Archive for the ‘Technology’ Category

In a blow to the software licensing paradigm and intellectual property rights everywhere, the European Court of Justice said that it was OK to resell a software license once you are done with it.  The case involved Oracle and a European company UsedSoft, which had made a nice business of reselling the licenses.  The story is reported here at Dow Jones by Vanessa Mock.

It really boggles the mind that such a court could redefine intellectual property rights in such a fundamental way.  Furthermore, I could understand, though not accept, it if this action came from North Korea or China where pirating is an open secret.  But to have the European Court of Justice come up with such a boner leaves me just shaking my head.

It’s almost as if medieval law was resurrected and rather than indenturing people to the land, it now indentures technology companies, and probably many others who provide licenses rather than products, to slavery.

This might be a boon to the subscription economy.  In that model there is no doubt about who owns the software and the terms of use.

So, does Oracle in this case have an obligation to continue providing updates to the new owner of record?  This is a story that will continue to evolve.

At Oracle Spring Analyst day last week, Mark Hurd spoke about simplification and about how the industry needs to reduce complexity, a good message.  But he equates simplicity with reducing the number of vendors that a corporation works with — at least in IT.  However,  history shows this is not the path to simplicity.  It’s just a route to profits once a vendor becomes the only incumbent.

Complexity is often the signal that an old paradigm is reaching its asymptote.  Simplicity, its opposite, often ensues but at the cost of exploding the old order.  Mainframes didn’t get simpler, mini-computers became common and the number of vendors didn’t decline, it rose thanks to the standards that new vendors brought.  Standards made it possible for lots of competitors to play and the competition made better products and services.

This paradigm busting continued when PCs and networks replaced both minis and mainframes and it continues as cloud computing replaces the data center and its ossifying stack.  Standards for cloud computing, social interaction and communication, mobility and analytics all contribute to the new paradigm, which Hurd seemed to see as a glass half empty.

Standards make it possible for many vendors to compete without increasing complexity.  In fact, without the standards brought by a new paradigm, the old paradigm simply collapses due to its increasing internal complexity.  So, Hurd was right to offer simplicity as a goal but I think he was off point in suggesting that the current paradigm could or should be simplified.

Oracle is initiating a new paradigm that simplifies the old order albeit with its own standards which I hope will remain non-proprietary.  I think in its messaging the company would be better served if it acknowledged that the road ahead is a new, and for a time, simplified paradigm.  Then the massive influx of social and services providers makes sense and ceases to threaten the IT hierarchy.

Simplicity is a good idea.  It often means a new paradigm is forming and those who initiate the change are usually the winners.  Oracle is both instigator and guardian of the status quo.  It must engage in its own creative destruction.  So far the company has walked a fine line of defender of the faith and iconoclast.  The challenge ahead is for the company to stay on course and not to believe all of its marketing messaging.

A Short Post

Posted: March 29, 2012 in CRM, Technology

I moderated a panel discussion this morning, something that goes with the job I do.  It was with the Massachusetts Technology Leadership Council (Mass TLC) and the event went really well.  People were engaged, there were good audience questions and the panelists gave well considered answers.

The title of the session was “Finding the Right Way to the Cloud: Measure, Manage and Monetize for Success” and I was told it would focus on the financial and business model aspects of becoming a subscription company which it did for the most part.  What interested me and what motivated this piece is the quality of the discussion about technology.

In a discussion that was supposed to be about business there was a lot of technology talk.  We were ostensibly talking about metrics for managing the business like churn, deferred revenue, recurring revenue, renewals and more.  But the technology discussion was also about monitoring API calls in a public cloud and other things that never come up in discussions about companies like Salesforce, NetSuite, Oracle, SAP, and Microsoft because those SaaS applications hide all this complexity form the user.

I don’t pretend to understand the significance of an API call and the costs involved, but the panelists seemed to.  In the middle of this I began thinking that this is the price you pay for going for an infrastructure as a service solution.  I suppose there are situations when a company might want or need a bare bones hardware solution. But it seems counter intuitive to me that anyone would give up a data center only to take on this level of complexity.  What is saved or gained with this down in the weeds approach?

News out in the virtual world is that some analysts have trimmed their sails regarding Oracle’s financial picture.  The company missed its revenue forecast last time and today the financial guys are concerned about competition in the database business and lack of strong market support for the company’s hardware.

Competition from companies like SAP with its in-memory database solution offers potential to disrupt part of Oracle’s database business.  Oracle also has a memory based strategy and there are other factors to consider.  For instance, how do SAP customers feel about buying their database services from their application provider vs. from their database company?

The same kind of question can be asked about hardware from Oracle, traditionally a software company.  Oracle’s purchase of Sun a couple of years ago changed that equation and you can argue that Oracle is more of a hardware company than SAP is a database company but I think this all misses the point.

Whether we’re talking about in-memory databases, very large computers, data storage and analytic appliances, we are seeing fundamental disruption in multiple markets.  What’s interesting about these disruptions is that the incumbent leaders in these markets are leading the creative destruction themselves.

In a more conventional market disruption we could expect a crop of small companies flying under the radar to create products and nip at the heels of the big guys for a few years until — Oh my gosh the sky is falling! — the moment when the little guys tripped up the big guys.  That’s not happening here.  The big guys, especially Oracle, are doing their own disrupting.

Perhaps it’s because hardware is no longer a place where Steve Wozniak can put a few chips together on a breadboard and invent the new, new thing.  It takes big bucks and lots of R&D to build what Marc Benioff derisively calls a new mainframe or the data storage and analytics appliances the Oracle has brought to market in the last two years.

Oracle has done its job, it has brought out some impressive next generation technologies and it has seeded its biggest customers, the early adopters, with the gear.  It has also received good reviews albeit with some first generation glitches.

Wall Street is doing its job too, though you might want to question the rationale.  The Street has a ninety-day time horizon; we know this.  But disruptions have their own internal clocks and they don’t kowtow to the analysts.  So we have a situation in which Oracle is having some lackluster results regarding market uptake of its newest and priciest products.  Not to worry, I say.

The alternative to really big iron is widely distributed iron and it will be interesting to see how this plays out.  A widely distributed scenario can use smaller and older technologies, but you lose economies of scale, even in a cloud computing situation.

So although Oracle is experiencing slower demand for its new products, I think the situation is temporary.  The new gear strikes me as the disruptive innovation that the market needs and we are going through a normal process of market uptake.  The only difference between this and a more conventional disruption is that as a big public company, Oracle is going through this in full view of all the critics.

One of the more noticeable efforts by Meg Whitman since she became HP’s president and CEO last September has been the company’s effort in cloud computing.  Last week the company announced  that within two months it will begin offering cloud services.  Moreover, HP has taken the important stance of trying to be different from the infrastructure as a service companies crowding the market.

Meg Whitman, CEO HP

Meg Whitman, CEO HP

The HP plan is to offer an expanding suite of applications rather than raw CPU and storage.  Recently, Amazon and Microsoft have become engaged in a price war that looks like both companies are selling at or below cost, presumably to gain market share.  Each company also supplies applications but the emphasis on price makes the apps something of a sideshow and I am not sure that’s the right emphasis.  While this approach might be good for building market share in the short term, building a customer base is all about providing something that customers want and need, which is well beyond low prices for IT.

HP might have another advantage too.  Tien Tzuo, CEO of Zuora, the billing and payments company that specializes in subscription services, tells me that HP selected Zuora for its business.  That makes a lot of sense because when you are selling something more sophisticated than servers-by-the-hour, things get complicated quickly.  Amazon has a lot of free apps and Microsoft is happy to sell one-time licenses, so there are some real differences between the three.

In addition to the number of seats, customers can suddenly buy a constellation of applications in different seat configurations that demand a billing system that goes beyond a single line item.

The HP relationship will not likely challenge Zuora’s infrastructure or its ability to serve many customers — the company already has well over a billion dollars worth of subscriptions under management.  But the relationship does something very important for Zuora and for the subscription industry.  HP, with its commitment to something beyond commoditized pricing of generic services, has taken the spotlight away from the simple price war and focused it on the challenges of managing a real business in the twenty-first century.  Zuora is integral to telling that story.

Here’s a quick shout out to Jobscience, one of my clients, for winning a AppExchange Best of ’11 Award for Human Resources and Recruiting.  What’s especially sweet about this award is that it is crowd sourced form Salesforce customers.  That’s right.  The people who buy and use the stuff said this is the best on the AppExchange.

As you know there’s been a goodly amount of M&A activity in HR lately with Oracle buying Taleo and SAP buying Success Factors.  That’s because HR is an important new frontier for companies who are often competing on the talent they attract as much as they are competing with other forms of capital like VC money and IP.

At least out in the Valley, there are more job openings than there are people to fill them.  The talent drought has made recruiting and holding on to people a more serious thing.  And with this comes the realization that old style HR systems that are attached to the ERP side of the house have a distinct disadvantage.

In his biography, Steve Jobs talked about the importance of hiring the right people and it has made a strong impression on me.  He said,

“…I realized that A players like to work with A players, they just didn’t like working with C players.  At Pixar, it was a whole company of A players.  When I got back to Apple, that’s what I decided to try to do.  You need to have a collaborative hiring process [my emphasis added].  When we hire someone, even if they’re going to be in marketing, I will have them talk to the design folks and the engineers.

In this environment, with a plethora of unqualified applicants trying for advanced jobs and a regulatory environment that sees to it that everyone gets a fair shot, the pressure on companies to conduct those collaborative hiring processes quickly so that they can put out offers ahead of the competition is intense.  Jobscience takes a front office approach to the HR challenge and the people who know best, have said that it’s got the right stuff.

Equally important, Salesforce didn’t have to spend a billion bucks to get Jobscience.  This is just another example of the power of real cloud computing.

This article on computer security in the New York Times earlier this week got my attention and impressed the heck out of me.  I know security is not my usual gig (boy do I know that!) but when something this good comes along, I just have to write about it because writing about technology is my gig.

It seems the pesky organization Anonymous targeted the Vatican website back in August and failed miserably to cause any damage and an effort to swamp the site and create a denial of service situation was at best mildly successful.  But before you start looking for miracles or other divine intervention let me say that there is a simpler explanation that we can all take to heart.

According to a report that Imperva, a computer security company in Redwood City, CA, planned to release this week, it all added up to taking good and appropriate steps to lock down the Vatican site to prevent hackers from penetrating the system.

This gives plenty of proof that any organization, with the right planning, tools and strategy can protect itself from this kind of attack.  To be sure protection is a moving target and what works today may not work manana.  So any strategy needs vigilance built in but it’s nice to know that organizations can thwart bad guys if they try hard.

That leaves us with a few questions though.  How much is enough?  What about the Chinese?  And Will Tom Hanks play in the movie?  First things first.  As I mentioned, this is not my gig but you can call the people at Imperva and other companies and you should.

The Chinese are a different situation.  They are professionals, unlike the ragtag bunch in Anonymous, and they are state sponsored.  It is not a stretch to say that when thirty odd companies in California get attacked by servers in a Chinese city and their IP is stolen (as happened last year), that an act of war has taken place.  That’s way out of my pay range as they say in D.C. but at a minimum, I would think that some agency of our government should retaliate.  I suggest we turn back a few Chinese cargo ships — say, a like number to the companies hacked?  Just a thought.

As you can see international relations isn’t my gig either.  As for Hanks?  I’ll call his agent.