Software as a service

Analysis of Software as a Service (SaaS), especially but not only in enterprise application software markets. Related subjects include:

October 4, 2006

KXEN and Verix try to disrupt the data mining market

Data mining is hugely important, but it does have issues with accessibility. The traditional model of data mining goes something like this:

  1. Data is assembled in a data warehouse from transactional information, with all the effort and expense that requires. Maybe more data is even deliberately gathered. Or maybe the data is in large part acquired, at moderate cost, from third-party providers like credit bureaus.
  2. The database experts fire up long-running, expensive data extraction processes to select data for analysis. Often, special data warehousing technology is used just for that purpose.
  3. The statistical experts pound away at the data in their dungeons, torturing it until it reveals its secrets.
  4. The results are made available to business operating units, both as reports and in the form of executable models.

Each in its own way, KXEN and Verix (the imminent new name of the company now called Business Events) want to change all that.
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July 28, 2006

Would a Google PC succeed?

Richard Brandt asked me to look over his post on the oft-rumored possibility of a Google PC. I actually opined on this back in January, when the rumors were rife in connection with a supposed Wal-Mart sales/marketing agreement. I concluded that that would make a lot of sense for internet connectivity and student/homework uses (I didn’t consider work-at-home or gaming uses because that didn’t seem a good fit with Wal-Mart). The reasoning I came up with back then looks good in retrospect, with only minor tweaks (e.g., my new reason for not worrying about IE-only websites is the IE emulation capability in Firefox).

Richard, however, goes further, thinking that Google could succeed in PCs used mainly to run word processing, spreadsheets, etc.. His arguments include:

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February 16, 2006

Dave Duffield back in the saddle

Good article on Dave Duffield and his new startup. Dave is quoted emphatically saying that he did not come back to Peoplesoft to sell it, but rather to try to keep it independent.

That jibes with my view of him. He once told me that what he most valued about his success as a CEO was the corporate culture he’d created. (#2 on the list was getting rich and giving lots of money to charity, specifically to animal-related causes.) I thought at the time* and now think again that he was sincere when he said this. He’s also pretty much the only CEO who’s ever said something like that to me. There certainly have been others who cared about their employees (John Cullinane was particularly proud of how many people he’d help make into millionaires), but Dave is one of the very few I’ve known who could talk about a “corporate culture” of the kind/gentle sort and not sound insincere, ineffective, or just plain delusional.

*I must confess, however, that I never knew Dave as well as I knew a lot of other CEOs. Somehow, I never managed to even meet him until Peoplesoft was on its IPO tour. We made up for lost time later, up to a point, but he’s not one of the guys like Larry Ellison or Bill Gates, with whom I’ve had multiple multihour conversations.

February 2, 2006

SAP On-Demand — some key points

Here are some of my quick thoughts on SAP’s CRM On-Demand announcement:

1. One of the biggest barriers to SaaS (Software as a Service) growth in my opinion has been the question of data integration. Some of my data is at a service provider. Some is inhouse. How do I integrate it? How do I analyze it? SAP has provided a very good but still partial answer to those concerns by ensuring that its hosted and onsite versions of an app have the same APIs.

2. I say “partial” only because I’m having trouble envisioning many scenarios in which a customer would really want to have some of its data inhouse, some outsourced. It seems like the main benefit would almost always be as a transition strategy.

3. That said, sales automation can be one of the exceptions. The distributed computing problem for serving sales offices around the world may be much greater than that for the rest of one’s apps, so outsourcing that aspect of network management is not totally ridiculous.

4. Anyhow, this was obviously the way the software industry was headed. Indeed, it’s the way a lot of the industry did business until the first half of the 1980s. There were timeshared and onsite versions of the same products, in many cases. That strategy only died out completely when DBMS replaced file managers as the standard underpinnings to packaged apps, and that didn’t happen until the rise of relational DBMS in the second half of the 1980s.

5. I’m sure there will be issues with functionality, pricing, service responsiveness, and similar aspects of nimbleness. There’s no guarantee that SAP will establish and commit to a viable sales model for this service; it may always remain an afterthought. Even so, it could be enough to slow the penetration of et al. into large enterprises.

6. To succeed in a big way, SAP has to establish a separate sales force, with a separate marketing budget. It also has to cross-commission between packaged product and SaaS sales. Those sound like slightly contradictory strategies, so there’s no assurance they’ll do both. Mark Benioff doesn’t have to panic quite yet.

7. The other non-trivial organizational problem SAP needs to solve is having one product development organization serve two sales force/marketing group masters. The closest thing they’ve done in the past to that is with NetWeaver, which is both a key technology for other SAP products and an important product in its own right. Their answer has been impressive fundamental engineering, but perhaps less “sizzle” on the surface of the product than it needs for maximum success. E.g., the BI products are significantly held back by their UIs, and serious attempts to fix that in my opinion just started last year — no offense intended to those hard-working people who might suspect I’m implicitly calling them “unserious” with that judgment.

Bottom line: Like most cases in which a huge and hugely successful company invades the core market of a rival, this effort will need to be judged several years and releases down the road. And the most important deciding factor will be whether or not there’s ongoing commitment to succeed in this new market, on a level comparable to the commitment with which the company pursues its much large core businesses. SAP has already shown such a commitment once this century, in NetWeaver. It’s too early to tell whether they’ll do so a second time, in SaaS.

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