Appirio

Wednesday, July 29, 2009

Lost withOUT the Cloud - NY Times on Cloud Computing

Mark Tognetti

Recently Jonathan Zittrain, a law professor at Harvard, and the author of “The Future of the Internet — And How to Stop It” published an op ed piece “Lost in the Cloud” in the New York Times. The article was forwarded to me by a number of IT security colleagues along comments like “I told you that cloud computing is risky.” I’ve ordered Professor Zittrain’s book, ironically from Amazon, a cloud computing pioneer, to more fully explore his ideas. But in the meantime, let's take a look at the "real dangers" that Zittrain claims come with the cloud.

The typical fears: financial stability, security and data privacy in the cloud

In the article, Zittrain cites the typical fears about financial stability, security and data privacy and backs these up with examples about online subscription services going out of business, the recent hack of a Twitter employee’s account, the Feds abusing the authority granted by the Patriot Act and the admittedly egregious Internet monitoring by the Chinese government. Each of these examples has more nuance than suggested, and represent a phases of growth vs. being "showstoppers."

1) Financial stability/long-term viability of online services: My local newspaper or manufacturing company is just as much, if not more, at risk of going out of business (they just stopped printing a Monday edition) than a reputable cloud provider. Last check, iTunes and Google, are a safer bet. As with any business relationship, choose your partners carefully and have a backup plan... but don’t fail to act.

2) Security of online services: The Twitter hack was great example of user naivete about strong passwords, but any company that provides remote access to their internal systems would be equally vulnerable. In addition to teaching users how to make good password choices, options exist to improve login security via multi-factor authentication from companies like Ping Identity and MyOneLogin. What the cloud does is provide more transparency around "what is secure" across people, processes and technology. It also provides a better view of where risk lies so that companies can take the right actions. For security addressing only the subset you know about doesn't make things better - in this case ignorance is not bliss.

3) Data privacy: Without debating what constitutes appropriate governmental access to private data, it is fair to say that governments can overstep their bounds. I agree with Professor Zittrain that my data on the cloud should be afforded a degree of legal protection equivalent to my data stored in my house. As with any disruptive technology, the cloud will require adjusting (or perhaps rewriting) existing laws and regulations. His comments that “With a little effort and political will, we can solve these problems” certainly rings true. Cloud providers will need to develop corresponding capabilities to ensure compliance with the intent of regulations.

A more concerning fear: does the cloud really reduce our ability innovate?

The most concerning statement by Professor Zittrain is that the cloud puts “the freedom to innovate" at risk. His concern about the cloud is that “the vendor of a platform has much more control over whether and how to let others write new software”. His cited examples are Facebook and Apple. Perhaps SAP and Oracle would be his examples of inspiring innovation ?

I grew up with the PC revolution. I wrote my first line of code at 12 on an Apple II which my parents paid several thousand dollars to acquire. I worked within the limitations of 48KB RAM, 140KB floppy disk drives, and Apple BASIC (with the occasional peek in to 6502 Assembly to do the tricky stuff). Today, because of the cloud my 8-year-old son has virtually infinite access to compute power, languages, databases, open source tools, etc. for free or pennies to use. Not only does he have significantly greater freedom to innovate, he will be able to innovate much more rapidly than his old man, because the cloud has eliminated the burden of building, maintaining and understanding the infrastructure (hardware, operating system, etc.) required.

Professor Zittrain’s concern is that the market could settle in to a handful of “gated” cloud communities who control the availability of new code. He believes that software developers are writing “less adventurous, less subversive, less game-changing code under the watchful eyes of Facebook and Apple”. But, as Professor Zittrain himself cites, far less restrictive development environments exist in Amazon Web Services, Salesforce's Force.com, Google App Engine and Google Android to name just a few. Although the ecosystem of cloud providers will certainly evolve over the next decade, I cannot imagine that we will end up with a few “gated” providers that are anywhere close to the level of restriction imposed by today's enterprise software vendors and architectures. The Internet and the cloud change the drivers for the vendor - it still wouldn't be in their best interest to stifle innovation (as David Schatsky explains in his response to Professor Zittrain).

Our conclusion: the cloud will drive enterprise IT innovation

The ability to innovate has and will be lost without cloud. The contrast between consumer and business driven technology innovation over the last decade is a staggering proof point - online banking and trading, job search, finding where I am going and what to do, e-commerce, social networking and a score of other innovations ranging from mission critical to just fun have made it nearly impossible to remember how we survived pre-Internet. The cloud can bring that level of innovation and productivity to enterprise IT. After all, its hard to imagine my eight year old or anyone in the future workplace settling for less than the near infinite scale and freedom cloud computing.

Labels: Cloud Computing, CloudComputing, SaaS

Monday, May 11, 2009

Do your most strategic apps belong in the cloud?

Balakrishna Narasimhan

I've been in a number of conversations over the past few weeks where I've been asked which business processes or apps belong in the cloud.  There are obviously some technical considerations, but I'd like to focus on the strategic reasons for making the decision and how things have changed in the shift from traditional IT architectures to IT in the cloud.

Traditional IT department
In the past, the only way for a company to maintain control of their business process was to completely own the technology supporting the process.  The rationale was that a company's most strategic, differentiating processes are unique and therefore have to built by the company either from scratch or by heavily customizing packaged applications.  This also meant owning the entire technology stack supporting the process and the application.  So, while the intent was to create differentiated processes that were agile and differentiating, the reality has become that the technology stack is an albatross around the IT team's neck that prevents them from moving as quickly and as efficiently as they would like to.

The result is that while IT organizations are keen to support the business, they are unable to go much beyond providing basic services.  The solution to the problem of managing the entire stack was traditionally either hosted/managed server services or outsourcing, but each introduces its own problems.

Outsourcing
In the case of outsourcing, the enterprise gains cost savings but relinquishes control of their business process and has to adhere to the provider's "best-practice" process.  This clearly means that outsourcing can only be applied to commodity processes rather than any differentiating processes or processes where innovation is needed.  The IT team's role shifts to primarily vendor management with little ability to innovate or drive the business.

Hosted/Managed Servers
Hosting gets a bit closer to solving the problem because it reduces some of the IT team's pain in terms of managing infrastructure.  However, the IT team still needs to spend a lot of their time maintaining the application and the middleware stack, i.e., applying patches and bug fixes, implementing upgrades, maintaining integrations, etc.  In addition, the team also needs to manage their relationship with the hosting vendor.  So, again, the main impact is some cost savings but no real gains in terms of agility or ability to innovate or support the business.
IT department in the cloud
Cloud computing changes the decision process completely.  No longer do companies face a choice between relinquishing all control of their business process for cost savings or dealing with the high costs and complexity of supporting an entire software stack.

Platforms like Force.com and Google App Engine give companies a way to control the parts of the stack that matter most, the application and business process layer and abstract away the management of the infrastructure.  This means that the IT team can focus their energies on driving innovation and supporting the business.

A real-life example
In a past life, I was a partner at a major management consulting firm.  Since our business was our people, we believed strongly that our most critical processes were those that were related to managing our people, e.g., recruiting, employee performance management, compensation, project management, project staffing, etc.  The technology supporting many of these processes is available from outsourcers but we couldn't even consider those offerings because our processes were absolutely unique and core to our business.  The result was the that we spent significant amounts of money maintaining a brittle IT infrastructure that was great at running the business in a static state, but was difficult to adapt as we changed our business model, made acquisitions or entered new markets.

Fast forward to today at Appirio.  We run our entire business in the cloud.  A core part of our business is delivering professional services to our 150+ enterprise customers (and products to over 2500 companies).  We manage all aspects of our professional services business in a custom application running on Salesforce's Force.com platform.  The application is completely customized to our unique processes but runs in the cloud.  Therefore, we can quickly adapt the application as new needs arise and not worry about maintaining servers or managing infrastructure.  With no intervention from us on the infrastructure side, the application has supported our four-fold growth over the past year.  In addition, as we make changes to our internal organization structure or introduce new products or service offerings, we can make changes almost instantly.  Our IT costs less than a third of industry benchmarks AND we can run a better, more agile business.

That's why we believe that over time, companies should move not only their non-core processes but also their most strategic processes to the cloud!

Labels: CloudComputing, Force.com, Google Apps, PaaS, SaaS

Monday, March 02, 2009

Whose cloud is it anyway? Appirio's takeaways from presenting at TechCrunch's Cloud Computing Roundtable

Ryan Nichols

You can watch the entire three hours of the event here.

You can also watch it on co-presenter's ooyala's neat player.

Labels: Cloud Computing, Google, PaaS, SaaS, salesforce, Tech Crunch

Wednesday, February 25, 2009

C is for Cloud: Appirio raises Series C from GGV and Sequoia

Chris Barbin

Given today's headlines, we're humbled to announce our Series C funding from GGV Capital(formerly Granite Global Ventures) and Sequoia Capital.  Amidst all the uncertainty confronting business and IT in today's economic climate, one thing remains certain: enterprise IT is moving to the cloud.  That single idea is at the core of Appirio's business, and is an idea that's worth investing in precisely because we're in the worst spending environment any of us can remember.

The headlines for most venture-backed startups are grim: "Tech start-ups call it quits," writes the Wall Street Journal, as GigaOm describes "VCs sowing panic in their portfolio companies."   We remember the buzz created by Sequoia's all-portfolio meeting last fall, featuring a picture of a slaughtered pig with all the fat removed. 

Why is Appirio growing so dramatically in this environment?

• Our market: Far more important than anything about Appirio's business is the market opportunity that we've targeted.  Cloud computing will disrupt $1 trillion of IT spending-- great things happen when you're able to accelerate an industry transition of this magnitude.
  
• Our model: New markets call for innovative business models.  Traditional wisdom says you have to choose whether to be a services company or a product company.  We believe that the availability of web platforms makes a truly hybrid business model not only possible, but advantageous.  Consider our new product offerings in 2009, Services Management and Facebook Referral Management --  neither would have been possible without the opportunity to directly serve and learn from leading customers in these markets.  Our model of delivering high end professional services, innovative software products and compelling cloudsourcing solutions is what we like to call a 'next generation IBM without the baggage of hardware'.  Customers need alternatives to the Global SI's and traditional enterprise software - our hybrid model directly addresses that need and has delivered repeatable results for our customers.
  
• Our team: There's something special created when you assemble a team of professionals passionate about transforming an industry.  We've been able to quadruple the size of our team in the last 12 months (and remain hiring now), because our #1 goal has been to hire the best and brightest change agents in the industry.  "The Appirio Way " comes through in every interaction we have with customers and partners, whether through sales, services, support, or R&D. 

Its a cliche that the easiest time to raise money is when you don't need it.  Appirio's business model is strong and our services business has been profitable since our founding in October 2006.  We create substantial value for our clients and share in the rewards of their success.  

But it is still "early days" in the business of accelerating the adoption of on-demand in the enterprise, and we're excited to have our new partners at GGV Capital on-board.  GGV specializes in deploying expansion capital, and today's investment from GGV and Sequoia Capital will be invaluable in our continued efforts to invest in products built on Force.com & Google App Engine, supporting and evolving our team of cloud computing professionals and investing in and innovating along side our strategic partners Salesforce.com, Google and Facebook. 

Consider, for example, our other announcement today-- Appirio's expansion into Japan, the second largest IT market in the world, barely penetrated by traditional packaged application vendors.  We believe that Japan has the opportunity to completely leapfrog on-premise packaged software and migrate directly to custom applications developed on an on-demand platform.  Being part of this process (and the largest Force.com deployment in the world) is tremendously exciting. 

We invite you to get involved.  Schedule a discussion with us, take a trial of one of our products, look into joining our team, or even just contribute an idea.  The transition to cloud computing is one thing to be certain of, even in these very uncertain times.  We look forward to working together!

Labels: Cloud Computing, Google, PaaS, SaaS, salesforce, Sequoia-Capital

Wednesday, January 28, 2009

Short the Global SIs

Global SIs Continue to Struggle with SaaS – Enterprise Executives Abandoning Accenture, Cap Gemini, & TCS

Chris Barbin

In January of 2007, we published an article, Services 2.0, which highlighted the shifting sands in deploying SaaS solutions such as Salesforce.com, Google Enterprise and Amazon Web Services. Two years later, Global SIs such as Accenture, Cap Gemini, TCS and others are still shackled by their dependence on old-school, on-premise partnerships with SAP, Oracle & Microsoft. While they may be paying lip service to cloud computing, most offer SaaS-based solutions at 2-3X the total cost necessary, are nowhere to be found in the relevant communities and developer ecosystems, and have few true SaaS enterprise reference customers to speak of.

In this down economy, we have seen a dramatic shift of enterprise customers looking to accelerate their SaaS & cloud computing initiatives--they have seen results from prior efforts and are eager to expand efforts to "do more for a lot less." Having served over 100 enterprise customers including Dolby Laboratories, Qualcomm, Harrah’s, Starbucks, Genentech, Plantronics, Japan Post and others, Appirio has seen a continued movement from simply replacing one or two on-premise apps with their SaaS alternatives, to enterprise-wide, C-level mandates. Here's some of the things we're hearing customers demand:

• "Eliminate 15% of our IT spend with SaaS"
  
• "Cut $100M in expenses by moving to the cloud"
  
• "Help us define a path to the server-less enterprise within 3-5 years"
  

When confronted with these mandates, the Global SIs that we see and hear competing for these deals seem flat-footed and ill-equipped, trying to meet these new challenges with dated on-premise technology and techniques. In the past 60 days alone we have witnessed 3 examples of this:

• Global SI #1: Quoted a basic SFA, Call Center and Partner Portal implementation for a $1B manufacturer @ nearly 3X the necessary amount. To justify its high cost of sales and hamstrung delivery model, the bid "added" unnecessary roles and services. They could not adapt to new rapid and iterative development methods - now a standard in SaaS development and deployment.
• Global SI #2: Quoted a global SFA requirements phase at 1.5X the necessary cost EVEN WITH A LOWER AVERAGE HOURLY RATE. Again, a dramatic misunderstanding of how to define requirements in a SaaS world, compounded by a lack of repeatable assets, IP and methodologies for SaaS deployments.
• Global SI #3: Quoted a PaaS initiative for an existing customer @ 2X its necessary amount. In this case, the quote was driven by a combination of exorbitant rates, a comfort level with an established client, an army of under-utilized resources already on-site, and a blatant misunderstanding of how to define, develop, deploy and support a PaaS initiative.
  

We see this list of examples growing every day, and it does not even include the dozens of customer relationships where enterprise executives are simply bypassing the Global SIs because of their bloated costs models, old school methods, multi-billion dollar partnerships with legacy vendors, or systemic lack of knowledge of cloud computing products and services. The discussion around "private clouds" is a perfect example-- Global SIs trying to teach an old data center new tricks.

More evidence? Search the discussion groups and forums for relevant case studies and success stories from these companies. While Accenture, Cap Gemini, TCS and others claim strategic partnerships and deep SaaS practices and expertise in cloud computing, the facts and relevant case studies prove otherwise. A few examples:

• A quick search in the Salesforce.com developer discussion forum for "Accenture" yields a grand total of 49 hits, "Cap Gemini" 30 hits and "TCS", 25 hits – for a total of 104 hits. The equivalent search for Appirio and our competitors yields well over 1,000 entries.
• The number of solutions offered by the Global SI community on Google Enterprise Solutions Marketplace – ZERO. When the TCO of the Google Enterprise solution is 1/10^th the TCO of Microsoft and/or Lotus Notes, is this any surprise?
• The number of enterprise SaaS success stories and testimonials on the Global SI’s websites – less than 10 based on our review. Appirio and our competitors have well over 200 true enterprise success stories.
  

When we launched Appirio just over 2 years ago, we suspected that the Global SIs would "get it" in 2-3 years, have significant assets, teams and relationships in the world of SaaS -- luckily, we are being proven wrong. Our new forecast, we have at least 2 more years. Or, perhaps Global SIs won’t ever be able to disrupt their traditional business, and the new Services 2.0 players will continue to outbid, out-deploy and out-innovate. If we are missing something and there is evidence of real SaaS growth at the Global SIs – we’d love to hear from you.

UPDATE, 3/11/09: We were flattered to receive a request from Accenture to remove their copyrighted image of Tiger Woods from this post. We are more than happy to comply-- we replaced it with this creative commons image.

UPDATE 2, 3/11/09: After the above, we received another request to remove Tiger's image altogether (from his people). We certainly never mean to cause the commotion, just to point out that Global SIs are focused on the wrong things, and they are lacking in getting behind something that genuinely is better for the customer.

Labels: Accenture, Cap Gemini, CloudComputing, SaaS, TCS

Thursday, January 15, 2009

2009 Prediction - Rise and Fall of the Private Cloud

#6 in our series of 2009 predictions

2008 Recap

2008 saw massive hype around the concept of a “private cloud,” roughly defined as a adopting the technology and practices from public cloud providers for a single company behind the firewall. “Private clouds are the future of corporate IT” declared Gartner. “Private Clouds Take Shape,” gushed InformationWeek, citing the funding of companies like Elastra and Parascale. “Get off my cloud” said eWeek, questioning the security of public cloud environments compared to private clouds.

2009 Prediction

Here’s the rub: Private clouds are just an expensive data center with a fancy name. We predict that 2009 will represent the rise and fall of this over-hyped concept. Of course, virtualization, service-oriented architectures, and open standards are all great things for every company operating a data center to consider. But all this talk about “private clouds” is a distraction from the real news: the vast majority of companies shouldn’t need to worry about operating any sort of data center anymore, cloud-like or not.

The idea that somehow companies can use “private cloud” technology to offer their employees web services similar to Google, Amazon, or salesforce.com will lead to massive disappointment. Here’s why:

• Private clouds are sub-scale: There’s a reason why most innovative cloud computing providers have their roots in powering consumer web technology—that’s where the numbers are. Very few corporate data centers will see anything close to the type of volume seen by these vendors. And volume drives cost—the world has yet to see a truly “at scale” data center.
  
• You can’t teach an old dog new tricks: What do you get when you move legacy applications as-is to a new and improved data center? Marginal improvements on your legacy applications. There’s only so much you can achieve without truly re-platforming your applications to a cloud infrastructure… you can’t teach an old dog new tricks. Now that’s not entirely fair…. You can certainly teach an old dog to be better behaved. But it’s still an old dog.
  
• On-premise does not equal secure: the biggest driver towards private clouds has been fear, uncertainty, and doubt about security. For many, it just feels more secure to have your data in a data center that you control. But is it? Unless your company spends more money and energy thinking about security than Amazon, Google, and Salesforce, the answer is probably “no.” (Read Craig Balding walk through “7 Technical Security Benefits of Cloud Computing”)
  
• There’s no secret sauce: There’s no simple set of tricks that an operator of a data center can borrow from Amazon or Google. These companies make their living operating the world’s largest data centers. They are constantly optimizing how they operate based on real-time performance feedback from millions of transactions. (check out this presentation from Jeff Barr and Peter Coffee at the Architecture and Integration Summit). Can other operators of data centers learn something from this experience? Of course. But the rate of innovation will never be the same—private data centers will always be many, many steps behind the cloud.
  

There’s also something very suspicious in all this discussion of private clouds…. private clouds are advocated mainly by companies who make their money from selling or operating data centers, and risk losing their shirts as real cloud computing drives more and more computing onto shared infrastructure. I understand why these companies are reluctant to embrace true cloud computing: Imagine being the junior partner in IBM Global Services pitching a client to develop an application on Amazon, Google, or Salesforce. Not only are you taking money out of the pocket of your colleagues in hardware and software….. you are also taking money out of the pocket of your colleagues in professional services, since integration and app development are so much easier using on-demand platforms.

That’s not to say that there’s no place for the technology behind private clouds. In certain cases where it simply isn’t an option to utilize a public cloud, this technology can have a significant impact. But those use cases are few and far between, and the benefits to be achieved are insignificant relative to the benefits of moving to a public cloud. Here’s who should be thinking about private clouds:

• Cloud Providers: This is an easy one… companies that plan on being in the business of providing cloud computing capabilities to others need to think about how to effective provide their own cloud. But we’d argue that very few companies actually need to be in this business (e.g., we believe most on-demand BI vendors should be running on public cloud infrastructure).
  
• Highly regulated industries: Government regulation will always lag behind commercial application of technology. There will inevitably be instances where nervous politicians or policy makers write up requirements that can only be met through a private cloud.
  
• Companies in the process of moving to a public cloud: Of course, no company of any significant size can move its IT infrastructure to the cloud all at once. In fact, Appirio specializes in helping companies figure out what the right first step is away from their on-premise infrastructure. For the IT infrastructure that hasn’t yet moved, it definitely makes sense to think about how to use “private cloud” technology. But that means the private cloud is a temporary stop-gap, not the “future of enterprise IT.”
  

Implications for customers.
Of course any customer with a data center should be thinking about how to use the technologies behind “private clouds” to improve their efficiency. But this should be a minor element of your long-term IT strategy. The most important thing any IT department can do in 2009 is chart out a thoughtful plan to migrate significant portions of your IT infrastructure to the public cloud. Don’t let “private clouds” be a distraction from that goal.

Labels: 2009-Predictions, Amazon S3, BI, Cloud Computing, Force.com, Google, IBM, On Demand, PaaS, remove, SaaS

Friday, December 26, 2008

2009 Prediction: Business Intelligence goes SaaS

#7 in our series of 2009 predictions

2008 recap

Business intelligence is an unsolved problem. At every company we’ve ever worked with, managers lack the information they need to make intelligent decisions.  Why is this, after the rise (and eventual fall) of an entire industry around business intelligence technology?  Will Cloud Computing change the sorry state of business intelligence for customers?

2008 saw a number of next-generation BI providers move their offerings from niche to mainstream.  Companies like PivotLink, LucidEra, Good Data, and Panorama announced a maturation in their offerings and important customer wins.  Even Business Objects and Cognos were able to advance their on-demand offerings from within their on-premise parents. 

But most business still lack basic access to critical information.  For most people in most companies, it takes a request to IT (and perhaps a call to your implementation parter) to do something as simple as add a field to a report.  In our eyes, this is a market ripe for disruption from cloud computing in 2009.

2009 Prediction

Despite the fact that on-demand business intelligence has been slow to take off, there are fundamental problems in business intelligence that, in our view, can only be solved through cloud computing.  We believe that the increased availability of cloud computing platforms in 2009 will make BI the next application category to reach the tipping point of on-demand adoption, fueled by data from SaaS applications. 

Why BI?

BI is a classic “bursty” application.  BI requires infrequent access to massive computing power-- a perfect application for cloud computing.

Thanks to Google, users have been trained to expect nearly instantaneous access to any piece of information.  Instead of spending hours formulating a carefully crafted query to run once, users expect to be able to navigate iteratively through their business information.  They expect to run an initial search, see what comes back, and explore from there. 

This is simply not possible with any legacy BI system: vendors brag about achieving sub-minute response time… a far cry from the sub-second response time that an interactive application requires. 

As a result, BI's impact in the enterprise has been limited... only a few power users are able to use it effectively.  The impact and value of BI would be exponentially greater if business users could search and navigate their company's data in the same way they search and navigate the information on the internet.  

Why can't in-house IT departments deliver this level of performance and usability using legacy BI systems?  In part, the issue is infrastructure.  BI infrastructure is overpriced and tremendously under-utilized.  Many BI systems sit completely idle 90% of the time, only to be hammered on well beyond capacity in the days (or hours) leading up to a management meeting or end-of-quarter analysis.

These are perfect conditions for the shared infrastructure of cloud computing. Shared computing power is the only way that companies can deliver the responsiveness their users demand without a prohibitive investment in hardware.  On-demand BI vendors, with their roots in modern web-based technologies and user interfaces are well positioned to create usable BI applications that will finally unlock the value from companies' transactional data.

Why BI from SaaS data?

We also predict that the winner in on-demand BI will emerge from an initial strength in analyzing data from SaaS business applications.  Why?  Analyzing data from SaaS applications overcomes 3 of the key barriers to adoption for on-demand BI: Security, transformation, and integration.     

Security:  Your business data are your crown jewels, and nobody wants to be the first to put that into a shared infrastructure.  That’s why we think that data generated by on-demand business applications is the likely starting point for on-demand BI…. After all, this data already lives in shared environment. 

Transformation: Query, reporting, and analysis is not the hardest part of BI—getting data into a format suitable for analysis is a far harder challenge, especially for an on-demand solution that’s trying to bring together information from behind the firewall.  This is less of an issue for BI running off SaaS applications where the data is already in the cloud. 

Integration: Most analytical applications require bringing together business data from multiple sources.  Most modern SaaS applications offer more open APIs than on-premise software.... on-demand BI has the potential to be better integrated, and therefore more valuable, when paired with a SaaS application.

Implications for customers

Of course, it will be difficult for customers to justify investing in an entirely new BI infrastructure, especially since most are still trying to justify the investment they made in their last round of on-premise BI infrastructure and 2009 looks to be a year of frozen or slashed IT budgets.

That’s why we expect to see on-demand BI enter the enterprise from the line of business, not the IT department.  Business users will be fed up by the inability of their IT department to support their basic demands for information.  If they’re already using a SaaS solution, they’ll be tempted to try an on-demand BI solution that they can get running without IT support, out of their operating budget (exactly how on-demand CRM initially penetrated the market).   

This is what we expect to see in 2009:  Low ticket, low risk, on-demand BI solutions, built on cloud platforms, with adoption driven by business analysts hungry for information. 

Our advice for enterprise IT?  Let it happen.  There isn’t yet a clear winner in on-demand BI, and you have much to gain and little to lose from these experiments.  These are not requests you’ll be able to service in 2009 anyway, and early experimentation will leave you well positioned to jump on a winning solution.  

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, BI, Business Intelligence, Cloud Computing, PaaS, remove, SaaS

Thursday, December 11, 2008

Gartner Says SaaS is Taking Off!

The Stats - Accelerating Adoption

According to Gartner, 90%+ of enterprises expect to maintain or increase their investments in SaaS. Even more interesting, ~40% of the organizations that Gartner surveyed are changing their IT environments completely from on-premise to cloud-based solutions. This end-user trend is reflected in the tepid financial performance of the SAPs and Intuits of the world while Salesforce, Concur, Taleo and others continue to grow at 40%+ (Ray Wang has an excellent analysis of this here).

The Business Drivers - Lower TCO while Increasing Flexibility and Innovation

We believe strongly that 2008 represented an inflection point in the adoption of cloud computing in large enterprises. This trend has only accelerated with the current financial conditions. As Nick Carr has observed, on-premise architectures are inherently wasteful (80% of server capacity, 65% of storage capacity are unused) and represent a fantastic opportunity for savings. However, the benefits of SaaS and cloud computing go far beyond savings alone. The "black magic" of SaaS is that companies can reduce TCO while increasing flexibility and innovation.

At Appirio, we experience this every day. We have a completely server-less internal architecture which has enabled us keep our IT costs at <2% of our revenues while scaling smoothly from 20 employees a year ago to nearly a hundred employees today. In addition, we have access to new innovations instantly. For example, a few weeks ago, Google rolled out video messaging in Gmail. Since we use Google apps within our domain, we had access to significantly enhanced functionality from one day to the next with no added cost or administrative overhead. Almost unimaginable in the traditional software world!

Our Prediction - Large Enterprises will Migrate Much More than Mail and CRM to the Cloud

SaaS is past the trial phase in many enterprises. Gartner notes that 40% of enterprises have 3+ years of experience with SaaS platforms. Companies have now experienced for themselves the benefits of SaaS within specific areas like CRM or messaging. We're seeing within our client base that companies are ready for a more holistic cloud computing strategy. We're increasingly working with large enterprises to quickly map their portfolios and develop roadmaps for large-scale migration to the cloud. Happy to see that Gartner agrees that this trend will accelerate in 2009!

Labels: appirio, cio, Cloud Computing, CloudComputing, Innovation, SaaS, salesforce.com, Software as a Service

Monday, December 08, 2008

Force.com for Google App Engine: Apps "Native" to a Cloud Community

Salesforce.com made two fantastic announcements today at their CloudForce event in New York. The first is Force.com for Google App Engine (demonstrated on stage by Marc Benioff and our own Narinder Singh using an extension of our work with Harrah's). The second is Force.com Checkout for native apps (Appirio Adoption Accelerator is one of the 19 apps in the pilot). These announcements illustrate two important elements of Salesforce's platform strategy: "Connecting the cloud" and "Go Native." We think Salesforce is uniquely positioned to bring these two concepts together into a powerful platform. Here's what we mean:

Labels: Amazon Web Services, AppExchange, Cloud Computing, facebook, Force.com, Google, Google Apps, Microsoft Azure, On Demand, PaaS, SaaS, salesforce.com

Monday, November 17, 2008

Microsoft and On-premise - Billions of Dollars Behind Google and Growing?

Narinder Singh

What would it take Microsoft to add such a capability into their traditional Exchange platform? How long until end users at customers would actually benefit from it?

1. Microsoft would have to build and test it - Given all the different versions of their software, hardware, OS combinations facing Microsoft, they would have to make some very tough choices or severely limit the options they supported. Given the precedent of Vista compatibility, this enormity of this can not be underestimated. Conservatively, it would take them more than 10x the effort for Google to do the same thing within Exchange.

2. Customers would have to then get the new version and upgrade all Exchange instances - With Google, it basically was a couple clicks and it worked. For Exchange / Outlook customers they would have to upgrade or install completely new software. If they wanted to chat with those outside their company, they would have to hope those folks had also upgraded.

With an estimated 500M Outlook users, lets assume that the fully loaded cost of the upgrade (license, support, rollout on the server and to each client) will be just $10 per user (an incredibly conservative number in our opinion). That means it would cost businesses at least $5 billion to gain the functionality Google just rolled out in a day. The likely case is that this would also take years to take hold, severely limiting the benefits because not everyone was on the same version immediately. You would have to wait for your friends company's to rollout the "new version" so that you could video chat cross company (or naively hope that Microsoft actually built it using a standards based approach).

3. They would have to fix security and synchronization problems - What major new capability released from Microsoft doesn't create new security holes? Lets say that 500M users represented 5M companies each of whom had to spend an additional $1000 (1-2 days over a year) to deal with the security patches, and the subsequent synchronization to OS, SQL Server, Exchange version, that would be needed. That's another $5 billion down the tubes. For Google, even when problems do arise, they are fixed by Google, once, for all customers (without the customer having to take any action).

So what's the answer? Microsoft will 'never' effectively add video chat to their on-premise Exchange platform. Instead they will try to mimic Google and eventually create an add on that leverages a single multi tenant platform to support this kind of capability. So what you say? Ray Ozzie already admitted Microsoft had to change dramatically, "It's (cloud computing) a transformation of our strategy." The real world challenges of attempting to "embrace the cloud" while preserving and even promoting their legacy is simply too much for even Microsoft to bear.

At a recent private event of medium size enterprise CIOs, one of the most senior Microsoft executives was left struggling to explain why a company should continue to invest in Exchange when Google was providing a broader (and growing) set of capabilities for 1-2 orders of magnitude less expense than Microsoft (Google Apps for mail, calendar, chat, docs, and sites lists for $50/user/year). The realities of attempting to preserve revenues from a legacy solution while promoting the new model is too much inner conflict for even Microsoft to wade through. As we have said before, the most likely path for company's like Microsoft to "transition to the cloud" is to set up an independent unit that can compete freely with their own solutions.

In the last year, Google has added more innovation to the messaging and collaboration space than Microsoft has in the last decade. To do this at a fraction of the cost for themselves and customers highlights the radical difference and inherent conflicts in on-premise vs. on-demand. With the current economic conditions, we expect to see a large set of studies and research that drill home the simple fact that real multi-tenant SaaS/PaaS solutions deliver much more value for a dramatically lower cost for both the provider and consumer. IT is simply too important and too costly to be left with solutions of a pre-Internet world.

Labels: Cloud Computing, Google Apps, Innovation, Microsoft Azure, SaaS, Video Chat

Wednesday, October 22, 2008

Waiting for the On Demand Generation?

Labels: Cloud Computing, Dreamforce, On Demand, SaaS, salesforce, Software as a Service

Tuesday, October 14, 2008

Good News for Cloud Computing: Nicholas Carr is getting boring

Ryan Nichols

We’ve always been a big fan of Nicholas Carr’s presentation on the Big Switch … he's delivered it at several Salesforce "Tour De Force" events earlier this year, and gave it tonight before a panel in Palo Alto on whether Cloud Computing is “Ready for the Enterprise.”

There’s a lot that we love in Carr’s pitch:

• We love the stats: In the average IT organization, 80% of server capacity is wasted, 65% of storage capacity is wasted, and 70% of IT labor cost is spent on upkeep of legacy applications. Clearly a ripe opportunity to capture the benefits of centralized cloud computing.
• We love the imagery: the image of a huge water wheel, created as a source of major competitive advantage for a steel company, abandoned to rot in the woods just 2 decades later. His message that on-premise servers are on that same path is right-on.
• We love the scope of his talk, with the emphasis on the broader economic implications of cloud computing. Carr points out that what’s most interesting is not the new infrastructure itself, but what gets built on top. The electricity industry itself quickly became a utility… but the market for electric-powered appliances became highly innovative for decades. As a company that builds on the cloud, we love that message.

We were expecting some fireworks in last night's talk: It was sponsored by the German American Business Association, and was hosted by SAP… not exactly the epicenter of cloud computing. And one of the panelists was Steve Lucas, the former head of On-Demand BI at SAP, who recently left to lead the Force.com business at Salesforce.com. Carr himself is a controversial figure, having gone from the IT industry’s biggest foe for suggesting that “IT Doesn’t Matter” to IT’s biggest friend by backing “The Big Switch” to cloud computing.

But there was remarkably little disagreement among the panel, composed of speakers
from SAP, Salesforce, VMWare, and T-Systems: Salesforce, of course, has built its business around the trends that Carr is talking about. VMWare loves the role that virtualization plays in enabling cloud computing providers. T-Systems positioned itself as an enabler of cloud-based applications. Even SAP acknowledged that “we believe that there will be certain edge processes that will be enabled by the cloud,” which is a bold step forward coming from SAP.

Is it just us, or has this entire conversation gotten a little boring? Where are the dissenters, aside from the attention-getting headlines from the free software federation? Carr saw nothing but nodding heads from the audience when he asserted that “the biggest question for enterprises is what do we move to the cloud and when do we move it.” Nobody argued with his assertion "we’re just at the beginning of a transition to cloud computing in the enterprise.”

My realization? "Boring" is probably a great phase for cloud computing in today's environment. The elephant in the room was this month’s financial crisis, finally raised by the audience in Q&A. “Boring” technologies do well in the enterprise during tough economic times.

Lucas emphasized that Salesforce has a simple subscription model that is going to get more appealing to companies in a recession. When the economy is bad, the last thing a company wants to do is write a big, difficult-to-justify license check. He quoted the CIO of a financial services firm he met with in New York in the midst of last week's financial crisis-- “We’re looking at Salesforce because we need to better leverage our IT investment. We have 88,000 servers in our organization, and want to reduce that number.”

Is cutting servers boring? Maybe. But good for customers and, ultimately, the cloud computing ecosystem.

Labels: Cloud Computing, Force.com, Nicholas Carr, on-demand, SaaS, SAP

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.

Labels: CloudComputing, investors, Microsoft Exchange, SaaS, SAP, Sequoia-Capital, Software as a Service, VC

Wednesday, October 01, 2008

Cloud Computing - It Ain't Over Til It's Over

Narinder Singh

Recently, a plethora of attempted clarifications (such as those seen in the Wall Street Journal and Information Week), confusion, and even an angry Larry Ellison rant in CNET News have weighted in on the latest hot topic, "what, exactly, is 'cloud computing?'" But the increasing volume level says more about the medium of the argument and the participants, than the it does about the topic's essence. Really, it's just insider talk among "thought leaders" and tech companies, which likely leaves Main St. CIOs scratching their heads.

Let's not focus on the semantic question of "what is cloud computing?" Instead, let's shift to "what your company should do." The wit and wisdom of Yogi Berra seems appropriate as a guide to help explain the causes of the perfect storm around cloud computing.

"The future ain't what it used to be"
Just a few years ago, many predicted the tech industry, and particularly business software, would go the way of the auto industry. A few gigantic players would survive, around which supplier ecosystems would develop. However, innovative providers discovered that if they ran all their customers' systems on a single multi-tenant instance, they could achieve huge advantages - hence the advent of on-demand, Software-as-a-Service (SaaS), and Platform-as-a-Service (PaaS). These providers were able to rapidly develop and innovate for their entire customer bases.

As this market matured, customers discovered that SaaS provided a better functional fit, it was faster to rollout, and it was generally more accepted by end users. Inevitably, if you spend more time on strategy, requirements, business process and adoption, while spending less time on hardware, operating system configuration, software installation and configuration, you end up with projects that better meet business needs.

The future of how businesses used technology was changed forever. Although this is now widely understood, we are still very early in terms of impact on IT and business. This set the stage for the current attention and debate surrounding "cloud computing."

"If you can’t imitate him, don’t copy him"
Cloud computing confusion is sometimes sown intentionally - because of vendor envy for missing the buzz. Large on-premise companies know they have missed the "news cycle" for something that has the powerful combination of hype and reality on its side. So they try to re-spin existing terms in order to re-assert their leadership, leading to interesting tricks like Larry Ellison, Oracle's CEO, cleverly deriding the term "cloud computing" as overused, while simultaneously wrapping the Oracle seal around it.

"Our similarities are different"
While on-premise laggards attempts at catch up fuel their interest in the cloud, successful SaaS companies have an equally compelling, but very different rationale for promoting "cloud computing." They know they have a winning value proposition, but, relatively speaking, a small part of the market dialogue. They fear a repeat of the past - where SAP, Oracle, IBM and Microsoft hijack leadership around an important market trend (see the browser, java, B2B/SOA, open source) that they've been living and breathing for years.

So in a classic judo turn, they also promote "cloud computing." But they turn it into a powerful weapon by using it as the theme that connects business software with mainstream consumer Internet disruptions like Google, Yahoo, Amazon and Facebook. Suddenly, they have a way to further differentiate themselves from their laggard on-premise competitors, with a future tied to the Internet.

Happily, this spin has the added benefit of being true (which is always a plus!). The consumer Internet has conclusively shown the power of collaboration. Now businesses want to be unshackled from the constraints of legacy software that was designed to be physically and emotionally closed.

"You can observe a lot by watching"

With both the laggards and innovators supporting buzz creation around "cloud computing" the race is on. Will clarity or confusion rule the day? Businesses are looking at cloud computing (which for today we'll assume to be a superset of all SaaS, PaaS, and on-demand solutions) as a way of doing things that had never been done beyond their four (virtual) walls. Unfortunately, too many vendors are simply trying to tie the movement back to their past strengths so that any change is incremental.

Our advice to all organizations and their CIOs is simple:

1. Use the cloud computing hype to discuss broader related changes in your organization. The business press is saying that "business must think differently about IT." This is a real chance to focus broader discussions around cloud computing into the very real, concrete benefits of SaaS/PaaS/etc.. Appirio launched Business Model Prototyping to jump on this opportunity. We think companies can use SaaS/PaaS and other learning from the consumer Internet to dramatically reshape their businesses.

2. Start with the concrete. The "cloud computing" discussion makes for good blogging, but it's not directly helping your business or feeding your kids. Real impact comes from translating the trend into action. Do this with projects that prove quick value or clear measurable milestones in a slightly longer journey, and highlight a sharp contrast with the old way of doing things.

3. Force vendors to be specific and timely. We'll be seeing lots of vendors starting to parade their products and services under the banner of cloud computing. We'll see more arguments over what cloud computing is, and how to understand it. Customers cut through the hype by forcing vendors to be specific in how they will help, where they will help, and on what timeline. Force discussions around initiatives that have a quick time to benefit and very clear milestones. Protect your company from being a victim of hype with low hopes for success. As Yogi Berra supposedly once said, "If you don’t know where you’re going, chances are you will end up somewhere else."

Labels: Cloud Computing, on-demand, PaaS, SaaS

Thursday, August 28, 2008

Lawson CEO: "Traditional software is like cocaine — you're hooked"

So customers like Flextronics (200,000 SaaS users), Japan Post (45,000 SaaS users), and Wachovia (55,000 SaaS users) are stupid?

McKinsey reports that three-quarters of software buyers say they are "favorably disposed to adopting SaaS platforms" for software development and deployment, and that they will dedicate 19% of their total software budget to applications delivered as services this year. Are they stupid?

How about Silicon Valley venture capitalists? When's the last time you've seen them fund an on-premise software company? Are they all stupid?

Let's reflect for a moment on who is actually "stupid." Over the past five years, Salesforce.com shareholders have tripled their money, while Lawson shareholders have watched their shares under-perform the market. After reading Mr. Debes' interview, many may come to their senses and bring in a CEO who doesn't see himself as a cocaine dealer. After Debes remarks, the most interesting open question is who will file the first lawsuit, his shareholders or his customers...

Labels: investors, Lawson, on-demand, on-premise, SaaS

Friday, August 15, 2008

3 Reasons We're Excited About Office 2.0

Ryan Nichols
Why are we so excited about this year's Office 2.0 conference ?

First is the theme: Enterprise Adoption. Using online tools to "get things done" is a topic that all of us at Appirio have always been passionate about personally-- we run our day-to-day lives on Salesforce and Google Apps, and most of cringe every time we have to install any piece of on-premise software on our laptops. But while the personal value proposition of Office 2.0 solutions is clear, we're still at the early stages of seeing enterprise adoption of these tools. And that is a topic that interests us professionally: there is massive opportunity in accelerating the adoption of these tools in sizeable organizations-- that's the premise on which Appirio was founded.

Second are the sponsors: In addition to the usual suspects (e.g., salesforce.com, Google), you'll see some new faces at this year's conference. Consider Salesforce and Intacct-- two companies not traditionally associated with personal productivity solutions. The fact that they are interested in Office 2.0 is a clue to why this year's theme is enterprise adoption. We've blogged before about the power of bring together solutions for businesses with solutions for business people, and talked about why this is so difficult using on-premise software. Office 2.0 solutions are increasingly being used to achieve the holy grail of enterprise computing-- getting the right information to the right people at the right time to drive the right actions. When the tools that people love to use to get their work done can display business information relevant to the task at hand, the business value proposition of Office 2.0 will be clear. Appirio is excited to help make this happen-- this is why we are proud to be a Silver Sponsor of this year's event.

The final reason we're so excited about this year's Office 2.0 event is the tone with which Ismael throws the entire production together. No paper. No desktop software. Non-traditional pricing. Centered on demos instead of slides. Rapid cycle between idea and execution. Ismael practices what we are all preaching, and the impact is clear-- a fresh, innovative conference.

So meet us there: the people will be fantastic, the content will be compelling, and Appirio will have some exciting news to share. The conference is September 3-5, at the St. Regis Hotel in San Francisco. Sign up here as a guest of Appirio and get $300 off the registration cost.

Labels: appirio, enterprise 2.0, office 2.0, SaaS, Salesforce for Google Apps

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:

1. 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.
2. Their SaaS feature set is way behind their current on-premise product.
3. They don't want a customer to think they made the wrong choice in selecting their on-premise product last year.
4. 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

Tuesday, June 03, 2008

Adobe Embraces the Cloud - Hazy Days Ahead for Microsoft?

Labels: Acrobat.com, Adobe, Google Apps, Microsoft Office, SaaS

Thursday, May 29, 2008

Connecting the Cloud, One Contact at a Time

Ryan Nichols

Most businesses ultimately depend on personal connections. Business people would be lost if they couldn’t connect everyday with the contacts in their address book. And businesses wouldn’t function without the rich web of connections among their employees, partners, suppliers, and customers. But your company’s contact database is almost certainly incomplete. Despite periodic reminders from management to “scan those business cards” and “import those contacts,” most people can't find the time to maintain this information unless they are forced to, regardless of the benefits to the company. Your personal address book is also incomplete. Sure, you may have a rich virtual rolodex of names, mobile phones, and email addresses, but you can't see how this person is related to your business right now.

• Imagine you’re writing a casual email to reconnect with a former colleague—who happens to be in the midst of making a big purchase with another department in your company. What if you had this sort of business context at your fingertips whenever you communicated?

• Now imagine that your company’s sales reps knew about this connection as they were putting together their proposal. You would have been happy to make an introduction—if they’d only known to ask.

Appirio Contact Sync for Salesforce and Google Apps

Today, we’re excited to announce Appirio Contact Sync for Salesforce and Google Apps. This offering extends our portfolio of solutions that connect the leaders in on-demand - Salesforce.com and Google - allowing users to easily synchronize calendars, collaborate on marketing campaigns, find and embed documents, and create and share customized CRM dashboards.

As with our other offerings, we’re starting with simple synchronization—you choose which of your contacts you want to share, and how you want them synchronized between your Google and Salesforce address books. This is a valuable start. Today, your Google email account automatically stores the email address of everyone you’ve ever written to, but knows nothing about their companis or roles. Your Salesforce.com contacts are detailed, but you’re missing hundreds of critical business connections. Synchronizing the two solves a real pain point that we hear from our customers today.

Contacts in Context
Sync is just the beginning. Appirio's vision is to bring the business context from all of a company’s on-demand enterprise applications into the productivity tools and social networks that individuals use as they work. We want "Solutions for Business" + "Solutions for People" to finally create "Solutions for Business People."

Contacts is the center of that vision, and sync between Google Apps and Salesforce is a great place to start. Enjoy the offering!

Labels: AppExchange, appirio, Google, Google Apps, on-demand, SaaS, SaaS integration, Salesforce for Google Apps, salesforce.com

Friday, May 02, 2008

Business by Delay - On-premise and on-demand are like oil and water for SAP

Narinder Singh

This week's announcement that SAP has delayed the rollout of its hosted midmarket “Business ByDesign” offering, and reduced expectations for the product, shed further light on the difficulties that on-premise software companies will have in delivering software as a service.

It's not that SAP leadership doesn’t “get” the opportunity, or isn’t “smart” enough to capture it. I spent three years in the Office of the CEO and know better. But it takes more than smarts to overcome fundamental conflicts between the traditional enterprise software business model and the on-demand business model. Many lessons only come with experience in the market, and SAP's approach to try to build it all at once (as explained by SAP founder Hasso Plattner in his debate with Marc Benioff) is completely off the mark.

For example:

• SAP locked 1,000 German engineers in an offsite location for five years to develop Business ByDesign. This follows the traditional model for building complex enterprise software. Software-as-a-Service (SaaS), on the other hand, allows, and flourishes with, continual refinement based on customer usage. This affects every aspect of the development lifecycle.
• SAP built a system that was service oriented by design, but service delivery was an afterthought. SAP has never been in the service delivery business - this is an entirely new core competency, which happens to be at the core of how Salesforce and Google create value.
• To avoid cannibalization of its core products, SAP has tightly restricted the target market for ByDesign to a narrow set of geographies and industries. Successful SaaS solutions, on the other hand, are adopted by the marketplace in a bottom-up fashion and spread virally, leading to surprising adoption patterns that result in new opportunities, such as Salesforce being used for Service and Support.

This week's announcement is bad news for SAP—they’ve spent the last 2 years validating the potential of the SaaS market and now have to admit that it is far more difficult that then they anticipated to capture this opportunity.

Maybe SAP should take Benioff up on the challenge that he issued to Hasso at the Churchill Club, and build their next business application on Salesforce.com's Force.com platform. After all, SAP’s core expertise is business processes, not in the technology or infrastructure required to deliver software as a service.

Labels: business by design, on-demand, SaaS, SAP

Sunday, April 13, 2008

Google and salesforce.com : Solutions for business, meet solutions for businesspeople

Ryan Nichols

Salesforce, meet Google Apps… this is an introduction we’re happy to make and an occasion we are excited to be a part of. As the first partner of both Google Enterprise and salesforce.com, Appirio is excited to see these two leaders in on-demand solutions come together to change the way that business is done.

Salesforce has revolutionized software for business. Their on-demand solutions for business have changed what it means to develop, deploy, customize, and use a business solution. Google has revolutionized software for business people. Their on-demand solutions for business people have un-chained us from our desktop productivity applications and changed the way that business people interact with information and with each other.

The technology of their joint offering is exciting enough: Use Gmail and Gtalk directly from Salesforce. Find and add Google Docs as you work in Salesforce. Synchronize your Google Calendar and your Salesforce Calendar. Create Google Gadgets from your CRM data. We’ve been working closely with our partners at salesforce.com and Google to make much of this possible.

But what gets us excited is how we plan on using this technology to impact the business of our customers. Bringing Salesforce and Google Apps together solves one of the biggest pain points companies have today—the gap between the tools that businesses need to run and the tools that people use to work.

Businesses suffer when the tools that support these two types of activities aren’t connected. First, of course, is the cost in productivity and efficiency—everyone has experienced how much time is wasted copying, pasting, importing, exporting, and plain old retyping to bridge these different tool sets.

But the real cost is misalignment. When the communication and collaboration of business people occurs without the context of business information, or when a business process occurs without the context of communication and collaboration, the outcome is certain: poor decisions, poorly executed.

Traditional enterprise software companies have failed to bridge this gap. The excitement around each new announcement between a traditional provider of solutions for business (e.g., SAP) and a traditional provider of solutions for business people (e.g., Microsoft) quickly fades to disappointment and failed expectations. This failure is inevitable because on-premise software is too inflexible to bridge this gap. The simple fact that enterprises would have to spend tens or hundreds of millions of dollars to upgrade to recent versions of SAP and Microsoft before thinking about joint solutions dooms the effort.

On-Demand changes all of this...again.

Today’s announcement and the future

On-demand solutions offer the potential to finally the bridge the gap between the tools that businesses need to run and the tools that people use to get things done. That’s what makes today’s announcement so exciting. Building on the platform salesforce and Google are providing, Appirio is delivering four new products that allow Salesforce and Google users to easily synchronize calendars, collaborate on marketing campaigns, find and embed documents, and create and share customized CRM dashboards. In addition, we have expanded our services for Google and salesforce customers to leverage these new offerings.

At Appirio, we’re already using Google and Salesforce together to change how our customers do business:

• Helping account teams collaborate in the context of their customer information in Google Documents and Sites


• Helping marketing teams coordinate their campaign timelines using Google Calendar


• Helping service and support teams leverage a knowledge base of their collective experience, captured in Google Documents and Sites

Over the past several months, we have helped numerous customers, including salesforce.com, benefit from Google Apps. Creating products and services to bring Google and Salesforce together in the enterprise provides Appirio a unique perspective. We believe that on-demand offers a way for providers like salesforce.com, Google, and Appirio to create compelling solutions for customers that cannot be matched by the rigidity of the on-premise approach. While this future may take time to reach all parts of the market, we believe it is inevitable and every enterprise needs to find a path to that future. We look forward to doing our part to help....

Labels: Google Apps, SaaS, salesforce, Salesforce for Google Apps

Thursday, March 20, 2008

What Do Open Source and On-Demand Have in Common?

Chris Barbin

What Do Open Source and On-Demand Have in Common?

They both keep Steve Ballmer awake at night? Nope, too easy. They both changed the game in enterprise software? True. But the most interesting answer is "community" - they are both driven, and advanced by, the power of the community that surrounds them.

This power was one of the topics raised at this year's Dow Jones Web Ventures conference held earlier this week, where Appirio joined Vauhini Vara of the Wall Street Journal and Salesforce.com president Steve Cakebread onstage.

(Interesting side note: Steve Cakebread is not only president and Chief Strategy Officer at Salesforce.com, but also a Salesforce.com user, and the system administrator at his family's well known wine business - Cakebread Cellars. It's a testament to the simplicity of Salesforce.com that the same platform can serve both a 60,000 person company like Japan Post, as well as a 50-person SMB shop like Cakebread Cellars.)

We joined Steve and Vauhini onstage to discuss how we're using the Force.com platform to create custom SaaS applications for enterprises like Dolby Laboratories and CRC Healthcare. The questions during Q&A focused mostly on core topics - about a potential recession, whether hybrid vendors like Oracle and Microsoft will succeed in on-demand, why Salesforce is betting on the platform play versus offering more applications, etc.

One of the most interesting questions - the one prompting this blog - came from an audience member who asked, "How does Salesforce take user feedback into consideration when developing their platform?"

Steve said that Salesforce.com is giving the community - users, partners, customers, prospects, developers - a public forum where they can share their ideas and suggestions and implementing a process to take action. Salesforce has created an on-demand product called Ideas to create this forum that turns ideas into action. It ranks the most requested suggestions, which they then incorporate into their own product development. They also use it to encourages their partner community, including vendors like Appirio, to address the other ideas that don't make it into their own development cycle. Salesforce Ideas is now being implemented at other companies, like Dell and Starbucks.

This illustrates a fundamental shift in how product development, IT and enterprise software organizations operate now. Taking a page from the open source model, smart companies like Salesforce.com, Amazon and Dell are tapping into the community to drive innovation internally. The Internet has given them the means of collaboration. Each of these companies focuses on transparency, openness and getting rid of the "not invented here" syndrome.

We like to say here at Appirio that you have two ears and one mouth for a reason - you have to listen to your customers if you're going to win and keep them. It's nice to see that we're in agreement with the leaders in our industry.

Labels: IDeaS, on-demand, open source, SaaS, salesforce.com, Software as a Service, VC

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

Thursday, March 06, 2008

Can Google Bring Enterprises Together?

Mike O'Brien

Last week marked the official launch of Google Sites, a web-based collaboration service that has been lovingly dubbed by some as the "Sharepoint killer." It lets you pull together information from across Google Apps to create customized company intranets, team sites and more. It's the reincarnation of JotSpot, which Google acquired over a year ago, with a few new twists.

Appirio has been using JotSpot for over a year as our employee intranet and knowledge base, using it as a way to disseminate information and best practices, document processes and methodologies, ramp up new hires and archive content. It has become an enormous corporate asset for a company like Appirio that has employees and consultants distributed across the U.S.

We're excited about the progress of Google Sites, but rather than review the new features or the pros and cons of the service, we'd rather highlight what this type of collaboration service means for enterprises and why on-demand collaboration is so compelling.

It's clear that approaches to collaboration inside enterprises have not had anything close to the same level of success as social networking sites for consumers. Why is that? People like to interact with other people. They like to do less work to be more productive. Yet despite these core truths, enterprise-based collaboration tools lag far behind the maturity and growth of sites like Facebook, mySpace, Digg and others.

We believe that if enterprise collaboration services shared some of the same characteristics of these successful social networking sites, we'd see a lot more progress.

• Keep it simple, stupid - On the whole consumers migrate to things that are intuitive. We want products that give you the features you need, without going overboard or making things overly complicated. No site represents this better than google.com. By making this so simple and intuitive, even the slightest change can draw substantial attention or mindshare from the user.This is where Google shines and it's very different from the way most enterprise collaboration tools have been built in the past. In the enterprise software world more attention is often given to the number of boxes you can check on an RFP response than to the actual user experience.

• Make users WANT to be there - The beauty of social networking sites is people actually want to be there. How many people can say that about Sharepoint? By making it easy to embed photos, slideshows and videos using services like Picassa and YouTube, employees are more apt to come to and stay on the site. Also, make it easy to update and navigate. Team collaboration may not always be FUN, but it should never be painful.

• Leverage the "wisdom of crowds" - The 2004 book by James Surowiecki describes how and when the collective intelligence of the "crowd" is far superior to that of any individual. The Internet is the ultimate enabler of that. eBay, Digg and other sites actively harness that capability every day. As a result, its critical to be able to embed services from across the Internet. That is one way Google Sites (embed any web gadget), Facebook (embed any application) and others become so powerful so quickly.

• Apply the network effect - The success of social networking sites correlates to size of the user community (wisdom of crowds) and the volume of interactions (e.g. Twitter). The same could be said for intranets or team sites. The more information and interactions happening on these sites, the more valuable they become. Google gets that, which is why their sites can be easily networked and searched, why users are encouraged to create their own sites, and why Google's marketing is often aimed more at the users themselves than IT departments.

The Cloud Inside the Silver Lining

Google Sites is making a lot of progress in the areas above. However, there are several things that CIOs and IT departments need to be conscious of before they deploy Sites or other collaboration tools like it in the enterprise. First is that these tools are going to get used whether you sanction them or not. Google Docs, Spreadsheets, Presentations and now Sites will emerge from the ground up. Understanding this can help plan and integrate natural momentum from a business user's consumer side influences.

Also, the easier it is to create sites the more employees will want to create their own. Google Sites encourages this, which may be a conscious decision to employ the network effect. However, it can create "pockets of knowledge" and reduce the impact of having a single, comprehensive site. The Internet tends to empower the end user not the IT administrator. The only way to get ahead of this in the enterprise is to do what good Internet sites do - become the most relevant site for the user. Creating relevant content, integration and awareness of a core set of capabilities makes it less likely that end users will stray into unsupported territory.

The Internet is the future of collaboration - whether it occurs inside or outside the enterprise. The innovative business that wants to drive productivity through collaboration must embrace this change to create a passion for working together.

Labels: Google Sites, JotSpot, on-demand, SaaS, social networking

Monday, March 03, 2008

Insights and Observations from the Pacific Crest On-Demand Conference

Narinder Singh

Last Thursday we had the pleasure of participating in the 3rd Annual Pacific Crest On-Demand Conference, the kickoff to Pacific Crest's Emerging Technology Summit. Salesforce.com CEO Marc Benioff invited us on stage during his keynote to illustrate how partners can harness the power of the Force.com platform, Visualforce and the AppExchange.

The participating companies covered the spectrum from large on-premise software companies such as EMC and SAP, who were describing their expansion into the newest "hot" market, to companies such as NetSuite, Salesforce.com and SuccessFactors that have built their business from the ground up with Software as a Service.

Interestingly, a number of companies there are in the process of trying to radically shift their business model from on-premise to on-demand, and they talked about the challenges. Most of these companies were small and nimble, which enabled them to make the transition cold-turkey. All were very clear that it wasn't an easy switch to make.

Can Companies Have Their SaaS Cake and Eat It Too?

Can companies successfully split their focus between traditional software and on-demand services?

This is a question we've been raising, skeptically, for quite some time in our blog. Our original Services 2.0 position paper in April 2007 described how the disruptive effects of SaaS will impact the economic models of on-premise software vendors. After a year of additional information and insight, it's even more apparent that treating SaaS as just another channel or product feature is a recipe for failure.

Spending a day with companies that have, or are attempting to make the switch from on-premise to SaaS reinforced the major challenges. IDeaS CEO Ed Booth gave a great presentation highlighting the challenges and upside of moving to an on-demand model. Concur Technologies has often been referenced as the best example of a company that successfully made the transition. Some issues raised by them and others included:

• One-time revenue hit: How do you manage through the decline in revenue growth when you move from an up-front license model to a monthly subscription model? With Wall Street and shareholders as panicky as they are today, this is a very difficult proposition for large public companies. Upfront licensing, even with longer term contracts, can drop by as much as 75%. As the Patricia Seybold Group has noted, As a company moves from perpetual licensing - where customers pay a relatively large, one-time licensing fee - to SaaS - where customers pay a relatively small, monthly license fee - financial performance slips in the short-term."

• Internal channel conflict: How do you manage the channel conflict that happens with your own partners, and even your own sales force, when offering both traditional license and on-demand software? Companies like EMC, with established business units focused on driving demand for SaaS or cloud computing, will have a serious challenge with this. The most reliable solution is to completely separate the businesses - which eliminates any synergy of having both models in the same company.
  
• Shifting to a "month by month" culture: How do you change the way you sell to and support customers when you have to earn their business every month instead instead of every few years when the next big version comes along? This is a huge cultural change for sales and support teams to make. SaaS companies require the culture of the web - where sites like eBay, Amazon, Google and others constantly monitor, serve and improve their customer's experience.
  
• Speeding up R&D: How do you adapt your product development processes to deliver an on-demand service? Successful on-demand vendors get the benefit of releasing new features quarterly, not every two or three years. When features are released, they are expected to work with other systems indefinitely. Salesforce.com still supports each of its 12 versions of its API. How many on-premise vendors can claim anything even close?
  

EMC, SAP, Microsoft and Oracle make it clear to customers and stockholders that their foray into SaaS or cloud computing is not a departure from their software strategies, but an expansion of it. They say things like "SaaS is just another delivery model," or "we're giving customers a choice." Yet they keep increasing the on-premise maintenance fees. SAP just increased its maintenance rate from 17% to 22% per year - an increase of 30%! This leads to one of two possible conclusions:

1. The cost of supporting a growing legacy of capabilities keeps increasing, which eliminates the benefits of on-premise scale. Compare this to any internet company, where increased scale lowers cost and results in expanded services for customers.
2. They are taking advantage of customers' inability to easily switch off of their on-premise software.

Traditional software companies - especially large ones - will certainly have to straddle the fence for a while. Yet the doubletalk and denial will not help in the transition. First, they must acknowledge the need to make a transition. Second, in many cases, dramatic actions, like separating SaaS products into completely independent business units or taking companies private to allow for transition, will be needed to make the change. It's likely that legacy companies will not switch until customers stop tolerating increasing TCO and diminishing innovation from their on-premise systems.

Labels: AppExchange, Concur Technologies, EMC, Force.com, IDeaS, on-demand, Pacific Crest, SaaS, salesforce.com, SAP, software-as-a-service

Monday, February 25, 2008

Adobe and Salesforce - A Fine Blend of Art and Science

Chris Barbin

Application development is a unique combination of art and science. Today’s announcement from Salesforce.com and Adobe introducing the free Adobe Developer Toolkit for Force.com is a good example - combining Adobe’s deep understanding of design with Salesforce's powerful platform-as-as-service model so developers can build innovative and visually appealing on-demand applications.

The Adobe Developer Toolkit is a new set of tools and services that streamline the process of creating customized rich user interfaces for delivery via the web. It allows developers to create on-demand applications that work without an Internet connection. The toolkit connects Adobe’s Flex and AIR (Adobe Integrated Runtime), two of the leading rich internet application (RIA) environments, with Salesforce's Force.com platform. This gives Flex developers access to the Force.com web services APIs, so they can make data in a Force.com database available offline.

CIOs and development organizations need to deliver users a wider set of on-demand applications that require very rich client interfaces and/or offline functionality. These have traditionally been two of the biggest challenges for developers of on-demand applications.

Appirio has been an early adopter of various front end on-demand development paradigms, including Adobe Flex and Visual Force. We use these technologies in a number of ways, for example:

• To create user interfaces for call centers - where a high volume of calls means that saving a few clicks can add up to thousands of hours a year
• To develop interfaces for the iPhone - where the user expects a very specific interaction style that works the same as other applications
• To design custom applications for a very specific purpose - like the cinema management application we have written about previously
• Even to create applications for our own internal use (yes, we eat our own dog food here) such as our Professional Services Automation (PSA) application

The Appirio Professional Services Automation (PSA) application enables professional services organizations to track, manage and reconcile a large collection of projects. Appirio originally developed the PSA application to visualize and manage our various projects, resources, timelines, skills and assignments, and at the time there was not a native Force.com application available on AppExchange that offered these capabilities. While you could use Force.com to manage the respective data, workflows and reports, Flex was what enabled us to create a single visual interface that could both increase individual user productivity and provide clear visibility into the status of projects.

This Flex-based scheduling tool brings our PSA, which is built entirely on the Force.com platform, close to functional par with pure-play on-demand PSA vendors at a fraction of the price. This neat little component (shown below) lets managers drag-and-drop projects, lay out an entire consulting team's assignments on a single color-coded grid, and double-click to drill down for more details. This makes consulting managers more productive - and smarter. If the result is just an increase of a few percentage points in utilization, the financial payback will be dramatic.

Here are a few screenshots of the Appirio PSA application and our Salesforce interface on the iPhone. For those interested in participating in the current beta program for our PSA application, please contact us at beta@appirio.com.

Screenshot #1: This is a high-level view of our PSA application, which lays out the entire consulting team's assignments on a single color-coded grid.

Screenshot #3: Example of a Visual Force application on the iPhone showing the apartment floor plan for a real estate agent.

Labels: Adobe Flex, appirio, Force.com, iPhone, on-demand, Professional Services Automation, SaaS, salesforce.com

Tuesday, December 19, 2006

Understanding the Difference between On-Premise and On-Demand Software

It’s difficult to touch, feel or smell enterprise software. It in a package, but definitely not one that has a bar code and a price on it. When we ask "what does it do," we’re asked in return "what do we need it to do?" Sometimes, the same question applies when one asks "how much does it cost." This sales approach, combined with zero marginal cost for the provider, results in the software industry being fraught with idiosyncrasies. In such an industry, one of the tools all of us use to understand the ethereal notion of enterprise software is the analogy. While analogies can never prove a point, they help frame our view and make software more concrete in our minds.

Analogies can expand or restrict our view of a situation. In this image, do you see the people or the goblet?

Below we have taken a look at some of our favorite (hopefully humorous) analogies for On-Demand and On-Premise software. Yet there is a more serious point - your approach to solving business problems with technology is often about how you frame the question.

The past several years on-demand software has empowered line of business owners to sucessfully deploy siloed applications. Yet for CIOs, today the question is not how you wrestle back control, but how to embrace on-demand, allow lines of business to pursue their efforts, and manage the overall adoption of the technology in the business.

With that, we hope you enjoy some of our favorite entertaining analogies that frame the difference between on-demand and on-premise. In addition, we welcome you to add to our list.

Enterprises choosing on-premise software are like teenagers getting married. It’s not what you thought it was going to be, there are all sorts of unexpected costs and divorce (think "upgrades" or "migrations") are both painful and inevitable. That’s why teenagers should focus on dating (on-demand)?

People try to compare on-Premise and on-demand to buying vs. leasing a car - as if either preference were equally valid. This analogy would be true if, when buying a car, you needed to take a special class that cost twice the price of the car, and every 3-4 years the car's engine would require rebuilding while in motion; while when leasing a car, gas and insurance were included.

But isn’t it true that at some scale, its just more cost effective to buy software and manage it yourself? Sure, I think that was right under the headline of Wal-mart buying old nuclear reactors to provide power to their stores.

Long term contracts, uncertain performance and costly upgrades? Hmmmm, you're talking about either on-premise software, or the New York Knicks.

Security, quality control, our large size, the need to customize things for our unique needs and the cost of buying things each month… those are the top reasons for using on-premise software... or deciding to buy seeds and grow all our own food.

Labels: on-demand, SaaS, salesforce.com, Software

Wednesday, December 13, 2006

IT Management & Governance In an On-Demand Model

The IT landscape for Salesforce.com customers is quickly growing complex. With over 400 applications on the AppExchange today – with projections of 1,000 by late 2007 – and the upcoming Winter '07 release and the Apex programming language, sound IT management and governance practices are essential. In the past, a single application such as SFA or Service & Support was manageable for a line-of-business leader or an aspiring IT professional. They could gather requirements, build a business case, sell internally and then implement. With the increasingly complex platform now offered by Salesforce.com, where customers have access to applications, extensions, API’s, partners and the platform itself, determining the tradeoffs among building, buying, and partnering requires a thoughtful and collaborative approach among the business, IT, and the Salesforce.com community.

Some Appirio customers have recently completed extensive application and server rationalization exercises as part of the launch of an on-demand strategy. Inventory analysis is a great first step towards on-demand portfolio management, and uncovers a number of obvious opportunities to migrate on-premise applications to the on-demand model. Many traditional project and portfolio management principles apply, but in the on-demand world there are four key strategies for CIO’s to apply:

• Centralize the Approval Process. All new IT project requests should flow through a single, cross-functional, company-wide approval process with common selection criteria. In the past, on-demand software vendors have thrived by working around traditional IT, which creates redundant projects, additional costs, and inefficient use of resources. Under this decentralized model, many departments (often including IT) are finding, promoting, and implementing siloed on-demand applications that solve a specific problem for that particular department, but perpetuate vendor bloat, cost creep and integration headaches. Further, many existing Salesforce.com customers and their IT departments may not be aware of the capabilities and benefits of the AppExchange platform. To take advantage of the benefits of a true on-demand platform, CIOs must have the business, IT, Salesforce.com teams in sync. The CIO should be aware of all projects currently in queue, and knowledgeable of the end-to-end platform capabilities. This linkage is essential to driving adoption, integrating the user experience, ensuring corporate buy-in, and keeping costs down.
• Apply Early Adopter Factors. Let’s face it, we are in “early adopter” territory: standardizing an on-demand platform for a company with thousands of users, hundreds of legacy applications, complex business models and an “on-premise” mentality.. Along with the benefits of the on-demand model, there are inherent risks, with few end-to-end enterprise class success stories today. The development methodologies and assets are far from mature, and for every ten integration challenges, there are twenty solutions presented. Based on the evolving nature of on-demand platforms and applications, CIOs are well advised to estimate timelines somewhat longer than rollouts of a single application, and to anticipate increased costs associated with training, development, integration and data cleansing and migration.
• Keep Up with the Upgrade Roadmap and Partner Ecosystem. Remember that when you use on-demand vendors, your software is automatically upgraded with each new release. New partners and applications appear on the AppExchange every day. In short order, enterprise customers can expect features that they were planning on building to show up in new releases, and will notice applications that they were expecting to buy to show up on the AppExchange or other marketplaces. CIOs making the platform decision should demand early visibility not only into traditional product roadmaps, but also ISV and SI applications. Specifically, power users and CIOs should find out which applications are actually being used - particularly in large deployments of more than 1,000 seats - and how they are scaling in terms of volume, security, integration, and usability. This information, and the ability to talk directly with other companies making similar investments, will have a direct impact on a CIO’s make, buy, or partner decisions.
• Salesforce.com is Not Just for Sales. Education, awareness, and sponsorship are critical. While it seems obvious to those of us who ”get” on-demand vendors like Salesforce.com, most executives, functional leaders, and even salespeople, do not understand the future direction and capabilities of the AppExchange platform. The notion of building an application development platform using an on-demand model is new for most people, and it takes awhile to fully appreciate the profoundness of this change for typical IT operations. To really drive platform adoption across the enterprise, the executive team needs to consistently educate and drive awareness thru sponsorship and active, visible pilots that demonstrate value to end users and the business.

The principles of IT management and governance still apply in the on-demand model, but with some unique challenges. Despite tradeoffs and risks, the benefits will often outweigh the costs, even for large, complex enterprises. Soon, more CIOs will make the leap from on-premise to on-demand, and pave the way for even wider adoption.

Labels: AppExchange, appirio, cio, on-demand, SaaS, salesforce, salesforce.com