Monday, September 15, 2008

Comparing Cloud Computing Mindshare Levels Between the U.S., Europe, and Asia

Would you believe that the U.S. has 4 times more people interested in cloud computing than Europe? How about 5 times more people so interested than Asia? It is impossible to derive irrefutable evidence to validate those statements, but this blog entry offers one concrete data source that indicates those statements are true.

There have been various studies on cloud adoption and mindshare. For a young industry, it is an important metric to understand. Just this week, Chris Marino started a cloud adoption topic thread on the Cloud Google Group. He cited the Pew's report on American adoption of cloud applications.

This blog entry provides more data for that discussion. However, it focuses not on the adoption rate within the U.S., but the relative interest in cloud computing topics across continents. It uses traffic data from my blog as the input into the analysis.

Aggressive Extrapolation

Just to give you fair warning, I am about to draw sizable conclusions from a single source of data. This data source, traffic to my blog, cannot be proven to be a meaningful measurement. But I am writing this blog entry anyway because I think it is an interesting topic and the data might be meaningful. Also, I find there is an absence of information on this topic out on the net, so I hope this is a good starting point for other studies.

Here are a couple of assumptions I am making during this analysis:

  • Given that blog access is location independent, there is an equal opportunity across regions for any cloud computing enthusiast to read my cloud blog entries
  • Given equal opportunity, the readership of my cloud blog entries roughly matches interest level in each region for the topic of cloud computing in general

You could certainly argue that my blog does not generate enough traffic to be a significant measure. You could also argue that the level of blog readership in general isn't consistent across the regions.

You could also probably find about ten other reasons why this study is not conclusive. Once again, I hope this is a starting point for others to contribute meaningful data, and so this blog entry will be published despite the possible objections.

The Raw Data:  Blog Readership Numbers

I will first introduce the raw visitor numbers of a handful of blog entries, as captured by Google Analytics. Later sections will explain the data and what to look for in these numbers.

Blog Entry Cat
gory		 Visits U.S. % Europe % Asia %
Cloud Taxonomy V2 Cloud 1631 67 17 13
Cloud Taxonomy V1 Cloud 1172 63 20 15
SaaS Taxonomy SaaS 207 54 18 26
SaaS for IBM, ORCL... SaaS 191 40 32 25
SaaS Contract Analysis SaaS 196 69 22 8
Control 1 Ctrl 131 51 27 16
Control 2 Ctrl 363 53 24 21

 

A few words on the data collection gathered from Google Analytics:

  • These numbers reflect visits between July 1, 2008 and September 14th 2008
  • Some of the entries were not available during the entire collection period.
  • They do not include RSS readers, as my feed exposes the entire entry
  • Some of the older entries started life on a different blog system before being migrated to this blogspot account in May. Some clicks may have gone to the older blog system for those entries and were not captured.
  • Visits are unique visitors, which each may account for one or more pageviews
  • The numbers don't add up to 100% due to hits coming from places outside the three regions

Primary Evidence: Cloud Computing Visual Map Entry

The primary piece of evidence, and the one from which I drew the main conclusions, is an entry made on September 8th 2008. It is titled "Cloud Taxonomy V2" in the table above. The blog entry contains the second version of  a vendor map I have drawn that visualizes the cloud computing industry. I pick this entry as the primary evidence for the following reasons:

  • It is very recent, and therefore very "clean" in terms of tracking actual human users reading the entry
  • It is an entry with general appeal - it covers the industry as a whole. It therefore should represent a broad measurement of interest.
  • It has enough visitors (1631) to make for a good sample size

The evidence reveals the following distribution:

image

It is from this data that the main conclusions are drawn:

  • U.S. interest in the topic of cloud computing is 4 times greater than in Europe
  • U.S. interest in the topic of cloud computing is 5 times greater than in Asia

Look also at the numbers associated with the blog entry listed as "Cloud Taxonomy V1". That was the first version, released in May of this year. It is comforting to see that the V1 numbers roughly match the V2 numbers.

What About the SaaS Numbers?

You will notice that the SaaS themed blog enties don't carry the same distribution as the cloud entries. This is odd, as SaaS is a subset of cloud computing (see the referenced taxonomy diagram if you want to see why).

Specifically, look at the first two SaaS blog entries, found here and here. See how the U.S. has a lower share of the readership than with the cloud taxonomy entries:

image

One fabricated explanation - its about early adopters?

  • The U.S. contains a higher percentage of early adopters (hypothesis)
  • The overall cloud computing industry is still quite young , and dominated by early adopters. Therefore, the U.S. has a greater share of the readership of the general cloud taxonomy entries.
  • SaaS is further along in adoption than the overall cloud computing industry. Therefore, you will see more balance in the interest levels.

Now look at the third SaaS entry - the one titled SaaS Contract Analysis. This one actually shows a higher distribution for the U.S. relative to the cloud taxonomy entries. Why?

image

Once again, a totally fabricated explanation - does this show Adoption as opposed to Mindshare?

  • The SaaS Contract blog entry contains an analysis of SaaS contract terms, and suggested terms to avoid as a customer.
  • This is not an entry for future thinkers or those just kicking the tires. This entry is primarily useful for those actually implementing SaaS and who need to review contracts with vendors. Perhaps this may show actual adoption, while the data for other entries show mindshare/interest?

Seeking a Control: My Non-Cloud/SaaS Blog Entries

While in recent times I have focused my external writing on Cloud Computing and SaaS topics, I also have written on topics such as mashups and Java security. To help shed more light on the numbers revealed above, I offer two of those blog entries as a control for this analysis. These may indicate what bias already exists in my blog readership.

Or they may not - most of my readers find my blog via search engines, not because they are regular subscribers. Therefore I would argue that these other blog entries don't offer much insight. But they are included anyway for your review.

Other Data Points on Cloud Mindshare and Adoption

There are other publicly available surveys on various adoption rates and mindshare. I would contend that none of these provide data for the specific discussion above, but they are interesting all the same:

Call for Collaboration

This analysis would be helped immensely by having access to more data sources. Cloud bloggers - what are you seeing? Cloud vendors, what can you say about your customers? Please reveal!

Also, the raw spreadsheet data from Google Analytics for my cloud v2 entry is here. If you would like a different export of the data, let me know.

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Monday, September 8, 2008

Visual Map of the Cloud Computing/SaaS/PaaS Markets: September 2008 Update


NOTE, New Version Available:

This version of the map is now outdated. I have released a new version of this map for Enterprise Cloud Summit at Interop Las Vegas. Follow this link for the latest version.

Interop NYC 2008

Four months ago, Kent Dickson and I created a visual map of the Cloud, SaaS and PaaS industry. It proved to be a popular item - we got a lot of comments and continue to see traffic to my blog page. I was long overdue to create a second version - comments needed to be integrated, and the industry has changed enough to warrant a round of updates. This blog entry contains an updated version of the map.
The timing is no accident. I will be speaking at the Interop NYC 2008 conference on September 15-19. I will be presenting on the topic of Cloud Taxonomy. My slide deck was submitted last month, but I want to have a fresh version of this taxonomy to present. Thus, the tyranny of the deadline has forced my hand.

Defining the Markets

In the first version of the map, the players were divided into four major buckets (from the bottom up):
  • Cloud Computing
  • Platform as a Service (PaaS)
  • Software as a Service (SaaS)
  • Core Cloud Services
In the intervening months, a number of others have attempted to dissect the industry into a taxonomy. Robert Anderson came closest to our original breakdown by identifying three major buckets in his blog:image
I like the labels on the bottom two buckets, especially getting away from the PaaS label in favor of Platform. However, I don't agree on the top, as Software is too generic of a word. I prefer Applications for that bucket. Also, I believe a fourth bucket is necessary, to include a number of standalone components that are built on the platforms but are not applications. We called these Core Cloud Services in the first version, and I have labeled the bucket just Services this time around.
The updated stack that I will use in the taxonomy is as follows (starting at the bottom):
  • Infrastructure:  the core computing resources and network fabric for the cloud deployment
  • Platform: the software infrastructure that allows sys admins and developers to deploy an app to the cloud
  • Services: additional services that can be woven into the cloud app, such as billing, storage, integration
  • Applications: the ultimate cloud product - the actual cloud based application that the user touches. These number in the thousands.
You will note that the map is annotated with these buckets, with "1" denoting Infrastructure, and so on.

The Visual Industry Map

Below is the visual map as promised. You will find a larger version hosted here. An explanation of each category and a full clickable URL list of the solutions is offered below the map.
Please post comments with your feedback - they are very much appreciated. As before, there is no hope for this map to be comprehensive. I have selected a good group of vendors, but of course there are others that could have been placed on the map. My research notes are here, and they may explain why a particular vendor was left off.
What worked well before was for commenters to log the omissions, which I can evaluate and remedy in a later version. Also, Jeff Kaplan at THINKStrategies has created a SaaS Showplace database that is far more comprehensive.
Now, to the point, the map as promised:

Laird_CloudMap_Sept2008

Reference Vendor List

The following is the clickable list of each vendor displayed above.

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Tuesday, August 26, 2008

Building a RESTful Enterprise Integration with Oracle and SnapLogic

In the enterprise space, integration problems abound.  IT must connect numerous legacy systems in new applications to adjust to the changing needs of the business. Technologies to achieve such integrations include SOAP based Web Services (WS-*) and binary protocols such as CORBA and RMI. This blog entry discusses a different approach - integration using lightweight REST APIs.

To illustrate the concept, a demo has been created showing how to combine data from Oracle's WebLogic Portal product with data from Oracle Database. This demo is accomplished using RESTful APIs as the data transport mechanism, and is orchestrated by a third party data integration product called SnapLogic. This demo was showcased at a REST Symposium I organized for Oracle employees in July, which featured speakers from Oracle, SnapLogic and Yahoo! (see below for details).

 

What is REST?

REST is an acronym for REpresentational State Transfer, and was coined by Roy Fielding in his PhD thesis published in 2000. It is not a technology, a standard, or a product. REST is an architectural pattern that describes the underlying architecture of the World Wide Web and how it came to be such a massively scalable computer application. The WWW is known to have the following qualities:

  • Highly scalable - millions of websites
  • Fault tolerant - at any given time, many websites are offline, but the web continues to work
  • Performance- HTTP allows for intermediaries to help improve performance via caching
  • Interoperable - nearly every computing platform has a browser, and websites are written in a myriad of languages
  • Distributed - websites and clients span the globe
  • Self describing - there is no user manual required for users to navigate the WWW

Aren't the above qualities desired for any enterprise systems as well? The power of REST lies in the idea that the same fundamentals that work so well for the WWW can also work with great success within the enterprise. 

There are plenty of resources on the web that explain the principles of REST, and so I have no intention of duplicating that material. In essence REST describes an architecture in which:

  • Application resources (objects, in the OO world) are exposed as URIs
  • HTTP requests are used to retrieve and update data on the server
  • The HTTP requests utilize the standard HTTP verbs (GET, POST, PUT, DELETE) to define the API operations, helping client developers by providing a consistent interaction model

An example is the following:

  • A client issues a request to the following URI:  http://wlp.bea.com/dvt/api/content/autos.jsp
  • The server response contains a list of automobiles, described in a format such as XML
  • The client consumes the XML document and outputs the entries that match the user's criteria

This pattern is seen most often with Rich Internet Applications (RIA), where the client is a browser and the API is being invoked via Ajax (more precisely, the JavaScript XmlHttpRequest facility). While this is a very powerful use of RESTful APIs and is alone enough to justify the creation of RESTful APIs, this use case is not the focus of this blog entry. I would encourage you to research Ajax application development for more background.

Instead, we will look more closely at how RESTful APIs can also make data integration easy.

 

RESTful Integration in Concept

RESTful APIs expose data in a way that is easily consumed. Invoking the API is as easy as issuing an HTTP request, which is possible to do from almost any programming language/platform. While enterprise data integration can be implemented using a wide variety of technologies, the purpose of this blog entry is to show how it can be done with RESTful APIs.

As stated in the preamble, there are non-RESTful approaches to solving this problem. A SOAP based solution could be implemented and for some cases is the preferred approach. If your use case requires the support of the WS-* family of standards, then WS-* is the way to go. What this example shows is that REST offers an alternative and is appealing in its simplicity.

Instead of discussing the theory, it is more useful to look at a working example.

Example: Oracle WebLogic Portal + Oracle Database + SnapLogic + REST

Consider the following example:

  • An insurance company is using the Content Management capabilities of Oracle WebLogic Portal to store auto claims. Each claim contains a photo of the damaged vehicle, and some data about that vehicle such as make, model, year and a description of the damage.
  • The insurance company also has a Oracle Database that is populated with industry data regarding the fair market value of the cars, and the salvage value. These values are specific to the make, model and year.
  • The insurance company wishes to put the repair of the damaged vehicles out to bid to a community of auto repair shops. The intent is to allow shops to bid on the vehicles they are willing to repair using the industry data and the information from the claim.

The insurance company decides to use a quick and lightweight approach to build a data mashup with a web UI. The implementation is achieved using RESTful APIs, and orchestrated using a product called SnapLogic. SnapLogic is an open source server that provides:

  • Many pre-built connectors to expose native data sources as RESTful APIs (e.g. database, spreadsheet, XML)
  • Sophisticated data manipulation capabilities, such as joins, filtering, sorting, and computations
  • A variety of output formats for the completed RESTful feed

The data integration demo was implemented as follows:

  • A RESTful API is configured for the WebLogic Portal (WLP) Content Management system. In this example, the RESTful API was custom built as a JSP, but this capability will come pre-built in a future version of WLP.
  • The Oracle Database schema is exposed as a RESTful data API using an out of the box Database Reader component of the SnapLogic server.
  • The two data sources are joined using a SnapLogic pipeline. The pipeline reads the claims from WLP CM and the industry data from the database using the RESTful APIs.
  • The joined data is converted into an ATOM syndication feed via the SnapLogic server (using an Xml Writer component)
  • The ATOM feed is displayed in a ATOM reader, in this case the Google Mashup Editor UI

All of this is achieved via configuration, not code. The architecture is depicted in this diagram:

image

The resulting web application appears like this:

image

For more detailed information on the implementation of this mashup, consult the companion entry on SnapLogic's blog:

Oracle and REST

This is a simple demonstration that shows the ease of implementing integrations using RESTful techniques, especially when combined with a REST integration enabler such as SnapLogic. It is a stated goal of some of the Oracle product groups to provide RESTful APIs for access to product data. Check with the roadmap for each product to understand when these APIs will be available.

Attendees to Oracle Open World 2008 will have several sessions related to Oracle product groups and REST:

Oracle Internal REST Symposium

For Oracle employees, more information is available on the company intranet. I organized an internal symposium on REST amongst the product groups on July 28th, 2008. The event included speakers from Yahoo! and SnapLogic.

eventLogo

The agenda covered a number of RESTful topics, including:

  • Explaining REST (Subbu Allamaraju of Yahoo!)
  • Industry product landscape - SnapLogic (Mike Pittaro, CTO SnapLogic), and other products
  • Enabling technologies - RESTlet, JSR 311, WADL, JSON marshalling
  • Oracle Product efforts - presentations by various products groups on their REST efforts

Access to the recordings and slide decks can be found on the intranet here.

Resources

You may find the following links helpful:

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Tuesday, June 17, 2008

Best Practices for the Suspension or Termination of a SaaS Customer Account

No one wants to predict the failure of the relationship between a SaaS provider and customer. But much like a pre-nuptial agreement helps to quickly and fairly resolve the end of a marriage, a good up front contract helps ensure that both parties are fairly treated when a SaaS contract terminates. For this to work, the contract must have a well defined and fair set of terms for unwinding the relationship that works for both parties and minimizes business disruption. This blog entry proposes a set of rights for both customer and provider to use when establishing the contract terms.

This blog entry is a result of my analysis of a number of SaaS contracts. I covered the analysis in my previous blog entry. Note that I am not a lawyer, just an amateur contract sleuth so please engage a professional when working on your contracts.

SaaS Customer Bill of Rights

Other authors have created full blown Bill of Rights for SaaS customers. For example:

This blog entry is more focused. I am proposing rights that apply to both customer and provider when an account is on its way to being terminated.

Termination Rights for the Customer

I propose the following rights for customers whose account is being terminated:

  • Right to Business Continuity - customers rely on their SaaS products to conduct their business. Therefore, the provider must not have the ability to just terminate the customer's account without warning. A process must be in place to give ample warning before an account is terminated.
  • Right of Data Ownership - the customer must be able to extract their data upon termination, regardless of cause. The format of the extracted data should be as lossless as possible.
  • Right to Walk Away - the customer has the right to discontinue use of the service at the end of their contract. By exercising this right, they don't relinquish their other rights.

Termination Rights for the SaaS Provider

I propose the following rights for the provider that is terminating the account:

  • Right to be Paid - if you read about the SaaS business model, you will discover that cash flow is a major issue for the provider. Providers must carefully manage incoming cash and outgoing expenses. Anything that disrupts the predictability of the business will create major problems. Therefore, the SaaS provider has the right to expect timely payment, perhaps months in advance. If the customer fails to honor this right, the provider can quickly move the account into a suspended state.
  • Right to Protect the Service - if a customer account engages in malicious behavior or violates terms in the contract, the provider has the right to protect their service. In cases where the account is causing ongoing harm to the service (Denial of Service attacks), the provider must be able to immediately suspend the account. For less urgent issues, the provider should provide an appropriate warning before suspending the account.
  • Right to Fire a Customer -  businesses need to adapt to changing markets, and sometimes this means adapting or discontinuing products that aren't successful. For customers that no longer fit the profile of the business, the providers need to be able to discontinue their relationship with these customers. However, this process must honor the customer's right to business continuity.

 

Further Discussion

Hopefully each of these rights are obvious in their benefit. A couple demand more discussion.

Data Deletion - Where is the Mechanic's Lien?

Most Terms of Service assert that the customer owns their data. I am no lawyer, but ownership appears to be full legal ownership, like you would own a car or a house. See Netsuite's ToS as an example, but a clause like this is seen in almost every contract:

"Customer Data shall at all times be considered the property of the Customer."

However, some ToS documents allow the provider to destroy that data without providing the customer a copy in cases where the account is terminated for breach of the terms or failure to pay. This does not appear to be fair to the customer (as the SaaS provider is the prosecutor, judge and jury in this decision), and is inconsistent with physical property law in the U.S. (intl folks bear with me, I am focused solely on U.S. law here).

For example, if you don't pay a carpenter that performed work on your house, that carpenter does not have the right to burn your house to the ground. Instead, there is a process called the Mechanics Lien that requires the tradesman to pursue the money through a legal process, and he cannot harm the property in question. You could argue that data does not carry the same legal rights as physical property, but at least in some jurisdictions the law appears to treat data the same:

It seems that if a provider destroys their customer's data they open themselves to some legal liability. On the other hand, perhaps expressly reserving the right to destroy the data in the ToS alleviates the liability for the provider?  Is it worth the risk of finding out?

Regardless, destroying a customer's property is not a good business practice. Providers should treat the data like any of the customer's physical property. It should be returned undamaged because it legally belongs to the customer.

Business Continuity

Some Terms of Service allow for immediate termination of a customer's account with or without cause. In others, short periods of time like 30 days is all the notice necessary before the customer can be turned out. For mission critical applications, this is troublesome.

I feel there are a couple of key principles here to consider.

  • For no-cause terminations, the provider must provide as much advanced notice as it will take a typical customer to migrate to a new service. For services with high switching costs, this will be a period of many months.
  • For cases where the customer is in violation of the contract, the account should move into a suspended state before termination. This allows the customer to remedy the violation before the account is terminated. Suspensions are reversible, terminations are not.

These two principles are not widely implemented, but are critical in order to provide the customer with fair treatment.

 

Negotiate your Customer Contract

These listed rights are all well and good, but they won't likely appear in your contract by default. The contracts I have seen are largely skewed in the providers' favor because they were written by the providers. As a customer, I feel it is worth your time working towards more favorable terms. As shown in this blog entry, don't forget to negotiate the exit terms in the contract to ensure a viable migration when the time comes to end the project.

 

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Thursday, June 12, 2008

The Good, Bad, and the Ugly of SaaS Terms of Service, Licenses, and Contracts

Did you read your contract carefully before signing on with your SaaS provider? This blog entry shows you why it is important. Mixed in with some good stuff are some bad terms, and even down right ugly terms of use. Some vendors assert full rights to use and sublicense your private data! That's right, for the privilege of using their SaaS application, you throw in the rights for the use of your private data. Caveat Emptor!

The Analysis

This blog entry is a roll-up of an analysis I did of the Terms of Use for 8 different SaaS products. The products varied widely - some for the enterprise, others for the consumer. What the analysis showed is that there is little consistency across the legal documents governing the use of these services. It also showed some alarming terms that some of the sites demand.

I have picked out just the highlights to present here. The full analysis is available for download at the end of this post, but I warn you, it is quite boring.

Notice: I am an employee of Oracle, but this blog does not represent the views of my employer.

The Good

The following are the bright spots in the collection of ToS:

  • Netsuite: there are reports that this company has onerous licensing practices, but I see no evidence that. Of the 8 contracts I reviewed, Netsuite's is by far the best written and the most consumer friendly. They have the best data retention policies and termination procedures.
  • Boomi, Netsuite, Taleo: offer warranties for the various aspects of their systems, and not just "as-is". (see Boomi item 6.1, Netsuite section 3, Taleo item 11)
  • All but Concur: all of these services affirm that you own the data that you upload. This is key. However, there are a couple of vendors that reserve too many rights to use your data, see below.
  • Boomi, Coghead, Netsuite, Salesforce, Taleo: these companies indemnify the customer in cases where the application is found to infringe on a 3rd party's IP, and the customer is sued. Taleo is the only vendor of the 8 that does not demand to be indemnified in return from someone suing them for your use of the system.

The Bad

The following are terms that you should be wary of when entering into a service contract. Try to negotiate better terms:

  • Box.net, Coghead, Concur, Salesforce, Taleo, Zoho: these companies have contracts that can change at any time without any notice. In a way, this could be the ugliest line item of them all because the company could write in whatever nasty thing they want. But I will leave it at "bad" until one of the companies does something evil with it. (see Box.net item A, Coghead item 6.2, Concur item 8, SFDC item 21, Zoho item Mod ToS)
  • Salesforce, Taleo: have a line item that allows the company to advertise your name as a customer, merely by signing up for a paid account. Customer references should be earned, not mandated. (SFDC item 1, Taleo 7.1)
  • Salesforce: prohibits direct competitors from using the Service. But at the rate SFDC is expanding offerings, will you become a competitor tomorrow? For example, anyone that offers software development tools became a competitor when they launched force.com. (see SFDC item 2)

The Ugly

The following is the list of contract terms that are unacceptable. I would not recommend using the following services unless you negotiate better contract terms. [Update:to be clear, I don't think these companies are out to do evil, I am merely sounding the alarm to their contract terms]

  • Box.net: [Update: Box.net has fixed this issue in their contract, by narrowing dramatically the scope of their rights to your content] by uploading content that you own to this service you are giving Box.net an irrevocable license to use, copy, create derivative works of, sublicense, etc etc of your content. Think about that. The only redeeming argument is that this contract is for personal, not business use. But they put this item in there for a reason - why? Imagine uploading your personal pictures and then seeing one in the next promotional campaign for Taco Bell. This could happen because Box.net has the right to sublicense as they wish. (see section D)
  • Coghead: if Coghead terminates your account, you have just 2 days to send written notice to request your data. Otherwise they can permanently delete all of your data. What's the rush? (item 7.3)
  • Concur: (caveat: this is the Trial license, which can only be assumed to match closely the production license) has the most worrisome contract as it relates to your data. It is the only one that has no explicit line to indicate that you still own your data (filed business expenses, in this case). But it does have a line saying that Concur has an irrevocable right to use that data - this includes your personal data and financial info! Why is this in the contract? This seems quite broad for data that is of utmost sensitivity. (see item 5)

Links to the Terms of Service

The following is a list of links for you to inspect the contracts for yourself:

Box.net http://box.net/static/html/terms.html

Boomi: http://www.boomi.com/application/Boomi+Master+Subscription+Agreement-Online.pdf

Coghead: https://www.coghead.com/user/register?plan=Pro

Concur (Trial license): http://www.concur.com/register/Concur-Expense-Trial.php

Netsuite: http://www.netsuite.com/portal/pdf/tos.pdf

Salesforce: http://www.salesforce.com/company/msa.jsp

Taleo: http://www.taleo.com/solutions/licensing-terms.php

Zoho: http://www.zoho.com/terms.html

Raw Analysis

The following link provides you with the spreadsheet I built while analyzing the licenses. The spreadsheet contains the list of common license clauses with pointers into the documents on where to find those clauses.

What it shows most of all is the lack of commonality across all of the licenses. Each document has a lot of variance.

Download: SaaS "Terms of Service" Analysis Spreadsheet

Account Suspension/Termination and the Deletion of Data

I found that the process by which accounts are suspended (reversible) or terminated (irreversible) wildly inconsistent and mostly incorrect in my opinion. Because termination is also coupled with data deletion, this process needs to be well understood and incredibly fair to the consumer. My next blog entry will focus on this part of the contract, and establishing a reference workflow.

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Thursday, June 5, 2008

How Oracle, IBM, SAP, Microsoft, and Intuit are Responding to the SaaS Revolution

In my previous blog entry, I discussed the possibility of a software giant failing to adapt to the SaaS revolution. I used the history of DEC as an example of how a highly successful company could miss a major shift in the market and capsize. This blog entry is a reference guide to what each of the major software vendors are doing in the SaaS space. I won't be sensational and predict the demise of any of these vendors. I think it's far too early to tell how the future will pan out.

I can say subjectively that I am impressed with Larry Ellison's pioneering efforts in the space. I can also say that SAP is currently the media whipping boy in the space, with delays in their Business ByDesign program costing them credibility. But this revolution is far from done, so let's not waste time trying to speculate the distant future.

Note: I am now an employee of Oracle, via the BEA acquisition

 

Oracle

Strategy

Larry Ellison, Oracle's CEO, has be talking about on demand software for a long time (10 years I believe), so it is clearly on his radar. In fact, he was an investor in both Salesforce and Netsuite, showing his belief in the business. Charles Phillips, Oracle President, has also spoken to the topic.

Larry and Charles Phillips have articulated a strategy on how Oracle can deliver SaaS and retain its focus on its core market (large enterprise). Larry does not intend to make a major push into the lower end of the SMB market.

Current SaaS Initiatives:

Oracle supports the following SaaS initiatives:

Weaknesses

Critics have primarily focused on the lack of end-to-end multitenancy in the On Demand business. The argument is that Oracle will not be able to provide a cost efficient solution unless the entire stack is multi-tenant.

Further reading:

 

Microsoft

Strategy

At an architectural level, Microsoft is promoting an S+S model, instead of a pure SaaS model. S+S stands for Software+Services. The idea with this is that Software as a Service is most useful when pared with local software (like Office). Microsoft obviously has a major incentive to make sure desktop software is not left behind in the SaaS world, so this makes for good strategy. Whether consumers will buy into it is another matter. See the weaknesses section below for more on this topic.

Current SaaS Initiatives

The following is a selection of  the SaaS offerings from MSFT:

  • SaaS On-Ramp Program - aids ISVs in building out SaaS solutions
  • Microsoft Online Services - its businesss applications ondemand offering
    • Hosted versions of Exchange, Sharepoint, and LiveMeeting
    • Dynamics CRM Live - hosted version of the Dynamics CRM offering
  • Windows Live - a family of hosted offerings for the small business/consumer
    • Live Mesh - touted as a SaaS solution, it currently is just a file synchronization service
    • Messenger (IM), Windows Live ID, Virtual Earth, Search, Spaces (blogs), and Gadgets
  • Architect Center - provides architectural guidance for ISVs
    • Lead by Gianpaolo Carraro and Fred Chong
    • Have produced a SaaS reference application, LitwareHR
    • While some of what they write is MSFT centric, most of the articles are generally applicable
    • As an architect myself, I admire the work that they do

There are more services listed here, but not all are really SaaS.

Weaknesses

Critics contend that Microsoft will struggle to succeed in the SaaS market while preserving its existing franchises. It already stumbled with its business model when a European partner began offering Office as a service:

Its Office franchise is already being eroded by service based offerings (Google Apps, Zoho, Adobe, etc). Somehow it has to prevent Office revenue from being decimated by pure SaaS players.

 

IBM

Strategy

Searching for interviews on SaaS with IBM's CEO Sam Palmisano or VP of Software Steve Mills does not bring up much of interest. This is a bit alarming, remembering the lessons from my previous DEC  post. Of the 5 major software giants covered here, IBM appears to have the least amount of executive mindshare for SaaS.

I am not the only one who sees this: Larry Barrett wrote an entire article analyzing IBM's apparent sluggishness when it comes to SaaS. While I don't see a high level business strategy, IBM has embarked on some SaaS initiatives, covered in the next section.

Current SaaS Initiatives:

IBM has these intiatives:

Weaknesses

As Larry Barrett noted, IBM doesn't appear to be aggressively pursuing the SaaS model. Sure, it has some initiatives going, but for the size of IBM those initiatives seem undersized.

Also, Jeff Nolan has pointed out that IBM lacks the business apps necessary to execute on an effective SaaS strategy.

Further reading:

 

SAP

Strategy

SAP CEO Henning Kagermann helped launch the major SAP SaaS initiative: Business ByDesign which is a hosted version of several of SAP's traditional heavy weight business applications. The intent was to target SMB, but due to problems in execution that strategy may be changing. It also plans to be a SaaS hybrid, with some on-premise software in the mix.

The bright spot for SAP and SaaS comes from its acquisition of Business Objects (BOBJ). BOBJ was already offering Crystal Reports at the time of the acquisition, and appears to be a healthy business.

Current SaaS Initiatives

SAP has three major initiatives:

Weaknesses

By far the biggest perceived weakness with SAP is its failure to execute on its much publicized SaaS release (BBD). Critics point to the major delays (possibly 24 months) as a sign that SAP's applications are a poor fit for the SaaS model. Worse, SAP validated the concept to its customers but failed to deliver, providing key advantage to competitors like NetSuite.

  • Loraine Lawson: SAP’s SaaS Is Dead. Long Live SAP’s SaaS.
  • Dennis Howlett: SAP Business By Design likely to be delayed

    •  

    Further reading:

     

    Intuit

    Strategy

    CEO Brad Smith isn't the most vocal about SaaS, but his company is doing the talking for him. Intuit is clearly pushing the SaaS model, with major product offerings already available. The strategy appears to be simple: offer online equivalents of their product suite:

    Current SaaS Initiatives

    Intuit offers the following products as SaaS offerings:

    Weaknesses

    I haven't seen any weaknesses other than stiff competition. The space Intuit plays in will become crowded, with Netsuite and Intacct already delivering SaaS, and Sage likely to become a contender as well.

     

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    Tuesday, June 3, 2008

    How to Survive the SaaS Revolution: Learning from the Death of DEC

    The story of Digital Equipment Corporation goes something like this: it rose to power in the 60's and 70's by being an industry leader in minicomputers, competing against IBM which was pushing larger mainframes. DEC was a powerhouse of innovation and grew impressively to become the number two hardware vendor. However, the 80's saw DEC struggle because it missed a fundamental shift in the industry - the rise of the personal computer. This struggle eventually led to its demise - in the 90's the company succumbed and was acquired.

    Today, large software vendors are being faced with a revolution of their own - the rise of Software as a Service (SaaS). SaaS has the potential to be as disruptive to the software industry as the PC revolution was to the hardware industry in the 80's. I don't think SaaS will necessarily produce the exact same results with the software industry, but I do believe that it shows what could happen. It demonstrates that even giants can fall.

    This blog entry focuses on a single article from the NYTimes in 1983 which shows an interesting snapshot of DEC in the midst of failing to adapt. This will lead to a larger lesson about what software companies need to do to avoid the same fate.

    Note: the views in this blog are my own opinion, and do not represent the official position of my employer.

     

    The Demise of DEC - a Failure to Adapt

    I was not even in high school 25 years ago when the following story was published in the New York Times. Older members of the blogosphere have more context into what was going on, but I think the article provides a great glimpse of a computer giant a few years before its downfall. Some of the quotes are shocking in hindsight, as you can see the disaster unfolding in the words of the company president.

     

    NYTimes Story:  THE REPROGRAMMING OF DIGITAL

    Author: Leslie Wayne

    Published: September 4, 1983

    Note: the bold text is mine, and the text in quotes is from the original article.

     

    Setup for the downfall, the giant stumbles:

    "Digital, one of the stars in the computer industry, has stumbled into tough times. After nearly two decades of almost 30 percent annual growth of sales and profits, Digital reported a 32 percent earnings drop, to $284 million, for its 1983 fiscal year, which ended July 2, the first such drop in 12 years."

    because the giant is late to invest and deliver on the next industry revolution:

    "Particularly troubling has been Digital's lateness in entering the explosive $5 billion personal computer market. The delay reflects the company's careful and methodical approach to doing business - an approach that some say is inappropriate in an industry where being first with new products is becoming increasingly important. Never before has Digital had to rush a new product to market and, given its size and slow planning cycle, it did not do so with its personal computer. This, critics say, has been a mistake."

    while its former profit centers are eroded by the maturing industry:

    "At the bottom end of the market, Digital is being squeezed by the growth of personal computers that can do much of what the larger minicomputers can do - and for a lot less. Thus, Digital must defend its position in the maturing minicomputer market with an aging product line, while making inroads into personal computers and office automation, markets where others have already established beachheads. It is uncertain whether the revenues to be gained in these new areas will offset declines in the old."

    Decades of prior success may not help the giant:

    "Digital gained a reputation as a sophisticated engineering company making high-quality products for scientific and technical uses and for such office functions as payroll accounting and data processing. (Mainframes, by contrast, are used for large, complex computations and huge information storage.)"

    and may actually hurt because the same strategies don't play in the new market and it is blind to the danger:

    "Mr. Olsen [Digital company president], who presided over the 10-day show, is far more optimistic about Digital's prospects. ''Things have never been better,'' he said in an interview at the crowded Digital show in Boston's Hynes Auditorium. ''I've never been as happy with our products as now, and even though there's been a slight drop in earnings, we've had no layoffs. I see no real problems with our business" ...

    Moreover, he is not concerned about Digital's lateness in getting into personal computers. ''We're sticking with the same old strategy, even though it doesn't look too exciting,'' he said. ''We may be the last kids on the block, but we wait until we have a better product.''

    Product development is not enough, the entire culture must adapt:

    "Digital's difficulties are compounded further by the fact that its essential personality has been that of a company dominated by engineers who sold to engineers and let the technical razzle-dazzle of the machines do much of the selling. Unlike many companies, the Digital sales staff is on salary, not commissions, a practice that Mr. Olsen defends as bringing in higher yields per salesman."

     

    Lessons to be Learned

    Important take-aways from the article, all of which are pretty obvious but are important to list explicitly:

    • The Chief Executive must take the lead in proactively addressing the shift
      • Revolutionary change must be supported by the top leader
      • Denial is unacceptable: ''Things have never been better...''
    • Leadership must formulate and execute on a good strategy
      • Hopefully something better than: "We're sticking with the same old strategy.."
    • Respond in a timely and effective manner, or risk being shut out of the new market
      • "Digital's lateness in entering the explosive $5 billion personal computer market..."
    • Old revenue streams may decline
      • "Digital is being squeezed by the growth of personal computers that can do much of what the larger minicomputers can do".
    • Internal cultural changes may be necessary
      • "Unlike many companies, the Digital sales staff is on salary, not commissions"

    Counter examples of DEC include these established companies, which all responded to the PC revolution during the same time period with better results:

     

    How Disruptive is SaaS?

    In hindsight, we know that the PC shift was an enormous change in the way people interacted with computers, and a massive market opportunity for computer suppliers. Will SaaS be as disruptive to the software industry? Many believe so, as do I, but only time will tell. Instead of selling the vision, I will offer a number of links that will help you come to your own conclusion:

    But please understand that disruption does not mean on-premise software will go away. Just like mainframes still crank away in basements everywhere, on-premise software will not go away any time soon, if ever. Disruption in this case means that I believe SaaS will take a significant market share next to on-premise software. I will leave it to the analysts to predict the actual market sizes.

     

    Looking at the Software Giants of Today

    Remember that DEC was once the second largest computer company on the planet. By the late 90's, after years of struggle, what remained was acquired by Compaq. What does this mean for today's software giants:

    • Oracle
    • IBM
    • Microsoft
    • SAP
    • Intuit

    Is it possible to determine if one of these giants is on the way to destruction? According to Bob Warfield's recent post, Salesforce Headed for Siebel’s Fate?, put all but IBM in the dead pool (IBM gets a free pass because they also have significant hardware and services businesses) . Bob states:

    "All good things come to an end, especially for software companies.  Very few live through a paradigm shift of any consequence."

    Bob does great work, but I think this statement is far too pessimistic. Software vendors have been living through constant revolution - since the mid 90's we have seen major waves of change in the software industry:

    • Java
    • Internet
    • Free Open Source Software
    • SOA
    • Social computing
    • Dynamic languages
    • and now SaaS

    Software companies have learned to adapt. For example, free open source was supposed to kill all software product businesses, but vendors are still seeing growth (e.g. Oracle DB revenue still growing). As for SaaS, each of the giants have initiatives underway. Some are having more success than others, but I think it is too early to draw any long range conclusions.

    As an Oracle employee, I am happy to see that Larry has been heavily involved in the space (including personal investments in Salesforce and Netsuite), and that multiple initiatives are already being delivered with success.  SAP has stumbled recently with delays in the Business By Design program, while IBM, Microsoft and Intuit seem to be making some progress.

    Which of these giants will pull through, and which will fail? Check back here in 25 years for the definitive answer.

     

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    Thursday, May 29, 2008

    SaaS Soup: Navigating the "as a Service" Acronyms: CaaS, DaaS, DBaaS, PaaS, SaaS, XaaS

    Ever wonder what all the "aaS" acronyms mean? Do you want to understand how they relate to each other? This blog entry will help. I have created a map of many of the "as a Service" terms you will see in IT and have grouped them according to category. I have also provided an explanation and links for further reading for each so you can quickly come up to speed on all. 
    I put this together because I am working on the second edition of a visual map of the SaaS, PaaS, and Cloud Computing industries that I released last month. In order to make progress on that map, I found I needed to have a better understanding of all of the common categories in the "as a Service" market. The map in this blog entry has a different focus - instead of mapping out industry players I am mapping out industry terminology. Both maps complement each other.

    Map of the "as a Service" Terms

    This graphic shows the groupings of the "as a Service" terms that you may encounter in the IT industry. Click the map for a larger view.
    aaSTree_Laird_May08

     

    Top Level IT Service Categories

    This section lists the primary categories around computing as a service. These categories serve as the larger buckets into which we will place the finer grained "as a Service" terms.

    HaaS

    Hardware as a Service
    Humans as a Service
    • What: service offerings that primarily require humans beings to deliver (aka professional services)
    • Not an industry term, but necessary to properly categorize some of the "as a Service" offerings
    • OK, I don't mean prostitution wise guy

    PaaS

    Platform as a Service
    • What: hosted software that serves as a platform for building SaaS offerings
    • There are different types of PaaS products, and sometimes HaaS products are mistakenly called PaaS
    • Some PaaS products may be optionally deployed on HaaS products such as Amazon's EC2
    • Examples of PaaS: force.com, Bungee Connect, Google App Engine, Etelos, QuickBase, LongJump, Apprenda SaaSGrid

    SaaS

    Software as a Service
    • What: in its most generic form, any software offered remotely as a service. Since this definition includes the entire world wide web, there are generally agreed on criteria for SaaS products to narrow the scope:
      • Primarily business software
      • Usage based pricing (pay as you go) with no long term contracts
      • Delivered over the internet, primarily via a browser
      • Managed by the ISV that developed the application (as opposed to the former ASP model)
    • Wikipedia: SaaS
    • Alternate form: Microsoft has pushed the term "S+S", which is a SaaS solution paired with on-premise software

    List of "as a Service" Terms

    This section lists many terms you will find referring to a "as a Service" offering in the IT industry. They are organized by acronym - sometimes the same acronym may refer to multiple terms. For each term, a few links are provided for further reading.

    BaaS:

    Backup as a Service

    CaaS:

    Communications as a Service
    Compliance as a Service
    Content as a Service (aka Content On Demand)
    • Category: SaaS  (note it may directly employ Storage as a Service for the actual storage of the docs)
    • What: offering a hosted content repository, including workflow, versioning, checkin/checkout
    Crimeware as a Service
    Computing as a Service
    CRM as a Service

    DaaS:

    Data as a Service
    Data Warehousing as a Service (or DWaaS)
    Data Mining as a Service
    Database as a Service (or DBaaS)
    Development as a Service
    Desktop as a Service
    Document Management as a Service

    EaaS:

    Ethernet as a Service
    • Category: HaaS
    • What: a solution provided by network carriers to provide virtual ethernet capacity from a much larger line
    • SearchTelecom.com: Ethernet as a service (EaaS)
    ERP as a Service (or ERPaaS)
    Email as a Service

    HaaS

    Human Resources as a Service (HRaaS), Human Capital Management as a Service (HCMaaS)
    • These terms are not used yet, but probably coming soon to a Workday blog near you

    IaaS

    Information as a Service
    Infrastructure as a Service
    Integration as a Service
    Identity as a Service

    MaaS

    Malware as a Service
    Manufacturing as a Service
    Mashups as a Service
    Media as a Service (as in: video, audio)
    • Category: SaaS, a subtype of Data as a Service
    • What: providing hosted access to audio/visual services
    • Chris Saad: MaaS - Media as a Service 

     

    QaaS

    Queue as a Service

    SaaS

    Security as a Service
    • Category: SaaS
    • What: the delivery of security capabilities using a SaaS model
    • Wikipedia: Security as a Service
    Storage as a Service

    TaaS

    Testing as a Service
    • Category: Humans as a Service
    • What: outsourcing the testing of software
    • TAAS Services 

    UaaS

    UI as a Service

    VaaS

    Voice as a Service

    Everything Else

    Confused? Think all of these acronyms and terms are ridiculous? You aren't the first.
    In recognition of the proliferation of "aaS" terms, umbrella terms have also appeared:

    Previous Acronym Round Ups:

    This isn't the first attempt at rounding up all the XaaS variants. You can find previous attempts here:

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