THINK IT Services

Salesforce.com unveiled a series of important enhancements to its Software-as-a-Service (SaaS) service-desk management capabilities this week aimed at helping businesses more effectively track and respond to the escalating volume of data feeds from Facebook and Twitter.

The company’s Service Cloud 3.0 announcement coincided with its CloudForce 2011 event at the Javits Center in NYC, in the backyard of ‘Corporate America’, the financial services sector and the traditional media world to maximize its attention.

The new round of enhancements were primarily focused on enabling users of Salesforce.com’s service-desk management platform to better monitor Facebook and Twitter feeds, and track their response to comments, complaints and other service requests via these increasingly important social networks.

Salesforce.com made sure to brand each feature as a separate offer to ensure it gained as much attention as possible, including Salesforce.com for Facebook and Salesforce.com for Twitter.

The new monitoring capabilities are actually enabled by a third-party company, called Radian6, which is now selling its solution on Salesforce.com’s AppExchange as well. By coincidence, people I know at SAP also use Radian6 to track Facebook and Twitter data feeds. So, don’t be surprised to see Radian6 acquired quickly by one of the two companies if Google, Microsoft or another suitor doesn’t swoop in sooner.

Despite the fact that most of the enhancements unveiled by Salesforce.com this week won’t be available for another quarter or two, its announcement overshadowed SAP’s own attempt to assert itself in the SaaS and social networking arena by previewing a new portfolio of on-demand business applications at CeBit aimed at responding to Salesforce.com’s growing success and the overall acceptance of SaaS/Cloud-based alternatives to legacy, on-premise applications.

I had an opportunity to get a private briefing re: SAP’s new offerings before this past week’s announcement (as I did for Salesforce.com’s Service Cloud 3.0 announcement) and was impressed with their functional and social networking capabilities, as well as the company’s intensifying efforts to deliver cost-effective SaaS solutions. However, it still has a long way to go to convince customers and the broader marketplace that it can succeed in the SaaS marketplace after numerous false-starts.

Meanwhile, Salesforce.com isn’t taking its foot off the gas pedal as it extends its lead as an innovator, and market/mindshare leader.

Disclosure: Salesforce.com and SAP are THINKstrategies clients.

The extraordinary success of Amazon Web Services’ (AWS) Infrastructure-as-a-Service (IaaS) solutions has prompted nearly every major hardware and software vendor to offer their own IaaS, Software-as-a-Service (SaaS) or Platform-as-a-Service (PaaS) solutions as well. This has put tremendous pressure on traditional hosting companies, communications service providers (CSPs), and Value-Added Resellers (VARs) to respond with their own offerings in this increasingly competitive marketplace.

This week, I had the opportunity to participate in a full-day analyst briefing and attend the kickoff session of Parallels’ 2011 Partner Summit. [Disclosure: Parallels paid my travel expenses to attend the event.] This year’s Summit built on the momentum of last year’s conference by unveiling numerous enhancements to its portfolio of Cloud enablement solutions, including:

• Parallels Automation for Cloud Infrastructure
• Hosted PBX
• Microsoft System Center Hyper-V Cloud
• Microsoft Office 365 Syndication

Parallels also promised to make an increased investment in its Application Packaging Standardization (APS) Program to permit greater portability of Cloud services.

What I especially liked about this year’s event was the way Parallels’ management team attempted to alleviate some of the anxieties among its partners and potential customers about the increasingly competitive Cloud marketplace by emphasizing the tremendous opportunities in the SMB segment and identifying industry best practices that can win hosters, CSPs and VARs success.

While the Cloud Computing market is evolving quickly, mainstream adoption of Cloud services among small- and mid-sized businesses (SMBs) is still embryonic. Parallels is attempting to accelerate the growth of this segement of the market, and help hosting companies, CSPs and VARs capitalize on this tremendous market opportunity with its Cloud enablement products and channel support programs. It is also expanding its role as a Cloud “broker” by recruiting  more Software-as-a-Service (SaaS) to participate in its service catalog.

The company also announced a leadership change with  Birger Steen assuming the CEO position and the company’s founder, Serguei Beloussov, retaining his positions of Executive Chairman of the Board and Chief Architect. Steen brings extensive business experience and strong Microsoft relationships which the company hopes will help it grow from approximately $100 million in revenue to $1 billion over the next five years.

An acquisition by Microsoft might come before it reaches this milestone. The company’s concerted efforts to align itself with Microsoft include many of this year’s product enhancements; moving its headquarters to Renton, WA; and adding other former Microsoft executives to its leadership team such as John Zanni, Vice President of Marketing and Alliances, who was formerly GM of Microsoft’s Worldwide Software + Services Industry, Communications Sector business unit.

A clear measure of Parallels’ growing presence in the Cloud enablement business was the larger number of attendees and sponsors it was able to attract to this year’s Summit. The energy and enthusiasm at the event also demonstrated the strong allegiance which Parallels’ partners feel toward the company.

With few vendors able to offer a comparable portfolio of Cloud enablement tools to hosting companies, CSPs and VARs, Parallels has an opportunity to grow quickly as its partners attempt to keep pace with the tremendous growth of the Cloud Computing marketplace.

Sometimes I feel guilty that I’m neglecting this blog because I’ve been invited to publish my perspectives on the Software-as-a-Service (SaaS) and Cloud Computing movement in so many other online venues. Anyone who isn’t following my writings in these additional outlets may have missed my most recent views since the start of 2011. So, here’s a quick list for your reading pleasure,

E-Commerce Times: Pushing the Cloud From Madison Avenue to Main Street, 02/11/11

Datamation:Capitalizing on Cloud Computing: Not If, But When, 02/08/11 

E-Commerce Times: Clouds Go Vertical, 01/14/11 

You can also click here to find my most recent blogposts regarding the latest M&A activity, conference dynamics and end-user focus in the SaaS and Cloud arena on TechWeb’s Internet Evolution microsite.

Verizon’s acquisition of Terremark, announced last night, clearly indicates that the company is committed to becoming a major player in the rapidly evolving and expanding Cloud Computing marketplace. It will also trigger a new round of similar acquisitions in the Infrastructure-as-a-Service (IaaS) segment of the Cloud Computing arena.

Verizon’s decision to acquire Terremark was a “classic make/buy” choice, according to the company’s executives during their telebriefing this morning. The acquisition accelerates Verizon’s move to the Cloud by leveraging Terremark’s proven capabilities. Terremark offers enterprise-class IaaS solutions which fit well into Verizon’s portfolio and target market. Terremark also has excess hosting capacity in its Miami and Culpepper facilities, and now has the additional financial resources and channels to market to fuel more rapid growth.

Verizon will allow Terremark to retain its brand and independent operations. In fact, Verizon executives suggested that they may move many of its own data centers under to the Terremark team over time to accelerate their conversion into more efficient Cloud environments.

You can bet that boardrooms throughout the telco and other segments of the tech industry are abuzz this morning with more urgent discussions about how they should cement their positions in the Cloud Computing marketplace to respond to Verizon’s move. And, I’m sure the phones at Rackspace, Opsource, Savvis, Joyent and other prominent IaaS players are also ringing with calls from M&A folks representing AT&T, IBM, HP, Dell, etc. seeking to keep pace with the intensifying activity in the IaaS market.

I’ve published two commentaries recently in leading industry publications which describe how the next wave of Software-as-a-Service (SaaS) solutions will target ineffecient business processes.

The first was in Sandhill.com discussing how the line of demarcation between software, business and information services is blurring.

The second was in E-Commerce Times examining how Cloud services are going vertical to address industry-specific requirements.

I hope you find these perspectives helpful and worthwhile.

There is no question that cloud computing was the top enterprise tech topic in 2010. Microsoft even succeeded in popularizing the term in its “Into the Cloud” ad campaign at the end of the year. Yet, most of the discussion and debate surrounding cloud computing in 2010 was focused on defining the term and its potential value.

Fortunately this debate didn’t prevent a diverse set of early adopters from capitalizing on the rapidly expanding assortment of cloud computing solutions being offered by a potpourri of emerging and established players. The growing number of cloud users are producing a compelling set of customer success stories and clear ‘use cases’ for employing cloud computing alternatives to legacy systems and on-premise applications.

THINKstrategies has been chronicling many of these success stories in our ongoing Awards programs — the Best of SaaS Showplace (BoSS) and Cloud Computing Business Value (CCBV) Awards. These awards were created to bring attention to the measurable business benefits being delivered by today’s SaaS and cloud computing solutions.

While there is still some lingering debate about how cloud computing should be defined and why it is worth considering, the growing number of success stories which THINKstrategies and others have highlighted clearly proves that IT and business decision-makers should be focusing their attention in 2011 on where and how to best employ today’s best cloud computing solutions to fully leverage its functional and financial benefits.

There are still plenty of risks associated with cloud computing, as there are with any technology or third-party service. But, the business benefits are quickly outpacing the real pitfalls.

Cloud computing is not only helping organizations save money and be more agile, these ’on-demand’ solutions are also enabling organization to better support their employees, serve their customers and gain a competitive advantage.

As a result, adopting cloud computing alternatives is no longer an option…it is now an imperative.

In 2011, this new reality should impel every corporate decision-maker to carefully reassess their immediate and long-term requirements IT and business needs in light of the rapidly evolving cloud computing alternatives. They should evaluate how these SaaS and Cloud alternatives can address existing issues, and be employed to pursue new business opportunities.

The year of the Cloud has come to a climax at Salesforce.com’s Dreamforce conference in San Francisco where over 30,000 registrants converged to celebrate the rapidly expanding world of ‘on-demand’ solutions and collaboration tools.

Salesforce.com used the event to beat back the recent efforts of Oracle and Microsoft to gain a share of the Cloud Computing market with a new round of initiatives aimed at building on its phenomenal momentum and success.

The two most significant announcements on Day One were Salesforce.com’s offer of free Chatter accounts across its customer base along with a public version of the social networking service in February, and a new Database.com offering as a spin out of its Force.com Platform-as-a-Service (PaaS).

Day Two began with the news that Salesforce.com plans to acquire the Open Source oriented, Ruby-based application development platform, Heroku, for $212 million in cash. Salesforce.com and BMC Software also announced that they are joining together to offer RemedyForce, a new Cloud-based IT service management and support offering built on Force.com. Salesforce.com also unveiled SiteForce, a new and improved version of its website design tool which was introduced previously.

Talking About Chatter

A year ago, Dreamforce attendees responded to the unveiling of Chatter with a lot of apprehension about why they should permit a Facebook-like social networking tool into their organizations. In response to this lukewarm reception, Salesforce.com put its marketing engine to work to overcome this hesitancy and has generated growing customer acceptance. 

Much of the opening session of Dreamforce was focused on the practical benefits of Chatter in corporate environments through a series of demos of use-cases and customer success story testimonials. Salesforce.com also emphasized how Chatter bridges the old and new worlds of the business user by linking to Microsoft Outlook and mobile devices.

Salesforce.com announced Chatter Free to extend its reach further into organizations beyond the sales and marketing departments. This initiative will permit Salesforce.com users to invite others within their organizations to utilize Chatter, in the same way Facebook users can invite friends to join their social networks.

With less fanfare, but possibly of greater significance, Salesforce.com plans to also roll out a public Chatter.com service in February aimed at popularizing Salesforce.com’s social networking capability in the open market. Both these moves will broaden Chatter’s footprint within organizations and brand equity in the marketplace. These moves will also make the folks at Facebook rethink whether they should have pursued the corporate market rather than relinquishing it to Salesforce.com. It will also get the attention of SuccessFactors which has been proclaiming that its Business Execution Software solution has a greater installed base of end-users than Salesforce.com.

Fortifying Force.com

Salesforce.com isn’t just seeking to permeate the enterprises via Chatter. It also wants to convince the developer world, both independent software vendors (ISVs) and internal enterprise developers, that Force.com is a credible PaaS for a new generation of enterprise-class, Cloud-based, mobile apps.

In its typical style, Salesforce.com unveiled Database.com as a new capability even though it is actually a part of Force.com which has been unbundled to create a new standalone offering and point of entry to Salesforce.com’s PaaS environment.

The standalone Database.com capabilities are being offered to respond to the changing way in which applications and databases are being architected in a more pluralistic fashion in the Cloud. The goal of Database.com is to democraticize database development, and give Salesforce.com’s customers and partners another reason to expand their use of its applications and PaaS. 

Salesforce.com has also been working hard to fend off competitive claims and developer concerns that its Force.com PaaS is too proprietary. It made a strong move in this direction with its alliance with VMware earlier this year, which produced VMforce.

Salesforce.com’s acquisition of Heroku reinforces this point, quickly giving Salesforce.com a strong foothold in the Open Source/Ruby application development environment, and immediate access to the rapidly growing Heroku developer community.

Heroku is considered by many to be the top Ruby platform in the Cloud market. The company has experienced 50% growth in application development activity in the past few weeks alone according to its Founder/CEO during his keynote presentation. Heroku will maintain its brand and become Salesforce.com’s seventh Cloud offering.

The Heroku acquisition and Database.com are geared to the new world of social, mobile apps. They are also intended to offset Microsoft’s aggressive efforts to gain customer and partner acceptance of its Azure PaaS, and undercut Oracle’s ‘false cloud’ offerings which it calls “Cloud-in-a-Box”. The Heroku acquisition is also a dramatic contrast to SAP’s purchase of Sybase, with Heroku representing the rapidly growing world of Cloud-based applications and Sybase viewed as an old-world development vendor attempting to recreate itself around mobile apps.

As Salesforce.com’s executives strongly stated during an industry analyst/press briefing, the message which the company is trying to convey to the market with this acquisition is that Force.com will be open and that Salesforce.com is going to be a platform company. A number of enterprise customers confirmed the importance of Salesforce.com’s PaaS efforts in their decisions to select the company as a strategic vendor.

SaaSifying IT Management

Salesforce.com’s announcement of RemedyForce in conjunction with BMC is significant for a number of reasons.

It is the company’s first attempt to provide a solution aimed specifically at the IT organization which is increasingly embracing SaaS-based alternatives to traditional IT management software. I’ve been telling clients and others about that the SaaSification of IT management and why this trend in the Cloud Computing market eliminates another barrier to greater customer adoption.

It is also the first time Salesforce.com has teamed with another company to launch one of its product-lines, or “Clouds”. This represents an important endorsement for BMC, as well as a risk for Salesforce.com. Teaming with an established ISV is an interesting choice for Salesforce.com. Like every established ISV which has attempted to add a SaaS component to its portfolio, it hasn’t been an easy road for BMC. But, the company has a highly committed CEO and has built a SaaS solution on Force.com which is gaining customer acceptance in the market.

This alliance puts Salesforce.com in the peculiar position of depending on a partner for the success of one of its product-lines. It also renews questions and concerns among its other partners about who gets preferential treatment within Salesforce.com’s ecosystem and why.

Closing Thoughts

One of the lingering complaints about Salesforce.com’s solutions is their premium price. Marc Benioff even joked about this point in his opening remarks at Dreamforce and got a hearty laugh from the audience. In an attempt to capitalize on this issue, Microsoft has launced a marketing campaign offering $200/user rebates  to Salesforce.com customers who jump ship in favor of Microsoft’s Dynamics CRM Online.  Benioff made light of Microsoft’s PR ploy by bringing the actor/model who is pictured in the Microsoft ads on stage during the Day Two morning keynote session and successfully convincing him to come back to Salesforce.com.

All joking aside, Salesforce.com’s premium prices hasn’t slowed its tremendous growth and hurt customer satisfaction/retention rates, or diminished the enthusiasm of the customers and partners attending Dreamforce this year.

The buzz and activity at Dreamforce 2010 is not only a clear indication of the Salesforce.com’s growing success, but also an impressive illustration of the widening movement to the Cloud.

[Disclosure: Salesforce.com paid for my hotel accommodations during my attendance at Dreamforce.]

Few technology trends have captured as much popular attention as Cloud Computing. The level of hype associated with the ‘Cloud’ hasn’t been seen since the hoopla created during the Dot.com era. As a result, there has been plenty of debate about whether the Cloud Computing phenomenon is headed to a similar demise.

Of course, I can point to plenty of proof-points which clearly demonstrate the differences between the false promises of the Dot.com era and the tangible benefits of today’s Cloud Computing solutions. However, the recent Comcast outage raises an even more serious concern — are businesses moving to a far less reliable operating platform when they turn to Cloud services to support their corporate operations?

I was confronted with a similar question after giving a keynote presentation at the Connecticut Venture Group’s Software Industry 2010 meeting. A member of the audience suggested that the rapid adoption of Cloud services reminded him of the broad-based acceptance of subprime mortgages before the bubble burst in 2007. He viewed the subprime mortgage business and Cloud Computing as similar in the following ways,

• Each has emerged and grown on a virtuous premise — making mortgages and computing power available to a broad, previously disenfranchised segment of the market.
• Each has relied on a new operating model which enables providers and customers to take advantage of a new set of pooled resources.
• Each experienced rapid growth based on an assumption of infinite scalability under a set of loosely governed rules and regulations.

Kind of makes your stomach turn when you think about the parallels between the subprime mortgage mess and the Cloud Computing phenomenon.

In simple terms, the subprime mortgage industry depended on the continous rise in housing values to safeguard against suspect loans. We all know what happened when housing values dipped and the subprime ‘house of cards’ collapsed.

What would happen if the fundamental premise of the Cloud Computing’s infinite scalability, reliability and security was derailed by a major service disruption or broad-reaching security incursion?

We got a glimpse of the potential ramifications when Comcast’s DNS servers failed just before Cyber-Monday kicked into full gear.

When confronted by this question at the CVG event, my immediate (knee-jerk?) response was to suggest that the Cloud Computing industry depends on a different combination of factors to ensure its long-term stability and success:

• Better educated consumers, both IT and business decision-makers.
• More incremental procurements which mitigate the risks of wholesale adoption.
• Spot and subscription pricing/packaging which requires Cloud providers to continuously improve the quality and reliabilty of their services to ensure customer satisfaction, renewals and add-on sales.
• Greater transparency as a result of a growing number of online dashboards, user groups, social networks, etc.

Salesforce.com’s latest quarterly financial results and the estimated revenues being generated by Amazon Web Services (AWS) are a clear indication of growing user interest in SaaS/Cloud alternatives. And, unlike the questionable value of the services offered during the Dot.com era, THINKstrategies’ Best of SaaS Showplace (BoSS) Award and Cloud Computing Business Value (CCBV) Award programs are continuously illustrating the measurable business benefits being delivered by today’s SaaS/Cloud providers.

But, skeptics can still argue that these benefits don’t prevent potential disaster in the Cloud. Until housing values declined, few complained about the growing availability of subprime mortgages. First-time homeowners, existing homeowners watching their home values rise, mortgage brokers, investment bankers, and 401k account holders were all happy with the rapid rise in their respective purchasing power and investment portfolios.

Some could suggest that the subprime mortgage illustrates the shortcoming of ‘crowdsourcing’. The question is whether cloudsourcing can safeguard against a similar collapse.

John Taschek of Salesforce.com suggests in a recent blogpost that this kind of combination of forces are at work to offset the potential disaster of a Cloud implosion.

While I generally agree with John’s views, the Cloud Computing industry must do more to prove to IT and business decision-makers, as well as evangelists like myself, that the service delivery infrastructure and financial framework underlying SaaS/Cloud Computing solutions are truly scalable and reliable to support the rapid growth of this market today and over the longhaul.

Organizations of all sizes across nearly every industry are putting aside their legacy, on-premise applications in favor of a new generation of Web-based, on-demand, Software-as-a-Service (SaaS) and Cloud Computing alternatives.
 
This escalating trend is attracting a new breed of software providers and forcing established independent software vendors (ISVs), as well as in-house software developers, to re-think how they design, develop and deliver business applications.
 
THINKstrategies has published a whitepaper, on behalf of SoftServe, which examines how Cloud-based, SaaS applications differ from traditional on-premise software products, and how specialized software development firms can help ISVs and in-house developers meet users’ changing expectations and achieve their business objectives.
 
Click here to obtain a copy of THINKstrategies’ whitepaper. I hope you find it helpful.

Despite the growing examples of organizations gaining tangible and measurable business benefits from Cloud-based, Software-as-a-Service (SaaS) solutions which THINKstrategies profiled in its recent report entitled, “Measuring the Business Benefits of Today’s Software-as-a-Service (SaaS) Solutions”, many corporate decision-makers remain apprehensive about adopting these Cloud-based services because of data privacy and security concerns.

Companies outside the U.S. are particularly concerned about using services delivered by U.S.-based providers because of the ominous language contained in the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, commonly referred to as the U.S.A. Patriot Act.

This regulation appears to permit U.S. law enforcement agencies to unilaterally access private customer records stored on corporate servers worldwide if they are suspected of holding data which could pertain to terrorist threats or other criminal activity. These fears have made organizations especially hesitant to consider SaaS-based Customer Relationship Management (CRM) software and services offered by U.S.-based SaaS vendors.

THINKstrategies believes these risks have been overly exaggerated and raise unfair questions about doing business with U.S.-based companies. Ironically, we believe companies who avoid contracting with leading U.S. SaaS providers may be at greater risk of data privacy breaches by continuing to rely on traditional, on-premise software applications and locally hosted servers.

We have published a whitepaper which examines the myths and realities of SaaS/Cloud Computing, the U.S.A. Patriot Act, and data privacy, with a focus on the CRM arena.

Click here to download a copy of this whitepaper. I hope you find it useful and worthwhile.