Business & Technology Nexus

Tomorrow San Francisco will get crazy with OOW’ers. I’m excited to be there for two reasons:

1- To share more of the Sun systems integration story and to talk publicly about our work at Oracle Applications Labs

2- To witness the unveiling of a project we’ve kept under wraps for quite some time @ Larry Ellison’s Wednesday keynote

The OOW event is so gigantic now it is hard to fathom. I think attendance is around 50K and there will be another 100K online.

See you there!

A few years ago, Linux appeared to be headed towards dominance in the server OS market. At the same time, MySQL “broke out” and seemed on its way towards making databases free. At layer after layer in the technology stack, open source was cool & moving forward.

So much so that vc-backed companies formed and grew taking traditional enterprise software or technology areas and professionally building and running open source project versions.

Here in 2009 the scene has changed. It feels very different.

For open source software companies expecting customers to choose to “pay” for “free” software, the bait-and-switch mindset which was so inevitable is more exposed. Imho, this is a good thing, as it frees the open source movement from a moral gray area where companies offered products for free but were incented to somehow cause those products to need other services or support to make them complete & functional.

Microsoft’s server OS seems to be faring better than expected vs. Linux. And Oracle has been very active, acquiring InnoDB (the jugular of MySQL), offering enterprise support for RedHat Linux (exposing the lack of intellectual property in RedHat’s business model), and then swallowing Sun to take Java & MySQL in full.

This leaves us in an interesting spot, where we seem to have only 2 viable technology stacks left – one from Microsoft and the other from open source + Oracle / IBM. IBM has growing gaps while Oracle seems strengthened in the enterprise.

As a fan of Ruby on Rails and other script-based languages, it will be a telling 2010 to see whether the market will consolidate around .Net and Java or whether choice continues & the tools market remains fragmented…

My wife is a family practice physician. Her clinic, FINALLY, is installing an electronic medical records system. I can’t tell you the number of times I’ve felt sick to my stomach while walking through her clinic looking at wall after wall of floor-to-ceiling files. It’s an in-your-face visual reminder of the information silos that prevent physicians from understanding a patient’s condition holistically & achieving better patient outcomes.

That’s why I’m a pretty big fan of Obama “calling the US healthcare system out” on being antiquated and ill-equipped to meet the needs of patients. From petty bickering keeping physicians from establishing common standards of care and treatment, to their all-to-often allergic reponse to technology, the time has long-since come for change.

And change does indeed seem to be on its way. In  fact, the mandates for change seem to be translating into a $19B “Obama Flood” of business for EMR software vendors and implementation specialists. And since often these systems are implemented (even at a small clinic) for more than $100K USD, there’s a lot of money about to change hands in pursuit of a much-needed modernization of our healthcare infrastructure.

I’ve been intrigued, as a procurement guy, how clinics and hospitals and other points-of-care are going about choosing their new systems. There seem to be a good number of website “lists” of EMR software systems available – and I think that’s a good thing. But I wonder if decisions like these are made more through face-to-face referrals from sources of trust. Even if so, some basic research by IT staff and clinic managers can ensure that organizations find the system that offers the best value and best matches their requirements.

How to buy complex systems in an opaque market, where vendors do not necessarily disclose complete information about their capabilities or their price, can be quite challenging. If you are currently researching an EMR system for your point-of-care facility, what are you doing to make sure you’ve found the right one?

Every once and awhile I tune in to JanRain’s broadcast – they are the team behind the Open Source project OpenID. (Which is timely to share since I think WordPress is now OpenID compatible.) I’ve written on OpenID in the past – but to recap it allows you to use your login credentials from your favorite trusted site when logging into other sites. (i.e. use your Yahoo! login to log in to WordPress, etc). It’s like a simple version of LDAP that any site in the world can tune into.

Now the guys over at JanRain has also baked up some Jyte. It’s like an open version of MySpace (without friendship rings, etc) with a little of Wikipedia thrown in. Its special sauce is that you or others can make claims about you – and then people get to vote on whether they believe or agree with your claim.

What if we all started using this for suppliers? And what if suppliers could use it for their customers?

For example: GE Pays Really, Really Late (Thumbs Up, +1000, Thumbs Down, 0). Or how about: Grainger’s Emergency Repair Part Service Is Inexpensive (Thumbs Up, 0, Thumbs Down, 321). Fun stuff!

As a Mac enthusiast who also uses PC’s, I thought this Business 2.0 article was pretty funny. DOT bans Vista! Also Internet Explorer 7. Well, I do have some insight on the IE 7 trouble. IE 6 so blatantly violated browser standards that it required some serious coding to support. Plus it was so dominate in the market that people just wrote apps that worked on IE 6 – forget browser compatibility, it’s not important when you get 90% of the market with just 1.

Internet Explorer 7 is far more standards friendly. Said another way, it works NOTHING LIKE IE6. So as I visit Windows IT shops most of them have “No IE7″ policies in place b/c they find all their production web applications are broken. There’s a lot of short term pain here, but in the end IE7 will behave a lot closer to Firefox and other browsers who respect standards, and so these same IT shops will have more choice moving forward.

Microsoft should have produced some sort of help for IT departments needing to migrate their web applications from IE6 to IE7. And who knows, maybe they did – so by all means point me to it if it’s out there.

I received a heads-up in late January from Scot Case over at the Green Electronics Council that President Bush had signed an Executive Order requiring all federal agencies to buy EPEAT registered “green” computers.

Given that estimates are US federal agencies buy 7% of the world’s computers, this is a big deal. And I think it’s great!

Now someone needs to explain to me, in small words please, how on Earth US federal agencies can possibly need 7% of the world’s computers…

As Coupa grows we’re getting serious about prospect followup, etc. One aspect of this is evaluating the quality of leads. In CRM terms, suffice it to say “quality” can mean whatever you want – in this case let’s say it measures interest-level (vs. budget-approved, is-the-right-sized-firm, etc).

For small firms like Coupa, the SalesGenius service seems pretty interesting. At its core, it tracks what prospects do with email you send them. It’s very cool, but in a creepy, big-brotherish kind of way..

Say I email Joe Schmo at fictitious company MotoRo with a nice email explaining my product offering. If Joe chooses to read the email I’ll get a real-time pop-up on my desktop saying “Joe is reading your email!”. The pop-up will include Joe’s contact information if I’ve added it to the system. If I embed a link in the email, say back to my website, and Joe clicks the link – voila, the SalesGenius service will shoot a message to my desktop: “Joe is on your website!”.

The thinking behind the tracking, which is clever and inescapably logical, is that if Joe is reading the email or perusing the website it might be a very, very good time to call him. The question I have is whether this crosses some sort of privacy boundary. A good test of whether it does is whether you’d be comfortable calling Joe and saying “Hey, I noticed you were reading my email 2 minutes ago and had clicked to our website so I figured I’d call in case you had any questions.” Now I’m no sales guy, but my gut tells me that wouldn’t be the best ice breaker.

…But hey, if you’re a sales guy and you think your competitors might be effectively using tools like SalesGenius to increase their close % it may be time to keep-up-with-the-Jones’. And on the surface, it seems pretty neat

I’d be interested in your feedback on other lead followup tools you like! Add your thoughts as comments below.

I’ve posted quite a few times on SaaS before. Some posts have been positive, while others have been more challenging.

But there’s one truth I think we can all agree on – that the pricing model of SaaS is fundamentally different and very challenging for traditional vendors to match.

Software license pricing is a very interesting area – as the business models themselves end up acting as a strong motivating force for very different styles of software development. But before we get into the psychology of pricing, let’s walk through the 3 basic approaches:

1. Bits-in-a-box Version-specific Perpetual License

Consumer software is sold this way, almost exclusively. Companies build a product, like Textmate 1.5 or Microsoft Word 2004 for the Mac, and sell you the right to use that software till the end of time. More and more, companies will use the internet to provide you minor updates for free, but these updates have more to do with controlling the firm’s support costs than anything else.

When a new version comes out you might receive a discounted price for an “upgrade” to the new version. But you may just cruise along on the old version if that proves good enough for your use. It’s up to the company to entice you to upgrade, presumably by building an impressive set of capabilities you determine you just can’t live without.

Support for consumer software products has been, for the most part, assumed. In the first place, if you are selling a product to hundreds of thousands of people for $20, you better not offer something that leads to them all wanting to call you to figure out some thorny technical problem. So, over time, people have gotten use to buying without the expectation of implicit support. And “bundled support” with the perpetual license, has become more and more paltry.

2. Introducing the Annual Support Contract

Software vendors have yet to offer the same quality and reliability in business software as they do for consumer software. And employees of the company buying the software, quick to protect their interests and standing, require significantly more assurances around a software buying decision. Enter the annual support contract. With it, software companies offer an array of telephone and web-based support, sometimes even including on-site presence.

At Oracle, this contract included a curious clause – as long as a customer stayed current on their support contract, both minor and major revisions of the software would be available “free of charge.”

In this way the customer pays for the current version via their perpetual license purchase, then for ongoing development with a portion of their annual support payment.

I assert that the Oracle model, while very fair to current customers, reduces the incentive to upsell its current customers on new versions of the software, and thereby decreases pressure to make more than incremental progress. Instead, it places an emphasis on new customer acquisition & on competent support thereafter.

3. Subscription – you know, like the Wall Street Journal

SaaS has been called “revolutionary” because it removes the burden of systems management from customers – instead relying on centralized, assumedly more expert resources to manage maintenance and updates efficiently. And we’re all used to SaaS – we use it via Google Maps, via Yahoo! Mail, and other B2C web services.

But in the enterprise space, SaaS tends to come along with something just as radical – the “end of the perpetual license.”

I’ve gotten in trouble in the past at describing SaaS as a “software rental service” – but the analogy holds here. But instead of thinking of software as “like a house” (which tends to appreciate over time), think of it instead as “like a car” (which tends to depreciate over time). So why not rent?

Knowing your software vendor’s preferred licensing model can give you insight into their likely future behavior. In the enterprise, there’s a definite shift away from a high up-front fee for an enterprise license fee, especially for big businesses concerned with the high degree of shelfware (software bought but rarely used i.e. sitting on the shelf).

The last point here, predictably, is that while SaaS made it popular, subscription licensing can work for on-premise software too. And for many businesses, subscriptions may just be a better way to go.

I was at peace reflecting on Oracle’s chop-block of Red Hat… But then Microsoft and Novell had to go and spoil the mood by getting into bed together.

A lot of the commentary has compared the Novell deal as similar to Microsoft’s support of a failing and flailing Apple (boy does that seem like a long time ago!). But this sure seems different to me.

There’s nothing like a major announcement full of intent, press releases, and the vacuum of any real accomplishments to get your mind racing. Where could the partnership go? What is it’s true aim?

After all, why should Microsoft try and bolster the SUSE derivative? Conceivably, and predictably, Microsoft could share device compatibility information in a clever way and in so doing bolster SUSE in the US market. Doing so would undercut Red Hat (and by extension Oracle), as long as those pesky intellectual property barriers are properly erected.

Oh Linus, is this what victory looks like? After all, you’ve done it, you’ve gone w-a-y mainstream.

All that’s left is my modest suggestion for Microsoft. Replace the Windows kernel with Linux. There’s about a million different reasons why this is very, very unlikely (and they are all devices that need drivers). But what if it did? Couldn’t Microsoft claim to be more “open” than Apple. Couldn’t they ride the open source movement with their proprietary, monopolistic shell of a user interface?

But then again, when you are running as far ahead as Microsoft is, sometimes it’s better to go slow…

Salesforce.com has unveiled a new on-Demand Programming Language called ABAP, oops I mean PL/SQL, oops I mean APEX.

Take a look for yourselves. What is great is that potentially this forces partners into a proprietary salesforce.com scheme for building applications. Write Once, Run Only On Salesforce.com. But if they can generate the marketing buzz & get IT departments and start-ups drifting that way, they could be mighty successful. The lock-in works for their business model, and VC’s hate to fund a start-ups SaaS “learnings” on how to do 24x7x365.

Neat stuff!