service, achieve buy in from all the various players and look, act and feel neutral.
So, whereto for Echoes? Well it is an MS product, MS have some serious relationships with the telcos so there is every chance that it will work. Whether or not it should of course is another discussion. In any case, and for the current and ex-pat antipodeans out there, I leave you with another Echo – one firmly emanating from the eighties.
I bumped into a couple of the folks from iPayroll last week. iPayroll [Diversity coverage here] is a New Zealand based SaaS payroll service.
There has been a fair amount of chatter around the blogosphere around the role of design vs functionality for software, especially SaaS software – iPayroll has come in for a reasonable amount of criticism for it’s look – in this interview we briefly touch on the design issue but focus primarily on the user-centric/solution-centric discussion.
The video is embedded below, apologies for the sound quality of lack thereof. Feel free to subscribe to Divrsity Blog’s Youtube channel for further updates.
The plot thickens – seems an article in the Independent Financial which was apparently critical of Xero’s performance was pulled after complaints from CEO Rod Drury. Hopefully it was pulled for the right reasons (ie factual incorrectness) rather than for any “not wishing to ruffle feathers” reason.
Either way it doesn’t seem to have hurt the share price any.
Following on from my previous post about SaaS being disruptive and hence tricky for traditional software players to deal with, news that former chairman of large UK accounting software company Sage looks set to buy all or part of an unamed SaaS accounting company (guesses anyone? FreeAgentCentral? Xero? who else?).
Sage has 5.5million customers but the company has been criticised for being slow to embrace SaaS for fear of cannibalising sales of its shrink-wrapped software.
AccMan has an interesting take on all of this (but bear in mind he’s a shareholder in FreeAgentCentral). He says that;
If I was on the receiving end of an offer from Jackson would I be willing to sell out right now? That depends on a multitude of factors but the answer is likely to be no. If anything, I would thank him for adding validity to the SaaS story and suggest he think about making angel or early stage investments. Why?
Building out a SaaS business to scale for the very small and small to medium sized business is not easy. Viral marketing can take you some distance in the right markets but not in all segments and not without a good amount of hard work. Even then, operating economically at scale is not as simple as it appears. FreshBooks with its 300,000+ new users since 2004 doesn’t exhibit too many technical problems and is said to be doing very well with zero external investment. But it is only one of many vendors vying for attention in this emerging market. In the meantime, an investing entrant like Jackson, with his years of experience in the accounting market, will most certainly be welcome. If nothing else, it is excellent PR for the SaaS contingent.
Looks like SaaS SME accounting will start hotting up pretty soon.
ITPro posted this badly titled out article “Software as a service hits a glitch”. In it author Stephen Pritchard confuses SaaS en masse with SaaS delivered by traditional enterprise service vendors. He rightly states that;
The problem for SAP – and for other enterprise software vendors looking for a share of SaaS revenues – is that there are few guarantees that businesses will turn to the established players for on-demand applications. Part of the attractiveness of software as a service, after all, is that it opens up the door for IT directors to buy in applications from new vendors, often offering specialist functional or industry expertise.
But isn’t this entirely the point? Zoli hits the nail on the head in his post discussing the shifting software business model when he says;
Of course it [the reduction of margins on software] isn’t just Office. The obvious business application is CRM, where Salesforce.com pioneered the concept and delivered the first On-demand product. But now a funny thing is happening: the pioneer is increasingly being replaced by more inexpensive competitors, including … Zoho. Yes, SaaS disrupts the traditional software market, but there’s another equally important trend happening: the commoditization of software.
Commoditization is beneficial to customers, but a death-spiral to (most) vendors. Except for the few that drive commoditization. Zoho makes no secret of doing exactly that.
Back at the ITPro article Stephen points out that the traditional vendors can’t help but come back to that old bug-bear. A move to a SaaS model cannot help but cannibalize sales from their traditional offerings. Bear in mind that most of these players are large publicly listed entities – how many shareholders are understanding enough to fore-go the current super-normal profit model for the uncharted waters of SaaS? And how many of them understand just how threatened the incumbents are by the new models?
So I decided that, being a bit of an early adopter, a move to naked DSL with VoIP was in order.
I dutifully purchased my PAP2T (to convert VoIP to a standard phone) and filled in my application form for WorldxChange’s fusion service (Naked DSL, VoIP combo for $70/month).
Horrors – it seems that my current provider (Telstra) refuses to allow porting of numbers to WorldxChange.
Two quick points from this;
Everyone is quick to lambast Telecom but WorlxChange advises me that Telecom ports numbers to them with no problems
Whatever happened to easy, ubiquitous and customer focused naked DSL in this country
The folks at WorldxChange were helpful – seems my best option is to port back to Telecom for a week then port over to WorldxChange from there – it’s a solution which would work but it’s exceptionally clunky and, let’s face it, a barrier to disruption.
Brickbats to Telstra and a bouquest to Telecom on this one I reckon!
I write a regular column for Unlimited magazine, one of New Zealand’s most respected publications for the creative business sector. In an attempt to alienate a good proportion of the population my article last month took a well aimed broadside at the franchising industry. For more information about Unlimited magazine click here, the article follows underneath.
The recent high profile debacle where a Green Acres master franchisee sold bogus franchises to unsuspecting people has highlighted once again the perils of franchising in New Zealand. While that story had a sort of happy ending (well, happy for the misled investors, but both sad and expensive for the owners of Green Acres who had to help make good investor losses), the saga raises some interesting questions for Kiwis going into business.
In the absence of good ideas, it seems New Zealanders wishing to chase the holy grail of self-employment are increasingly looking to franchising as an option. While I risk alienating the entire franchising industry in this country, I’d like to stand up in resistance to this trend.
New Zealand has historically been a number-8 wire type of country — the sort of place where a reasonable idea, a fair measure of elbow grease and a dash of determination can get spectacular business results. The late Sir Angus Tait, founder of the Tait group of companies, is often held up as the paragon of this self-created and self-executed model. Where else but in New Zealand would the saying about business being ‘one part inspiration and nine parts perspiration’ be coined?
Yet in the past decade or so, franchising has become huge business in this country as it has in others. The statistics bear this out; according to Westpac’s franchising unit, New Zealand has 350 franchise chains covering 64 areas of business. That makes 14,000 enterprises employing 41,000 people and turning over $10 billion a year. And franchising would seem to be running hot, especially in the services and business-to-business sectors. For next to no capital or experience, people can buy their way into ownership of an operation with a brand name, readymade back office systems, and central office training and support. Or so the spin goes.
Call me a sceptic but Kiwis buying into franchises is analogous to Ed Hillary being dropped to the top of Everest by helicopter: sure it achieves an outcome, but it misses the point. It seems everything these days is franchised; we’re all used to McDonald’s, Subway and Mr Green franchises but our local hardware store, supermarket and even our accountant might also be a franchised operation. So much for ‘knocking the bastard off’; we seem to prefer the bastard to be brought to us already pre-packaged.
It seems many people pushing franchises do so with the rationale that while potential franchisees may have some professional skills, or a desire to be ‘self-employed’, they often lack the core business skills — the strategy, the accounting, the marketing and so on. Call me simplistic but this would seem to be a real red herring. The average franchise has a hefty initial fee, continuing royalty fees, along with strict requirements on the franchisees. With these onerous (and expensive) requirements, it’s not hard to see that someone could just as readily buy some professional help (accountants, after all, aren’t that expensive) or, even better, learn some skills themselves (through the likes of excellent, and free, New Zealand Trade and Enterprise training courses).
I accept it’s easier to obtain funding for a franchise than for a self-contained startup business. Banks, being the risk-averse (and not overly SME-savvy) beasts they are, usually prefer a known quantity. A well established franchise brand provides this . But just because something is easier to fund doesn’t necessarily make it better.
There is one group, however, for whom franchises are a no-brainer. That group is, of course, the head franchise owner. Imagine being able to scale your business, achieve geographical spread and guarantee an ongoing income and growth without any real investment yourself. Most franchises have a requirement for franchisees to purchase centrally, and often this will result in yet more revenue for the franchise owner. Not only do they win through the upfront and ongoing royalty fee, they’re often making a cut on the raw product the franchises use.
It seems franchising works best for those wanting to ‘buy themselves a job’. It has to be asked, however, why they’d bother. I argue that a franchise gives all the negative parts of self-employment but fails to produce the positive ones.
So my advice is if you’ve an inkling to be self-employed, either come up with a novel idea yourself or seek a partner who already has one. Don’t rely on someone else’s secondhand idea to make you rich. That other person has a good reason for wanting you to buy into their dream.
Over on Gigaom there is a post ranting on about the problems Twitter faces. Om tells us that the Twitter issues are caused by basic architectural flaws (not my area but difficult to argue against this one). Om explains the problem using Robert Scoble as an example;
to put Scoble and his Tweets in context, let’s assume for a minute that he always has 25,000 followers and he sent them 12,000 updates which are all 140 characters long, the maximum size allowed by Twitter. Again, hypothetically speaking, assuming each update is 100 bytes, then 12,000 updates generated used up 30 GB of data. (12000 updates * 100 bytes)* 25,000 = 30000000000 (30 GB)
Om then decides the best way to solve this issue is for Twitter to move to a freemium model where they charge heavy users – Om suggests that;
Twitter should charge Scoble, Leo, [Om], Michael Arrington and anyone else who has more than 100 friends and followers. How about something simple? $10 a month for 1,000 subscribers. 25,000 subscribers means someone like Scoble should be paying them around $250 a month
Let’s take it a step further. Twitter should limit people to 500 free messages a month. Any more should come in a bucket of, say, 1,000 messages for $10. Businesses like Comcast that want to use the service for commercial reasons should pay for the service, and so should startups like Summize, which want to build their businesses based on Twitter’s API
Let’s look at this – how many people have more than 100 followers – I’m guessing around half of Twitter’s users. Of those half I’d suggest that a significant number are accumulating followers for no other reason than that they can. Slap a heavy user charge on them and they’ll quickly start culling lower value (and spam) followers from their group.
So the pool of potential paying customers is reducing all the time. Say we’re now left with 30% of original users. How many of them really consider Twitter anything more than a fun toy? Maybe a third – down to 10% already. And here it gets interesting – 10% of users need to pay for the design and build of a truly scalable messaging service – while 90% of users come in on their shirt tails.
Nope – freemium isn’t the answer for Twitter Om – face it – Twitter signals a bubble – and sure I use it, but I wouldn’t invest in it nor pay to use it – that’s the real problem, not architecture.
A few weeks ago Vodafone New Zealand announced plans to lock cellphones to the Vodafone network. Their plan was to charge customers $50 to unlock phones in the event that they wanted to move to another provider.
Telecommunications commissioner Ross Patterson waded in and expressed concern saying that the move was a potential barrier to competition.
Vodafone, seeing the writing on the wall, backed down from their plan – kudos all around with Patterson saying that;
Vodafone’s move was potentially a major competitive barrier to a new entrant, and they [Vodafone] reconsidered and chose not to proceed……There is no benefit to consumers, to the parties or commission, to get involved in a long, convoluted process if things can be resolved quickly
Great to read of the success of some SaaS players at the Australian CeBIT awards.
First up Saasu won the business advantage award.This is the second year that Saasu have taken out the award which is given to the product or service that provides a clear, immediate and outstanding business benefit to its users.
This was followed up by eWay taking the Excellence in Technology Services Award. eWay is a payments gateway provider that provides secure Online payments and Mail Order processing of credit cards in real time via the Internet.
Lastly but not leastly, IPscape won the Excellence in Communications Award. IPscape has a Software as a Service product for contact centres
CeBIT had this to say about Saas;
The Software as a Service business model swept major categories in the prestigious CeBIT.AU Business Awards 2008, taking the most contested categories and marking SaaS as the hot technology currently in the sector. Saasu.com was nominated for three awards and won the CeBIT.AU Business Advantage Award – arguably the most prestigious of the event – with its Saasu.com accounting package. Saasu.com was also a winner in 2007, with its integrated Net-based financial system that has seen enormous growth since the company exhibited at CeBIT Australia last year.
Further validation of the SaaS model – well done to all three businesses and thanks to CeBIT for the high recognition they give to SaaS.
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