THINK IT Services

Dimension Data’s acquisition of OpSource marks the end of an era and illustrates how the Cloud Computing competitive landscape is expanding to encompass every type of tech vendor and service provider.

Although it is only a fraction of the size and has only a fraction of the brand equity of Salesforce.com, OpSource has had a disproportionate impact on the growth of the Software-as-a-Service (SaaS) market and broader Cloud movement.

The company’s CEO, Treb Ryan, has been a tireless evangelist for the business value of SaaS and now the Cloud. He and his staff have invested heavily in educating and facilitating the industry’s growth through an endless stream of webcasts and whitepapers, and founding the industry’s most important annual gathering, the SaaS Summit, now known as “All About the Cloud” and managed by the SIIA.

Rather than simply offer a set of hosting services, OpSource put together the first federated SaaS enablement model and associated ecosystem to help established independent software vendors (ISVs) and start-ups migrate to a SaaS delivery capability. It also acquired one of the pioneers in the SaaS billing and provisioning business, LeCayla Systems.

Despite all of its work to promote SaaS, the company struggled to make a living in this segment of the market because there is only a finite number of aspiring SaaS vendors that could appreciate and afford its services. It was given new life when it broadened its attention on the infinite opportunities in the rapidly expanding Cloud Computing market. It also won a strategic investment and established an alliance with NTT which appeared to have the inside track for an eventual acquisition.

It has long been speculated that Opsource was an acquisitioin candidate for larger service providers, including Verizon and AT&T. IBM, HP and Dell were also considered potential acquirers. This speculation gained even greater intensity with the recent acquisitions of Terremark, Savvis, NaviSite and other Cloud/hosting companies.

Dimension Data is a global value-added reseller and services company that probably wasn’t on many people’s radar screen as a potential acquirer. It has ascended from the price sensitive hardware sales business by offering a widening array of managed services. It recognizes that it now must extend those services to the Cloud level. It will be interesting to see how far and fast OpSource will move them in this direction.

OpSource will retain its brand and become the centerpiece of Dimension Data’s broader Cloud portfolio of products and services. Retaining OpSource’s executive team will be essential to optimizing its value because few companies are as dependent on the brand equity of their executives as OpSource.

However, OpSource also began promoting its ’secret sauce’ recently. It is a Cloud orchestration software suite which accelerates the deployment of Cloud services by traditional service providers and relative start-ups. This solution was recently at the heart of a new alliance with VCE, the joint venture of VMware, Cisco Systems and EMC.

Dimension Data is a key reseller of VCE solutions and integrator of VMware, Cisco and EMC products. So, it will probably try to leverage OpSource’s Cloud enablement functionality to not only support its own Cloud services, but as an additional asset to support its service provider customers.

Regardless of OpSource’s future direction, everyone in the SaaS and Cloud Computing industry owes Treb Ryan and his team considerable thanks for their significant work in building this exciting and rewarding marketplace. Knowing how hard surviving this type of acquisition can be, I wish them well and am hoping for the best from this transaction.

OpSource and the Virtual Computer Environment (VCE) Company announced an alliance today which will offer joint solutions aimed at helping service providers (xSPs) launch public cloud services more quickly. This joint initiative is the latest effort by various vendors to enable  xSPs to fulfill their promise as potent ‘cloud brokers’.

VCE is a joint venture formed by Cisco and EMC, with additional investments from VMware and Intel, to create a new generation of networking, storage, virtualization and management technologies to improve xSP infrastructure operations. VCE’s primary product is the Vblock™ Infrastructure Platform for virtualization, data processing, networking and storage capabilities in cloud computing environments.

In this new alliance, OpSource is adding its cloud orchestration software capabilities to VCE’s Vblock Platform to enable xSPs to handle the user sign-up, provisioning, metering, billing, and reporting requirements associated with cloud services. Together, OpSource and VCE’s combined solution promises to eliminate needless development costs, accelerate the service providers’ time to market and reduce their ongoing cost of operations.

OpSource and VCE are not the first to market with a cloud orchstration solution. BMC, HP and Parallels have also announced cloud orchestration solutions for service providers, among others. However, VCE is backed by powerful xSP vendors and OpSource adds a competitive edge based on its extensive hands-on experience delivering cloud services.

I’ve worked with nearly all of the major xSPs who are trying to win a share of the rapidly evolving cloud marketplace. They are all in a hurry to rollout cloud services, but plagued by their traditional corporate cultures, legacy infrastructures and byzantine business processes. So, none of these cloud orchestration solutions can be expected to win a lot of xSP contracts short-term. It will be a long sales process.

Beyond the obvious opportunities and challenges associated with selling these cloud orchestration solutions to xSPs, what fascinates me even more is how this alliance moves OpSource into a different position in the market.

In fact, when I was briefed by OpSource execs about this announcement, the first word that came out of my mouth was “Opsware”. For anyone who is not familar with Opsware, it was a hosting services software orchestration vendor acquired by HP after it was spun out of LoudCloud which was a hosting services company acquired by EDS a decade ago.  

Silverback Technologies went through a similar evolution in the managed services realm, shifting its business from selling services to offering a software platform to other MSPs which was eventually sold to Dell.

Now, OpSource appears to be moving down the same software path offering its ‘platform’ solution to other xSPs.

Cisco Systems’ decision this past week to shut down its Flip video camera business generated plenty of attention because of its implications on multiple levels for the networking company and the IT industry. Here are a few of my perspectives on the meaning of this event and the lessons to be learned.

Cisco deserves credit for the boldness of its acquisition of Pure Digital, the maker of the Flip camera, in 2009 and its equally brave decision to walk away from the over $590 million investment (acquisition, development and marketing costs) in a two year span. It had hoped to use the Flip camera and other home entertainment products as catalysts for additional consumer demand for its network connectivity capabilities and its service providers’ transmission services. Although Cisco didn’t sell as many Flip cameras as it hoped, it certainly can be credited to contributing the rise in video transmission volume during the past two years and growing expectations for more video services going forward.

Few could anticipate that the popularity of simple and economical video camcorders would quickly be give way to a new generation of smartphones with built-in video recording capabilities in such a short time after Cisco’s Pure Digital acquisition. In the same way digital cameras were made nearly obsolete by embedded cameras within smartphones, the video camcorder is becoming a thing of the past as a result of a similar bundling process. It is truly amazing to consider how many formerly standalone functions of a decade ago are now merely assumed features of today’s cellphones.

The power of the smartphone has grown so strong that Cisco didn’t even publicly offer its scuttled Flip camera unit to a potential buyer. In hindsight, Cisco may have been better off buying a smartphone developer, like Motorola, rather than a videocam manufacturer to better compete in today’s increasingly competitive market.

Cisco made this move because it recognized that it had to refocus on its core networking business to fend off escalating challenges from Juniper Networks and a wave of new, offshore clone manufacturers who are threatening to commoditize its market.

But, Cisco’s mistake shouldn’t dissuade it, or others, from continuing to bridge the gap between the consumer and corporate worlds. The consumerization of IT continues to reshape the tech industry as ‘prosumers’ become more of the norm and the enpowered end-user weilds greater influence over IT corporate decision-maker. As more corporations encourage their end-users to work from home or the road, these end-users are making their own decisions about the network, storage and other IT gear, as well as the service providers, that will best support their needs.

Cisco succeeded in bridging the gap between enterprise and service provider (SP) markets in the 1990s when others like 3com and Lucent abandoned this dual market strategy. By selling to both, Cisco has persuaded xSPs that it was an essential supplier to their customers. The same value proposition holds in the consumer market which is increasingly an extension of the corporate world.

But, Cisco also recognized that it was at risk of attacking too many markets and allowing its core business to be undercut. Over 25 years ago, Novell’s demise made a series of acquisitions, including WordPerfect and Borland, to spread into new markets only to have its core business attacked by Microsoft, which led to its eventual demise.

Cisco’s failure to capitalize on the Flip camera is the most obvious example of the company’s recent acquisitions falling short of expectations. Cisco has also failed to leverage its WebEx acquisition to accelerate the adoption of its videoconferencing solutions and collaboration software. Now, WebEx is being threatened by a myriad of cheaper and easier to deploy web conferencing services.

Cisco hopes to refocus its resources on selling its Unified Computing products which promise to transform the way data centers operate to meet the growing demand for Cloud Computing services. But, Cisco’s push in this direction has only helped to galvanize HP’s efforts to strengthen its own server and system sales. Ironically, despite its own leadership problems HP continues to benefit from its growing presence in the consumer market. Meanwhile, not only is Cisco trying to determine how to gain a foothold in this market, but IBM is probably lamenting its decision to relinguish its PC business which removed it from the consumer market as well.

So, Cisco’s move doesn’t mean that there isn’t a synergy to be found between the consumer and corporate worlds. It just means that you need to focus on the right set of products and services to exploit.

Dell’s acquisition of Boomi today is the latest example of the tech industry’s herd mentality.

In the same way that Dell followed HP’s example when it purchased Perot Systems after HP acquired EDS, Dell is now copying IBM’s acquisition of Cast Iron Systems with its own move into the integration business.

Besides trying to keep up with other ’systems’ vendors, Dell is also attempting to fortify its Cloud Computing capabilities which hinge on helping potential customers cost-effectively migrate and integrate data from various legacy applications and databases into a new set of cloud services.

Dell indicated at an analyst briefing in Boston last week that it wants to ‘move up the stack’ and build a platform which can help enterprises and independent software vendors (ISVs) develop and deliver applications. Dell can’t compete with the other major Platform-as-a-Service (PaaS) vendors — including Salesforce.com, Google and Microsoft — from a software development standpoint. But, it can challenge them and others, such as Amazon and IBM, from an Infrastructure-as-a-Service (IaaS) point of view.

Why Boomi?

Because it is small enough for Dell to digest easily to test the integration market opportunities and requirements. It is still assimilating Perot Systems into its operations and corporate culture, and may not have been ready to acquire a bigger player, like Informatica or Pervasive.

Why is Boomi selling at this time?

My sense is they were at risk of becoming a victim of their own success and their rapid growth was creating operational strains which would take significant new investment to offset. Rather than make this investment, Boomi’s investors and management team felt that the Dell deal would not only give them a solid ‘exit’ but also the corporate resources necessary to ‘cross the chasm’.

It will be interesting to see if Dell is able to do a better job assimilating and growing Boomi’s business than it has with some of its previous Software-as-a-Service (SaaS) acquisitions — Everdream, SilverBack Technologies and MessageOne.

By coincidence, I heard about today’s news while attending Pervasive Software’s IntegratioNEXTconference, down the road from Dell in Austin, TX. You can bet there were a lot of smiling faces among the Pervasive staff who expect Dell’s move to trigger additional integration vendor acquisitions. I’m sure Pervasive’s counterparts at Informatica, which is also hosting a partner conference this week, were equally excited about Dell’s move.

While speculation about a Boomi acquisition has been rising since the Cast Iron Systems purchase by IBM, Dell was not high on the list of potential suitors suggested by various industry observers, including myself. Instead, the clearer candidates seemed to be HP, SAP, Oracle, EMC or even Microsoft.

All these companies continue to be likely acquirers for the handful of remaining integration vendors, including Hubspan and SnapLogic, in addition to Pervasive and Informatica. Not to be overlooked as potential buyers are also Google and Cisco Systems.

When Oracle announced its intention to acquire Sun Microsystems in April 2009, CEO Larry Ellison proclaimed the acquisition, “transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems.”

Although he was not ready to use the term at the time, it didn’t take long for Oracle to refer to its combined capabilities as a Cloud Computing solution set, which it recently put on full display at its annual OpenWorld conference.

The event was also a coming out party for its new President, Mark Hurd, the high flying former HP CEO who departed in disgrace only a month earlier. Hurd’s appointment wasn’t hard to understand given his hardware experience at HP and NCR, and now gives Oracle’s move into the system business even more significance.

HP has retaliated by announcing the appointment of Leo Apotheker as its new CEO, along with Ray Lane as its non-executive chairman of the board. Apotheker comes to HP with extensive experience in the software industry, suggesting that the company is ready to counter Oracle’s move by escalating its own efforts in the enterprise software business.

But, Apotheker comes to HP with far less success as a software executive than Hurd achieved in his comparable time in the hardware business. Apotheker resigned as CEO of SAP AG in February after the company had fallen into a deep malaise of slow sales coupled with low customer satisfaction and employee morale.

Despite his dismal record, HP has swapped a successful hardware executive for an unsuccessful software executive.

Like nearly every other industry watcher, my friends at Triple-Tree and I didn’t see this coming when we generated our own list of potential candidates, although we were half-right in suggesting Ray Lane would be a good candidate for the top job at HP, but we didn’t necessarily mean the board chairmanship role.

Apotheker’s appointment is not only aimed at attacking Oracle’s rising threat on the systems side, but is also intended to fend off IBM’s continued push into the software business as well. Big Blue has been on a software buying spree and has done more than HP to position itself in the cloud. CA Technologies has also been acquiring an assortment of young software companies squarely focused on the cloud computing phenomenon. HP also has to reexamine its relationships with Cisco Systems and Microsoft because of their moves into the server and services businesses as well.

HP has also been engaged in an escalating battle with Dell, most recently in its fight-to-the-finish bidding war for 3PAR while it was CEO-less. In addition to competing in the server market, both companies have also deepened their services capabilities by acquiring EDS and Perot Systems respectively. I’ve questioned these moves because they are focused on the old world of IT outsourcing rather than the new world of cloud computing.

But, Apotheker’s appointment also raises serious questions about why senior executives within HP continue to be passed over for the CEO job as outsiders seem to come and go. My guess is that some of these executives will be jumping ship shortly, leaving Apotheker with the additional challenge/opportunity of building a new leadership team.

So, can Apotheker transform HP into a software-driven company? More specifically, can he transform HP’s current software business into a competitive player in the Software-as-a-Service (SaaS) market? And, can he combine HP’s software, hardware and service capabilities to create a viable cloud computing portfolio which can compete on an even broader battlefield?

If the past is any indication, the odds are against him. However, anyone who is familiar with the controversy which surrounded Bill Belichick’s hiring as the New England Patriots’ head coach in 2000 knows that he arrived with plenty of skeptics because he had failed dismally in his only other head coaching experience. Yet, he proved the skeptics wrong by leading the Patriots to three Super Bowl titles in his first five years and has continued to be a contender for the better part of the past five years as well.

Maybe Apotheker can pull off a similar surprise at HP. But, he’ll be facing far greater challenges and failure could have far greater consequences.

Some are already suggesting that one of Apotheker’s first moves should be to acquire SAP, which boasts an attractive installed base of customers who currently rely heavily on IBM systems to power SAP’s enterprise applications. Acquiring SAP would enable HP to square off against Oracle and dislodge IBM from many of these accounts. But, it could also burden HP with an aging set of on-premise applications and the same set of disgruntled customers who were happy to see Apotheker leave SAP before. (I’d be more comfortable seeing HP acquire Symantec, which would fill its security and storage management void, and would fit better into HP’s product portfolio, channel strategy and corporate culture.)

Companies often make bold moves to serve as a catalyst for change. This is certainly the intent of Apotheker’s hiring. However, HP’s board better be sure they found the right guy before they compound their past mistakes by trying to become an enterprise application vendor as well. It wasn’t too long ago that Carly Fiorina was in the midst of a series of highly publicized internal battles trying to prove the logic of her proposed acquisitons of Compaq and PwC.

The Compaq acquisition, in addition to EDS, has made HP the biggest company in the tech sector. But, they haven’t made it a leader in the rapidly evolving Cloud Computing market which is transforming the tech industry.

Apotheker refused to comment about Oracle’s strategies in response to a question during his introductory press conference, but acknowledged that the technology industry is in the midst of a very disruptive transition period as demand for cloud computing services explodes. His ultimate challenge will be transforming HP into a company which can capitalize on this extraordinary opportunity.

Mark Hurd’s sudden resignation as HP’s CEO has opened a floodgate of speculation regarding who the company will select to succeed him.

Because his departure wasn’t anticipated, there are no clear-cut internal candidates. And, because Hurd himself was a surprise selection for the post in 2006, it is possible that another little-known industry executive may be tapped again for the position this time around.

So, this creates a wonderful opportunity for anyone with a passing interest in HP’s future, and the future of the technology industry as a whole, to throw a few names in the hat.

The HP CEO position is particularly intriguing in part because it has grown to become the largest IT vendor in the industry through a series of acquisitions of Compaq, EDS and others. More importantly, HP like the rest of the IT industry is at a pivotal crossroads brought on by the disruptive forces surrounding cloud computing, globalization, the consumerization of IT, mobility and the economy.

As a consequence, HP and every other established technology (and software) company has to re-think their corporate strategies, redesign their products and services, and restructure their go-to-market tactics.

For HP, this means realigning its hardware, software and service capabilities to more effectively leverage the ‘cloud’ so it can more effectively responding to customers’ rapidly changing requirements and expectations, and compete in an increasingly competitive marketplace.

I was first prompted to think about potential HP CEO candidates immediately after Hurd’s resignation when I was asked by a top-flight headhunter for my quick suggestions and came up with the following names off the top of my head:

• Joe Tucci, EMC’s CEO who has transformed the company from a hardware-centric to a software-driven business model and pulled off a similar feat at Wang Computer where he moved the company from hardware to services. EMC and HP’s corporate capabilities and challenges have many similarities.
• John Chambers, Cisco Systems’ CEO who has successfully transformed the company from a corporate network infrastructure vendor into a multidimensional technology supplier to everyone from major service providers to small office/home office (SOHO) workers. Under Chambers’ leadership, Cisco has withstood every economic and competitive challenge, and is now moving into the data center where HP has made much of its living.
• Marc Benioff, Salesforce.com’s CEO who has transformed the software industry by leading the Software-as-a-Service (SaaS) charge and evangelizing about the added business benefits of moving to a broader array of cloud computing alternatives. If Salesforce.com isn’t going to be acquired by Oracle and Benioff made CEO under Larry Ellison, he would be a great candidate to push HP’s legacy software business into the new world of SaaS and its hardware business into the cloud.
• Steve Mills, IBM’s Software Czar, who has used an aggressive acquisition strategy to recast the company into a powerful middleware vendor within a similar set of hardware, software and service businesses which HP possesses. As a result of his success with the software division, Mills was recently given responsibility for managing IBM’s IBM hardware, storage, and operating systems businesses. But, Mills is also facing a mandatory retirement barrier to further advancement and could put his experience to good use at HP.

My friends, Chris Hoffmann and Scott Donahue at TripleTree, where I am a senior advisor, suggested that we put our heads together to broaden the candidate list. Here’s what we came up with:

• Michael Capellas- He has successfully stepped into even tougher situations at Compaq (now part of HP) and MCI/Worldcom, and is well respected in the tech industry and beyond.
• Bill Campbell - Current Intuit Chairman and former CEO, but more importantly he has been a key advisor at Google and Apple, and is also very well respected in the tech industry.
• Kevin Johnson- Former rising star at Microsoft now running Juniper Networks who understands HP’s products and channels.
• Anne Livermore- Runs HP’s Enterprise unit which brings together its hardware, software and services businesses. He’s been passed over many times but might be the safest best as an inside pick.
• John Thompson- Former CEO, and current Chairman of Symantec, recognized the importance of moving to SaaS but couldn’t overcome channel resistance.
• Meg Whitman - If the Governor thing fizzles…she’s a proven, capable leader who will be looking to prove herself again.
• Ray Lane- Ran Oracle as President, then became an early proponent of the virtues of SaaS as a top-tier VC.
• Charles Philips- Has been driving Oracle’s acquisition strategy and runnng a major portion of its operations. He’s just beginning to learn about the hardware business as a result of the Sun acquisition, but he’s a quick study and forward-minded.
• Jon Rubinstein - Ex-Palm, Ex-Apple…might be too much of an engineer but interesting match for HP. Understand mobility which is where the world is heading, and can help HP fully exploit its Palm acquisition.
• Ed Whitacre- Just announced his resignation from GM where he quicklygot the behemoth back on track with no prior industry experience. Before that, he also pulled together SBC and AT&T, and could bring HP’s far-reaching assets together. He’s in his early 60’s, so it might be a stretch to see him as a long-term CEO at HP. However, he could bring stability until HP cultivates a new leader for the longhaul.   
• Diane Greene- Former CEO of VMware revolutionized IT with virtualization, a key component in HP’s future. Might be too techie, but certainly understands the opportunities and challenges.
• Shantanu Narayen - Well respected, but not well known CEO of Adobe which is a key player in the web development world which is driving cloud services.
• Vivek Paul- CEO of Wipro, known as a visionary in outsourcing, now in private equity, with the global experience which will be essential going forward.

If these industry stalwarts seem too mundane, here are a few frivolous ideas to think about for fun:

• Brett Favre – nominated by my Minneapolis-based friends at TripleTree who worship the indecisive quarterback as a brilliant turnaround artist.
• Joe Montana – my football oriented alternative because of better winning record and Bay Area roots.
• Simon Cowell – he is a tough-minded task-master with time on his hands since he left American Idol.
• Oprah Winfrey – knows how to build businesses and a worldwide following, and might be willing to put aside her upcoming year of long goodbyes as she departs her syndicated talk show.
• Tony Blair- the consummate negotiator who would be a perfect candidate to address the myriad of channel issues which will arise if HP adopts an aggressive SaaS/cloud computing strategy.

As you can see, Mark Hurd’s resignation has given us a great way to while away the dog-days of August with various ideas. I hope this gives you plenty of food for thought for the weekend and welcome your suggestions as well.

SuccessFactors, Inc. announced today that it is acquiring Inform Business Impact, an Australia-based provider of workforce analytics and planning solutions.

Here are my quick impressions about the business implications of this announcement:

1. This move confirms my prior predictions that the pace of acquisitions within the Software-as-a-Service (SaaS) would accelerate and that major U.S.-based SaaS vendors would put greater emphasis on growing internationally in 2010.
2. The acquisition of an Australia-based SaaS vendor, on the heals of yesterday’s revelation that Salesforce.com recently acquired a Scotland-based SaaS vendor, illustrates that the on-demand services movement is taking root globally. In fact, approximately 30% of the over 1200 companies listed on THINKstrategies’ SaaS Showplace are headquartered outside the U.S.
3. This is SuccessFactors’s first acquisition, and it is clear that it plans to do many more because the company also announced today the hiring of Cisco Systems veteran Judy Blegen as its new VP of M&A integration. Few companies have made more acquisitions over the past decade than Cisco, and Blegen has been in the middle of their many transactions.

As the new year and decade get underway, here are a few of the areas of the cloud computing market which I think will be important competitive battlefields for established and emerging players:

1. Collaboration Wars: Collaboration is the ‘killer app’ in the Software-as-a-Service (SaaS) segment of the cloud computing market. The rapid adoption of Google Apps has demonstrated the latent demand for these web-based solutions. Now, IBM is promoting the enterprise-class qualities of its LotusLive offering to win a share of the market. Cisco Systems is also intensifying its efforts to promote its collaboration solutions built around WebEx and Telepresence. I also think Microsoft will accept a greater level of cannibalization of its Office products to win a bigger share of the collaboration market with OfficeLive.
2. Business-Oriented Social Networks: These are closely linked to collaboration and have gained a tremendous amount of attention because of the explosive growth of Facebook and Twitter. Although many corporate executives are still uncertain about how to harness social networks, Salesforce.com’s introduction of Chatter at Dreamforce clearly shows that offering an enterprise-class solution can create a competitive advantage.
3. Platforms-as-a-Service Wars: Salesforce.com will continue to push its Force.com PaaS capabilities hard. And, Google App Engine will continue to be a popular development environment with start-ups and tech heads. But, I think Microsoft Azure will experience surprising success in 2010 because the company has a better understanding of how to work with third-party developers and is less likely to create channel conflicts because it would prefer not to develop and deliver its own SaaS solutions. There are also plenty of niche PaaS vendors who will be acquisition candidates in 2010.
4. Cloud Governance: HP, IBM and an assortment of niche players are capitalizing on the lack of unified management systems for cloud computing services. While price competition threatens to commoditize raw Infrastructure-as-a-Service (IaaS) offerings, management vendors that can help the IaaS providers and their customers monitor and control their cloud resources will gain a competitive advantage. HP and IBM are realigning their legacy management portfolios to address these needs. A proliferation of niche players are also seeking to win a share of the market, especially focused on single sign-on and access control.
5. IT and Service Management: IT professionals are learning about how SaaS-based management solutions can help them do their day-to-day jobs more cost-effectively. In response, a plethora of new web-based players are emerging and established players, such as BMC and CA, are shifting their attention toward SaaS-based solutions. Salesforce.com has also helped to bring greater attention to the ’service cloud’, where other SaaS companies like RightNow and Service-now.com are experiencing rising demand.
6. Communications-as-a-Service (CaaS): HP and Cisco Systems are on a collision course to compete for unified communications enablement opportunities among service providers and end-user organizations, large and small. Unified communications has been an ideal for over a decade, and now cost-effective, web-based solutions are becoming a reality. CaaS can also be a key enabler of end-to-end enterprise collaboration solutions.
7. eHealth and Energy Management: With the Obama administration promising to plow billions of dollars into modernizing healthcare systems and everyone trying to reduce the cost of their ‘carbon footprint’, these segments of the market are ripe for SaaSification. Brand-name corporations, as well as a new generation of web-based ventures, will ratchet up their efforts to win mindshare as well as marketshare offering cloud-oriented services to address these important issues.
8. Millennials and Generation Z: Companies positioning themselves for the longhaul are already trying to win the hearts and minds of our children. Apple has converted years of cultivation work within the classroom into a new generation of corporate workers who prefer Macs over PCs. Google is attempting to do the same by encouraging public school systems and universities to use its Apps. Although many kids use Microsoft’s Xbox, few have any allegiance to Microsoft Office and are adopting Google Apps. Other vendors will try to follow Apple and Google’s lead into the classroom.

Escalating cloud computing battles in these areas will also fuel additional acquisitions by established players seeking to accelerate the rollout of new services and penetration of new markets. Oracle and Cisco have been active acquirers for years. Salesforce.com will likely make additional acquisitions and continue to be a target of acquisition speculation as well.

I also think SAP will make a substantive SaaS/cloud acquisition in 2010, in an attempt to overcome some of the internal obstacles which have prevented it from successfully rolling out its BusinessByDesign solution. An acquisition could also offset the growing success NetSuite has had nimbling away at the SAP customer base.

Let me know if there are other important competitive battlefields I missed.

As I recover from yesterday’s Thanksgiving festivities, I’ve been struck by two thoughts regarding last week’s Dreamforce conference,

• Salesforce.com’s new Chatter social computing functionality may be a defensive as well as proactive move.
• An acquisition of Salesforce.com by Oracle may be a friendly maneuver rather than a hostile takeover.

As I reported in my previous blogpost, Salesforce.com’s introduction of Chatter last week at Dreamforce was met with mixed reviews. Many customers, partners, analysts, press and even internal staff and salespeople were uncertain about the company’s goals and capabilities in this new area.

I believe that building an ‘enterprise-class’ social networking component makes sense and adds a timely new dimension to salesforce.com’s fundamental functionality.

Marc Benioff justified salesforce.com’s move by claiming in his keynote address at Dreamforce that neither Facebook nor Twitter were willing to fortify their services to meet the needs of enterprise users.

But, what if this isn’t true? What if Facebook and Twitter could add a contact database, tracking mechanisms and other features to their services in the future to meet the needs of enterprises? Would today’s consumer-oriented, social networking sites become tomorrow’s corporate customer relationship management (CRM) systems?

Changing the focus of a consumer-oriented online service is possible. Apple is quickly converting its consumer-oriented iTouch into a powerful business-oriented iPhone with thousands of add-on apps from a widening array of third-party developers.

And, IBM is also moving in this direction with LotusLive, transforming the company’s pioneering but dorment on-premise collaboration application into a viable on-demand business service.

So, salesforce.com may not only be responding to growing demand for social networking tools among corporate end-users, but also demonstrating its astute competitive instincts by quickly strengthening its defensive position against future attack from Facebook, Twitter or others in this realm.

On the acquisition front, I’ve been predicting for a couple of years that Oracle would make a hostile bid to takeover salesforce.com to capitalize on the company’s rapid growth and commandeer the growing SaaS movement. I also predicted that Google would be the ‘white knight’ who would come to salesforce.com’s rescue to preserve this important path to the enterprise market.

However, my views have changed over the past month with Marc Benioff’s invitation to speak at Oracle OpenWorld and the publication of his new book, “Behind the Cloud”.

Having Benioff speak at OpenWorld clearly showed that Oracle doesn’t view salesforce.com as a simple competitor. Instead, it illustrated the more complex relationship between the companies.

While Larry Ellison has enjoyed making disparaging remarks about the long-term profitability and viability of the SaaS business model, he has also been very happy to accept salesforce.com’s money as one of Oracle’s biggest database customers.

At the sametime, Benioff is recognizing that he no longer has to play the role of revolutionary to evangelize about the business benefits of SaaS and ‘cloud computing’. Instead, he now knows that it is more important to convince a broader cross-section of enterprise decision-makers – both IT and executive – that SaaS and cloud computing services are not radical ideas and can easily integrate into their legacy environments and enhance their current operations.

This tact exponentially increases salesforce.com’s addressable market opportunity by appealing to a broader array of organizations who may have been too risk-adverse to accept SaaS and cloud computing alternatives if they viewed them as an ‘either-or’ proposition.

With Oracle on the cusp of acquiring Sun Microsystems (depending on the disposition of various regulatory hurdles), it may be ready to make a more aggressive move to consolidate its position in the SaaS and cloud computing marketplace by moving ahead with a salesforce.com acquisition.

I no longer believe Benioff would resist such a move. Throughout his new book, Benioff repeatedly gives Ellison credit for his personal success and the success of salesforce.com. He refers to Ellison as his personal mentor and describes instances in which Ellison’s decisions helped salesforce.com overcome critical challenges.

So, if Benioff doesn’t view Ellison as an adversary will he be willing to risk the future success of salesforce.com by accepting an Oracle acquisition. It won’t be his decision. If Oracle offers a good enough price, Benioff is obligated to accept it.

The question is now whether Google, Cisco Systems or another company will try to outbid an Oracle offer to enhance their own position in the SaaS and cloud computing market.

Last July, I offered my views on the similarities and differences between Software-as-a-Service (SaaS) and cloud computing. This past week, I had an opportunity to elaborate on the relationship between these two worlds and terms, along with Platforms-as-a-Service (PaaS), during a webcast hosted by Symplified entitled, “Beyond the Buzzwords”.

Then and now I believe cloud computing is an outgrowth of the success of the SaaS market and web-based, packaged applications. Cloud computing represents a rapidly growing array of web-based tools which enable users to build their own applications or utilities that can be deployed via the Internet (“cloud”) or ‘downloaded’ to an on-premise environment.

Much like the open source world, the cloud computing environment enables users to take advantage of a wide assortment of piece-parts from a variety of sources to create their own solutions for various project and production purposes. They both rely on incredibility economical development resources and generous community-minded contributors willing to share and swap ideas and outputs.

During last week’s webcast, the question was asked how Platforms-as-a-Service (PaaS) relates to SaaS and cloud computing. In my view, PaaS is a vendor-centric set of tools and resources which permit users to build apps and utilities which not only take advantage of the vendor’s holistic portfolio of technological capabilities, ranging from development to delivery, but also leverage the company’s customer base and/or channels to market.

I dissected some of these ideas and leading platform players last month. I also will be moderating a panel session at Interop in Las Vegas on May 19 entitled “SaaS, Pass and More: A Taxonomy of On-Demand Applications”, that will include executives from Cisco Systems, LongJump and Salesforce.com.

These topics will also be discussed at other events I’m attending and participating in over the coming weeks.

You can also obtain useful insights about how SaaS vendors are leveraging platforms in SoftLetter’s new SaaS Benchmark Study. My colleagues at Triple-Tree also published a useful report on platforms last year.