Archive for the 'Business' Category

Where incumbents go wrong

A guest post from the unreasonablemen.net

I saw this from Ovum analysing SAP’s Q1 financials. There are a couple of take outs from this that really struck me with respect to SaaS and incumbent business models.

1) The company is still growing its core business (double digit growth no less)
2) The SME product group is going gang busters 18% growth
3) Their SaaS offering is not performing (now there’s a surprise!)
4)They are going to address this by only focusing on selling SaaS (wait for it…) into those markets where they have been successful selling on premises… uh oh!

Lets break this down a bit.
1) SAP are selling a heap of core enterprise apps, solutions (services) and mid market core apps.

From the aggressive growth you would have to postulate that the focus of the company is on … core stuff with big numbers. That’s like heroine. Try to stop using that and you are going to have withdrawals…stock market, staff and customers…

2) They’ve decided to “…focus for the remainder of 2008 on Germany, the US, France, the UK and China, where most of its existing customers are located” and “…reduce its “accelerated investments” in Business By Design this year by about €100m - a decision prompted by the slow uptake”

Basically selling SaaS into those very markets (and companies) where they’ve already sold on premises solutions to, but with a ‘lesser’ product. This is a multi faceted strategic faux pas, and they aren’t alone is doing this.

This whole situation reminds me of a conversation I had with a leading SaaS CRM vendor. My contact had actually set up a meeting with Seibel in an effort to coach them on how to be more successful. He’d done this because their performance in the SaaS space was so woeful it was (in his opinion) damaging the growth of the SaaS market.

The key issue, they were targeting their existing enterprise customers with their SaaS offering, BUT only when they have failed to sell the on-premises version. To put this in context, Seibel’s sales approach is to approach their existing customers (who they’ve convinced to buy expensive on premises stuff), try and sell them more expensive on premises stuff, and when they lose the deal say …”well we’ve got this SaaS thing that’s cheap”… nice!

So what are the problems with this approach?

1)You are damaging your brand. If like SAP you are the king of the heap in a market, known for a certain thing, why risk damaging this with a competitive offering?
2)The way you sell this is different. SaaS isn’t the cheap and cheerful part solution, it’s a fully functional alternative that has its own value proposition that needs to be properly articulated in order to be successful
3Saleforce skills and rem. The only way to change this is to change the way your sales teams sell and are rewarded. They sell what you pay them to sell!
4) Sharemarket. The sharemarket isn’t exactly enamoured with the idea of you tanking your cash cow revenue stream. They dislike that only marginally more than large investments in new technology that fail and essentially eat into their payouts. No way are they going to support you doing this long term unless you can show it’s a stonking success. Neither Seibel nor SAP have done that.

In years to come, do you think students will read case studies on how not to embrace a disruptive technology that include SAP, Seibel or Microsoft?

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Net Neutrality

There’s been a fairly long protracted debate about net neutrality happening in the US.

My basic understanding is that Carriers in the US want to be able to police what goes over their portion of the internet. That is stop VoIP or P2P traffic because it damages their core revenue streams etc etc.

I admit to not getting the debates relevance (outside of a moral discussion) My question for you readers is two fold.

1) should anyone who lives outside the US even care? What is the impact here

2) does it even matter? The point being that the internet is so interconnected now that content etc can be taken from anywhere and if we can’t get it via the US then we’ll get it from another source… and such activity will only be to the detriment of the US economy ?

Can you out there shed more light on this?

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It was never about competition

In case you were wondering. The Labour government has zero interest in improving the broadband situation in this country.

This report on the line just shows that the whole operational separation is a political exercise. The reports here were obtained under the official informations act…

The report, dated five weeks before Telecom publicly announced the extensiveness of its FTTN plans and three weeks before the release of the final LLU STD, advised Cunliffe that FTTN is generally considered to be “the death-knell” for a LLU regime. Written by MED manager ICT regulatory team Reg Hammond, the report advised that a gradual deployment of FTTN is “the most effective means of maintaining efficient investment incentives” for industry players.

If the Commission made a slight change to the STD without public consultation, it would be immediately picked up by the industry and would be akin to an announcement by the government that it intended to accelerate FTTN. “While this would stall investment by access seekers in LLU it may be more palatable than allowing access seekers to invest in LLU and then making an announcement at some later stage,” reads the document

Following the official news of the extent of Telecom’s cabinetisation plans, Telecom CEO Paul Reynolds sent a letter to Cunliffe saying that he was “genuinely taken aback” by the industry’s negative reaction. “As such, we think the accusation that we have been hiding information and gaming the situation is completely baseless and unfair,” reads the letter obtained under the Official Information Act.”

Couple that with this on stuff, with IDC stating that operationally separating Telecom won’t reduce the incumbents dominance. (I’ve written before on the unreasonablemen.net about how markets operate)

In case you forgot, its an election year….

So just a bit of time to ask yourself, has all this kerfuffle changed your perception of Telecom? and …while you were focusing on hating Telecom did you forget the promised tax cuts? that AU GDP and standard of living had gone up again, that interest rates had sky rocketed, that kiwisavers a huge flop (in terms of implementation), that compliance costs on SMB’s have gone up…..hmmm interesting…..Maybe the Government got what they wanted after all….

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Life@Google

After my post about the Google brain drain, a friend sent me this slideshow of the Google Zurich campus.

I’m sitting in my office and thinking what I’d do if I was firmly ensconced at Google - would I stay…. or would I go?

What’d you do?

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SaaS security concerns - a response…

At the ICT Outsourcing conference last week I discussed some of the key barriers to the adoption of SaaS by larger businesses. One of these barriers was the security concerns of the organisations.

I’ve just come across a whitepaper from Salesforce.com that I wish I’d had my hands on before my presentation. It answers many of the concerns of CIOs regarding security.

Click here for the entire whitepaper

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Call me mainstream…

In a moment of respite from organising children’s birthday parties, I took the Facebook political compass test.

In the words of the application creator,

The Political Compass positions you on both an economic and a social axis through your responses to a series of propositions during the next 3-5 minutes. In each instance, you’re asked to choose the response that best describes your feeling: Strongly Disagree, Disagree, Agree or Strongly Agree. At the end of the test, you’ll be given the compass, with your own special position on it. Your Political Compass chart will also be added to your Facebook profile.

I took the test and have discovered that I’m a centrist, devoid of any strong socio-policial bias in any real direction.

Those who know me well will realise the the test must be flawed, I surely do have some strong positions on a number of issues. I can only surmise that my attitudes are sufficiently diverse (left leaning in some areas, right in others. A libertarian over some issues and an Authoritarian over others) causes the somewhat glib. How do others do?

pcgraphpngphp.png

Update - a commenter suggested I take this test. I did and my score was somewhat different (but possibly no more accurate);

drawphp.png

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5 reasons why 92% of New Zealander’s don’t use RSS

(cross posting from Mike Riversdale: Enterprise 2.0 New Zealand style blog)

A massive 92% of Kiwi’s have no idea how (or choose not) use the RSS technology as reported by Russell Brown* Why is that?

(If you’re unfamiliar with the term RSS check out the excellent RSS in Plain English video)

I commented on the NZ State Services Commission blog where Jo reminded me of this amazingly high statistic:

I know, 92% have no idea … and whilst I still a little unbelieving at how high that seems from my experience introducing this “stuff” into organisations I am no longer stunned by it.

Mind you, the “young ‘uns” might not be able to tell you what RSS is but they probably use it in Facebook and the like. Maybe it’s a technology that (like TCP/IP) doesn’t need to be known but just works.

Having said that. I bet close to 90% wouldn’t know what “reader”, “subscribe” or the wee orange logo are referring to. Good thing is, hardly anyone hates it when they discover it … all growth ahead!

The clients I work with are generally not bleeding edge but they are slightly more forward thinking than a lot - as it should be, otherwise why engage with me. They have heard of Wikipedia, they do know something about blogs and they have most certainly looked at Facebook and have some understanding about the ’social graph’.

When I initially engage with clients I try and gauge where they are on the continuum with one method being to throw the acronym “RSS” at them. Having performed this a few times now I am no longer surprised by the “92%” reported - New Zealand business are still driven by three main applications:

  • Email + Calendar
  • Word / number processing
  • “business specific apps”

(note - I tend to work within “knowledge based” organisations industry’s)

And so it seems that within New Zealand 2007 wasn’t the year of RSS take-up.

But why is that? Especially because, as I said, I work within “knowledge based” industrys and therefore one would expect a higher percentage of workers to have (their chosen) information coming to them and not have to re-invent the wheel all the time by re-doing Google searches.

Before I outline my thoughts on the New Zealand situation you should know that I don’t actually think “RSS” are three letters real people ever care about (as I mentioned in the SSC comment). RSS is a technology, it is geek and it’s not of the real world. However, the ability to “subscribe” is part of Joe Blogs’ world, the ability to “receive updates” is, the ability ‘track changes” is …

… forget the annoying acronym.

What’s important is what you can do with RSS.

source: Surprising RSS usage stats: 50 million-plus users don’t know what RSS is - Debbie Weil, Feb 2006

The “92% of New Zealanders don’t use RSS” may also reflect a version of what Yahoo! discovered in October 2005 (pdf | Google html version):

The real story, however, is the much larger population of “Unaware RSS users” who
consume RSS syndicated content on personalized start pages (e.g., My Yahoo!, My
MSN). 27% of online users consume third-party content on these pages without knowing that RSS is the enabling technology.

My thoughts on the New Zealand situation (in no particular order).

1: Home broadband and wider WiFi is still uncommon
Huh? What has this to do with RSS Mike?

If you do not have a permanent and pervasive connection to the Internet then the behaviour is to “pop in and get out”. This can lead to using the Internet as one would use a research library - have a specific need to be satisfied, get in, get the answer and get out. If one was to visit such a library and they were to offer a radio that would broadcast a special station answering just your queries you’d probably look at them strangely and ask how they knew what to broadcast exactly when you needed.

With a pervasive connection however there is no “popping in” - you are surrounded by the library and would quickly start to appreciate the ability to tune your own radio to the station broadcasting only the sorts of information you want.

RSS is your radio station with the sort of content you want.

2: Organisations are surrounded by impenetrable walls
The majority of New Zealand organisations still operate within the “inside/outside” world view.
There is “inside” the organisation and there is everyone else “outside”. All the information that I need to do my job should exist inside the organisation … and for company specific info it probably does. But it’s the “all” part of the sentence - a large majority of the work we all done has already been done somewhere else and has been shared either by individuals or by those company’s that have a far more permeable wall around their information.

With the information to do my job exists within the wall why subscribe to RSS feeds outside of it - that’s just playing on the bosses time, surely!!?

3: Client software isn’t widely installed
Most people go to work, fire up the PC given to them and there’s nothing on there that would have a clue about RSS. Without the technology to read the feeds there’s no point in teasing people with Utopian views of never having to send emails again and all the information you’ll ever want will come to you just in time.

But then why bother installing software if there are no feeds to subscribe to …

4: Organisations aren’t feeding their staff
Ok, 3 and 4 go hand-in-hand.
As organisations slowly move towards both an Enterprise 2.0** approach (to “knowledge work) and updates company specific applications the amount of information will increase as will the ability to subscribe.

The challenge will then be how to staff know the feeds available to them AND how easy will it be for the staff to subscribe?

A case in hand - Microsoft’s Sharepoint 2007 (MOSS) is an excellent source of RSS feeds and nearly everything can be subscribed to (top work!). However the feeds are generally hidden away on menus AND getting RSS feeds into readers is left entirely in the hands of the user with no Feedburner approach to choosing the reader.

5: Myths and downright lies
Some I have heard from IT staff, users and the like:

  • RSS feeds are huge and will kill our network
  • You can only have one feed at a time
  • Subscribing to feeds outside of the workplace isn’t technically possible
    (the IT Department was horrified to learn this as they were actually advocating RSS over using the InBox)
  • RSS history will overload our storage capacity
  • You have to use a web based reader as RSS is all about web sites
  • Reading RSS is just playing

I think the final comment comes from a deeper, “The Web eh, it’s just a hobby, surely” which I touched upon in my Webstock presentation.

And so, in summary - RSS is a technology that, like “HTML”, real people won’t ever care about. Once the way of “being on the Internet” becomes more comfortable for staff and organisations RSS will be supported, made available and used - this is happening but slower than other parts of the world.

* part of Russell’s Webstock 08 talk and reporting from the ??? report.
** Enterprise 2.0 is the application of the Web 2.0 technology and mindset within an organisation. - more …

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A grand vision…

This isn’t my normal topic, but I can’t resist. I’ve secretly always harbored a dream that NZ might really make something of itself. Do what Germany & Japan did post WWII & Ireland have done recently & recreate their economies. To me, the easiest way to do this was to remove our dependency on the outside world for products. My reasoning? It just seems quite similar to any addiction, at some stage, if you are going to get ahead you have to break the habit.

So I was quite enamoured by the NZ herald article that states

that New Zealand was one of just a handful of places identified worldwide that was well placed to become carbon-neutral for transport, given advances in biofuel technology…..New Zealand could be a world leader in the field and was already getting international attention because it could be self-sufficient given the ratio of vehicles to land available.

Fantastic, love the grand vision, why not!…Then I thought about it, and then I found some problems with this approach.

  1. we need a government who has the long term interests of the nation at heart, not the next re-election, this is after all a 40 year plan!!
  2. If we are the only country that can do this doesn’t that mean other more powerful / innovative countries will solve the oil / transportation issue in their own way & we end up with an orphan technology? (Cuba anyone?)
  3. 25 yrs @ $ 2-3 billion a year…. To be honest if we couldn’t invent something better technically, sooner and with a better NPV return and that didn’t rely on combustion to create energy with $100 -150 billion then we should be shot.

I do applaud the vision though is sincerely hope that one little nation can, & will be a leader in alternate energies for our planets sake as well as for our economy.

So, if we were serious about this kind of nationwide transformation, and we had loads of cash, what do you folks think NZ could do? What is your grand vision?

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What’s the difference between software you WANT to use and the stuff you HAVE to

(cross posting from MiramarMike, Enterprise 2.0 New Zealand style)

Completely independently these two articles recently applied to some thinking to the subject of “heavy/crap” software being the norm within organisations:

I think their arguments are fundamentally the same … Eric makes it a little more succinctly but there’s depth and reasoning behind Jason’ reporting of the Gartner findings.

Ask yourself the question, “Does it have to be this way?”
If the answer is, “No!” - go fight those that are forcing it upon you, whoever you decide that is.

First here’s Eric’s view

Photobucket

And here’s the Gartner diagram from Jason’s article that may give some answers to the “why”:

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This one’s straight from the “what the..” category

From computerworld this morning

Telecom chief executive Paul Reynolds has joined the board of XConnect Global Networks, which provides VoIP and IP-based services

From the Xconnect website

XConnect’s award winning services enable over 400 VoIP service providers and carriers worldwide to peer with millions of VoIP endpoints.

Am I alone in thinking that this is way up the bizarre scale? Telecom’s stance around fast broad band, VoIP Trunking and even VoIP solutions has been to treat it like something distasteful stuck to the bottom of your shoe, and their new CEO does this????

Disclosure - Diversity Limited is a consultant to Telecom New Zealand and its subsidiaries.

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