Flying Through the Cloud: Dreamforce Takeaways at 50,000 Feet

A couple of weeks ago, I attended Salesforce.com’s Dreamforce event–along with about 19,000 other people. Having had a chance to digest the proceedings (as well as Thanksgiving dinner), here’s my commentary on what stood out as the top takeaways from the conference in terms of where Salesforce is headed and what it means for the software industry and market.

• Super-charged energy levels. Ever the master of marketing, Marc Benioff did not disappoint. As he continues to thrust Salesforce beyond its CRM roots into ever-widening orbits, Benioff’s passion and enthusiasm remain high—and contagious, as evidenced by  the strong turnout, constant tweeting and feedback I heard in many 1-1 partner and customer conversations. (Not to mention that people were lined up to have their pictures taken with Salesforce mascots Saasy and Chatty…scary!). More to the point, the energy level at Dreamforce was off the charts in comparison to most recent industry events. While it’s easy to be cynical about people drinking the Kool-Aid, it seems the substance is there to sustain Salesforce’s energy. Competitors will need to dig deep to inspire the same intensity of purpose as Benioff breaks new ground in quest to develop Salesforce.com’s next billion dollar market.

• May the Force be with you. Force.com, Salesforce.com’s cloud computing platform-as-a-service (PaaS), is fueling a lot of this energy. Force.com enables people to build multi-tenant software-as-a-service (SaaS) applications that are hosted on Salesforce.com’s servers. A long line of customers and partners testified to the power of the Force–which is basically that it gives them a fast, easy, low risk way to build applications.  According to Salesforce, 200,000 people are now developing on the platform, and 100,000 custom applications have already been built for it. More important, Force.com is racking up wins across many segments, including small end-user customers, such as Ball In Air, to larger corporate customers, such as Kelly Services. On the commercial development side, Salesforce has reeled in an impressive roster of partners large and small, young and established. Here’s a sampler: Xactly launched a new sales performance solution for small and medium businesses (SMBs); FinancialForce, which Salesforce invested in with Coda to to deliver business critical financials solutions on the platform; BMC is partnering with Salesforce to bring Service Desk Express to the Force.com platform in 2010; and CA and Salesforce are teaming up to deliver agile development management via the Force.com platform.  As Force.com development momentum accelerates, it leaves less time and money for companies to invest with  traditional platform powerhouses such as Microsoft and IBM.

• Unveiling Chatter. The biggest news was about Chatter, Salesforce’s strategy to aggregate social media streams into a single place. According to Salesforce, Chatter will both a collaboration application and a platform for building social cloud-computing apps, and will be available sometime in 2010. To me  “chatter” is one of those words that can get very annoying when overused—and Benioff must have used the word “Chatter” about 80 gazillion times in the keynote alone, leading me to imagine that he will have the Rolling Stones rewrite Shattered to Chattered as a marketing gimmick. But with adoption of social media skyrocketing, Salesforce is likely envisioning Chatter as a good bet for it’s next billion in revenues. After all, collaboration is the one thing every employee does, every day, regardless of role. Naturally, Salesforce has set its sights on the collaboration gorillas,  IBM Lotus and Microsoft SharePoint. Of course, this is unchartered territory for Salesforce, which hasn’t really ventured here before, and it will have to navigate a lot of new turf in areas such as corporate governanc, which bigger rivals have had years of experience with. At the same time, Salesforce will also need to deal with newer, more nimble Davids–such as CloudProfile, which lets small businesses manage both outgoing and incoming social media in one place.

• No longer David, not yet Goliath. Salesforce has clearly left the David stage of development, but is not yet a Goliath. At the analyst luncheon, a very astute analyst (apologies that I did not get his name) asked Benioff how Salesforce will position itself and operate now that it’s a billion dollar company, with a very large appetite for a bigger chunk of the software pie. Benioff assured us that Salesforce still wants to do good in the world and put customers first, etc. (I’m paraphrasing of course). However, a new crop of Davids, such as Zoho, are nipping at Salesforce’s heels, with effective guerilla marketing, strong viral adoption and no/low cost offerings. As a tweener, Salesforce must navigate and position amidst the competition from both above and below. Just as important, it will need to rethink its “co-opetition” agenda. For instance, Benioff repeatedly cast IBM Lotus as old-school collaboration, apparently unaware (or unwilling to acknowledge) that Lotus has reinvented itself for the world of Web 2.0 and social media with offerings such as Connections, LotusLive, Sametime, Quickr—just to name a few. In fact, the vision for Chatter looks a lot like Lotus Connections.

Apart from feeling a bit too chattered, my overall take is that Salesforce will continue to rearrange the competitive landscape as it moves into new areas. While it’s not always the first to innovate, Salesforce is among the best when it comes to helping customers “get it” in terms of  using new technologies and tools to solve business problems. Competitors who underestimate its ability to reframe the market—whether the market is development platforms, collaboration or character mascots—risk ending up on the short end of the stick.

Top Takeaways from IBM’s General Business Influencer Summit

Last week, I attended IBM’s General Business (GB) Influencer Summit for analysts covering the mid-market (companies with 100 to 1000 employees and larger enterprises that are not currently spending a lot with IBM, sometimes termed “white space” accounts). I’ve attended this event since IBM began holding them a few years back. IBM recently split GB into two groups, creating separate sales and marketing arms for the mid-market and white space large enterprise accounts to better tune its resources and initiatives to the very different needs of these two sectors. While Big Blue is a natural to grow market share in the large enterprise space (especially as the ranks of Sun defectors grow), the mid-market is an area that IBM is still figuring out. It’s also the area that I cover, so focused most of my attention on how IBM is evolving strategy and execution in this area. Here are a few key takeaways that bubbled to the top for me, and that underscore some of the ways IBM is shifting gears to better reach and serve the mid-market.

• Telling a more aspirational, transformative story. IBM is making its corporate Smarter Planet (which centers on the message that the world is rapidly becoming more intelligent, instrumented and interconnected—in other words, smarter) more relevant to mid-market customers by engaging them in deeper, more industry-specific conversations, such as “What does it mean to be a smarter retailer?” and providing solutions that will help them to achieve better business outcomes from their IT investments. In addition to the industry-specific approach, IBM has themes that run across industries, such as Dynamic Infrastructure, New Intelligence, and Green IT. While it may be difficult for IBM to condense the Smarter Planet story in sound bites, if IBM can clearly articulate the vision in a targeted way (by industry and/or horizontal requirements), it should resonate as the economic recovery gets underway and mid-market companies re-focus towards growth.

• Continuing to shift from commodities to solutions and bottom line business benefits. Mid-market customers prefer to buy solutions, not piece parts. To that end, IBM continues to push its revenue mix further towards software and services. The vendor is introducing more integrated, cross brand offerings that zero in on top mid-market issues such as improving efficiency, reducing costs, getting new customers, increasing productivity, improving customer service and managing risk. The goal is to make it easier for mid-market customers to deploy solutions for specific workloads, and speed time to value from them. For example, IBM has introduced solutions building blocks that offer customers pre-configured, pretested building blocks that combine IBM hardware, services and financing. IBM packages the components in a loose bundle that customers can order and assemble quickly. Comprehensive Data Protection and Cognos Express are some of the first out of the gate, with more scheduled for 2010. Then there’s IBM’s Linux based smart appliances, which include the SmartCube and Lotus Foundations (see What is a Business Applications Appliance and Why Should You Care? for background), as well as a growing portfolio of cloud-based services (see below). IBM’s new integrated solutions story is kind of a back to the future experience—ala the AS/400—that IBM has had great success with in the past. This time, however, IBM is offering customers many more solution paths, which is good for choice, but also makes the story more confusing. IBM will need to clearly position and delineate benefits and outcomes to avoid getting in its own way.

• Shaping its cloud strategy and portfolio. Like most legacy hardware and software vendors, IBM has been somewhat ambivalent about the cloud. However, it seems to be moving past this ambivalence with a more decisive strategy that includes both public and private cloud offerings. IBM will significantly expand its Smart Business Services offerings, which are standardized services that run on IBM’s cloud, such as LotusLive, which IBM currently offers, and a slew of planned solutions for  analytics, development and testing, desktop and devices, infrastructure and storage, and business services. Smart Business Services also includes IBM’s private cloud services, in which IBM builds and runs a private cloud behind the customer’s firewall. In addition, IBM is developing Smart Business Systems, an integrated platform to deliver and manage cloud solutions. While the vendor still has a lot of work to do to clearly position and market these solutions, and is still searching for the right formula for creating value with SaaS developer partners, it seems to have a more substantive and cohesive strategy than its had in the past.

• Ramping up and revamping partner programs. In addition to significant investments in global partner recruitment and enablement, IBM is restructuring incentives to help partners weather the recession. The vendor has moved from a cumulative type ladder approach to a simplified incentive program that pays partners in a more linear approach from step one. IBM is also trying make it easier for partners to do business with it, with new PartnerWorld communities and concierge service designed to remove administrative costs and hassles. Being the behemoth that it is, IBM may never be able to make the partnering process friction-free. But, I’ll give it points for pushing the needle forward, and more points for helping cash-strapped partners stay the course in difficult times, and its efforts to remix its channel to better align with evolving mid-market customer requirements.

• Increasing investment in demand generation. Partners have told IBM to focus more on demand generation, and less on lead passing. So IBM is scaling up resources for high air cover marketing. All told, IBM conducted 835 marketing events, drawing more than 63.000 mid-market customers, in the past year. For instance, the vendor is conducting what it terms “Grand Formaggio”sessions around the world to personally engage mid-market CEOs with senior IBM executives, and also has a series of events aimed at CFOs. IBM also recently launched InfoBOOM, a social network for U.S. mid-market businesses, in partnership with CIO Magazine. IBM sponsors the site, but content is designed around mid-market themes and issues so that IBM can better understand and share with the community. IBM intends to launch this in other countries soon. Successful demand generation will be critical to raising IBM’s profile and heightening awareness about what IBM can offer mid-market customers—and keeping the channel happy.

• Reconfiguring operations for growth markets. IBM has invested in building two management systems, one for established markets, and one for emerging growth markets. This enables IBM to tune in to the different requirements, approaches and government investments that different regions afford, and accelerate expansion in emerging growth markets. For instance, IBM has added more than 50 new offices in growth markets, and investing in leadership and talent development by moving seasoned IBMers from developed markets to emerging ones, and bringing fresh new faces to more established territories to learn the ropes. Big Blue has built new innovation centers in countries such as Vietnam, South Africa, Poland, Brazil and Hungary, and a global innovation center in China.

• Better financing programs for the mid-market. IBM’s 30 year-old Global Financing arm (IGF) is strong, healthy and proactive—in fact, financing accounts for 9% of IBM’s pretax income. The vendor offers solution financing for hardware, software and services with at least 20% IBM content, and has simplified rate structures and contracts to help streamline the financing process. IGF has also introduced some “recession busters”, such as a Q4 deferral program and 0% financing for Software Group financing for 12 months. IGF also runs a huge asset recovery program (processing about 40,000 pieces of hardware a week) and $1.5 billion dollar used equipment business, which offers cash-strapped companies value based alternatives as well. IGF is also ramping up partner programs and education to help partners better engage mid-market CFOs in the IT purchase conversation. In the current economy, IGF is clearly one of IBM’s most powerful marketing weapons, helping companies to invest now to jump start growth as the economy turns around.

• Continuing investments in asset-oriented acquisitions that can scale to the broad market. IBM has been on a shopping spree, acquiring companies such as Internet Security Systems (ISS), Cognos, Outblaze and SPSS, among others. IBM can use its global distribution capabilities to expand the footprint for these solutions, and as necessary, make them more relevant for mid-market customers.

As it nears its 100th anniversary (in 2011), IBM is putting a more shape and substance into its mid-market strategy and execution capabilities than it has ever done. However, in a market where brands such as Microsoft, Dell and HP dominate, and Google and other “born on the Web” vendors are ascending, IBM’s job isn’t easy.

The IBM brand is already well-respected in the mid-market, but IBM will need to continue to step up its efforts to become more relevant. Unlike many of its competitors, IBM doesn’t have a consumer or even a small business presence to leverage in the mid-market. Big Blue will need to wow the mid-market to move customers out of their current comfort zones.

One of IBM’s strengths is that it has a very rich portfolio of offerings and solutions, but this is also a double-edged sword. IBM will need to articulate and position overlapping solutions to help guide both customers and partners through the clutter to best-fit solutions. IBM will also face challenges on the channels front. How will it make the economics of the channel and the economics of lower-cost, volume based solutions work? And how will it fold high-growth SaaS vendors into a value-added and profitable business model?

To succeed in its mid-market quest, IBM will have to fire on all cylinders over the long haul, continue to sharpen its mid-market focus, and ensure that its offerings stack up well not only against the Microsoft-centric status quo, but against the increasing array of newer solutions available.

Small Business Has a Big Appetite for Digital and Social Media Marketing

Small business adoption of technology-based solutions rarely keeps pace with the expectations of vendors, analysts and pundits. When it comes adoption of digital marketing and social media tools, however, small business adoption is fast and furious.

Recently, we (Hurwitz & Associates) conducted a survey sponsored by email marketing vendor Campaigner. The survey investigates how North American small businesses with 1-20 employees are adapting their marketing plans and budgets to compete more effectively in the future. While we uncovered many interesting trends in the first report in a two-part series, Small Business Marketing Health Check (available here), one of the most eye-opening findings is that small businesses are rapidly shifting their marketing initiatives from traditional media to digital marketing media tools, including social media, such as blogs, forums, Twitter, Facebook, etc., email marketing, search engine marketing and webinars and podcasts (Figure 1). While traditional media, such as direct mail, tradeshows and newspaper advertising still have a part in many small businesses’ marketing playbook, they are being overshadowed by digital and social marketing alternatives.

Figure 1. Small Business Use of Marketing Tools

Why are small businesses, who usually take a long time to shift gears, so fast out of the gate in this case? In a nutshell, it’s because digital and social marketing solutions deliver on the cheaper, faster, easier and better promise that so many other technology-based solutions don’t deliver on. These marketing tools are often less expensive to use than such traditional marketing options as print advertising and direct mail—a small investment can help companies significantly boost marketing reach and return. Digital and social media marketing tools give small businesses more immediate visibility into whether they’re reaching their target audiences, and easier ways to track and measure payback on the time and money they’re investing than traditional media. You can also rapidly adjust and refine campaigns and outreach as needed.

So, with their appetite whetted, what will leading-edge small businesses be looking for next to take their digital and social media marketing game to the next level? Here are some of the areas that I think hold great opportunity for growth as small businesses appetite in this area increases:

• More targeted search optimization and management. Services that are tailored to help specific kinds of small businesses achieve very specific results from their search engine marketing campaigns. For instance, Lotusjump provides a service to help small businesses optimize organic search results for hundreds or thousands of keywords to generate more qualified leads. The automated service automates the process of building more qualified leads based on more specific “longtail” search terms. Yodle, meanwhile, focuses on SMBs with local services business harness existing demand, by helping them to create a Web site, develop an effective SEO campaign across the Web, and help make the phone ring when the business is found through a Web search.

• Solutions that help local businesses integrate online marketing and advertising campaigns across different outlets. Own a hair salon or a tree service business? If you do, everything is local, and services that help to reach the local market are what you care about. WebVisible,  for instance, buys advertising space from multiple media providers and ad networks, and provides many types of online marketing solutions, including fully managed search advertising, banner/display advertising, call tracking solutions, custom landing pages, promotional URLs and more. Using the WebVisible platform, small businesses can target local advertising more effectively.

• Tools that enable you to manage all of your social networking profiles through one client. HootSuite offers a service today that lets you manage all of your Twitter profiles simultaneously, but I don’t think I’ve seen something would let you do manage across multiple sites, such as Facebook, LinkedIn, Twitter, etc.

• Services that help integrate more structured digital marketing tools (Web sites, email and search engine optimization and marketing) with more ad hoc social media initiatives. Ideally, this integration could significantly boost the value of both types of activities. I haven’t spotted a  good example of this yet, so let me know if you know of one.

Another Plea for Plain English!

Yesterday, I was listening to NPR’s Here and Now at lunch time while running a few errands in my car. I tuned into a great story about the “Plain English Campaign”, which was founded in 1979 by now 71-year old Chrissie Maher.  The organization’s mission is to campaign against “gobbledygook, jargon and misleading public information.”

Host Robin Young and Ms. Maher shared a lot of interesting statistics on how organizations from the Veteran’s Administration, the Navy, the FAA to General Electric have saved time, money and even lives by rewriting documentation and other materials in clear, simple language instead of a lot of jargon and babble. The two used terminology favored in the financial services industry to illustrate how complicated, contrived, dense language makes financial documents so difficult to understand—and probably contributed to the economic meltdown.

Hmmm…I thought, the technology industry suffers from this too. But my overall impression is that as an industry, we are communicating more clearly than we have in the past. Sadly when I got home, I realized we may have further to go than I thought, as I opened a press release for “New Adobe Flash Builder for Force.com Increases Developer Productivity for Creating Rich Internet Applications in the Cloud” in my inbox. The first paragraph reads as follows:

SAN FRANCISCO – October 26, 2009 – Salesforce.com [NYSE: CRM], the enterprise cloud computing company, and Adobe Systems Incorporated [NYSE: ADBE], today announced the availability of a new offering that unites the power of the Force.com platform with the richness and ubiquity of the Adobe® Flash® Platform to enable a new generation of cloud-based rich Internet applications (RIAs).  The new offering, Adobe® Flash® Builder™ for Force.com, integrates the two platforms to bring the richness of the consumer Web to enterprise cloud applications to enable a significantly improved level of developer productivity.

Whoa—translation, please! I think that the release is saying that these two vendors are teaming up to make it easier for developers to write cooler, more interactive Internet applications. But what was the person (or people) that wrote this thinking–or drinking—when they came up with that? Between “power of the Force”, the cloud, the flashes, the RIAs and the rest of the hot air, they’ve made it unnecessarily complex to sort through. You might even think this was an alliance between different empires in Star Wars, instead of two technology companies.

Believe me, I understand that it very tough to break down complex, technical things into understandable terms. And of course, it can be hard to resist trying to make all this stuff sound (more?) exciting. I’m setting up an RSS link to the Plain English site as another reminder to always at least try to demystify the technology solutions I’m writing about, instead of making them harder to understand.

PDFSalesLeads-A Clever Solution to the Pesky .PDF Problem

In our industry, vendors spend a lot of time and money developing white papers to educate prospects about new technologies. White papers that are well-researched and clearly written can help explain the value of  new or complex solutions to the audiences that can potentially benefit from them.

Of course, vendors also want to generate qualified sales leads from their white papers. But when it comes to tracking and measuring how well they actually perform in terms lead generation, many marketers find themselves in a quandary. After publishing a white paper in an Adobe .pdf file, do you gate access to the paper by requiring people to fill out one of those annoying registration forms (and risk losing the reader), or do you just put the document up without a registration gate, and  leave it to chance that prospects will contact you on their own?

Last week, Vitrium briefed me on it’s new solution, PDFSalesLeads, which I think will give both vendors and Web surfers a happy medium. With PDFSalesLeads, you can embed a registration form anywhere in your .pdf document, so that the reader can take a look at the information first, and   then decide if they want to register and receive more information or be contacted.

The software-as-a-service (SaaS) based solution comes with 8 standard registration questions, you can use as few or as many of these as you like. You can embed the form in 5 steps, which the site guides you through. Pricing is $49/month, for an unlimited number of documents and leads.

One of the things I really like about this solution is that  there is a skip button. So if a reader doesn’t want to fill out the form, they don’t have to. This is great for people like me, who are often doing secondary research–not shopping. And actually, this should save vendors time and money  too when you think about it. I can’t even count the number of sales calls and emails I’ve gotten from downloading .pdfs for things that  I’m really not  a prospect for. So while marketers may get fewer leads, they should be better quality leads.

Another cool thing about the solution is that the embedded registration form stays with the .pdf. So as the .pdf gets circulated around via email, subsequent recipients can register if they want to, giving you the potential to capture these viral leads.

Vitrium is also developing an on-premise, enterprise version for companies that want to run it internally, but they are going to prove it out and work kinks in the SaaS environment. The enterprise version will have features for batch file loads, and system to system integration with CRM systems.  Vitrium will likely also find a market for this with white paper aggregators, such as Ziff-Davis or TechTarget, who can offer the service and manage leads for their clients.

Workingpoint’s New Twist on SaaS Pricing for Small Businesses

In a post earlier this month, I raised the issue that SaaS vendors targeting small businesses need to start experimenting with different pricing options if they want to create a true volume market for their solutions (Prescription for Subscription Fatigue? Time for New SaaS Pricing Models). While per user, per month pricing has become the norm in the SaaS world, monthly fees can add up quickly for small businesses–and at a certain point, individuals and decision makers in small businesses balk at forking out for another subscription.

Last week, Tate Holt, CEO of Workingpoint (http://www.workingpoint.com) gave me a briefing and demo on their solution. In case you’re not familiar with Workingpoint, the company was previously called Netbooks, but they have scrapped that name, along with the old Netbooks product. Workingpoint is built on new code and sports a much cleaner, easier to use UI than it’s predecessor. The solution provides small businesses with a business management solution that includes accounting, contact management, expense tracking, dashboard and reporting–along with some other neat things, such as— a profile page to create a one-page starter Web site to get indexed on the Web.

Workingpoint has come up with a new twist on SaaS pricing that is worth taking a look at. The vendor’s strategy is to offer small businesses “a compelling free product without a time limit with compelling reasons to upgrade”. The first user subscription is free “forever”.

This in itself isn’t that unique; several vendors offer a free seat or two. However, Workingpoint charges one flat fee that covers both additional users and premium services–kind of like a buffet. For $10 per month, you can register as many additional users as you need. So whether you add 1 user, or 5 more, you’re covered with that one, $10 per month charge. —In addition, the flat  $10 per month fee will also give the small business access to use many of Workingpoint’s planned premium features, such as banking integration, Web store integration, and mapping service for Schedule C Level tax reporting.

To make this business model work, Workingpoint needs to convert about 25 percent of its users to the paid model. After formally launching the solution in July, the company has taken it’s first baby steps towards this goal, signing up its first paying customers this month. It will be very interesting to monitor Workingpoint’s progress and see if it can make this alternative pricing model work–both for small businesses, and for itself.

FinancialForce: A New Force in Cloud-based Accounting

Last week, Unit 4 Aggresso, parent company of CODA, announced that it has teamed up with Salesforce.com to launch FinancialForce.com. FinancialForce.com is actually Coda2Go, the cloud based accounting application that CODA built from the ground up on the Force.com platform, and sold through AppExchange. The deal pushes FinancialForce into the spotlight as a poster child for Force.com, and underscores Salesforce’s determination to break down the barriers that have kept companies from running their accounting and financial applications in the cloud.

But how much will this move the needle for cloud-based accounting–which has never been able to gain the kind of market momentum that cloud CRM has enjoyed? There are many reasons for the gap, but mostly because the financials/accounting function is a very different than CRM. In comparison to CRM, accounting solutions usually serve a much smaller, more bounded set of users. CRM users typically span several line of business areas, from sales to marketing to customer service, while accounting users reside primarily in the financials area. CRM users are more likely to be geographically dispersed and mobile, whereas accounting users are usually located in headquarters or major branch or divisional locations. In addition, those financial types have a reputation for being pretty set in their ways.

And, let’s face it, it’s not like cloud-based financial solutions are anything new. NetSuite (which launched as NetLedger in 1998) has actually been around a year or so longer than Salesforce. Intacct, Intuit QuickBooks Online, and several lesser-known companies including Workingpoint, Clarity, Less Accounting, Freshbooks and others offer cloud-based financials aimed at small and midsized businesses.  These players have made some headway—especially in the SOHO space—but the vast majority of companies still choose to deploy traditional, on premise accounting solutions. In comparison, close to half of all new CRM deployments are cloud-based.

However, with the formation of FinancialForce, Salesforce is now bringing its considerable marketing clout and savvy into the ring. While Salesforce.com’s stake in FinancialForce is undisclosed, my call with Jeremy Roche, Coda2Go CEO, who will continue in the helm at Financial Force, leads me to conclude that the investment and alliance is considerable:

• FinancialForce has opened a new headquarters location in Salesforce.com’s incubator building, supplementing existing offices in Manchester New Hampshire and Harrogate, England.
• FinancialForce is earmarking a good chunk of the Salesforce investment to aggressively ramp up its sales personnel and initiatives.
• The two companies are using Salesforce.com’s service cloud to link their support systems, and Salesforce will provide front line support for FinancialForce.com customers. This will enable  FinancialForce to scale quickly to support all the new customers that they expect to gain from the expanded sales team and the fresh cache of the Salesforce association.

I believe that financials and accounting will never be as obvious a choice for cloud computing as CRM, collaboration and other applications that need to serve a bigger, more diverse and more mobile set of users. However, this new venture will bring cloud-based financials into more frequent and serious consideration for more customers—especially as Gen Y/Millenial workers replace retiring baby boomers and Gen-Xers. Salesforce has more marketing DNA than any other B2B company that I can think of, and a large, growing user base that it can prime for FinancialForce. It can appeal to CEOs with a message of tight integration between the two solutions on Force.com and in the Service Cloud, and reassure CFOs with CODA’s 30 year of financials experience.

In fact, as it’s done in the CRM arena, Salesforce will create a rising tide that will lift the boats of other cloud-based financials vendors as well.  After all, FinancialForce won’t be the best fit for every company, but Salesforce will do what it does best—and get more people interested in considering the cloud-based option. As the tide rises, vendors of traditional, customer premise financial software—particularly in the small and medium business markets—will face more pressure to rethink re-think their cloud strategies—or lack of them.

What are Managed Services, and Why Should You Care?

(Originally published in Small Business Computing, September 25, 2009)

Technology insiders tend to throw around technical terms and business jargon, assuming people outside the industry understand what it all means. By its nature, technology vocabulary is often confusing and complicated, and insiders often add to the confusion by over-complicating things. To help add a sense of clarity to the confusion, each month, Laurie McCabe, a partner at Hurwitz & Associates (a business consulting firm), will pick a technology term, explain what it means in plain English, and then discuss why it may be important to you. This month, Laurie takes a look at managed services.

What are Managed Services?

Managed services let you offload specific IT operations to a service provider, known in tech parlance as a Managed Services Provider. The managed service provider assumes ongoing responsibility for monitoring, managing and/or problem resolution for selected IT systems and functions on your behalf.

Managed services providers can offer services such as alerts, security, patch management, data backup and recovery for different client devices: desktops, notebooks, servers, storage systems, networks and applications. Offloading routine infrastructure management to an experienced managed services professional lets you concentrate on running your business, with fewer interruptions due to IT issues.

Managed services providers usually price their services on a subscription basis. Depending on the services they provide, pricing is usually based on the number of devices, with different packages priced at different levels. Some provide customer support onsite when required. Basic services often start with a monitoring service, which notifies you of problems, which you resolve on your own. At the upper end of the spectrum, service providers offer fully managed services that cover everything from alerts through problem resolution.

Typically they perform an initial assessment of your current IT environment and management requirements to help you decide what services and service levels you need.

Why Should You Care?

Just like larger companies, small businesses need technology to operate efficiently and to compete effectively. But as reliance on IT grows, the resources to support an increasingly complex IT environment may not. In many small businesses, IT resources are scarce, and can be quickly overwhelmed with the day-to-day responsibilities of keeping the IT infrastructure that the business depends on up and running.

If you fall behind in keeping up with things such as backups, patches and security, the odds are that you’ll face an IT outage or another problem down the road that will negatively impact your business. For instance, if your e-mail server, customer relationship management system, financial application or network goes down unexpectedly, you face substantial productivity and revenue losses as a result.

MSPs act as an extension of your IT department, taking care of routine IT infrastructure monitoring and management around the clock—freeing up your IT staff to focus on higher-value projects. By proactively monitoring and maintaining your systems, an MSP can help you avoid many technology problems in the first place. Should an issue occur, an experienced MSP can troubleshoot and resolve it more efficiently.

Unlike traditional outsourcing situations, where you surrender complete control of your IT assets, you decide what you want the service provider to take care of, and what you want to handle. You retain full visibility into the process and management of your systems. In addition, the MSP subscription model gives you more expense predictability than a consultant-type time and billing model.

What to Consider

MSPs offer a wide range of different services. Many focus on managing specific areas and functions, such as storage and related management services, or desktop management and help desk services. Some provide management services for server hardware, operating systems and middleware, but limited support for applications such as e-mail. Many provide onsite services as required, but may have limited regional or local coverage areas.

If you are looking for more comprehensive services, including alerts, monitoring and management services for a wide range of client, network, servers and applications, Dell offers ProManage-Managed Services for SMBs. The service offers small businesses a choice of service levels, priced on a per-device, per-month basis. Most services are provided remotely, but Dell and its channel partners supply onsite service when required.

With so many different types of MSPs and offerings, the MSP label can be a confusing one. So, when considering managed services, think first about your requirements. How satisfied you are with the level and quality of support that you have today? Where are the gaps, pain points and inefficiencies in IT infrastructure management? How do downtime, outages and other problems impact your business?

With these requirements top of mind, evaluate MSPs that map to your IT, business and budget requirements and provide a flexible, proactive approach that can adapt with you as your needs evolve.

Prescription for Subscription Fatigue? Time for New SaaS Pricing Models

As an analyst that’s covered the software-as-service (SaaS) market since 1999, I am briefed by vendors introducing new subscription services into the market on a regular basis. Many of these solutions provide small businesses with real solutions to real problems—whether helping you market your business, keep your books, manage projects or pay your bills (just to mention few). In many ways, SaaS or “cloud” pay-as-you-go subscription pricing model is ideal for small businesses. It eliminates the barrier of big upfront capital investments, and reduces financing requirements, freeing up capital for other needs. The SaaS provider takes on the burden of IT support and maintenance, enabling the small business to focus more resources and attention on the business.

And there’s no doubt that the SaaS model provides tremendous economies–which vendors can pass on to customers. Multi-tenant architecture enables vendors to service customers much more efficiently, and Web-centered marketing makes it much more affordable for companies to effectively reach prospective customers with their offerings. All else being equal, its highly likely that a SaaS solution will be easier for a small business to digest—both financially and technically—than a packaged software offering.

But, I have to wonder, how will subscription fatigue affect adoption of software-as-a-service (SaaS) or cloud computing solutions in the small business market? While the threshold for purchasing an individual solution may be quite reasonable, when you start adding more services, how many of these monthly subscription fees can the average small business afford? And how many different service provider contracts does a small business want to manage and monitor?

From a consumer standpoint, just stop and tally up what you spend every month on mobile and land lines, cable TV, Internet connectivity, and other services from Netflix to satellite radio to online gaming–not to mention traditional media subscriptions. For a family, it can quickly creep up to enough to feed a family of six in a third world country.

In the SaaS world, these monthly fees can add up even more quickly for a small business, who may be purchasing a service for $10, $25, or $60 per user per month, for several users. At a certain point, individuals and decision makers in small businesses balk at forking out for another subscription. Unless the service just whacks you over the side of the head with its value, many businesses will decide to just continue to do without. As they tally up monthly fees, they may also determine that some services haven’t really provided enough value—and are, in fact, dispensable.

All of which points to the fact that, for the most part, the small business SaaS per user, per month pricing model hasn’t changed in the past 10 years! Oh sure, there are ad supported free services, and a few vendors, such as Zoho, that give companies a couple of free seats before fees kick in. But for the most part, the per user, per month model reigns, no matter how much or how little individual users actually use the solution, or the value that they get out of it.

SaaS vendors targeting small businesses need to start experimenting with some different options if they want to create a true volume market for their solutions. How about trying pricing models that would allow for concurrent use, instead of specific named users?  Or unlimited use for businesses of different sizes? Or (and I’m sure that this will send shudders down some vendors’ spines) pricing based in part on measuring the effectiveness of the solution, in terms of time or cost savings, or increased web site traffic, or some other relevant variable? SaaS has been a huge leap forward in how software is delivered, it’s time for vendors to experiment with the next big leap—new pricing models.

What is a Thin Client, and Why Should You Care?

(Originally published in Small Business Computing, August 27, 2009)

Technology insiders tend to throw around technical terms and business jargon, assuming people outside the industry understand what it all means. By its nature, technology vocabulary is often confusing and complicated, and insiders often add to the confusion by over-complicating things. To help add a sense of clarity to the confusion, each month, Laurie McCabe, a partner at Hurwitz & Associates (a business consulting firm), will pick a technology term, explain what it means in plain English, and then discuss why it may be important to you. This month, Laurie takes a look at thin clients.

What Is a Thin Client?

A thin client is a computing device that’s connected to a network. Unlike a typical PC or “fat client,” that has the memory, storage and computing power to run applications and perform computing tasks on its own, a thin client functions as a virtual desktop, using the computing power residing on networked servers.

They typically have just enough processing power, information and parts to access and use the computing resources of a server. The thin client can’t run applications or store data or documents on its own; it functions as an interface to convey your keystrokes and connect to the applications, documents, data and storage on networked servers, where the actual work is done.

Most thin clients run Web browsers and/or remote desktop software, such as Microsoft Terminal Services or Citrix XenApp, so you see the familiar browser or desktop environment that you’re used to.

With thin clients, you run the desktop environment on the server, and remotely display the desktop screens on the thin clients. You need to manage this on the server side with what’s called a virtual desktop infrastructure (VDI) — software that creates the desktop images, stores them on servers and sends them over the network to the thin clients. Both desktop and mobile thin clients are available from a wide range of manufacturers. Some such as Wyse, specialize in thin clients, while others, such as Dell and HP provide thin clients as part of a larger client device portfolio.

Why Should You Care?

Because they lack hard drives, CD-ROM drives, fans and other moving parts, thin clients are smaller, cheaper and simpler for manufacturers to build than traditional PCs or notebooks—and cheaper for you to buy.

Thin clients decrease client maintenance costs and hassles. With fewer moving parts, and very little software running on the device, fewer things can go wrong with a thin client, so they’re easier to maintain and fix. If a thin client does fail, you can easily swap in a replacement without losing productivity because employees don’t store any data on their client device.

Since everything is managed, stored and secured centrally, from the data center, thin clients eliminate the issues of installing, updating and patching applications, backing up files, or scanning for viruses on individual computers. Because employees see and have access only to what they need to do their job, thin clients are easier for non-technical people to use.

Centralized management also provides security benefits. You’re not storing any data or information on the thin client, so you don’t need to worry about exposing confidential data if a thin client gets lost or stolen. In industries such as healthcare, where adherence to privacy regulations is of paramount importance, thin clients can give medical personnel access to patient records without concerns about confidential information being downloaded. Thin clients also use less energy than standard desktops and notebooks.

Because they run cooler, they can help reduce air conditioning requirements as well.

What to Consider

Companies have traditionally turned to thin clients to give employees access to certain applications and functions, such as in a call center or retail setting via remote desktop software. Thin clients are also a good fit for remote offices, where it can be difficult and time consuming to get PCs fixed. However, as cloud computing becomes more prevalent, the use of thin clients has the potential to expand significantly, as they can also provide a gateway to an almost limitless number of Web-based applications.

However, thin clients aren’t right for all situations. Thin clients must be connected to the network at all times. Performance for graphically intensive applications can be slow, since people access them over the network instead of on their own device. People may also balk at giving up desktop applications and control over their workspace. And, companies need to also factor backend infrastructure and remote desktop licensing costs into the equation to determine whether thin clients are the right fit for their needs.