Salesforce’s Dimdim Acquisition–Adding to a String of Collaboration Pearls

The SMB Group has followed (and used!) Dimdim, which has provided innovative, easy to use Web conferencing services in a freemium model with very liberal terms of use, for a couple of years. In January, Salesforce.com acquired Dimdim for $31 million.

Immediately after the acquisition, Salesforce announced that while Dimdim would remain “fully operational during the transition,” it would “no longer be accepting new registrations.” Instead, Salesforce is focusing on bringing Chatter and Dimdim together to provide what it terms “Facebook for the enterprise.”

What’s Next

Last week, we had a follow up briefing with Salesforce’s Mike Micucci, VP Product Management, and Steve Chazin, Senior Director, Product Strategy, to learn more about these plans. Essentially:

  • Salesforce will peel off the Dimdim front end and reconstitute Dimdim’s real-time collaboration capabilities into Chatter. This will give Salesforce a way to provide Chatter users with real-time presence capabilities, so users can see who else on their team is online and their status via a button on their Chatter screens, and start “in context” meetings on the fly.
  • Salesforce will focus initially on connecting internal team members via Chatter, but over time, will broaden this to connect partners and customers as well, integrating them with its Activa acquisition. (Salesforce acquired Activa, an enterprise chat startup that provides on-demand live chat software for customer service, support and online sales interactions last September).
  • The vendor will also explore incorporating audio, screen sharing and video capabilities from Dimdim into Salesforce as well.

While Salesforce is currently deferring to standalone Web conferencing partners (they actually conducted their briefing with us via Citrix GoToMeeting!) in the realm of scheduled meetings, I believe that its only a matter of time before they turn this service on, as users will want it.

Quick Take

With over 1 million registered users, it’s safe to say that Dimdim’s service will be missed by many SMBs–including the SMB Group!

But Salesforce has set its sights on a much bigger picture–one in which it is building, acquiring and integrating the components it needs to become a major player in the collaboration space. As we discuss in Moving Beyond Email: The Era of SMB Online Collaboration Suites, Salesforce’s collaboration strategy is oriented towards social media, real-time activity streams and tight  integration with its CRM offering.

The Dimdim acquisition gives Salesforce the ability to aggregate and integrate real-time capabilities across the Salesforce cloud, via a single mechanism, with multi-device access. Combined with its own Chatter platform, and acquisitions of Activa and GroupSwim, which provides collaborative semantic analysis technology (a fancy way of saying that it has technology that allows people to automatically analyzes and tags content with keywords in a collaborative way to make for easier, more relevant searching), Salesforce is stringing together an impressive set of collaboration capabilities.

Salesforce indicates that more than 60,000 companies have already deployed Chatter, and the vendor recently unveiled Chatter Free, a freemium service to entice non-Salesforce customers to the Chatter fold. With viral routes into both installed base and off base customers now in place, look for Salesforce to give the existing collaboration powerhouses–Google, IBM Lotus and Microsoft–an interesting run for the money.

What is Hybrid Computing, and Why Should You Care?

(Originally published on June 9, 2010, in Small Business Computing)

What is Hybrid Computing?

A hybrid computing platform lets customers connect the packaged small business software applications that they run on their own internal desktops or servers to applications that run in the cloud.

As discussed in What is Cloud Computing and Why Should You Care?, more software vendors are deciding to develop and deliver new applications as cloud-based, software-as-a-service (SaaS) solutions. This model helps them reach a broader market and serve customers more efficiently and cost-effectively. And, because cloud computing can often provide significant cost, time and ease-of-use benefits, more companies are choosing to buy and deploy cloud computing solutions instead of conventional on-premise software as new solutions needs arise.

However, most companies will continue to use a combination of both traditional on-premise software and cloud-based SaaS solutions. Think about it: You are unlikely to get rid of an application you’re running in-house just to swap in a SaaS solution. But if you need a new solution, you’re likely to look a range of options, including SaaS applications, to fit the bill. In some newer areas — such as email marketing or social media management — this may be the only way solutions are even available. In cases where you have a choice, you may simply decide that the SaaS model makes more sense, or that traditional deployment will work better for your company.

Why Should You Care?

Many software vendors with a strong presence and customer base in the traditional packaged or “on-premise” software world are developing platforms that provide new SaaS solutions that extend and integrate with their traditional on-premise applications. Some vendors provide app stores or marketplaces to make it easier for you to find solutions that will work well with those you already have.

For instance, Intuit has developed a platform and Intuit’s Workplace App Center so that customers can find and try applications that work with QuickBooks and with each other. Microsoft’s Software + Service strategy is designed to connect a myriad of Microsoft’s traditional software applications to Web-based SaaS solutions.

Recently, Sage launched its Connected Services offerings, designed to connect users of its traditional packaged software offerings with online SaaS services. The Sage e-Marketing application, for example, connects ACT and SalesLogix users with online email marketing services, while many of Sage’s accounting solutions connect with its new Sage Exchange online payment processing.

These vendors realize that most companies will use a mix of on-premise and SaaS solutions for a very long time. While companies can get some value from using some point solutions in a standalone fashion, in many cases, you’ll need to integrate the new SaaS solution with an existing on-premise application — such as integrating payroll to accounting and HR, or social media management to contact or customer management application — to get the value and efficiencies you need.

From the standpoint of their own corporate interests, vendors can increase revenues and profitability by selling existing customers new SaaS services (either their own or those of their partners) to connect to and extend on-premise solutions they’re already using. Having a strong SaaS play that is integrated with their on-premise solutions also helps them protect against competitive SaaS-only vendors that could steadily encroach on their turf.

More altruistically, these vendors want to offer their customers the means to bridge between the on-premise and SaaS solution worlds more easily. After all, it can be very confusing to even sort through and differentiate between all the solutions in a given category, and expensive and time-consuming to integrate them so they work well and easily with what you’re already using.

What to Consider

Most small businesses run at least a couple of on-premise software applications that are critical to their business. For instance, it’s a good bet that accounting and financials are on this list. Other applications will vary depending on the business you’re in, but could include things such as solutions to manage contacts and customers, projects, human resources, logistics or a function specific to your industry.

As you identify and prioritize new requirements to streamline and automate additional tasks, think about the overlaps they’ll require with workflows in the core on-premise solutions and processes that you’re using. For instance, if you decide you want to streamline payments processing, does your accounting software vendor provide a payments processing service that can easily snap into the accounting application?

By taking advantage of the SaaS offerings available from a vendor’s hybrid computing platform, your new solution will generally be up, running and integrated with the core application much more quickly. However, keep in mind that as you snap more services into that core on-premise application, your reliance on that anchor application will grow — arguably making it harder to switch should your needs change.

NetSuite’s SP 100 Program: An Offer VARs Can’t Refuse?

In a bold move to get traditional value-added resellers(VARs) off the SaaS fence, NetSuite announced its new Solution Provider (SP) 100 Program, which gives business application VARs 100% margin on the first year of license subscriptions they sell. The program requires a 2-year minimum license commitment from the customer, and after the first year, NetSuite pays VARs 10% margin on recurring annual license fees. Prior to this program, NetSuite had offered VARs 30% of annual license sales.

NetSuite’s SP 100 Program targets established mid-market and enterprise ERP and CRM VAR’s and consultants, including VARs selling Microsoft Dynamics, SAP, Sage, Epicor, Deltek, and others. The program is not exclusive—VARs can continue to sell their packaged business software offerings as well. NetSuite is also extending the program to it’s current solution provider partners, and it includes all other SP program perks, including sales and technical training, sales cycle assistance, and marketing support.

Background:

Since the model got off the ground over 10 years ago, SaaS vendors have argued that SaaS can open the door for VARs to create a recurring revenue stream, and free them up from low margin IT service chores to focus on generating higher value business.

But the case has evidently not been strong enough to entice the masses, for a few key reasons. First, the recurring revenue model is radically different to the conventional business applications model, where VARs earn a large upfront commission for selling a business solution, hardware and infrastructure software. Second, VARs have balked at not being able to generate income from services necessary to deploy and maintain business applications on customer premises. Third, whether real or perceived, many VARs don’t trust SaaS vendors. Deep down, they think that after they make the sale, SaaS vendors will take control of the account and soon disintermediate them entirely.

Quick Take:

NetSuite’s SP 100 Program supplies VARs with the big upfront payment that they are accustomed to. NetSuite’s own side-by-side VAR revenue comparison to Microsoft Dynamics favors NetSuite of course, but VARs can try it and do their own math to see how it proves out without having to give up selling competitive packaged software. It’s an opportunity to get up to speed on SaaS, the cloud and recurring revenue models and develop their business consulting skills.

As important, it comes at a time when the SaaS model has proved its maturity and staying power, many VARs have lost deals to a SaaS vendor, and many customers are trying to avoid big upfront capital outlays. While some VARs will remain skittish, distrustful, or even just lethargic about adding a SaaS solution to their business management portfolio, I think NetSuite’s SP 100 will be big wake-up call for many VARs.

Microsoft–Still Relevant, But No Longer Dominant (Redux)

Last week, former Microsoft VP Dick Brass wrote a very
thought-provoking op-ed in the New York Times entitled Microsoft’s
Creative Destruction
which sparked some interesting
commentary from media, industry insiders and observers, and so I
thought I’d toss my two cents into the mix as well. Where should I
begin? Since the dotcom boom, people have been predicting
Microsoft’s doom in almost every market that it’s in, from browsers
to search engines, smartphones to music players. Around  2002
or 2003, when I was an analyst at Summit Strategies, one of our
annual predictions was something along the lines of
 “Microsoft–Still Relevant, But No Longer Dominant”. Okay, we
were probably a little ahead of our time. But I think that the
times have now caught up with this prediction, and it sums up
Microsoft’s market position fairly well today. As the Brass article
states, Microsoft’s biggest coup was to make desktop computing and
personal productivity software ubiquitous and affordable. But
in recent years, the company has not been an innovator. Like so
many other companies in our industry, Microsoft has found that it’s
original, game-changing innovation can be a tough act to follow.
Seibel Systems (which invented CRM), Digital Equipment (which
revolutionized the industry with mini-computers) and Wang
Laboratories (which invented word processing) leap to mind. In
each case, the paradigm shifted, but they were exceedingly
reluctant and slow to follow. Seibel didn’t believe customers would
ever buy  CRM in a software-as-a-service (SaaS) model, but
eventually launched a SaaS offering after watching Salesforce.com
eat its lunch. Digital and Wang both resisted PCs–in the eyes of
their CEOs, no one would want a PC when they could have a dumb
terminal hooked up to a mini-computer, or a computer that just did
word processing. While I don’t think Microsoft is on a path to
extinction, it is does appear to be suffering from a similar
mindset that led to these dinosaurs’ eventual irrelevance and/or
demise. Over the years, I’ve observed a pattern that when other
companies build better mousetraps, Microsoft often dismisses their
relevance and importance until the market demands that it pay
attention. As a result, it has become more of an imitator than an
innovator, with companies like Google, Apple and Amazon beating it
to market to create the new categories that can really spike
growth. So far, Microsoft’s dominance in the operating system and
desktop productivity markets has funded it’s catch up game in new
areas, and it continues to hold a huge market share advantage in
these spaces. However, as profitable as these areas still are
for Microsoft, competitors are whittling away, even in these
strongholds. Not only are Linux, open source and Apple making
headway, but Google is intent on making the traditional desktop
operating system irrelevant for the average user. I agree with Dick
Brass–Microsoft has a lot of creative, talented people but has
lost much of its original, innovative spark. Is this due to
internal politics and bickering, as Brass contends? It’s probably
best left to Microsoft insiders to determine the exact cause. But
 from the outside in, it looks to me like Microsoft needs some
new leadership that will change the current climate and re-orient
the business so that Microsoft can regain its creative edge and
start shaping the future with it’s own innovations.


Intuit Partner Platform: Changing the Rules of Cloud Platforms with Federated Applications

Cloud platforms, or “platforms-as-a-service” (PaaS) are quickly becoming a key channel for application developers. By writing and publishing their applications to integrate with those of a major PaaS provider, such as Salesforce.com or Microsoft, smaller developers can gain instant access to a large installed base of customers.

With so many vendors creating their own clouds, however, it’s easy for software developers to get lost in them—or potentially, locked into in a cloud. After all, it takes a lot of time and effort to write an application that conforms to the requirements of a particular cloud platform. Smaller developers, without extensive resources, have to place their bets carefully, as they may not have the resources to rewrite their applications for different environments when a new or better opportunity arises.

But recently, Intuit unveiled a new capability called “Federated Applications”, which opens up the Intuit Partner Platform to developers that have existing software-as-a-service (SaaS) applications built on other cloud platforms, programming languages or databases. Instead of having to rewrite applications from scratch, developers can use basic XML integration to configure or “federate” their solutions with key integration points, including the user interface, billing, account management and permissions, data and single sign-on to ensure that their solutions integrate with QuickBooks and other solutions on the Intuit Workplace. For example, the partner solutions that Intuit announced at its launch—Expenseware, DimDim, Setster, Rypple and Vertical Response–are built on a wide range of different platforms.

Intuit also provides a wizard to help developers create their pricing plans, and checks each application to ensure that it meets Intuit security and privacy requirements. Once the process is complete, applications are published to the Intuit Workplace, where four million small businesses and their 25 million employees that use QuickBooks can access them.

With its Federated Applications model, and tremendous presence in the small business market, Intuit is poised to change the rules for cloud computing platforms, both for small business developers and customers, as well as rival PaaS vendors. Intuit’s model makes it much easier and faster for developers to leverage existing investments and reach a new market than for PaaS competitors without this capability. In turn, millions of Intuit customers get access to one-stop shopping, account management, connected data, and single sign-on for applications in the Intuit Workplace.

Intuit’s business model represents a dramatic shift from that of the current PaaS gorilla—Salesforce.com. In the Salesforce model, every user of any AppExchange solution must also pay a platform fee to salesforce.com, whether they need to use the Salesforce solution or not—a tax that many small business customers, in particular, are unwilling to pay. In comparison, Intuit charges Workplace developers a percentage fee (typically 14% to 20%, depending on volume) when they sell their solution on the Workplace. In return, developers get a sales channel, platform services, and a friction-free route to Intuit’s large installed base.

By lowering the bar to entry to its platform so significantly, Intuit’s federated approach makes it easy for developers to place a bet on the Intuit Workplace. Intuit customers, meanwhile, can look forward to a flood of new solutions that will work with QuickBooks. At the same time, its more likely that these solutions will be available on other cloud platforms, should the customer decide to move to another accounting solution. Seems like a win-win-win for Intuit, its partners and its customers—and a challenge to PaaS competitors with more proprietary models.

IBM Lotus Foundations: A Real Choice for Small Businesses and Partners

As I mentioned in a blog I posted after Lotusphere 2009, IBM Lotus has been reluctant to go head to head with obvious rivals, particularly Microsoft. At Lotusphere, however, the company came out swinging, declaring intentions “shatter Windows” and “change desktop economics” with Symphony, the free Lotus desktop suite, and compete aggressively against Microsoft Small Business Server (SBS) with the IBM Lotus Foundations appliance.

This new, feistier approach is paying off–as evidenced by the IBM’s announcement that it has signed up 1,000 Microsoft business partners for Foundations in just five months. I’m sure existing IBM Business Partners are liking this approach too. In the same blog post, I polled the question “How aggressive should Lotus be in marketing against competitive Microsoft solutions?” 62% of readers answered that they should “Take it to the limit–otherwise no one will pay attention.”

I first saw learned about the Lotus Foundation appliance at Lotusphere 2008, when it was still in development. I admit, I was skeptical—IBM has had a lot of false starts in the small business arena (remember when it acquired Whistle back in 1999?). Furthermore, Lotus hasn’t been a small business brand in years, and IBM usually refrains from aggressive, head-to-head competition against Microsoft.

But I went, and I saw, and this time, I think IBM is doing it right. I’ve had several demos at different IBM events, and Foundations makes good on its pledge to provide small businesses with an easy to use, turnkey collaboration solution—really! Foundations offers file storage, advanced backup and recovery, connectivity and security, collaboration and email and application services in one integrated package. Some of the things that set it apart include:

  • Automated installation and configuration; it discovers and maps the network for you, and auto-configures firewall and VPN, so you can deploy it in 30 minutes or less.
  • Automatic data backups, and full system recovery if a disaster should occur.
  • Symphony office productivity tools are bundled with, so you don’t need to buy Microsoft Office software.
  • Under the covers, you get the reliability and cost benefits of Linux and open source technologies (Foundations is priced less than Microsoft SBS servers), but you don’t have to know a thing about Linux or these technologies to run it.
  • It has the collaboration power of Lotus Notes and Domino, tailored for small businesses, with Notes clients for Windows, Mac, and Linux.

As important, IBM has factored in what’s often the biggest hurdle to getting momentum for new product: inertia. Outlook users can continue to use Outlook with Domino Access for Microsoft Outlook. And, IBM added VMware virtualization to Foundations, so you can also run Windows applications on it. Customers don’t have to give up things they already use–Outlook and Windows apps, such as Intuit QuickBooks. And, I almost forgot—you can also get a 30-day free trial, and it’s black and yellow, like a bumble bee.

The small business technology market and the channel partners that serve them are at a turning point. Many businesses are tired of dealing with the cost and complexity of Microsoft products and licensing, and channel partners are deciding that they need another option for serving customers that don’t want to deal with these hassles. This time, IBM is in the right place, at the right time, with the right solution, to give them a true alternative.

Can Standards Clear the Clouds?

With market adoption of cloud computing forecast to skyrocket, no one in the tech industry wants to be left on the ground. But, as cloud computing platforms, models and definitions multiply, they’re becoming as numerous and diverse as Mother Nature’s clouds—and just as easy for customers to get lost in.

Last week, Ben Worthen blogged in the WSJ about how the tech industry’s “old guard”—including Cisco, Citrix, EMC, HP, IBM, Intel, Microsoft, Novell, Red Hat, VMware and others—are forming a new group, the Open Cloud Standards Incubator, to develop standards for cloud computing. Their objective is to define technical standards to ensure that businesses can easily move information between clouds. But, as Worthen noted, there’s just one hitch–the new guard of Internet behemoths, such as Google, Amazon.com, Salesforce.com have yet to get on board.

 Vendor Politics vs. Customer and Partner Interests

Commercially, each vendor is the anchor tenant of its own cloud, with a vested interest in strengthening and extending its cloud footprint to upsell, cross-sell, and tighten their bonds with customers. Internet companies have had their own secret sauce for a while, and have used it to their advantage. For instance, Amazon has its own AMI standard, which allows customers and partners to build their own Amazon-standard clouds; Salesforce.com has Force.com, which speeds application development for the salesforce.com platform.

While vendors’ internal standards make it easier and quicker to develop new solutions, on their platforms, however, there is a catch. Commercial developers have to place careful bets on which clouds platforms will be provide them with the best market potential. Today, Salesforce.com may look like the best bet—but in two years, maybe Microsoft will offer a better opportunity. But, unable to afford development and integration costs for multiple cloud platforms, many smaller players will get stuck on a cloud.

Meanwhile, as more of a customer’s solutions get tied into those of an anchor vendor, it becomes increasingly difficult for the customer to extricate itself from a cloud, or to integrate applications that reside in different clouds.

 A Ray of Hope

While history and cynicism make me skeptical about whether its possible for this group—or any other–to gain the critical mass necessary to ensure broad-based cloud interoperability, I do see a ray of hope.

Developers and customers are sick of vendor lock-in, and the risks associated with it. Part of the promise of cloud computing has been freedom—the ability to deploy and run IT solutions quicker, better and more easily and affordably. Developers want the freedom to transport their applications to multiple clouds as new market opportunities present themselves. Customers want the freedom to integrate applications residing in different clouds, public and private. To make this possible, they need the economies of scale, cost and time-to-market benefits that standards can provide.

It’s still early going for cloud computing. Vendors may have to put aside some of their own bickering, and clear the way for cloud computing adoption to live up to its promising forecasts.

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