I'll start with a discovery I made near the end of my researches, a superbly thought-provoking essay by David Gray entitled the The Connected Company. Obviously that's a title that's going to resonate with the writer of a blog called The Connected Web. It was my fellow Enterprise Irregular Dion Hinchcliffe who pointed me in Gray's direction, and who succinctly sums up his "viewpoint that businesses can't be treated as machines, as much as some try to, but are more like living organisms and we need to treat them that way." In Gray's own words:
"You have to put your strategy into people if you want to get results. And today, thanks to social technologies, we finally have the tools to manage companies like the complex organisms they are. Social Business Design is design for companies that are made out of people ... It's not about design for control so much as design for emergence. You can't control a complex system, but you can manage its growth, and there are a lot of things you can do that will position it for success."
Hinchcliffe concludes his comments on Gray with another swipe at those top-down process designers: "I fully expect that management theory in the next 5 years will look a lot more like his thinking and less about hierarchy, org charts, and out-dated, mechanistic business process 'optimization'."
There's plenty more food for thought in Hinchcliffe's post, which reports from sessions of the Social Business Summit 2011, which his (and Gray's) consultancy Dachis Group runs. A resonant line from Salesforce.com's JP Rangaswami, for example, that "we have meticulously engineered the act of being social, out of business." Also a couple of key ideas in the application of social business from leading thinker John Hagel (as reported by Hinchcliffe):
"1) 'Exceptions are the shadow economies of firms today' and [provide] fertile ground for social business solutions, which thrive in an exception-driven environment, and 2) his advice to start social business 'on the edge. The core of businesses have antibodies that are effective at throwing off and resisting change'."
That advice chimes with the findings of a recent Deloitte report, Social Software for Business Performance, which I came across thanks to a blog post by another Enterprise Irregular member and Dachis Group consultant, Susan Scrupski.
The Deloitte report highlights exception handling as the main area where social business initiatives deliver quick payback: "Employees need tools that enable them to navigate organizational boundaries, connect to the right people and accelerate exception resolution ... Social software, applied against the problem of exception handling, can directly and measurably impact operating metrics and improve business performance."
Deloitte recommends placing the focus of efforts on these pain points in order to achieve demonstrable results, rather than trying to achieve widespread adoption right out of the gate. Or as Scrupski puts it in her own blog post on the findings:
"... the adoption story is much less about the technology than it is about the organizational dynamics required to rewire the culture." It's more than just cat-herding, she reports one member said at an Adoption 2.0 Council event: "These are not cats we're herding; they're Tigers, and they bite!"
There was another sideswipe against prescriptional process design to relish, too: "the folks who are critical of the adoption effort required are not particularly proficient in working socially in the first place," she wrote, "and cling to the world they know which is process-oriented and rooted in the industrialization (machining) of the enterprise."
Instead of designing from the top down, these consultants are arguing for rebuilding enterprises from the bottom up — starting with the people who actually get things done on the ground.
]]>"BPM, Gartner-style, is no longer focussed on the 20 percent of the enterprise that is structured work and automating the routine. It's just as much about 80 percent that is the unstructured, dynamic, social operational reality ... Most interestingly perhaps, it's about an empowerment mindset: 'Take a chance on your workforce, trust the creativity of your people to deliver'. But all of course within an appropriate governance framework."
Despite this clarion call at the opening, other speakers during the day were from more of a classic BPM mold. Established BPM professionals tend to have a 'Yes, but ...' response to concepts of unstructured, social processes. They know they have to make positive noises about the social buzzword, but they're not sure how they can make it fit without thoroughly disrupting their familiar world.
The original notion of BPM was to be able to model processes more effectively and thus roll out efficiency and agility across the organization, all the while enforcing and reusing best practice. Trouble is, the system depended on a highly centralized model, where all the skills, the process design, the planning and the objectives were set by an inner clique, whether of management or of BPM experts. It had little space for user-generated processes, and no framework for devolving process design in a sufficiently loose and forgiving manner to accommodate rapid process innovation at the periphery.
The result has been a wave of user dissatisfaction, exacerbated by people's perceptions of greater freedoms in other areas of IT. As Forrester Research analyst Clay Richardson put it last year in conversation with Joe McKendrick:
"What we're seeing in the process world is this idea of process populism ... Last year, when I would speak with process pros or business stakeholders, they almost sounded frustrated, almost sounded like they had pitchforks in their hands. They're going to IT and saying 'we want more control.' We're starting to see more demand from business, instead of relying on IT."
Coming back to BPM, Gartner's vision does indeed promise change and empowerment for the dissatisfied populace of business users. But that doesn't solve the crisis of how you go about building out the infrastructure to allow for dynamic, distributed automation of business process innovation and improvement. Nor does it answer how the users are going to learn the skills they'll need to exercise those capabilities successfully. Enterprise BPM faces a social crisis, and although the revolution may have begun, we're far too early in the transition to say how the new power structures are going to play out.
]]>What's needed goes further than a few enhancements. The web conferencing model is broken and faces disruptive change. Nothing illustrates that better than contrasting recent moves by Cisco and Slideshare.
Cisco last week announced the shutdown of its online mail product, which was based on the 2008 acquisition of online email and calendaring startup PostPath, and which was originally going to be relaunched as WebEx Mail (it was since rebranded Cisco Mail). Web meeting market leader WebEx was itself acquired by Cisco in 2007, and in the first year or two Cisco aimed to make it the centerpiece of a sophisticated enterprise collaboration platform.
It has turned out that the vision was over-engineered and the high-falutin' platform concept has gone nowhere — which is probably the real reason for the demise of the mail component, as it no longer has a context to make it compelling. But what's really sad is the continued neglect of WebEx itself, which is in an even worse state than I was already complaining of in mid-2009:
"Despite the glaring inadequacies users have had to put up with throughout those years, web meetings to this day remain difficult to schedule, poorly integrated with other web collaboration technologies, absurdly complex to post-edit, archive and search, and still totally cut off from recent developments in social media (how difficult can it be to plug in a Twitter stream widget?) ... I'm sad to say that WebEx comes across as a meager, undernourished poster child for Cisco's ambitions in cloud services."
I hoped that perhaps the cosy cartel might be challenged by outsiders such as European vendor Netviewer, which back in 2009 was experimenting with online live video. But last month Citrix completed its acquisition of Netviewer, bringing 18,000 mainly European customers to the Citrix Online platform but doing little to refresh its feature set.
No, the real excitement last month came when online slidedeck sharing platform SlideShare announced Zipcast, which adds a conferencing capability to its already successful slideshow platform. [Disclosure: I've been offered an early opportunity to present a promoted Zipcast using the platform]. The genius of this new release is that it strips away all the unnecessary paraphenalia that we've come to associate with web meetings: the clunky client software, the cumbersome integration of social tools, the proprietary screenshare window. Instead it just gives us the slidedeck in a browser window and video, audio and social feeds from the presenter and other participants.
This is a classic disruptive move, giving the unserved majority the 'just enough' that they need to get the job done, but in a platform that's easy to extend with additional features. The established web conferencing vendors have had the past ten years to consolidate their dominance by driving forward with innovations that made the experience richer, simpler and more productive. They flunked that opportunity. Now the disruption begins, and online collaboration steps out in a new direction that I hope will rapidly generate some explosive, pent-up innovation from newly liberated users.
]]>Targeted at media companies and consumer brands, the technology already has some high-profile users: Sports Illustrated used it to create a website to bring together news and picture feeds, social streams and discussion for last year's soccer World Cup; Universal Music built a site for teen idol Greyson Chance, where Twitter, Facebook, Myspace or Google users can log in and post comments on the site and to their own streams at the same time.
The heavy lifting behind all this audience engagement is described well in a posting by Ken Yeung at The Digital Letter. He also does a good job of summarizing why this matters:
"No longer do we need to tell people that they need to be fans of our brands on Facebook or follow us on Twitter — it can all be right on the brand's website. It's the start of what some might consider to be great social integration with your website ... Echo is giving the power to the publishers to take back their websites and community without just simply leaving it in the hands of third-parties who may or may not have restrictions on data portability."
I've always liked Echo as a company, right from the beginning of its earlier incarnation as JS-Kit. The reason is that, unlike virtually every other player in the Web content management space, it has never sought to own the customer's core website. Instead it has specialized in plug-ins that bring interaction to the static web pages, delivered as a service. JS-Kit provided a comment capability (similar to Disqus) that took care of user log-ins so that users only had to log in once and site owners didn't have to waste resources on managing their own user sign-ins. The new E2 service does pretty much the same thing by analysing and mashing up social media streams.
"The new unit of currency on the Internet is activity data," said Echo's CEO Khris Loux in a statement at the launch. "And the new captains of the web are the teams with the creativity and insight to build highly social real-time experiences with that data."The transformation of JS-Kit into Echo took place two years ago and was a move to what Loux then called the "death of the comment," brought on by the rise of Twitter, Flickr and other social media streams. This month's launch adds powerful real-time analysis and mash-up technology capable of processing many thousands of items per minute in order to filter and present the right content. Loux calls it "real-time as a service." As he explains it, "a publisher or start-up should no longer build real-time ... The Web is becoming designing blocks and Echo, real-time as a service, is the new block in town."
This is a product that clearly follows on from the theme I highlighted at the beginning of the year as a trend to watch when I wrote, Big in 2011: Curation and Consultation. It's a powerful combination of the two components, recognizing commentary from social stream users at the same time as bringing it together in a curated context. Although for the present the market for this technology is clearly concentrated in the mass market consumer brand arena, it's a reminder that real-time analysis and mash-ups are going to be vital tools in any environment where there's a need to harness social streams to produce meaningful results.
]]>Fortunately, the ITSM vendors are now starting to introduce social tools into their applications, and the advances that I've been recording on this blog for several years already in the field of customer support desks are finally landing up on the IT service desk.
"It's as much a cultural change as anything else," David D'Agostino, EMEA product marketing manager for Service-now.com, explained to me in a briefing this morning. The ITSM vendor is introducing some new social media tools in the latest release of its SaaS application, which went live to customers last week [disclosure: Service-now.com is a recent consulting client].
'Social IT' comes in the form of two main components that are now available as part of Service-now.com's ITSM suite. One adds online chat, which can be used as an additional channel by which users contact the service desk, or as a medium for internal real-time interaction, for example to open a virtual 'war room' while resolving an open problem.
The second is a live feed, similar to Salesforce.com's Chatter stream, which can accept posts from people or from system objects, such as devices or open incidents. The stream shows up in a sidebar of the Service-now.com application window, and can be filtered using tags.
The new functions appear to be be meeting a pent-up demand. "I'm very pleased by the number of people that are wanting to get their hands on this and start using it," said D'Agostino. "It's actually quite interesting to see how fast it's being adopted."
In part the explanation may be that it's easy to add these tools without disrupting or replacing existing processes. Another factor may be that people already have third-party tools in place but prefer to have these social functions native in the applications they use for core processes. Service-now.com was itself using the third-party chat tool Yammer internally, D'Agostino told me, which had helped to prove the use case. "It took that kind of staging process, using Yammer and demonstrating that it wasn't wasting people's time, [that] it was useful."
Integration to other applications remains an issue, though. The ability to intersect with Chatter streams may well be something that Salesforce.com users will want, while customers are already asking about connecting Service-now.com's XMPP-based chat with other chat services (not yet an option but in the roadmap, they've been told). This another example of the stovepiping of social streams within enterprise application stacks that I've written about before.
Not related to the social tools launch but still relevant to the topic, D'Agostino pointed me to an interesting account of how Facebook itself manages its own server data center using a lightning-fast application developed on top of the Service-now.com platform. Here's just a flavor of how Facebook approached the task:
"The project was nick named 4-Clicks because it was the goal of the Director of Datacenter Operations, that each server repair could be identified, assigned, and have repairs completed in just 4 clicks of the mouse ... Each server has its own wall so a tech can easily see current status, repair history and what the pre-determined diagnosis is for why the machine is not functioning as expected."
If only all enterprise IT systems management could be as intuitive, efficient and fun. Maybe, one day, it will.
]]>Asana is out to fundamentally change how people collaborate at work, primarily by doing a much better job of automating and simplifying collaboration than every existing enterprise collaboration tool. Why will it succeed when hundreds of prior start-ups have failed to achieve a similar aim? Techcrunch's Sarah Lacy explains that at least it will bring some fresh thinking to the problem:
"Asana is one of the first business software products re-thought from the ground up by twenty-somethings with no background in old-style enterprise sales and frankly, not too much experience using enterprise software in the workplace."
"Whenever you're working with a group, you always have this problem of, how do you manage logistics, how do you stay on the same page, how do you stay co-ordinated? It occurred to us that, if we could solve this not just for Facebook but for the world, at web scale, that would be an immense way to help out ... we could potentially make all organizations faster."
Asana tries to solve that by providing the necessary underlying structure, but framed within a user interface that is designed to be as fast to use as a text editor, with a panoply of rapid shortcuts, so as not to slow people down and thus switch them off as users. "Like an iTunes for your task list," says Rosenstein.
Perhaps because the UI is so simple, the product demonstration looks disappointingly anodyne. But there is some interesting technology under the hood. A big section of the two-year development process was devoted to creating a simplified technology framework called Luna to provide a streamlined interaction between JavaScript in the browser-based user interface and the back-end data model. Luna is described in a fair bit of detail in this Quora answer posted by Asana's Jack Stahl.
Asana's objective is not merely to become another collaboration app. Rosenstein's pitch talks about becoming the collaboration foundation for just about every enterprise team activity you can think of, including support ticketing, applicant tracking, performance reveiws, calendaring, discussion and meetings. That ambition may sound hubristic but it's also aligned with the need I've alluded to in previous postings here for collaboration to link in with process as well as content. So maybe it's too early to dismiss Asana just yet.
]]>Back in the mid-1990s, when people were still barely starting to become aware of the Internet, IBM started promoting the concept of e-business until it became a commonplace concept. At the beginning of the new century, IBM declared the beginning of the on-demand era, foreshadowing the spread of new ways of living and doing business online that we now take for granted, such as banking, shopping and recruiting over the Web. This week, IBM signaled its resolve to start talking about social business in similar terms, with one senior strategist describing it as a $100 billion market opportunity (yes, that's 100 billion with a 'b' and eleven noughts).
Now of course, as my Enterprise Irregulars colleague Vinnie Mirchandani reminds us, these strategic visions sometimes take a while to translate into concrete, practical market behavior. I can understand Vinnie's caution after listening to Doug Heinzman, director of Lotus strategy, telling him that, "in IBM's vision a 'social business' rethinks traditional CRM, HRM, PLM, SCM — almost every area of business where in Doug's view you can 'optimize workforce efficiency'." That's a vast swathe of change that isn't going to happen overnight. But if IBM has put its best minds together and determined that this is a trend on this scale, then a lot of people are going to start listening and that in itself will hasten its arrival.
Social business — along with all of the enterprise collaboration technology that underpins it — just got an almighty heft from IBM this week, and the repercussions will ripple for many months or even years to come.
]]>Writing at the beginning of this month, Paul Ford puts his finger on a core truth about the Web in an essay entitled The Web is a Customer Service Medium:
"Why wasn't I consulted? ... is the fundamental question of the web ... Humans have a fundamental need to be consulted, engaged, to exercise their knowledge (and thus power), and no other medium that came before has been able to tap into that as effectively."
A single sentence stood out for me in Erick Schonfeld's TechCrunch prediction article, Seven Technologies That Will Rock 2011:
"Quora represents a bigger technology trend, which is the layering of an interest graph on top of people's social graph."
An end-of-year blog post by Bradford Cross discussing Why the iPad is Destroying the Future of Journalism delivered this superb aphorism:
"... the future of news products need Google-level relevance, Facebook-level social, and Apple-level design."
The need for curation was summed up well I thought in a Thanksgiving-weekend blog post by Rand Fishkin, The Algorithm + the Crowd are Not Enough. It included this crucial wake-up call:
"I do think there's an opportunity brewing for entrepreneurs, websites and companies to add editorial components to the algo-crowd paradigm."
The first article of this quintet was a mid-November blog post by Tom Foremski, entitled Curation And The Human Web.... Like Fishkin later in the month, Foremski writes about the limitations of machine-driven selection of content. But he also delves into how to make the two models work together, letting the machines automate as much as possible, leaving the humans to concentrate on the areas where they can contribute the most utility:
"The cheapest way to add a human layer is to improve machine aggregation by taking clues from what people do online, what they share, what they write, and what they discuss. That's why tech companies talk about the "social web" and social graphs. These are ways of improving their technologies without having to employ people."
Those are my picks. What do you think?
]]>This matters because, if Facebook does hold onto its position as the gorilla of the social media scene, then it will become a de facto standard that sets the tone for social computing among both consumers and business people.
Several observers have taken the news as a cue to reminisce back to the days when AOL was the dot-com darling, culminating in its merger in January 2000 with the Time Warner publishing conglomerate, when it was valued at $150 billion.
AOL turned out to have been hugely overvalued. Instead of remaining captive, its subscriber base rapidly drifted off elsewhere as faster broadband providers emerged along with free-of-charge web-based email accounts from the likes of Hotmail and Yahoo!. Facebook doesn't even have the subscription revenue that AOL was able to count on — nor of course does it have the cost of sending out all those CDs that AOL sprinkled across the nation during its rise to notoriety. A recent posting to the Quora question-and-answer site by AOL's former CEO Steve Case has revealed the economics underlying those discs: AOL spent $35 to acquire each subscriber (over $300 million in total, says its former CMO), but that was just 10 percent of the average lifetime subscriber revenue of $350.
A spot of mental arithmetic tells me that Facebook only needs to make a profit of $10 per user per year over the next decade to handsomely reward its latest investors — although I suspect they wouldn't care anyway as they're probably not from the Warren Buffett school of buy-and-hold investing. So long as they can offload their stock to someone even more optimistic before the music stops they'll have met their investment objective.
But how likely is it that Facebook will both retain and monetize its subscriber base on that scale? There's already a backlash in some quarters against Facebook because of its cavalier attitude to individual privacy. I'm told it is possible to lock down your privacy controls as a Facebook user, but you'll have to invest a fair bit of time. Social media is a fashion business, as Oliver Marks points out, which makes even Facebook vulnerable to a change in popular sentiment. Then there's the question of how much spending really is going to go through Facebook rather than other more targeted sites such as Groupon.
The truth here is that, just as with AOL back in the late 1990s, the dynamics of why people are flocking to social websites and how they'll be used in the future are barely discernible right now. That's the big unknown that threatens Facebook's current valuation. Goldman Sachs and its allies may be ready to bet on the future of Facebook today, but to do so is pure speculation.
]]>Just published is a new McKinsey report heralding The rise of the networked enterprise: Web 2.0 finds its payday. This is the latest in a series of global annual surveys carried out by the management consultant, which have been investigating attitudes to, and take up of, enterprise 2.0 technologies.
There's dramatic news from this latest report, which has found that enterprises that take advantage of Web 2.0 collaboration tools are more successful than those that don't. As summarized by the Financial Times, "companies using the Web intensively gain greater market share and higher margins."
More precisely, the research found that enterprises that foster collaboration and connections both internally and externally are most successful. Forbes blogger Rawn Shah has drilled into this part of the report and found that merely being connected is not enough on its own: what really counts is integrating collaboration into core workflows within the organization — "The better you can integrate into how people work, the more apparent the value."
This echoes a trend towards Ubiquitous Collaboration that I identified as one to watch right at the start of the year. Events quickly moved on, and by February I was asking, Can Enterprise 2.0 Apps Stand Alone?. Over the year, I think it's become evident that at the very least they need to integrate with other applications. One approach we saw emerging was the use of new tools for Integrating Process in the Cloud.
In many cases enterprise application vendors are going as far as building in their own social and collaboration tools. By whatever method the integration is achieved, use cases are starting to emerge that demonstrate the potential for Building Disruptive Business Structures in the Cloud.
Another large-scale survey of business attitudes I want to highlight is the Cisco Connected World report, a three-part study that has been published over the past three months. The findings highlight the rise of mobility in work patterns — for example, the research suggests that almost two-thirds of workers believe they don't have to be in the office to be productive. For these workers, being connected means much more than being on the corporate network at work; they expect to be able to access collaboration and core processes wherever they happen to be.
Of course, most organizations' IT policies have not yet caught up to this new working reality. Thus the research finds "a disconnect between IT policies and workers, especially as employees strive to work in a more mobile fashion and utilize numerous devices, social media, and new forms of communication such as video."
]]>"Salesforce.com will be wise to make its as-yet unpriced 'Chatter Lite' license — which provides Chatter without Force.com or Content — free-of-charge. This should become the Chatter equivalent of the Force.com Sites capability, which publishes forms and data on Web pages for use by external users. Making Chatter feeds and interaction similarly available to external users and applications will make it 'stickier' for core users of the licensed versions, and extend its reach into new fields."
Last week at Dreamforce, Salesforce.com followed that advice, introducing a free version that is designed to extend the use of Chatter to any employee within an enterprise, or even beyond in some cases. "Our goal is very simple," said CEO Marc Benioff in the event's opening keynote. "How can we get everyone on Chatter?"
While this is a welcome development, it opens up new challenges for business people that want to harness the technology productively. Participating in a broadcast of the Gillmor Gang discussion show from the Dreamforce show floor last week, I talked about the lack of standards to allow collaboration streams like Chatter to cross either application boundaries or enterprise boundaries.
There's a real danger that conversations within the enterprise will get corralled into application-specific stovepipes, with Salesforce.com users talking on Chatter, while SuccessFactors users engage with Cubetree and SAP users interact on StreamWork. Meanwhile, earlier social networking initiatives will continue on dedicated platforms such as Jive, Socialtext or even SharePoint.
Susan Scrupski, founder of the 2.0 Adoption Council, which brings together early adopters of enterprise social platforms, discussed this danger in a blog post yesterday. The Council's members represent hundreds of large enterprises that already have social business initiatives under way. Many of them are worried about the impact Chatter adoption might have on those initatives. "It is bad news if the legions of non-converted enterprise employees flock to social via SFDC and cause a disruptive wrinkle (and endless analysis paralysis) in the strategic plan that's already underway on another platform," she writes.
On the other hand, she welcomes the upside of having such a visible ally championing the use of social tools in business. "Having Benioff move front and center to embrace the social revolution is like a dream come true," she writes. "This sector needs a Benioff. Grafting on JP Rangaswami to the SFDC social story was pretty slick as well."
The battle right now is for adoption, but once that battle has been won, there will be a new struggle to establish integration standards for collaboration streams, to ensure it does not turn into a pyrrhic victory.
]]>Last week, I had a conversation with my six-year-old son when he came to me saying that he wanted to find out the names of places in Africa. OK, I said, where you can look up information about countries and places around the world? 'Google?' he replied, after just a moment's thought. OK, I said, isn't there a type of book where you can look up all the countries in the world? Finally, he remembered about the atlas. A younger parent than I might have settled for his reliance on the Web but I wanted him to remember there are alternatives, just in case the Internet isn't always there when you need it.
Today, though, the Web is pervasive and the most telling moment in the Accenture video comes right at the end (so I suppose you could say what comes next in this blog post is a plot spoiler, as I'm going to tell you about it). The narration asks, 'Remember the music industry before Apple?' Then it adds, 'They don't.' The point being that some business models and consumer habits have been completely overturned in the past decade.
It's probably worth taking a few moments thinking about what else these 10-year-olds don't remember. I've started a list here but feel free to add more in the comments.
In this podcast, learn about some of the advantages of SaaS for enterprise applications and find out why most companies nevertheless are going to be running hybrid on-premise and cloud environments for a good many years yet.
Listen to or download the 7:12 minute podcast below:
---Transcript---
PW: Before the break, Bruce, we were talking about software as a service and some of the ways in which companies are adopting SaaS. A lot of the talk about moving to the cloud is all about what can go wrong, but I think that perhaps we should focus more on the benefits. Do you see from Infor's customers what some of the positive elements of moving to the cloud and SaaS actually are?
BR: Sure. Well, I think there's several. The first one that everyone mentions is the fact that there is no cap-ex, or capital expenditures; that you're not having to worry about buying a big enough server, or enough storage, or doing the database provisioning or all of that. You don't have to hire additional IT resources to be able to run that application. Basically, all you need is a browser and a trusted SaaS or cloud provider.
That said, just because you're running the application on the cloud doesn't mean that you start running that application tomorrow. The physics of software still apply. You still have to migrate data from one system to another. You still might want to do some business process reengineering, as you're starting to put the new systems in. There's still a little bit of training, even though most of the cloud apps are designed to be more consumer-like versus the classic enterprise software, where you look at it and say, 'Oh my God, this is not Amazon.com or online banking — I'm going to have to have a PhD to figure this stuff out!'
So while there's the benefits of cap-ex and lower IT cost, I think it's important to point out that you still have to do the traditional things of implementing software, even if it's all running in a data center that's far, far, away.
Right, and particularly when you're talking about these core business systems, where it's vital that the processes are properly checked out and are actually doing the jobs that the company needs doing. But I think the example that you were giving earlier — of a company that wanted to deploy financials to subsidiaries where they didn't necessarily have the staff on-site — that's a great example of where going SaaS and cloud can really be beneficial, because it can cut your costs a lot. And you've also got the standardization, haven't you, across those sites?
Yes — and the best part is they're all running on a single system. So, even though it's six sites, they all look the same, they're all sharing the same approved vendors, they still have all the business processes that you're running at corporate. So you do have a harmonized environment and you're doing it at much lower cost.
And actually one of the things that I think I've seen Infor talking about is reporting. I guess having that single instance that everyone is running from means that you can do quite interesting things on the reporting side.
Right. Well, we have a new product that we announced this summer called Infor ION — and it's hard to describe. We've described it as an integration platform, and that doesn't really describe the architecture or what it supports. But one of the capabilities it has is, it allows you to build a real-time data repository, where what you're doing is managing from business documents that you share between systems.
So, I'll give you a quick example. Imagine that you want to connect your ERP system to a warehouse management system. We provide the ability to configure that: get both systems on an enterprise service bus, arrange the workflow, and configure the documents that these two servers are going to share.
So you may say, well, give an example of that. So look in the ERP system. You're going to buy some additional materials. So you place a purchase order with a supplier, a copy of that document goes to the warehouse management system. The warehouse management system doesn't really care about the financial terms, they want to know the name of the supplier, the quantity, the type of product it is, and when it's to be received. So the documents that are shared between the ERP system and the warehouse management system, a copy of that goes into the repository.
So if you can think about: what percent of my shipments were late this month, what percent of my shipments were partial — meaning I ordered 100 units, I only got 50 or 75 — did the pricing match up? So you have that information available, without having to build a cube to be able to get at that, the data's right there. So we can now start to populate dashboards; we can generate reports and alerts; there's an event management capability to tell you that, by the way, the product that you're waiting on is not going to be here, it hasn't arrived; so there's a lot of intelligence that we're building in, seamlessly.
And I think that's very important, isn't it? That people often think about integration as a data integration issue; but actually there's a lot of process, a lot of collaboration also, that it involves. And if you've got a platform to do that, I think it's going to be very helpful for these companies. All of your customers presumably are going to be in the situation where, even if they're moving some of their systems into the cloud, they're going to inevitably have other systems still on-premise and they hope to link those things together.
Well, I think only purists can say that the world would be 100 percent SaaS. The truth is, as manufacturers — and that's, most of our [customer] base are manufacturers — you never throw anything out. If it's working and it's still delivering results — you'd be surprised, at some of the largest companies in the world, somewhere they're running a 20- or 30-year-old application, probably COBOL-based, and they have no intention of moving off of it. It might be homegrown. So the idea that somehow that's going to be running in the cloud? The CIO would tell you it's on his or her dream list, but they don't really have a path for getting there.
So I think we're always going to have a hybrid environment, where there will be some applications that make obvious sense. Why would you want to have expense management on-premise? If it's an application that you're not banging away at every day; maybe once a week, or every other week, or once a month, depending on your frequency of travel. Likewise, a sales force automation application: you don't live in that all the time. An HR application: how often do you change your beneficiaries, or adjust your benefits, or things like that? That's an occasional app. All of those make perfect sense to be cloud-based.
I think near-term, the vast majority of your ERP systems, your financial applications, I think those will continue to run in your own data center. So what you'll need is a unified environment where someone like you and me — that might want to get access to data from the ERP system for financial performance; might need to get data from a CRM system to see what the pipeline system looks like; might need to approve a new hire, submit an expense report — we'd like to be able to get that from a single integrated environment, without having to log onto five, six, seven different systems. We also don't care where it is. Is it in the data center down the hall or is it being run through a service? So I think a hybrid environment is where we're going to be for a long, long, long time.
]]>In this podcast, learn what factors lead businesses to move their financials to the cloud and find out which well-known SaaS vendor has yet to make that move.
Listen to or download the 6:38 minute podcast below:
---Transcript---
PW: Bruce, Infor is a pretty big business software vendor serving the mid-market, but I guess some of our listeners may be unfamiliar with exactly what the company does. So just to get us started off, can you give us a few brief sentences to convey the scope of what Infor does?
BR: Sure. Infor was started in June 2002 — so we're just more than eight years old — and one of the ways we've grown to $2 billion in annual revenue and 70,000 customers was by making a lot of acquisitions within the software market. As a result today, we've got a line of ERP products: supply chain, CRM, product lifecycle management, HR, business intelligence; and performance management, enterprise asset management, expense management. We also have solutions for specific verticals: hospitality and public sector. So if you can think of a product category, it's an excellent chance we have a product for it.
Right, okay. And obviously, you're looking at competing up there with the big names in the industry. And one of the interesting developments in recent weeks is that you now have a new CEO, Charles Phillips, who until a few months ago was president of Oracle — so obviously, a very big name in the enterprise software world. And does having Charles Phillips on board mark a change in direction for Infor or is it designed to reinforce what you're already doing?
Well, to be honest, Phil, it's really hard to say. He doesn't start till December 1 and I've only had a brief conversation with him. But knowing how he works — I knew him when he was a top enterprise software analyst while at Morgan Stanley and I've spent a fair amount of time with him while he was at Oracle so I think I have some insight into how he works. I just mentioned that we have a really broad portfolio of products and I'm guessing that what he's going to do is narrow the focus. One of the things that you can't help missing is, every story that mentions Charles Phillips coming to Infor mentions that we're the largest software company you've never heard of. So I think he's going to narrow the focus so that we're definitely associated with some of the fast-growing products.
Right, okay. And yes, I think getting on the radar screen and making sure that people know what you're up to is very important. Something else I know that has been a big part of the strategy for Infor recently, and one of the reasons why we're talking today, is because of the move to software-as-a-service. Do you think that's now going to start to become more mainstream in the enterprise application space?
Well, it's funny, if you would've asked me a year ago when I was an analyst how I thought the cloud market, SaaS market, on-demand market would take off, I would've told you that I thought ERP, financial applications, order management — sort of the crown jewels, the stuff that companies most want to protect — I would've told you those would be the last applications to go over to the cloud. I'm actually surprised by the amount of interest. Virtually every RFP we get for a deal has a cloud component. The truth, though, is that often they're asking about your cloud strategy and they have no intention but to continue to run it in their own data center. So I think there's more and more interest.
Our most popular product today in the cloud is our expense management application, but we're building a growing pipeline for ERP in the cloud and some of the deals are huge. We've been participating in an opportunity that's going to be more than 5,000 users. Whether or not they actually deploy all of those in the cloud, I think remains to be seen. Our very first deal is a biotech company. They had the option of buying hardware, networking, storage capabilities, adding IT resources; or putting that money into hiring some additional scientists. So to them it was a no-brainer. They went with adding more scientists rather than adding a lot of capital expense.
Of course, there is this reluctance to entrust core financial data to third parties. It's interesting what you say about people wanting cloud as an option to be there on the vendor roadmap, even if they've got no intention of taking up themselves. Are you starting to see people being more prepared to put that financial data into the cloud?
You know, it's funny. If you were to ask Marc Benioff, the founder of Salesforce.com, he'll tell you every application that they have, that they use, whether it's their own or a third party, runs in the cloud — except for Oracle Financials. They actually have those as their back office and he's reluctant to move that to the cloud.
That must really grate. That must grate, mustn't it? [laughter] I remember there was all those years when Bill Gates was so annoyed that Microsoft did its financials on, what was it? [IBM] System 38s or something. It's exactly the same scenario. Right. Yes, yeah.
No, I think it's gradually going to happen. There seem to be three types of companies out there that are looking at ERP in the cloud. Some are the small ones, like startups — like the biotech company that I just mentioned. At the opposite end are companies that are the early true believers, that — they think in the future all applications will run in the cloud, and so they're already planning for that. Whether or not they are five, or ten or twenty years ahead of the rest of the market, that's the direction.
The middle part are people that are saying, where cloud works for us is, we've got an ERP standard that we're running now. I'll give you an example. We're working with a large SAP customer. They have a small division that has six plants around the world. They don't want to have to put IT resources, and computers and storage — basically data centers — in these six countries. So they came to us and said, 'SAP is too expensive to run at these six smaller sites, we'd like to talk to you about putting your SyteLine product there.' So we're working with them to develop a plan. All of us believe that it's going to be a fraction of what it would've cost for them to run in an on-premise mode, so this could be win-win for all of us.
Right. And so there are particular examples of businesses that actually see big benefits from a cloud or a SaaS deployment because of particular situations like that.
Right.
This is a two-part interview. In Part 2, find out Why Cloud Apps Must Co-Exist With On-Premise.
]]>In particular, he picks on the oft-cited comparison of the adoption of modern-day technologies to the take-up of radio. The normal purpose of these comparisons is to demonstrate how much faster technologies get disseminated in the modern world. At first glance, today's adoption rates seem to be far more rapid:
"Radio took 38 years to get to 50m users, the internet only four years, the iPod a mere three years and so on."
But as Mark goes on to point out, the world's population was much smaller when radio got started, and the adoption figure that is quoted for radio is for the US only, whereas global statistics are quoted for modern technologies. This puts a rather different complexion on the figures, as he goes on to explain:
"So let's adjust the figures to make them a proper like-for-like comparison. At the time radio hit 50m listeners in the US the US population was around 132 million, making radio's penetration 38%. Currently the world's population if around 6.8 billion, so to hit a similar 38% figure the iPod would have had to have got to 2.6 billion users. Kind of makes the iPod's current take-up levels look rather puny compared to what radio actually achieved."
Looked at this way, radio's rate of adoption looks almost unbeaten, especially if you take into account factors such as lower per-capita wealth, less efficient distribution and slower communications of the day.
Social mavens certainly know how to hype, but does the hype add up? Apparently not so well.
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