SoftSummit 2006 (a conference led by Macrovision) happened a couple of weeks ago. I was there as a speaker so got a chance to meet some good people. Much of what was discussed was the same old, but one session stood out.

One topic over lunch on Wednesday was this: “Virtualization Takes Over the Enterprise.” Raghu Raghurum, VP of platforms at VMWare and Chad Jones, Sr. Product manager at Microsoft were the two content leaders.

This is such a sexy topic. Not. But for those in technology, it is an interesting yet sometimes overused term. Virtualization started in data storage with companies like Brocade leading a technique for hiding the location where computing existed. You could house storage in India and get cheaper resources worldwide. Now, virtualization can be done so systems, applications, and the OS can all be run in such a way that you don’t need to have a bunch of desktop units. Using a central device (think old school mainframe), the desktop acts much more like a dumb client. Fundamentally, it allows applications, OS, and other things to be available to all, without having to be on each unit. Instead of needing a copy of Microsoft Office for each computer, you could potentially run it or similar applications once. Can you see where this is going?

Okay, I said it was not sexy. But it is still appealing. Virtualization should reduce overhead. For IT resources, it promises to simplify life. By decoupling apps, OS, and hardware through virtualization, you can start to get platform agnostic. Instead of having to develop for multiple platforms, you can enable an SOA solution, package the app once, and efficiently deploy to entire enterprises at once. That’s the developer point of view. IT and corporate data managers only have to maintain one copy rather than 3,000 or 100,000 units of software.

Virtualization will surely change the existing software licensing model. Many vendors (say, IBM or Oracle) tie their license pricing model to things like the number of CPUs. In other words they are asking customers to pay for the resources consumed. This, if it’s not already, is quickly becoming antiquated. Software vendors can’t know if their app is going to be used in a virtual world. So they won’t be able to use that old metric. Customers will be challenged to figure out how to do a license deal with those vendors, thus creating an obstacle to sale.

But the real point going forward is that the value metric for how software pricing will be done will depend on the value of the software — and what it is really doing for customers.

So you go, virtualization. Bring it on. The faster this happens, the better. VMWare is one of the few companies that can enable this. Virtualization will only cause better price performance value for customers. Tech firms better figure out a new pricing model — fast — for their software, and customers ought to encourage the data center and desktop application provides to enable virtualization.

-NM

Written by Nilofer Merchant
Tags: Pricing / Licensing
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Web 2.0, meet Software as a Service.

SaaS, meet Web 2.0.

You two need to talk. You’re working on many of the same problems, but you don’t communicate well, and sometimes it seems like each of you barely knows that the other exists.

Web 2.0, you’re certainly fun to hang out with. Your conferences are full of exciting speakers predicting amazing things, and it seems like you come up with a new and interesting product every day. You also throw great parties.

Your name is all over the place, so much so that a lot of people aren’t even sure who you are. You seem to delight in being mysterious and difficult to pin down. SaaS secretly suspects that you may be faking it, like your older brother Bubble did.

You say that you’re interested in enterprise, but it sounds like lip service because almost all of your energy goes into consumer products. SaaS isn’t sure why that is. Maybe it’s because you want to change the world, and you believe that’s best done from the bottom up. Or maybe you just think that corporations are old and evil and you want to do away with them. That’s the vibe you give off sometimes. It’s a shame, because the corporations aren’t going anywhere, and no amount of youthful wishing will change that. Just ask your parents what they did in the 1960s, and you’ll understand.

SaaS, your conferences are about as exciting as watching a wet cat sit in the rain. You take your business very seriously, because you know how easy it is for a software company to fail. You worry endlessly about the needs of IT departments and finding ways to increase productivity by another five percent, because you know that companies and careers are often built on incremental progress. Besides, you know your customers don’t really like revolutions because they’re full of risk.

Nobody outside your circle of friends knows your name. It’s like every other cryptic corporate acronym we’ve seen over the years. Sass. Isn’t that what Sally Field had in “The Flying Nun”? (SaaS will get that joke. Web 2.0, do what you always do when you’re confused — look it up on Wikipedia.)

SaaS, you talk endlessly about how important the Internet is, but sometimes it seems all you really care about is taking your old software and delivering the exact same thing through a new online channel. When Web 2.0 hears you say things like that, it makes them crazy, because delivering old-style software is about the least interesting thing you could possibly do with the Web. It’s like you inherited Leonardo da Vinci’s brushes and you’re using them to paint houses.

But Web 2.0, you need to understand that a lot of what you say and do is equally infuriating to SaaS. You don’t respect the need of enterprises for absolute reliability and complete nonstop reliability. You’ll take down your photo sharing site over a weekend and post an amusing joke in its place, or if you lose a day’s blog postings you just shrug and tell your users to re-enter their information. “Hey, we told you to make backups.”

Web 2.0, you just don’t understand how unacceptable that is to a corporation. SaaS knows that if they lose data or if a key system fails, awful things can happen. Factories grind to a stop, people lose their jobs. If your software’s managing a hospital or an airliner, people could die. Seriously.

The ironic thing is that each of you has something the other needs. SaaS, you know enterprise’s problems, and you’ve got the understanding of business processes and the focus on bulletproof reliability that Web 2.0 lacks. Web 2.0, you’ve got a whole new way of making software that could produce a huge gain in corporate productivity.

If you could only work together, you could create something wonderful. What would we call it? “SaaS 2.0?” “Web as a Service?”

Nah, I know. We’ll call it “the future of enterprise software.”

Written by Michael Mace
Tags: Strategy, Technology
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Robert Scoble, former lead blogger at Microsoft, was interviewed recently by Ziff-Davis. Some key points:

• Some corporations are using blogs for internal communication by senior managers. This is an alternative to e-mail, allowing employees to ask questions and also making the archive of the manager’s memos searchable. It’s an interesting approach, but we think companies should make clear where employees should look to know what’s going on. Otherwise they might check e-mails and not the blog, or vice-versa, and miss things.
• He had an interesting take on Google vs. Microsoft:

  I don’t see them challenging Microsoft or taking money off the Office team’s plate in the enterprise for the next two years. Further out, however, they are positioned to come in and take some business from Microsoft. If I were still at Microsoft, I would be freaking out. The first thing Google will do is stop the growth of Microsoft Office. Small startups aren’t going to buy Office anymore, they’re going to use the free apps on the Internet. Is Google going to get Chevron to switch from Exchange? No. Not soon. What they are going to do is add new value that Microsoft can’t, like the Google calendar team showing me how to put my calendar on my blog. It’s really nice. Those kinds of things are what you’ll see enterprise companies start to use in little projects here and there. Google will sneak in the back door, just as Microsoft did 25 years ago with DOS and PCs.

We’re skeptical about the near term prospects for replacing Office with web apps, but overall we think the process Scoble describes is correct and the web apps companies (not just Google) will eat away at the established software franchises, one feature and one vertical market at a time. And new users will be the first to switch.

Scoble also argues that blogs are a great way to have ongoing focus groups with customers. We’d raise a huge red flag about that. Unless you’re making a blogging software program, bloggers are not your typical customers. They are enthusiasts. If you design for them, you may end up putting in a lot of features that will distract and confuse your average user. Product suggestions from the online community should be used very cautiously.
-MM

Written by Michael Mace
Tags: Management, Technology
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