Security and privacy are often mentioned in the same breath, but when it comes to cloud computing, security tends to be the dominant subject. But should it be? While there are seemingly endless security threats, cloud providers are becoming increasingly sophisticated and capable in addressing them.

When it comes to privacy, though, cloud vendors have not made the same progress. In fact, it’s more than likely that Software-as-a-Service (SaaS) companies breach the customer’s perception of data privacy regularly.

I’m not referring simply to consumer companies and their problems with privacy, e.g. Facebook sharing personal data with advertisers. Enterprise SaaS companies face their own unique challenges around customer data usage, even though those issues have not received the same level of scrutiny.

Enterprise Services Know A Lot About Their Customers

The challenging aspects of SaaS privacy arise from the close relationship between vendor and customer - a situation vastly different than in days of on-premise software. As the name suggests, SaaS vendors provide a service, and with that service comes the ability to log every keystroke and mouse click that a customer makes using their software.

Why would a SaaS vendor do that?

Think about customer relationship management (CRM) software as an example. What would you think if your CRM took note every time you updated a contact, and then made that updated contact information available to other users with that same business connection? Sounds like a pretty useful service for customers, doesn't it?

What Are Your Expectations For Data Privacy?

But does it breach your expectation of data privacy? SaaS opens up the door to increased interaction and partnership between a customer and a vendor, but it also opens the door for misuse.

One particularly interesting area with privacy concerns is the use of the metadata (data about the data). Let’s say, for example, there is a clear agreement that all data is owned by the customer and can’t be used by the vendor. But would that agreement also include things like the number of users (salespeople) actively using a CRM system or the number of new sales leads entered in a given quarter or the number of meetings booked?

This type of data could yield tremendous insight to an individual trying to gauge sales activity at a given company or within a given sector. Would use of this metadata be covered under data ownership or could the SaaS vendor sell those insights to the highest bidder with a clear conscience?

Then there’s obfuscated or anonymized data. Is it OK for a SaaS provider to use your data to create unattributed market statistics? Imagine a financial SaaS vendor that could create a composite view of all the private companies using its system and publish average earnings growth over various periods of time. Or a customer-service SaaS vendor that could create benchmarks on average time to close a trouble ticket. In each case, the vendor is producing valuable data points it can use for profit. Should there be any type of reimbursement for customers, or is it just a cost of doing business?

Who Owns The Intellectual Property?

Many SaaS platforms offer robust tools to customize the experience for individual customers and companies. These customizations often reflect significant investment in design and development and sometimes reflect proprietary business processes. How much exposure to these customizations does a SaaS vendor have? Could it use these customizations as templates for future product enhancements that might be offered to competitors of the customers that originally created them?

We’re just scratching the surface of potential privacy issues that can arise with SaaS vendor relationships.

Don’t get me wrong; I’m not saying companies should avoid SaaS. In fact, I think the benefits of embracing software in the cloud far outweigh the potential risks. The close relationship developed between a SaaS vendor and its customers has the potential to deliver significant payback, especially for companies embracing SaaS not for cost savings, but for business transformation.

But both sides of that equation, the vendor and the customer, need to fully understand the bargain and the trade-offs made between privacy and business value.

Asking The Tough Privacy Questions

Similar to their IT security due diligence, companies need to ask questions about the privacy of their data before they enter into a cloud vendor relationship.

Who owns the data? How many copies of the data are there? How can you ensure that data is erased or unreadable in the event that a customer chooses to decommission or change service providers? And especially, What is the vendor's acceptable use of a company’s cloud-based data?

Hopefully, better awareness and transparency about these issues will build trust and help business-facing cloud vendors avoid the lawsuits that have afflicted their consumer-facing cousins.

Now what do you do?

If your favorite consumer cloud service goes out of business or simply feels it's time to end-of-life a particular application, it's frustrating but life goes on. More often than not, you weren't paying for the service, anyway. But for an enterprise, losing access to a preferred SaaS application can be devastating.

Just ask Xeround's customers.

Learning From Xeround's Failure

Recently the Database-as-a-Service (DaaS) provider terminated its cloud database service, giving free users a week to pack up and move on, and paid customers just two weeks:

"Xeround’s leadership forum has recently decided to re-focus the company’s effort. This means we will no longer be able to support our service over public clouds, across all of our currently active data centers... We ask you to please export your database instance and migrate your database to another service of your choosing before the termination date... We regret the inconvenience this causes you."

It's a nice thought, if not particularly helpful. Moving to an alternative solution is easier said than done. Migration between products, cloud or otherwise, is never particularly easy, often by design.

In the case of Xeround, which promises 100% MySQL compatibility, migrating to MySQL might not be difficult. But what if you wanted to move to an alternative database? Or what if instead of a database or other somewhat swappable infrastructure you were hoping to migrate off a SaaS application?

Good luck with that.

Open Source As A Safety Net

Could open source help with this? While not a panacea, giving users both a cloud service and an on-premises deployment, with the latter offered as open source, would ensure a robust back-up plan. It might also give them comfort to use the cloud service in the first place.

As Eucalyptus CEO Marten Mickos argues, infrastructure software is almost entirely open source now as developers "require access to the details [of their cloud infrastructure] — not just to have the ability to do the same, but for the ability to verify the quality and modify to fit their needs." Businesses are embracing the cloud because it yields cost and convenience benefits, as Forrester's Ted Schadler posits. Add to this developer peace-of-mind and it's a near-perfect combination.

This isn't really about source code. While some will want to tinker with code, doing so will generally void your contract with a vendor. Instead it's about security once the vendor fails or cancels a service: moving a cloud service to your data center, even if only temporarily, buys you time and makes the initiatl investment in the cloud much less precarious.

What's Your Back-Up Plan?

As organizations move to the cloud, increasingly with a 'cloud first' policy, having a back-up in mind is important. Open source is one option that seems to be working for SugarCRM, Eucalyptus and others. But what's your cloud back-up plan? Frequent data dumps? If you had the chance to migrate your end-of-life SaaS application to an on-premises, open-source deployment, would you do it?

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But what about IaaS (Infrastructure as a Service) and PaaS (Platform-as-a-Service)? Even many tech professionals can't explain the differences without babbling incoherently. 

Fortunately, this new infographic from IaaS provider ProfitBricks does a good job of explaining the differences and who uses which one for what. Enjoy.

As enterprise software moves into the world of Software-as-a-Service (SaaS) and consumer technology innovations invade the workplace, how companies evaluate enterprise software vendor changes dramatically in many way. Yet, in some ways, it remains the same.

First, five things that SaaS changes forever:

1. Quality User Experience Drives Adoption

Gone are the days when IT could mandate software solutions with a less than stellar user experience. Today, users will go rogue and adopt consumer apps over enterprise-approved software if it makes them more productive and more mobile. Before you select an enterprise SaaS solution, put yourself in the users’ seat and compare the experience to leading consumer apps. Do they match up? If not, you better keep looking.

2. Simplicity Trumps Feature-Rich

For decades, enterprise software providers have jammed features into their products to meet every IT and user need. The mobile first, cloud-computing world is all about apps that do one thing really, really well. A portfolio of simple, elegant products that are easy to use and easy to implement makes more sense than a complex, comprehensive solution with a long roll-out time and a steep learning curve.

3. Continuous Improvement Is Expected

The 18-month product release cycle is a thing of the past. Today's users demand constant improvements to the way they work - without radical changes that require retraining or disrupt productivity. And you’ll find it’s a great advantage to have your vendor improve features without having to install any software updates. Ask your SaaS providers how they maintain their products with regular releases that streamline and bring the best to the top. What is their pace of innovation?

4. You’re In The Driver’s Seat

One big change in enterprise software is the shift from perpetual licensing that hits capital expense budgets to subscription-based pricing that hits the operational expense budget. Software in the cloud requires no capital investment, expensive roll out or prolonged training. With relatively low initial investements, if a service doesn't solve the problem or users don't adopt it, cancel your subscription and move on.

5. Your Success Is Critical To The SaaS Vendor's Success

Because there are no huge upfront costs, SaaS vendors have to keep customers happy on an ongoing basis. Enterprises have no problem paying good money for software that delivers value, they just have a problem paying upfront for technology that they are not likely to use.

And now, three fundamental ways your relationship with your vendor does not change.

1. You Still Want To know And Trust Your Provider

No matter how much digitization permeates our lives, people will continue to make large software or Software-as-a-Service purchases from people they know and trust. But this is a marathon, not a sprint. You need to partner with vendor in it for the long haul and are accountable beyond any one product or service.

2. Security, Compliance And Management Still Matter

IT technology restrictions may not seem logical to users, but the need to mitigate risk and comply with requirements remains and enterprise reality. A SaaS provider may be highly secure and have a terrific consumer following, but if it doesn’t meet the compliance bar, it doesn’t belong in the enterprise.

3. You Still Need To Know What’s Coming

SaaS companies that cater to the consumer market often introduce new features by rolling them out to users even before they tell them. Enterprises need predictability and a transparency about upcoming changes. Updates may have important implications for security, compliance, compatibility and workflow. Make sure your SaaS vendors communicate proactively.

Gone are the days when IT could mandate which tools were used where. People want to work as efficiently as possible, anywhere, on any device. That dramatically affects how enterprises choose and buy their software, but some things never change.

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But if Oracle's big earnings miss last week is any indication, one of three disappointing quarters over the past two years, the cracks have widened to a chasm. As bellwether for the enterprise software incumbents, Oracle's miss suggests that the legacy vendors may struggle to adapt to the world of open-source software and Software as a Service (SaaS) and, in particular, the subscription revenue models that drive both.

It isn't going to be pretty.

Changing How Vendors Get Paid

This isn't just a matter of improving legacy software products. It's a matter of fundamentally changing how these legacy vendors deploy and charge for software. For example, Oracle's entire cost structure is built around the premise of a hefty upfront license and high-margin maintenance (Over 20% of the license fee). Ever read The Innovator's Dilemma? Clayton Christensen's classic addresses just this sort of inability for established companies to change. It turns out to be brutally hard, and often impossible.

Small wonder, then, that SAP has been raising its maintenance fees, trying to milk more money from its customer base as it faces serious headwinds maintaining its license model against upstart competitors like Workday:

Such actions basically force customers to start looking elsewhere, if they weren't already.

If this were just a matter of technology, Oracle, Microsoft et al. would likely weather the storm quite well. Oracle makes great software. There's a reason it's the enterprise database leader, and by a wide margin (though smaller rivals are gaining in popularity).

But building great technology is not enough. Oracle's peers, from SAP to IBM to Microsoft, also charge for software in this way, and across the industry they've been taking a beating as enterprises look to the improved productivity and OpEx of open source and SaaS. Oracle, for its part, blamed its miss on "sales execution," but as Cowen & Co. analyst Peter Goldmacher points out,

...[W]e have a hard time believing that almost all the legacy software names are suffering from poor sales execution at the same time. We believe the primary issue is a fundamental shift in the technology landscape away from legacy systems towards a new breed of better products at a lower cost both in Apps and in Data Management. Virtually every emerging software trend is having a deflationary impact on spend.

Not everyone sees it this way. Wells Fargo senior analyst Jason Maynard urges investors in Oracle to "keep calm and carry on," and expects Oracle's license revenue to grow 5% year over year. 

Good luck with that. 

Developers Rise In Importance

The problem isn't that Oracle and the mega-vendors have lost their hold on CIO affections. They haven't. The problem is that they have little to offer enterprise developers, who increasingly are the gateway to software adoption. Explaining this shift in his excellent The New Kingmakers, Redmonk analyst Stephen O'Grady argues:

With the rise of open source...developers could for the first time assemble an infrastructure from the same pieces that industry titans like Google used to build their businesses -- only at no cost, without seeking permission from anyone. For the first time, developers could route around traditional procurement with ease. With usage thus effectively decoupled from commercial licensing, patterns of technology adoption began to shift....

Open source is increasingly the default mode of software development....In new market categories, open source is the rule, proprietary software the exception.

The top-down approach, in other words, is losing its currency within the enterprise, as both open source and cloud enable developers (not to mention line of business executives) to get work done without getting permission.

The effect on the mega-vendors is overwhelmingly negative, as Oppenheimer analyst Brian Schwartz posits:

We believe something more secular is occurring as cloud computing increasingly entices CIOs to refresh their legacy IT systems with cloud services rather than infrastructure. Additionally, software purchasing is becoming more decentralized with decision-making power shifting away from IT and weakening the selling advantage as a "one-shop supplier." These trends dampen big-ticket on-premise software purchasing and remain a headwind for the infrastructure vendors.

None of which means the big vendors are going out of business anytime soon. In my years at Novell, for example, I witnessed a serious decline in the company's fortunes, even as revenue remained above $1 billion.

Time To Change?

In fact, Novell is a great example of what might happen to the mega-vendors. Ultimately, Novell had to be bought out and then split into pieces in order for its SUSE business unit, now an independent company, to thrive. SUSE can now support its subscription model without all the overhead Novell's legacy business imposed on it.

The same may well prove true for the other enterprise mega-vendors.

Not all enterprises will be affected equally, of course. Years ago IBM reshaped its business to be more services driven, which allows it to embrace new trends like open source enthusiastically. And even Oracle has built out a considerable cloud business (despite starting years later than it arguably should have), to which it can move current customers. Microsoft has been doing the same, transitioning customers to Office 365 rather than lose out on customers moving to Google Docs.

But the revenue profile for these businesses differs significantly from the traditional license/maintenance business, and it's an open question whether any of these companies will be able to turn the corner in their current form.

The Wall Street Journal echoed this sentiment, suggesting that Oracle's "business is being eroded at the edges by smaller, more focused companies offering newer technology," and, I would add, by the very different business models these firms employ. It's a great time to be in enterprise technology...so long as you're not selling a legacy business model. 

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This fact doesn't make the headlines, as vendor after vendor instead hails the signing of marquee clients for their particular service. But after the media spotlight fades, new SaaS customers are often left with shiny new portals for an online service, and plenty of headaches trying to get their legacy data to work with the new service.

That enterprises and other businesses are attracted to SaaS is nothing new: a 2010 Forrester report commissioned by Symantec reported even then that "58% of enterprises use two or more SaaS-based business applications today, and 72% plan to in 12 months. More strikingly, 19% of enterprises report having six or more SaaS-based business applications today, and 30% plan to have that many in 12 months."

There is little evidence that this situation has changed in the past 27 months, according to Mike Hoskins, CTO of Pervasive Software. Indeed, as SaaS technologies have improved, applications have become even more robust and easier to deploy.

Integration Is Still An Issue

"But integration is still an issue," Hoskins said. Even in the 2010 report, 39% of SaaS customers reported concerns with data integration - a concern second only to security worries. Today, the outcome of many SaaS deployments paints an even bleaker picture.

"49% of our potential customers report difficulties with post-deployment integration," said Lance Speck, General Manager, Integration Products at Pervasive. And these are not trivial problems, either, Speck emphasized. They are enough to derail the entire deployment operation for around 20% of SaaS migrations.

It's not just the potential for failure. The costs of data integration can be huge, and this potential expense is not typically mentioned by SaaS sales teams knocking on enterprise IT's door. For every dollar spent on a customer resource management deployment," Hoskins cautioned, "a customer can spend up to $5 on integration."

These figures punch a big whole in the theory that SaaS is the end of the rainbow for enterprise IT. And data integration is not the only problem facing SaaS deployments.

Not Just Data Integration

Security remains the prime concern for SaaS deployments. Actually, it was a huge concern, and now it probably ranks high on the "Something Wicked This Way Comes" scale, as service after service this year have announced hacks that have compromised their security.

(See also Evernote Is Latest Hacking Victim and World War III Is Already Here - And We're Losing for more on SaaS security.) 

Data portability is another pitfall of SaaS deployment. If you spend all that time and money getting your data to work with a particular service, the last thing you want to hear is that this service is about to shutter its doors. We've seen quite a few consumer services roll up their welcome mats, enough to warrant concern for enterprise customers.

(See also Sudden Site Shutdowns And The Perils Of Living Our Lives Online.)

It's not just the threat of a SaaS vendor dying, either. Price changes, poor service or a better mousetrap are all valid reasons for wanting to pick up your data and move. With integration so expensive, that makes choosing the right SaaS vendor all the more important.

Warning Signs

Speck warns IT customers to be on the lookout for tell-tale signs that may indicate that a SaaS vendor may be trying very hard to get that initial signature on the contract - and not worrying about the all-important follow through.

"Whenever the SaaS vendors says, 'we'll worry about integration in Phase II'," it's a big red flag, Speck said. Another call from the cluephone? "'Don't worry about integration, we have an API,'" Speck added.

APIs (application programming interfaces), which enable a customer's applications to talk to the service's code, are indeed an critical component of data integration, but the mere existence of an API is only a part of what's needed. Other relevant questions to consider: How open is that API? How well documented? And how easy is the API is to use?

Not every SaaS vendor should be greeted with suspicion, of course, but enterprise IT departments should consider the entire process, from deployment to integration, as well as security and data portability, when selecting a SaaS vendor.

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You may have read a lot of articles last year about why the so-called "freemium" model doesn’t work for most consumer-oriented companies. And it’s true that offering a base-level product for free to gain visibility and marketshare and then converting a subset of users to a paid, premium version is not a viable strategy for every business.

However, depending on the product you’re offering, the freemium model can work well for business-to-business (B2B) companies, and especially well for B2VSB (business-to-very-small-business) companies.

(See also Why Free Is Bad: Businesses Should Be Happy To Pay For Key Services)

Here are six questions to ask yourself if you are entertaining a freemium model for business customers:

1. How big is the target market? For a freemium model to work, you need to make sure your audience is extremely large, since typical conversion rates range from 3% to 10%. According to the Small Business Administration, in 2009 there were almost 28 million small businesses in the United States. (The SBA defines a small business as one with fewer than 500 employees). Let’s say your business captures 2% of all the small businesses as free accounts, and 3% of those convert to paying customers. That’s almost 17,000 paying customers. Based on your business model is that enough to sustain and grow a profitable business?

2. What is the value of a free customer? By offering your product for free, you run the risk of cementing that value in the minds of customers. The flip side of this is that when you’re trying to build a brand and a user base, the freemium model makes it easier to get exposure, a base of quality leads, the potential of high virality and a built-in sounding board for essential user feedback.

3. How does your product impact the daily lives of your users? Do your users recognize that your product makes their work life more productive, more efficient, more organized or more informed? If so, converting from a free version to a paid version will be a natural progression.

4. Does your product help grow your customer’s business? If your product offers some kind of analytics or metrics that can be used to measure an aspect of the health of the business (i.e., sales, efficiency, productivity savings or gains), then it’s easier to align your product with the growth of the company and easier for a small business to justify spending dollars on it.

5. What is the best conversion metric – transactions or users? Both models have pros and cons. In many cases, users like the transaction model because it’s often pay-as-you-go. However, sometimes a transaction model can be perceived as nickel-and-diming the user. A user license is another common conversion metric, and it may be easier for your customers to swallow as they try to justify the budget to convert from a free account to a paid one. If it makes sense, you can may be able to combine both models (i.e., offer X number of transactions per user license).

6. What is the difference between the free and paid versions of the product? Don’t cripple your free version to the point that it offers minimal value. Remember, your customer’s first interaction and impression will likely be with your free product, so make sure that your free offering is useful on its own terms and not just an obvious stepping stone to a higher-level paid version.

Freemium models should be based on your specific business realities. If the math of the freemium model looks like it will work for your business, your product and your audience, give it a try.

 Image courtesy of Shutterstock.

While trying to hold on to PeopleSoft and Siebel customers, Oracle was just getting started on its own Fusion Applications. The company marketed Fusion as its next-generation application suite that would bring together the best of its e-Business Suite and the software it had acquired for billions of dollars. Oracle believed Fusion would eventually spark a mass migration from the older applications to the latest and greatest from its own stable. But a new survey from Forrester Research has found Oracle was wrong, and customers are holding the company to its word and sticking with the older software with which they're familiar.

Oracle's Dilemma

By refusing to switch to the more expensive Fusion apps, Oracle customers are making it difficult for the company to grow application revenue, according to Forrester. "In recent years, Oracle's application revenue growth has underperformed both the overall software market and SAP, resulting from slowing growth in existing apps and too little revenue from its Oracle Fusion Applications," according to the report, entitled "Oracle's Dilemma: Applications Unlimited Versus Oracle Fusion Applications."

Forrester's numbers are sobering. The survey of Oracle clients found 65% had no plans to move to Fusion Applications and another 24% were on the fence. The biggest barriers were Oracle's muddled application strategy and the immaturity of Fusion, which became generally available in November 2011.

At the same time, recent acquisitions of software-as-a-service companies, such as Taleo and RightNow Technologies, are not bringing in enough revenue to take up the slack, according to Forrester. Oracle customers show little interest in trying the SaaS products, with only 11% of survey respondents interested in making the move.

Making matters worse, Oracle is in danger of losing business from some of its customers. Forrester found 29% of the companies it polled were planning to move to another vendor's SaaS product or packaged application. The main reasons for their unhappiness with Oracle were high licensing costs, high maintenance costs and difficulty in upgrading.

Impact on Oracle Customers

Oracle's lackluster revenue growth could eventually have an impact on customers. When revenue from a vendor's products are flat or declining, the company often treats the software as a "cash cow, milking maintenance revenues and cutting back in its investment in enhancing and supporting them," Forrester says.

While there are no signs that Oracle is heading down that path, the company is unlikely to let Applications Unlimited customers stay where they are forever. Oracle has sunk too much money and resources in Fusion Applications to let customers ignore them, Forrester says.

Oracle is expected to step up efforts to get customers to move to Fusion or its cloud infrastructure products. How the company will do that is not known, but it could decide to make life harder for companies that stay with the older technology. Forrester is advising companies to start preparing for the added pressure they will be feeling from Oracle.

For Oracle, Forrester believes it's "make-or-break time" for its applications business. The company's Fusion Applications are its main strategy for growing software revenue and defending against a number of fast-growing SaaS competitors.

Forrester believes that won't be enough.

Oracle is likely to kick-start its growth strategy with more acquisitions, and the likeliest candidates will be fast-growing SaaS companies. In the meantime, Applications Unlimited customers should ponder their next move.

Oracle did not respond to multiple requests for comment.

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Software, databases, customer relationship management… these are all key elements of information technology that haver been pushed into the cloud to be deployed "as-a-Service" (or *aaS). This follows the model of Software-as-a-Service (SaaS), Data-as-a-Service (DaaS), and the like. Other, more rudimentary, aspects of IT have already been deployed this way, to great effect: Witness how online bookseller Amazon now dominates cloud computing by introducing Infrastructure-as-a-Service (IaaS) a few years ago.

As the idea of a sharing and scaling services that were otherwise once local and isolated continues to spread, we are now seeing just about every function you can imagine being delivered as-a-service to any business who wants them.

Marketing-as-a-Service

The most recent example of this new *aaS trend is the release of the Vocus Marketing Suite, a hosted marketing service that enables small- to medium-sized businesses to access marketing tools and (more importantly) expertise for those SMBs to use.

Anyone, really, can toss together a bunch of tools to market with social media, email and press releases. A one-pane aggregate application could handle that. But using the publicly available big data that's readily available on the Internet, Vocus' new application is designed to push out very targeted information that pertains to a business' marketing goals.

Say a business wants to sell jewelry, outlined You Mon Tsang, Vocus' Senior Vice President of Products. The Marketing Suite will listen for keywords on social media channels to determine who's an influencer in the jewelry scene or maybe just which desperate significant other is out there looking to buy an anniversary gift fast.

If you're using email marketing, the tool will make sure you're not spamming potential clients, either in frequency or through the language you're using. Human editors will also step in to help craft messaging. The key to this new service making the expertise affordable to SMBs who might otherwise have to go it alone.

Big data, as mentioned, makes this all possible. In the past, marketing was sort of a gray area when it came to hard results. Using a new class of metrics, marketing's return on investment is now much more easily calculated, and results can be concretely measured.

Healthcare-as-a-Service

There are some who would argue that some things still don't scale very well. Medical information and healthcare services seem to be one of them.  Sure, you can go on to WebMD and find out how to treat the cold that seems to be coming on… but without medical expertise at your disposal, you may decide that you really have the bubonic plague. And while "the plague is upon us" has a nice historical ring, it also tends to be a bit alarmist.

Healthcare professionals don't scale terribly well online, if only because the medical arts depend, usually, on face-to-face contact between the patient and the caregiver.

This is not to say that some aspects of healthcare can't be found in *aaS. A new startup in Indiana called hc1.com, for instance, has created a very niche cloud approach to resource management for medical labs, so they can work with multiple providers and deliver analyses more efficiently.

As medical providers continue to work with government and market requirements to use electronic health records, vendors like ClearDATA are working the edges, delivering secure messaging and cloud computing services.

So healthcare and medical-sector services are finding their way into the cloud, though still more on the edges instead of a full-on approach. But after a few more years of medical-monitoring innovation, who's to say you won't someday get a text message that says "Stop eating that pastrami, your arteries are about to pop!"

Anything-as-a-Service?

The world around us, thanks to connectivity and much faster computing platforms, seems destined to push all manner of services on to the Internet, where they can be acquired on demand, without having to build your own infrastructure to support them. Distance learning, shopping, news gathering and many more are already there. Others are coming, and there's no telling how far the trend will go.

Image courtesy of Shutterstock.

While some are buying up the competition while they still can or building their own startup-like operations (praying they won't cannibalize their main businesses), others are hiding their heads in the sand. For them, at least, the results aren't going to be pretty.

The Old Guard

The enterprise software market is big and messy for a reason: The "enterprise" isn't a thing, precisely. Enterprises are just big businesses - and businesses do everything. Clorox, Facebook and the Department of Defense might all be considered "enterprises," but they have very different organizational structures, revenue models and supply chains. If you're selling software to support those differences, you'd better be ready to customize. 

Enter SAP, Oracle, IBM, EMC and other enterprise "solution providers." Typically, these vendors sell customers a product for $500K, charge another $1 million to integrate it and make it work, then take even more ongoing fees to keep it running. Enterprise software products scale - which is why companies are willing to invest so much in them - but they're expensive, slow-moving and complicated.

For small-to-medium businesses (SMBs), speed and cost trump scalability, so they tend to focus on separate "point" solutions. An SMB might stitch together Quickbooks, Microsoft Project, Joomla, payroll services from ADP, and a ton of spreadsheets and email to fill in the gaps. These solutions are cheap and quick, but integration between them is often glitchy, crticial data can get lost in the shuffle, and they have an annoying tendency to fall apart as companies grow.

The New Guys

Over the last 10 years, Software as a Service (SaaS) delivered from the cloud has bridged the gap between the two worlds, offering scalable enterprise-class services that can be up and running in a matter of weeks, rather than months. SaaS applications are generally less customizable than their on-site competitors, but they're a lot simpler to understand, often provide better performance, and their pricing is much more straightforward. Some of the biggest enterprises in the world are moving chunks of their infrastructure to these SaaS upstarts, and many newer companies are building their entire platforms in the cloud.

Salesforce.com is the most successful example of a SaaS vendor, racing from nowhere to a multi-billion dollar valuation in just a few years. Along the way, Salesforce has proved that the cloud can, in fact, support large enterprises. The company currently manages a 25,000-seat contract with Merrill Lynch, for example, and it closed a $140 million deal with State Farm Insurance earlier this year.

Deals like that get headlines, and you'd think that traditional enterprise software vendors would be worried enough to do whatever it takes to response to the challenge.

You'd think that, but it's not always true. In many cases, the big dogs don't seem to be paying attention, and it could end up costing them.

Quick Response

Sometimes they get it right. In HR for example, the SaaS threat is well understood, and the response is already in motion. Workday, created by PeopleSoft founder Dave Duffield and other PeopleSoft refugees (and powered by an underpublicized but smoking IPO) provides a full suite of hosted Human Capital Management (HCM) and financial management applications that compete directly with SAP and Oracle (the company that bought PeopleSoft). SAP responded by acquiring the cloud HCM provider SuccessFactors for $3.4 billion – a 52% premium. For its part, Oracle spent nearly $2 billion on Taleo.

Game on.

The Laggards

But that's not the whole story. There's still plenty of head-in-the-sand thinking going on. Take Web Content Management (WCM), for example, the software companies use to store, edit, manage and publish their assets online. It's an absolutely essential piece of the enterprise puzzle.

In a podcast titled "The Big Shift," Gartner Group's Mick MacComascaigh declared a sense of urgency "driving attention to SaaS-based Web Content Management (WCM)." His partner on the podcast? CrownPeak CEO Jim Howard, who's been promoting SaaS as the "new" face of WCM for the past 10 years.

SaaS has plenty of benefits for WCM. It's much more marketer-friendly, for one. Service-based solutions lack some of the infinitely tweakable options you get by running on your own iron, but they make it far easier for Chief Marketing Officers (CMOs) and their minions to put together something quickly, without IT help.

According to Howard, enterprise sales at CrownPeak are heating up. "CrownPeak will experience over 60% growth this year, with about half of the growth coming from expansion in Fortune 1000 accounts like MetLife, Microsoft/Skype and Intercontinental Hotels," he claims. Howard also notes that the majority of CrownPeak's clients are companies with more than $1 billion in revenue, and that many of them plan to migrate away from in-house systems. 

Nothing To Fear?

So why isn't everyone launching an SaaS WCM system? According to Tony Byrne, founder of Real Story Group and one of ReadWrite's Five Analysts to Watch, market demand hasn't met the expectations. "Web CMS customers seem to want more platform-oriented systems, rather than highly productized, SaaS solutions."

That kind of conservatism makes a lot of sense. After all, your content – articles, video, contracts, code – is what you do and who you are. Outsourcing that to a service in the sky is a major leap of faith. It's also the kind of thinking that keeps established software developers entrenched. No matter how clunky a system is now, a "rip-and-replace" will always bring more near-term pain.

As a result, Byrne argues, entrenched Content Management vendors like EMC and OpenText are undergoing less of a paradigm shift and more of a hybrid evolution, trying to address demands for easier management without disrupting the current ecosystem. "We're beginning to see more traditionally on-premise CMS tools begin to become more 'cloudified,' with managed hosting offerings, including some cloud-based alternatives. To be sure, this is not the same thing as SaaS, but it does offer a kind of compromise where you can customize and extend the platform in bespoke ways, but can outsource most of the systems administration." 

CrownPeak's Howard, understandably, thinks "cloudification" is nearsighted and misses the point. "What the old guard calls Cloud (or Hosted or SaaS) has the same IT bottleneck that their premise solution has. The only difference is that the 'IT guy' works for the vendor, and not the company. To be true SaaS, a company needs to design the application from the ground up to support parallel development of multiple projects, invest millions in scalable and secure infrastructure, and have services that go beyond fixing what's broken. When you install a traditional application in the cloud, you still have all of the big, expensive headaches and poor outcomes." In this view, "cloudified" solutions are just in-house software plus a hosting plan. 

But is that really what's going on? The established vendors don't seem to want to clear up the confusion. Many are sure selling cloud solutions like they're traditional software. OpenText Cloud's product page, for example, does a horrible job of summarizing what the service actually does and how a knowledge worker might actually use it. 

The gist seems to be a murky "We do good stuff. Call us and we'll talk about how we can do good stuff for you." That might work for existing customers looking for options, but it probably won't sell well with CMOs – often the new technology customer.

Winning The Battle, But...

Just because the content management market hasn't yet fully embraced the SaaS model, established vendors can't afford to take a break. Their job is to stay ahead of customer demand – not just meet it.

CrownPeak and plenty of others are making beachheads in the enterprise, one department at a time. According to Howard, "The SaaS option doesn't have to be an either/or. In many large and very large organizations, SaaS can initially fit a niche need while the existing solution stays in place." That approach introduces the enterprise Marketing Department to a new, responsive company that gets the job done. Since Marketing will be signing the checks, those small sales could lead to much bigger ones down the line - threatening the long-term prospects of the traditional vendors.

That's exactly how those $1 trillion wealth transfers gain momentum.

Lead image courtesy of Shutterstock.

Salesforce's New Social Tools

Salesforce unveiled a long list of products Wednesday and highlighted big-name customers like General Electric and Virgin Airlines. The new services are built on top of Salesforce’s core software for managing customer relations and for helping sales and marketing teams be more effective.

Over the coming months, Salesforce customers will have the option of using Chatterbox for managing and sharing files with partners and customers. Chatterbox places Salesforce in competition with Dropbox, Microsoft’s SharePoint and Box, in which Salesforce is an investor.

Other services that will be available in the near future include being able to hold conversations with customers via Facebook, Twitter and LinkedIn and to create and manage marketing campaigns on the sites. Salesforce will also release tools for gathering intelligence on sales leads from Twitter, blogs and YouTube videos.

Market Pressures

Salesforce is hoping all its new products will keep it ahead of larger rivals Oracle, SAP and Microsoft. With such heavyweights in its rearview mirror, Salesforce can’t afford to standstill. It needs to enter new markets in order to continue driving double-digit revenue growth.

The brass ring for all players delivering business software over the Internet is a $49 billion market that grew by 25% over last year, according to Forrester Research. Spending on social business software will grow from $800 million in 2011 to as much as $5 billion in 2016, according to IDC.

Companies Fear Public Social Networks

With so much at stake, Salesforce is pushing hard into the new social business frontier. But what the marketing hype doesn’t highlight is the risks that need to be addressed before customers rev up the vendor’s new services.

The danger of having employees say the wrong thing on Facebook, Twitter or LinkedIn is real. Pharmaceutical company GlaxoSmithKline learned the hard way when it paid $3 billion last year to settle U.S. government allegations that sales reps sold the company’s drugs based on claims not approved by the Food and Drug Administration.

Avoiding A Calamity

To avoid such catastrophes, analysts recommend a thorough training program for every employee that will be conducting company business on a public social network. “Implementing them (social business tools) isn’t that difficult,” IDC analyst Michael Fauscette, said. “The problem is the tools need to change your business processes and your company culture.”

Employees need to be prepared to do business under the company’s brand in an open environment. Policies have to be clearly stated on what information can and cannot be shared with customers or partners. Workers also need to be taught how to speak on social networks. They need to be aware that communications go far beyond the walls of the corporate office where they are sitting in front of a computer.

While email can also be used to mistakenly release intellectual property or private communications with customers and partners, information posted on a social network travels faster and wider. “You’re no longer shouting it out in the cafeteria, you’re shouting it out at the local mall where anybody can hear,” Forrester analyst Rob Koplowitz said.

Nothing Is Simple

There is no simple way to introduce new policies and procedures for handling social business and collaboration tools. Changing a company’s culture to be sensitive to the greater exposure will also be difficult. So make sure you are ready before you turn on Salesforce’s new products.

Instead of selling direct to the corporations that actually use computing services, hardware, software and infrastructure vendors will all need to pivot to serve the new cloud services new market. That’s the lesson from the latest forecasts by market researcher IDC.

The difference is stark. IDC estimates companies will spend $100 billion on IT cloud services by 2016. That compares to $40 billion companies are expected to spend this year and represents a five-year, compound annual growth rate of more than 26%.

Software Disruption

Huge disruption is expected in the software market. Salesforce.com, launched in 2000, perfected the Software-as-a-Service market for businesses, and its success has led to big-name companies like Oracle, SAP and Microsoft introducing SaaS versions of their own business software. “You have to be a strong player in SaaS now, if you’re going to survive as a software vendor,” said Frank Gens, IDC analyst and co-authorof the forecast. Delivering software over the Internet will account for almost 60% of the public IT cloud in 2016.

Heading into to the cloud means redesigning products and making major business model changes for software makers. The lump-sum software sales prices and annual maintenance fees software makers get today will have to be converted into monthly subscription fees. It’s not at all clear whether those fees will match the totals of the sales and maintenance charges they replace. And they money will come in at a very different pace - distributed over time rather than with the majority up front.

In addition, customers will pay only for the software and service they actually use, rather than licensing the whole package. “That is hugely disruptive for the market,” Gens said. “Traditional vendors are all looking at a financial abyss that they’re trying to vault over.”

The only way to make the numbers work, vendors and observers agree, is for software vendors to dramatically in increase the number of customers they serve. The days when large vendors could build a robust business selling to just the Fortune 5000 are nearing an end. Instead, most software makers will have to sell to everyone, since success will be measured in volume.

“If you just stay with the Global 5000, it’s going to be very hard to be a successful large scale IT vendor anymore,” Gens said. “You have to reach out to and you have to love small businesses, even the smallest ones.”

Hardware Vendors Have Their Own Problems

Hardware vendors will also suffer stress in the transition. To a large extent, heading to the cloud represents a continuation of the trend toward virtualization that has dominated IT for the last 10 years. Before companies could run multiple operating systems on virtual machines, servers were often used at 20% to 30% of capacity. With the cloud, on-premise hardware will share computing power with an infrastructure service provider, which will result in companies doubling the amount of capacity they get with their hardware. Assuming equal demand, that’s likely to suppress the need for new servers and associated equipment.

To make up the difference in selling less hardware to enterprises, vendors will have to focus on those companies delivering cloud services, whether its SaaS companies or Infrastructure-as-a-Service (IaaS) vendors like Amazon and Rackspace. Demand from such companies will increase as more businesses of all sizes rent more server capacity in the cloud. Will it be enough to make up the difference?

“The market will absorb as much capacity as the industry can throw out there, if it’s cheap enough and easy enough to access,” Gens said.

Corporate IT Shops Get Hit, Too

The disruption won’t be confined to hardware and software vendors. Corporate IT shops will also have to deal with dramatic change. Their tasks will shift from managing silos of their own technology resources to working with cloud vendors to get the services they need, properly integrated, at the best possible price.

Traditionally, IT shops have been divided into groups with separate organizations taking care of servers, databases, storage or sets of applications. Under the cloud model, the vendors take much more responsibility for managing and maintaining the software and hardware components.

Many jobs that focused on individual areas of in-house software will become obsolete. Instead, IT staff will be managing cloud service providers to set service levels and make sure those levels are met. “If that cloud service fails, you’re in deep trouble,” Gens warned. “Suddenly, you don’t control it. It’s your vendor controlling your IT operation.”

That’s a big deal for IT departments, since CEOs will still hold them responsible for they the company’s technology strategy and execution, even if much of the actual work gets “outsourced.” On the plus side, they should be able to save money - on up-front capital costs if nothing else - and take advantage of the latest technology and trends without having to make huge investments themselves.

As the cloud brings significant risks and benefits hardware and software vendors as well as their customers, everyone will have to work together to successfully navigate the technology evolution. But among the many choices for all the parties, opting out won’t be one of them.

Image courtesy of Shutterstock.

The Rise of "Office as a Service"

Office 365 began this time last year as an evolutionary mode of licensing the existing Office 2010 software on a monthly basis like a service, with Office Web Apps being added as a placeholder for the fuller online editing functionality users would expect. What Office 365 is now becoming - and indeed, what it should become - is the way to buy Office in the 21st century.

"That's what it means to say Office is designed as a service: You can just click, and start running Office immediately from the service," Ballmer told a packed room full of journalists, analysts and customers. "Office uses the cloud to remember what you were doing and where you were, and what your preferences and favorites are, your documents, and how you're working together with other people... We need to support that for people in their... private lives, in addition to supporting enterprises in their business persona."

Like Windows, Office must satiate several customer groups simultaneously, even though their requirements are vastly different. What has maintained Office's dominance in the enterprise up to this point (despite the negative reception to the Ribbon to Office 2007) is its relative consistency and reliability through the years - a huge issue for the traditional desktop computer user. If Microsoft were truly to fundamentally rethink the architecture and mission of its Office apps, devising a model as starkly different from its predecessor as the Windows 8 Start Screen is from the Windows 7 Start Menu, then users in large numbers might simply refuse to upgrade.

The Beginning of the End of Office Web Apps

One possible way to play to all parties might be for Microsoft to redress Office apps in different forms - conceivably, as phone apps, Web apps, Metro-style apps (for Windows 8) and Desktop apps. Microsoft began experimenting with this Medusa-like idea in 2010, with its original Office 365 strategy for the first generation of Office Web Apps.

Office Web Apps were never intended to be as functional as their locally installed counterparts. Instead, they were miniaturized versions of Office apps that recognized existing Office Open XML documents, but could not always create new ones, that saved those documents to Microsoft's cloud-based SkyDrive storage, and that triggered the launch of real Office apps once they reached the limits of their power. In lieu of full applications, the Web Apps seemed to remind competitors of what Microsoft could eventually do in this space.

Surprisingly, in their roles as scarecrows, Office Web Apps were successful, driving otherwise attractive competitors such as Adobe's Buzzword into similarly sidelined roles as online accessories to Acrobat. Amazingly, because Office Web Apps behaved as minor league players, Microsoft's competitors responded with minor league strategies. Google Apps have never nearly been as functional or reliable as conventional Office apps, though they were arguably superior to Office Web Apps. When Google geared its Google Drive storage essentially for Google Apps, it was perceived as a bundling maneuver more characteristic of the old Microsoft.

But bundling works best when an unknown or otherwise undesirable product is bundled with an absolute necessity, such as an operating system - and Google Apps is far from a staple of the enterprise. With its stale usage model, unreliable synchronization and security, and its new reliance upon a service that's not as flexible as Dropbox or Box, Google Apps is vulnerable. That vulnerability could be exploited by a reliable, proven product that merely relocates itself from the hard disk to the cloud without a great deal of tumult.

Uncharted Waters

So despite Ballmer's characterization of the new Office 365 as a fundamental rethinking of Office, it obviously is not. And in the real world, that's actually a good thing. If and when Office fully morphs into Software-as-a-Service, it must still retain its identity. But Monday's demonstration leaves open many questions about when Microsoft will make the hard choices to change what must still be changed about Office, if it is to truly embrace the "modern office" that Ballmer described:

• The place of Outlook (above) as a communications tool makes more sense in a more hard-wired, 2000s-style client/server environment, where Exchange is but one server, and all accounts are maintained by one PC. This is clearly not the way people want to communicate today, even if Outlook forces them to do so. Adding more Facebook and Skype to Outlook merely adds more hard-wiring to the existing wiring. That's contrary to the ideal expressed in today's demonstrations, where Office Division VP Kirk Koenigsbauer showed working with Word in Office 365 on one machine, suspending it, and picking up the same document at the same point on another machine later on. Outlook is the least portable of the Office apps, and nothing exemplifies that fact more clearly than the new, revised SharePoint (below), which uses a flexible, social communications stream that surprisingly takes more than a few cues from Salesforce.

• The divisions between Office applications make less sense in the modern office. While OneNote has been rethought with a more Metro-style-like approach to the arrangement of tabs and the flexibility of inputs, these arguably good ideas should actually be incorporated into Word, which could make the best use of them.

• PowerPoint has perhaps gone the longest without any significant upgrade, and it was a pleasant surprise to see PowerPoint getting the biggest makeover. But in a world where clients and audiences are expecting video and animation to be the foundations of presentations - not just attachments - it was disturbing to see the PowerPoint document still portrayed as a slideshow. In 2013, Apple is likely to push consumer-grade video presentation to new levels, making PowerPoint look like a dinosaur.

• As willing as Microsoft appears to be to incorporate multitouch as a guiding theme, and as much as Windows 8 is adopting rows and columns as its main design ethic, it's remarkable that Excel - our last solid connection to computing in the 1980s - remains essentially a keyboard-driven ledger sheet. Even the name "PivotTable" cries out for the type of tactile, touch-sensitive functionality that Microsoft is building into other less-needed areas of the software suite.

• The phrase "Windows Phone 8" was brought up several times in discussion. However, the functionality that Koenigsbauer demonstrated smacked of an "Office Web Apps-like" approach - a placeholder for where future functionality should appear, once Microsoft gets around to it. We've been expecting a licensing model that lets Office 365 subscribers use Office, or some respectable form of it, on their Windows Phone 8 devices. But for it to truly qualify as Office, it needs to be more comprehensive than merely enabling the user to check SkyDrive (as in Koenigsbauer's demo shown above) to make sure one's documents are still there.

Still, Microsoft's next move with Office needed to be measured and well-orchestrated - and avoid giving business users the feeling of being shoved into a new and bewildering universe.  Thus far, Microsoft seems to be navigating that narrow canyon carefully but smoothly with the new Office 365. If businesses move to the new licensing model without executives and employees complaining about the high cost of change in the enterprise, and without the same level of "disruption" we love to see in the consumer space, then this strategy will have succeeded. The trick will be to convince consumers their worlds are being completely made over... when they're really not.

Lead photo by Fredric Paul for ReadWriteWeb.

This post is a message of sincere appreciation - a love letter if you will - to the cable guy who recently upgraded the Internet connection in my San Francisco home. Whether you know it or not, you’ve made my life better in so many ways.

I’ve had broadband access at my home since DSL came to San Francisco in the 1990s. So I didn’t think getting faster service would make all that much of a difference in my life. Boy was I wrong.

My family and I just upgraded our cable Internet service from about 10 Mbps to 50 Mbps. And then we bought a new Wi-Fi router to extend that service to all our wireless devices. Now, 10Mbps isn’t that slow, and 50Mbps is far from the fastest service around (heck, ReadWriteWeb’s headquarters clocks in at an awesome 100Mbps). But I am still stunned at how much the change is affecting how we all use the Internet. And how much I want to hug the Astound cable guy who brought it to us.

Easy Upgrade

Compared to the early days of broadband, the process was amazingly simple. The Astound technician came out to our 115-year-old Victorian with a new Cisco DPC3010 cable modem (actually showing up in the first half hour of the promised 4-hour window!) The tech replaced our old unit and checked out the cabling in less than an hour. Bam, the speed of our hardwired connections instantly quintupled! No fuss, no muss.

Except that the increase was only visible on wired connection, not the fleet of smartphones, tablets, laptops and other devices where we do most of our work (and play). They got a bump to about 20Mbps. Faster, but suddenly pokey next to the wired connections.

Even though we had a relatively recent Belkin router using the modern 802.11n Wi-Fi specification, it simply couldn’t keep up. The tech - remember how much I love him? - recommended getting a new router that supported the DOCSIS (Data Over Cable Service Interface Specification) 3.0 standard. And because we have a mix of Apple, Windows and other devices in the house, my spouse decided to choose simplicity over economy and we splurged for an Apple AirPort Extreme Wi-Fi router.

Although its $179 price is almost double that of competing devices with similar specs, it was by far the easiest router to install and configure that I’ve ever used. Everything was up and running within five minutes, with none of the false starts and geeky questions I’ve encountered setting up other wireless systems over the years. I wouldn’t have chosen it, but I can’t say I missed the headaches.

More importantly, though, suddenly every device in the house was testing out at 50Mbps downloads. 

Faster Everything

The conventional wisdom holds that just about any broadband connection is sufficient for browsing the Web, and that faster connections don’t really provide much benefit in this regard.

Thanks to our cable guy, I can confidently state that conventional wisdom is dead wrong.

Web browsing at 50Mbps is noticeably faster and less annoying than browsing at 10Mbps. In most cases, pages begin loading faster and images show up along with the text, not a second or two later. Downloading large files, from software applications to data sets to high-resolution images is now something we do in real time, rather than a process we start and let run in the background. 

If general browsing got a mild boost from the faster speeds, working with Software as a Service (SaaS) applications delivered over the Internet enjoyed a serious kick in the pants. Gmail and Google Docs suddenly seemed almost as fast as email or productivity software running on a local machine.

Better Streaming

Perhaps the biggest, most noticeable improvement came when consuming streaming content. At 50Mbps, YouTube and other online videos leap into action, instantly jumping ahead with plenty of buffer room. Nice to see on the desktop, but positively intoxicating on an iPad or other tablet, which now seems seamlessly connected to the entire Internet. (I murmur soft words of thanks to the cable guy every time I watch anything on a tablet.)

I now find that I want to have the iPad close at hand at all times, because it’s just so darn easy to watch anything online as soon as I can type it in. Just as important, I’m now wondering why I need a tablet with 64GB of storage space when I can grab stuff from the Net just as quickly. (That makes my new Google Nexus 7 tablet seem more inviting.)

Not surprisingly, that holds true when using streaming media services - whether on a computer, iPad or big-screen TV. Services such as Hulu or HBO Go perform almost as well as our satellite TV service - and our Apple TV box delivers a more TV-like experience than ever before. If it weren’t for live sports, I’d already be considering cutting the cord. (I worry that the cable guy wouldn't like that, though.)

Better Backups and Sharing

All of the members of my household rely on Dropbox to sync and share files, and some of us even pay for extra space. And one of us relies on Apple’s iCloud to sync huge chunks of data among many devices. But syncing all that data to new devices used to take hours, and it churned through much of our 100GB per month data cap. No more. At 50Mbps down and 6Mbps up, those syncs and backups happen much faster. Syncing and backing up to the cloud now seems like a much more reasonable option than it used to.

Upload speeds are often the Achilles' heel of cloud services, but 6Mbps is fast enough to help ease the bottleneck. Still, if the cable guy wants me to buy him chocolates, it would be nice to have upload speeds closer to the downloads.

Bigger Data Limits

When you add up all this stuff, it’s pretty clear that my family is likely to churn through a lot more bandwidth every month - and we were already incurring fees by exceeding our old plan’s limit of 100GB per month. The new plan ups our data transfer limit to 300GB per month, but with the extra speed encouraging all these new uses, we’re actually worried we may blow past that figure as well!

We made the switch because we cycle through a lot of data in our house, and it seemed to make sense. But I think we were all surprised at how much a five-times boost in speed changed the quality and quantity of our Internet usage. I’ve become an instant convert to the idea that the future of the Internet requires that everyone get not just broadband, but really fast broadband.

I hear that Verizon FiOS now offers up to 300Mbps. A week ago, I would have said that’s ridiculous. Now I’m wondering if those speeds will ever be available in San Francisco (if not from FiOS, which apparently won't be built out any more than it already has been, then from another provider). Sorry cable guy, I appreciate how much you’ve done for me, but if the phone company guy shows up with six times faster service, I’m going with him.

Lead image courtesy of Shutterstock.

The Chromebox’s $329 price point and marketing seem to suggest that Google is making an enterprise play with the monitor-less ChromeOS device, trying to attract corporate shops with a one-time $150 lifetime support and upgrade plan and desktop-as-a-service functionality (DaaS) via partner nGenx.

But is this really the right fit? Or would Chromebox - a device designed to be completely connected to the cloud and run all applications in a browser instead of natively in an operating system - find a more welcoming home in the small business space?

The Security Issue

For one thing, there are strong indications that cloud security is still a deal breaker amongst enterprise IT directors. A recent survey of 800 IT managers by Intel showed that even for private clouds, lack of control, data boundary configuration and the security of network packets rank as big hurdles blocking wider cloud adoption.

Add compliance and business-process requirements on top of that, and enterprise adoption of Chromebox and similar devices might not be as simple as Google would want you to think.

For smaller businesses, though, the risks may be more likely to be outweighed by the benefits.

Living Without IT

For instance, small businesses and retail stores often live without the benefits of a true IT staff. Computing decisions are often the bailiwick of the company nerd - or the sales people at the nearest big-box electronics store. And even when a smaller company has a dedicated IT staff, daily maintenance and upgrade cycles often delay implementation of longer-term projects or big-picture concerns, like disaster recovery.

And that’s where the Chromebox can make a difference. Results of the 2012 AT&T Small Business Technology Poll showed that “while nearly three-fourths (71%) of small businesses feel it is important to recover computer data in the event of a disaster, less than one-third (31%) use the Internet or computer network to send data to a remote location.”

Because data on the Chromebox is stored remotely on Google’s servers, the risk of losing data plummets. Even if a particular Chromebox is lost or damaged, a simple sign-in to the same account with another device will instantly regain access to the data.

SaaS and DaaS

Addressing these kinds of concerns for small businesses is exactly where SaaS and DaaS could really shine. Always-on, always-updated software preconfigured and relatively unbreakable by staffers is a pretty attractive option for small companies. In fact, it may be the only way small businesses can leverage advanced technology without creating an expensive support infrastructure.

The Chromebox is not quite there as a small business solution yet. That $329 price point remains too high (with the $150 support fee tacked on, it’s higher than entry-level desktop PCs). And even though small businesses don’t have as many compliance hoops to jump through, security is still just as big an issue for mom-and-pop stores as it is the enterprise. (Of course, most smaller shops aren’t doing much about security on their own.) And many observers had similar hopes for the first-generation Chromebooks, but they didn’t pan out.

But as Chromeboxes become more affordable - and if Google can help customers establish secure Internet connections and adapt their business processes - Chromeboxes would be very useful small business/retail devices. The available Google application set with the capability to add Windows applications with the nGenx DaaS software would easily meet most of their needs. If Google could eventually add preconfigured setups (point-of-sale tools for a retail account or accounting software for a bookkeeper), it would be an even sweeter option.

Even without configurations for specific uses, Chromebox and devices like it have a lot to offer small businesses without IT teams. With easily managed hardware, always-current applications and minimal setup needs, Chromebox could be a low-impact, high-result solution for many companies.

This quiet but uncomfortable truth permeates the discussion of technology use across many sectors. A report released Monday by the State Educational Technology Directors Association called "The Broadband Imperative" specifically identifies the need for more external broadband in today’s schools, citing “at least 100Mbps per 1,000 students/staff” as a 2014-15 school year target, and 1Gbps per 1,000 students/staff for the 2017-18 academic year.

The report called for even higher internal networking specs: The minimum internal WAN connections between schools and the district should be 1Gbps/1,000 for 2014-15, and 10Gbps/1,000 for the 2017-18 target. Most schools, of course, don’t even approach those speeds. Nearly 80% of survey respondents said their school’s broadband connections were inadequate to meet their current needs.

The reason for the need in schools? The increase in online curriculum and multimedia content that the organization expects will be delivered to the classroom.

Widespread Bottlenecks

The bandwidth squeeze in schools is hardly unique. The problem is being felt in the enterprise as well. As more organizations move their infrastructure to the cloud and replace traditional software with Software-as-a-Service (SaaS) solutions, the extra network demands are saturating networks and actually slowing down the user experience.

But nowhere is the bottleneck of networks and wide-area network (WAN) connectivity being felt as strongly as the big data sector.

MapR’s Jack Norris sees this pain all the time. MapR, like Cloudera and Hortonworks, is a commercial vendor of Apache Hadoop, the open source clustering storage tool that so many associate with big data. MapR works with companies every day to improve data processes.

“For many organizations, it takes longer to move the data across the network from the storage clusters to the compute servers than it does to perform the analysis,” Norris, MapR’s VP of marketing said. “Particularly when dealing with large data such as clickstreams, sensor data, credit card transactions, ad impressions, genomic data, etc. It makes more sense to perform data and compute together and send the results over the network.”

Fortunately, Hadoop does not typically replace existing data infrastructure, like relational databases and data warehouses. Rather, Hadoop augments these existing tools. This is helpful to the network bottleneck problem, because more data is staying put and being processed in situ within Hadoop, thus reducing network traffic.

Even Hadoop Can’t Save Us

But even with Hadoop doing more heavy lifting, big data infrastructures are starting to take network performance hits.

Cloud computing, SaaS and big data will all feel the weight of network capacity limits, brought on by much more data, aging networking technology and edge-of-network problems like bufferbloat. (For more on this issue, check out Jim Gettys' blog.)

It’s a problem that engineers at networking companies like Cisco are working hard to address, by rethinking the way networks work, using traffic classification and engineering methods.

Until a solution arrives, however, the potential benefits of cloud computing and big data solutions will be compromised by the reality of the networks used to access them.

If you've ever worked with a distributed team, you know how difficult it can be to make decisions as a group. Discussions are unstructured, rambling affairs with dozens of messages flying about and no good way to track consensus. Even worse, requests for feedback can go without comment entirely, or with only a few stakeholders raising a voice.

Agree, Disagree, Abstain, Block

Discussion in Loomio starts with a discussion and specific proposal, and members have the option of voting on the proposal. A group can define the options (defaults are yes/no, abstain and block), and each member can give their view summary. As votes are tallied, everyone can see get a chart that shows how many folks are in agreement, how many aren't, how many have abstained, etc.

This sounds pretty simple, but most of today's collaboration tools don't provide a good way to focus a discussion. The key to Loomio is that it provides a central tool for discussions and (if used properly) narrows things down to decisions that are easy to vote on. Central is key here. It helps a lot to confine activity to one tool rather than making users look all over for information.

A lot of online teams communicate in several ways, including email, IM, IRC, over the phone and face to face. Stakeholders who prefer one medium (like email) lose out if discussions are held in IRC, or vice-versa. Even worse, stakeholders may be totally unaware a decision is being made at all. If a group settles on Loomio, it would enable the group to say "decisions are made here and nowhere else." If something isn't put up in Loomio (or another approved tool), then a decision wouldn't be legitimate.

Settling on a decision tool like Loomio should also help cut down on noise in other communication channels. It's popular to have discussions in email and CC everyone who might have an opinion or might need to vote on something. An active team can inspire email fatigue pretty quickly with discussions that are neverending. Loomio would allow users to visit, vote and get back to work.

Actually, Loomio isn't only for distributed teams. There's no reason it couldn't be used in any organization, but its especially appropriate for situations where team members or stakeholders are far-flung.

Can Loomio Solve the Problem?

Like any tool, Loomio would only be effective if used properly. The early design could probably do with some modification - a more obvious start and end date for votes, for example - but the initial design is solid. The Loomio team says it's already in use by some organizations. New Zealand companies or organizations like Enspiral and BuckyBox are among the first adopters - though no one seems to be providing a public instance that we can point to.

If you want to help, the group is looking for contributions from Ruby on Rails developers, as well as a little extra cash (NZ $5,000) to help the volunteer team devote more time to Loomio development. The project is sort-of open source and already on GitHub. It's "sort-of" open source because the site says it's open source, but if you look at the license text on GitHub it's basically a stump saying: "We need to add the license. GPLv2?" The pledge drive (through the Pledge Me platform) ends on May 18th. The developers have already raised more than their target, but more money might mean more time spent on development.

If adopted a bit more widely, Loomio might help take distributed teams to a new level - much like GitHub has helped with development. It is a simple concept, but bringing order to decision-making could help teams communicate better and make better decisions, no matter where they happen to be located. 

Founded in 2005, the Pleasanton, California-based Workday makes payroll, accounting and human resources management software available over the Internet to 280 corporations, including big names like Time Warner, Kleenex-maker Kimberly-Clark and giant electronics manufacturer Flextronics. So far, Workday has raised $250 million from venture capital firms and other investors.

Dave Duffield Strikes Again

The company is the brainchild of David Duffield and Aneel Bhusri. Duffield, cofounder and chief executive of PeopleSoft, was forced to sell the company to Oracle in 2005 for $10 billion in a hostile takeover. Duffield and Bhusri, who was vice chairman of PeopleSoft, decided that same year to start rebuilding their company in the cloud.

As of the end of 2011, Workday had more than $300 million in revenue and an estimated value of $2 billion, AllThingsD reported last week. The company expects to launch its IPO in the fourth quarter with the help of bankers Morgan Stanley, Goldman Sachs, Allen & Company and JPMorgan Chase & Co.

Ironically, while the hype has focused on high-profile consumer and social-media IPOs, business-focused tech companies may be a better bet. On the consumer side, as of Friday, the stock of online game maker Zynga had fallen 25% from its IPO price in December last year. Stock of coupon site Groupon has dropped 50% since November 2011.

But Jive Software, which makes social business tools, has seen its stock climb 50% from its IPO price in December 2011. Stock in Guidewire Software, which serves the insurance industry, is up almost 60% since the company’s debut in January.

Workday is going after a market that is expected to soar. Worldwide revenue from delivering business software over the Internet is expected to reach $240 billion in 2020, a six-fold increase from 2010, according to Forrester Research.

Cloud Rules

Companies of all sizes are looking at cloud-based software because it’s often easier and less expensive than deploying and maintaining on-premise applications. In an interview with Bloomberg TV in April, Bhusri claimed Workday’s HR software is half the cost and is much easier to use. “There’s no reason enterprise software needs a training manual,” he said.

Early investors of Workday included Duffield and venture capital firms New Enterprise Associates and Greylock Partners, where Bhusri is a partner. In its last round of funding in December 2011, Workday raised $100 million from investors that included MSD Capital, owned by Dell founder Michael Dell, and Bezos Expeditions, the personal investment entity of Jeff Bezos, founder and chief executive of online retailer Amazon.

Workday is not without competition. German software maker SAP bought rival SuccessFactors last year for $3.4 billion, and Oracle is expected to either buy or develop its way into the HR cloud. In addition, analysts are wondering how long it will be before Workday partner Salesforce.com begins to add competing capabilities to its cloud-based software for sales reps and customer relationship management.

Despite the competition, Workday has built a solid business that investors and some analysts believe could make it a leading player in the HR software market – even though the general public has probably never heard of the company.

Everyone knows Facebook, of course, but analysts are debating whether a company with slowing revenue growth and a potential valuation of 99 times earnings can possibly live up to its hype.

Lead image courtesy of Shutterstock.

The best way for startup founders to improve their chance of success is by learning to make better decisions. But if you want to make better decisions, you need better data. And that’s where Startup Compass comes in: It’s designed to help you benchmark your startup’s performance against thousands of others to identify what you’re doing right and what you need to improve.

Startup Compass collects data from tens of thousands of startups around the world. It collects lots of data, then creates best practices, recommendations and benchmarks to help entrepreneurs make better product and business decisions.

Big Data for Small Companies

“This is a big-data approach to startup success,” says Startup Compass co-founder and serial entrepreneur Bjoern Lasse Herrmann. “Big companies have analysts to make sense of their data, and executives can make decisions based on that data. But startups don’t have any access to that kind of analytics. We wanted to put analysts in the cloud for startups.”

“Startups can learn three key things,” Herrmann says. “First, which key performance indicators actually matter. Most startups don’t even know which KPIs they should track or why they should track them. Second, they learn how their KPIs compare to other companies’ KPIs so they will know if they’re on the right track. See, for example, their customer acquisition costs. The third thing they learn is what actions they need to be taking. We help businesses take the next steps.”

Startup Compass calls its approach “cracking the code of innovation.” We call it “how not to kill your startup.”

The 5 don'ts

The real value of Startup Compass is comparing your company to others like it, but Startup Compass also summarizes its findings in its Startup Genome report. Here are nuggets of wisdom from the first Startup Genome report, five things not to do:

1. Don’t scale too early. This is the No. 1 cause of startup failure. Startup Compass has found that 70% of startups crash because they scale prematurely.

2. Don’t work part time. Sleepy? Get used to it. People who work full time on their startups raise an average of 24 times more funding than those who work part time.

3. Don’t go it alone. Maybe you are the smartest guy in the room. But solo founders raise less than half the money that two to three co-founders raise.

4. Don’t ignore customers. Yes, they’re annoying. (What do they know?) But startups that track customer metrics have 400% more user growth.

5. Don’t forget about the technology. Startups without a tech-oriented co-founder are twice as likely to scale prematurely and have three to five times less user growth.

If you want advice on an ongoing basis, you can join Startup Compass and in exchange for data on your startup, the company will benchmark your startup monthly, comparing you to similar outfits, so you can keep your priorities in line.

Startup Compass has 17,000 companies now using the service for things like checking whether their churn rate is too high or their retention rate is too low - or if they should be spending more money on customer acquisition.

“We have a number of companies that have gone through the process and tell us they used our product and realized they were falling behind on this or that metric and were able to fix those things and adjust accordingly. As a result they were better able to acquire customers in the long run and didn’t waste more money on things that were not productive.”

Images courtesy of Shutterstock.

PLM is like PDM on steroids, extending the concept to cover "the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal," as Wikipedia puts it. If you haven't heard of PLM, don't feel bad. The category hasn't exactly set the world on fire. But Autodesk thinks cloud computing can change all that.

At yesterday's Autodesk Media Summit in San Francisco, the awesomely named Robert "Buzz" Kross, senior VP of design, lifecycle and simulation, acknowledged that "PLM does not have a great history." The 10-year-old market, he acknowledged, "is still fundamentally immature." But he claimed that Autodesk PLM 360, which launched late last month, leverages the cloud to finally help PLM fulfill its promise to the enterprise.

I'm no engineer, and maybe that's why the pitch impressed me. Kross said PLM 360 is specifically designed to go beyond PDM's engineering focus and bring together all aspects of a product lifecycle, including supply chains, quality management, facilities and so on - and on all platforms. Kross added that it works with existing enterprise business models and practices, and installations take days, not months. And unlike traditional PLM, he said, the cloud makes it relatively simple to set up trial installations.

But as is often the case, the cloud's biggest impact comes in rewriting the cost-benefit equation. According to Kross, a typical PLM installation can approach $5 million in the first year. PLM 360 clocks in under $300,000. Even if the product can't match traditional functionality, cutting costs by an order of magnitude can open up the category to many more potential customers and use cases.

PLM may never be sexy, but as with other business applications from CRM to ERP, moving to the cloud can help make it dramatically easier and more affordable. I can't judge how PLM 360 compares with traditional PLM solutions from vendors like Siemens PLM, Oracle, Dassault Systèmes, SAP and others. But assuming Kross' price comparison is valid, even "good enough" and much cheaper can be a game changer.