Wednesday, January 07, 2009
2009 Prediction: Google doubles down on the Enterprise
#3 in our series of 2009 predictions
2008 Recap
2008 was a fantastic year for Google's enterprise apps. They successfully made the transition from something small companies might dabble with to apps that large corporations rely on. In 2008, large corporations like Genentech and government organizations like DC government successfully made the transition to Google apps and became public advocates.2008 was also a year of great innovation for the rest of Google's enterprise-relevant technology, with the introduction of their App Engine development platform, great new APIs like the visualization API and significant new features like adding video to Gtalk. Google also got serious about becoming part of the enterprise application ecosystem. They did this through integrations between Google Apps and Salesforce.com in April, and integration between App Engine and Force.com, late in the year.
2009 Prediction
We believe that 2008 was an inflection point in Google's adoption in the enterprise, particularly for mail and calendar. Google will double down on the enterprise in 2009 and see massive adoption. We believe this will be driven by 4 things.Google continues to demonstrate commitment to the Enterprise
Google has publicly highlighted the enterprise as a strategic area in 2009. They have also made concrete moves to address enterprise needs, including obtaining SAS-70 certification, integrating with Enterprise class clouds like Salesforce and providing SLAs. We expect this to continue and accelerate in 2009 with expanded offline access, greater support for enterprise-class programming languages and more. Google's mission is to organize the world's information. Much of that information is generated as we all go about our daily jobs-- those who suggest that Google isn't serious about the enterprise have too narrow a view of their ambition.
Economic conditions drive evaluation of alternatives to Office/Exchange
Companies everywhere are re-evaluating their budget in the light of the stormy economy. In this environment, companies are scrutinizing all spend, particularly spending on non-strategic activities. Mail and Collaboration software, while necessary, require a disproportionate effort and cost for most IT departments. CIOs, who will be under pressure to do more with less, will be more open to evaluating alternatives to Exchange and Sharepoint. Forrester recently released a report titled "Should your email live in the cloud?" (More detail from RWW). The answer for nearly all companies was an unequivocal "YES."
Enterprise references establish Google as a viable alternative
Google adoption and endorsement by the Genentechs and DC Govts of the world are changing the way CIOs think about Google apps. They're no longer a curiosity but a viable alternative to Exchange. We've seen this shift over the course of the year in our own client base. Earlier in the year, questions were raised about about whether Google's corporate culture is really "enterprise ready." We stand by our assertion that it is the culture of traditional IT vendors that is no longer fit for the enterprise.... and predict that more and more of the world's largest companies will agree with us.
Google apps functionality leapfrogs Exchange
One of the barriers to Google apps adoption has been companies fearing that their users will have to adjust to a lower level of functionality because of the shift to Google apps. While this might've been true in the past, Google has not only closed the gap but actually provides a superior experience for core messaging. A few key advantages are large mailboxes (10s of Gigabytes per user), the ability to search all messages using Google's fantastic search capabilities, native iPhone/Blackberry access and integrated chat/video chat. And these features are available instantaneously: when Google introduced video chat, our clients started using it that same day. In an on-premise world, this would've required upgrades to each instance of the software before it was available to all users at the company.
Implications for Customers
Google apps are here to stay and are a viable, potentially superior alternative to Microsoft Office/Exchange. However, there are two important caveats. First, Google Apps, while sufficient for the needs of 80% of a company's business users, will likely not completely replace Microsoft Office, especially Excel and Powerpoint. Here at Appirio, we continue to use Office for a lot of our document creation, but then move documents to Google Apps to share, revise, and present (instead of using email and GoToMeeting).
What do you think?
Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below.
Labels: 2009-Predictions, Google, Google Apps, Google Bootcamp, Microsoft Exchange, Microsoft Office, Microsoft Sharepoint, remove, Salesforce for Google Apps, Software as a Service
Monday, December 22, 2008
2009 Predictions: Azure Disappoints
#2 in our series of 2009 predictions
2008 Recap
We’re not sure exactly what there is to recap about Microsoft Azure in 2008, other than the launch event, which certainly generated a lot of buzz.
A closer look by many generated more skepticism. Phil Wainewright said it best: “Whereas real cloud vendors release working services in beta on the same day they announce them, Microsoft simply announces what it’s going to do a year or two off in the future…. Ray Ozzie confessed that ‘the maturity of the things that we’ve got on them as this point in time is limited. It will be a different story a year from now. But I wouldn’t want to hold it for another year. So, we’re getting in the game.’”
2009 Prediction
So we’re keeping our expectations in check for Azure in 2009. CNET doesn’t expect web-based Office on Azure until 2010. There are only a handful of applications (nearly all Microsoft built) being demonstrated on Azure….the next generation of Live Meeting is supposedly up next.
Why the slow pace? Part of the explanation is certainly the scope and ambition of the Microsoft vision. Microsoft has a history of being late to markets that it eventually dominates, and we certainly don’t want to under-estimate the power of the resources Microsoft has at its disposal. Ray Ozzie is a visionary, and he’s charted out an ambitious course that will take decades to fully realize.
But we think there’s more to it than that. The last 2 years have shown us how challenging it is to play in both the cloud and client-based worlds. We’re written about the challenges SAP has faced building new business models without disrupting their core business. Microsoft will face the same challenges. This tension between wanting to play in the cloud without damaging its cash cows is the reason that it has taken Microsoft so long to even start talking about Azure.
Given this conflict, we don’t expect much from Azure in 2009. Microsoft will use it as a platform for some of its own services, but will face huge go-to-market conflict in rolling these out to customers. Microsoft’s developer community will face the same conflicts, and will be unsure how to focus their
investments. The hundreds of companies that make their living hosting Microsoft Exchange servers have the most to lose—Exchange and Sharepoint are likely to be the first applications ported to Azure (exhibit A of the types of conflict Microsoft will encounter as they roll out Azure).
What it means for customers
The big news for customers out of Microsoft Azure is validation of the cloud computing model. The entire IT industry is FINALLY unanimous in acknowledging that the future of enterprise computing lies in the cloud. Microsoft, IBM, SAP, Oracle—all have now told their customers that they need to be thinking about cloud computing.
So the real question for the enterprise is how to get started. That’s a question that we at Appirio love to help customers answer. Unfortunately, the answer is probably NOT with Microsoft Azure.
What do you think?
Which of our predictions do you agree or disagree with? Please let us know by voting in our poll or commenting below. And follow a rich dialog on these predictions hosted by Clint Boulton at eWeek.
Labels: 2009-Predictions, business by design, Microsoft Azure, Microsoft Exchange, Microsoft Sharepoint, PaaS, remove, SAP
Friday, November 21, 2008
What IS the "Hidden" Cost of Google Apps?
- Create a Cname record, and train users to go to "mail.blumsday.com" for email. It is much more intuitive than "www.google.com/a/blumsday.com/
mail" - Spend some time and train your users. If all of your employees are spending 30 mins a day, it won't take much effort to improve their efficiency and your ROI by delivering a training class or two. Poll your users on what their issues are and address them...stop making them frustrated and unproductive!
- Create help desk procedures. Treat Google Apps support just as seriously as you would any installed software support issues.
Labels: Cloud Computing, Google, Google Apps, Microsoft Exchange, Microsoft Office, Software as a Service, Video Chat
Thursday, October 09, 2008
Sequoia Capital Meeting: Our take on the economy and on-demand adoption
Chris Barbin
There's a lot of talk today about a meeting held earlier this week at Sequoia Capital, Appirio's lead backer, with the CEOs of their portfolio companies. The headlines grab your attention: Sequoia has emergency meeting, Sequoia sounds the alarm, Sequoia says to cut expenses now. The meeting was held in confidence, but we thought we'd share our perspective on the condition of the economy, what it means for Appirio, and, most importantly, what it means for customers considering the adoption of on-demand.- SAP customers faced difficulty financing upfront license fees. On-demand customers, on the other hand, pay for their solution as they use it. They don’t need to finance a big up-front investment in a monolithic solution with an uncertain business benefit.
- SAP customers balked at difficult-to-justify maintenance fees. On-demand customers, on the other hand, know what they are paying for — they see continual enhancements to their solutions without expensive upgrades or patches.
- SAP only learned of this in the final days of the quarter. On-demand customers, on the other hand, don’t need to engage in the edge-of-the-cliff negotiations with their technology vendors at the end of the quarter. These vendors know that they will only keep their customers for as long as they are able to create value, and need to be working every day to keep their customers happy.
The average company spends 4-6% of revenue on IT-- for a customer at $1B in revenue, that is $40M - 60M in annual IT expense. Organizations that 'cloud-source' their IT infrastructure to on-demand providers can reduce this to 2-3%... a 50% reduction. This model provides cash critical in a down economy, and also provides executives flexibility and innovation that on-premise vendors cannot.
Labels: CloudComputing, investors, Microsoft Exchange, SaaS, SAP, Sequoia-Capital, Software as a Service, VC
Wednesday, July 09, 2008
Microsoft to Partners: We Still Don't Get SaaS
Chris Barbin
The on-premise titans trying to transition to on-demand face considerable challenges, well-documented in this blog and elsewhere. One of the most significant mistakes companies make trying to transition is pursuing a "hybrid" strategy. We've watched SAP and Oracle stumble into all sorts of problems trying to seek the middle ground, and now it seems Microsoft wants to join the party. Recently we were invited to listen to Microsoft's new CRM pitch , designed to recruit existing Salesforce.com partners. The pitch centers on a benign-sounding notion, the "power of choice" (see screenshot at left). Microsoft's lack of a choice (on-premise vs. SaaS) is the core issue. Choice when used in the context of technology architecture typically points to a vendor with a conflicted or transitional strategy. They're not quite ready to make the full commitment, so they spread their attention, development, marketing, and operations resources across fundamentally different paradigms.
What is deemed a choice actually represents a company trying to provide two conflicted models. Would you expect the company who sold you a backyard well to be able to offer a water utility? Would you expect the company who sold you a diesel generator to be able to offer you the benefits of a utility company? Nick Carr did a good job exploding the general myth of "choice" as an alternative to "progress" in The Big Switch, where he extends the electricity analogy to the current age of IT technologies.
We recently blogged, and were quoted in eWeek, saying that companies like Microsoft build "physically and emotionally closed solutions." This makes them unable to meet the challenges of tomorrow's enterprises.
A sign of this and that a company doesn't get SaaS is when it positions on-demand as a transition path to on-premise. This usually means:
- They are trying to not completely freak out their sales and management teams with the notion that their SaaS offering will cannibalize their traditional software.
- Their SaaS feature set is way behind their current on-premise product.
- They don't want a customer to think they made the wrong choice in selecting their on-premise product last year.
- They still don't get what SaaS means for their products, sales, operations and culture.
Microsoft was so brazen as to promote a financial incentive for partners who help customers move from on-demand to on-premise. Microsoft evidently considers this customer ripoff to be an "Opportunity for Success" for its partners (see second screenshot).
Again, the analogy to other utilities is useful: if a company tried to sell you the benefits of their electric or water grid as a "transition" to a bigger and better backyard well and generator, you'd have reason to question their commitment and ability to deliver the promised utility.
What could be more illustrative of this than Microsoft's attempts to put thin web front ends on on-premise solutions? Look at the screenshot below. This solution is really nothing more than diesel generator hooked up to a electric grid and pretending to be a utility (although this solution is apparently good enough for some other companies 'committed' to on-demand). At best this type of solutions is a stop gap measure; more likely, it demonstrates a lack of understanding for what is required to deliver SaaS to tomorrow's enterprise.
Labels: Google Apps, Microsoft Exchange, on-demand, oracle, SaaS, SAP
Friday, March 14, 2008
The SaaS Fight for the Enterprise Continues - Google Antes Up (Again)
Tony Bianco
The SaaS Fight for the Enterprise Continues - Google Antes Up (Again)
Google continued to make its run at the enterprise last week, following up the splashy Google Sites launch with the quieter introduction of some new tools and APIs for Google Apps. These include a new tool that will enable two-way syncing between Google Calendar and Microsoft Outlook, as well as a new Google Contacts Data API that provides secure, programmatic access to contacts in a Google address book. This enables developers to access and share contacts between different applications (e.g. social networking sites, contact managers), without providing full access to a user's Google account. There is a great Wired blog on why this is so important.
If You Build It They Will Come
This closes an important gap in Google's API coverage for Apps, and like the introduction of Google Sites last week, should increase enterprise interest in Google Apps. Not that they need much help. Google already has over 500,000 businesses using Google Apps and claims to add over 2,000 businesses each day. This easily puts them at over a million users and growing rapidly.
This kind of growth shows that customers are becoming much more comfortable moving their email, calendar, contacts and documents to the cloud. It's enough to motivate traditional software juggernauts like Microsoft and IBM to sit up, take notice and react. Last week Microsoft continued their dance toward their version of SaaS, which they call "software plus services," with a beta version of a Microsoft-hosted SharePoint and Exchange.
With all the recent SaaS talk from traditional on-premise vendors, it'll be interesting to watch the battle. We believe Google has a head start for a few reasons.
- Google makes it easy for their applications to work with other systems - the new Calendar Sync tool and Contacts API are great examples of this. Google also makes it extremely simple to migrate data over from existing applications, which is critically important for enterprises.
- Google is focused solely on the SaaS model and they are well aware of the requirements to make that model work. As we've said in the past, vendors that try to split their focus between on-premise and on-demand will have a difficult time succeeding without making significant changes to the way they develop and sell their products, and how they service their customers. This is a difficult task for those who must protect existing on-premise cash cows.
- Google has made it clear that they're investing heavily in this area with new services like Google Sites and recent acquisitions like Postini. Most importantly, they have the resources and the experience to make it successful. With the rate of innovation coming from Google, we're sure competitors will need to stay on their toes.
Labels: Google, Google Apps, Lotus Notes, Microsoft Exchange, Microsoft Sharepoint, SaaS
