Category Archives: Enterprise Software

Who Makes Money in the Cloud?

This is my seventh AlwaysOn Stanford Summit. I thought it looked a little smaller, but Tony Perkins told me at lunch that they had 850 people on the register, and that they had sold out of CEO Showcase spots.  I can see that, because the showcases seem packed.  There are many startups in the world.

Here’s my friend Rafe Needleman, CNET Editor whose writing I’ve been following for ten years through various incarnations as a tech journalist,  moderating the next panel on Rainmakers in Cloud Computing. The participants are Kenn Comee, CEO of Cast Iron Systems, Monica Lam, Co-founder of MokaFive, Juan Carlos Soto, VP, Sun Microsystems, Chip Hazard, General Partrner, Flybridge Capital Partners, Michael Stein, CEO of Darkstrand, Michael Peachey, Chief Architect & Dir. Cloud Computing, TIBCO.

Over lunch, several people talked to me about cloud computing.  Most didn’t know what it meant. Some language: “outsourcing,” “the mainframe is back and it’s sexy,” “hosted applications,” “pay as you go,” “software subscriptions.”

There has been a technological shift in the last five years that has changed “utility computing” to cloud computing and in ten years the software business and the cloud will be synonymous, some of these panelists say. Desktops have been virtualized, and almost all desktop apps can be put up in the cloud.

We can now “pay by the drink.” It’s the mainframe all over again, shared computing power with a “thin client” that looks like a browser. But will enterprises want to shift all their digital data to the cloud? Not quickly, and not to the public cloud. But private clouds will run in ways that look like the public cloud.

What are the big opportunities for making money on cloud computing? Infrastructure is actually one of them, and new kinds of apps enabled by the cloud will help the business user who doesn’t know how to deal with IT.

What’s the next new Salesforce.com? The landscape of horizontal software-as-a-service is pretty built out. But there will be needs for new infrastructure that will help IT departments run apps in a private cloud. The side benefit is that the cloud is an enabler of application development, as Dave Winer can already tell us. Disaster recovery and backup will cross the boundaries from the enterprise to the cloud.

Issues?  Quality.Rafe says all these web apps can be built for next to nothing, because they’re built on Amazon Web Services and running in the cloud. But many of them aren’t making any money. So there will have to be a rationalization to optimize how clouds work (Ken Comee). Then many things running in the cloud will die, but the best ideas will percolate up.

Infrastructure. Michael says that GE is trying to deploy a SmartGrid for utilities, but it can’t figure out how to run that in the cloud because the backbone of utility companies has data rates that will bog down the traditional internet. The cloud will get too crowded, and there won’t be “room” to put everything on the internets. Moving a terabyte of data on Amazon Web Services is no fun. So Sun has tried to bring many of the concepts of running your own  datacenter into how you would run your own cloud so you are not on the public cloud.

So the networking side of cloud computing has a lot of opportunity.

Security. How far can people in the enterprise go with an app before the iron hand of IT comes down on them? That depends on the application. People will then develop private clouds for niches like HIPAA compliance. There will be many clouds ooptimized for different market segments.  That would be happening today but for interoperability issues — which will be solved. Security is the number one reason enterprise apps are afraid to go to the cloud. 75% of enterprise people  wouldn’t move their apps because of it.

To what extent do security issues like the break-in at Twitter undermine the premises of cloud computing? Most of the apps Twitter used were in the Cloud, like Google docs, and the hacker came right in and got all their data. But the panelists agreed that security policies at Twitter have been lax, and that even if the docs had been on internal servers, a hacker could have gotten them given Twitter’s security policies.

There are no HIPAA compliant clouds out there today, although there are SAAS-based EHRs. As a user, I’m not worried about someone taking my medical information, but I am very worried about Google mining my data, or my insurance company. This is a reason for a private cloud and locked down security.

Return on Investment. From a VC standpoint, it takes a long time to run a subscription business past the Valley of Death.  Time to revenue for a cloud business is very long, because revenue comes in a stream, not a lump. Driving sales has to be very swift and very focused.

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Legal Ramifications of Social Media in Enterprise 2.0

We all know social media is difficult to “control,” from a central corporate location. It has gone way beyond the marketing department, where it started as a means of listening to the customer and responding with carefully crafted “messages,” into a free-for-all in which digital natives come in to corporations with expectations about what they can say on their Facebook and Twitter pages, and what opinions they are entitled to express. Life isn’t always divided into home and enterprise, nor is the enterprise with its increasingly flattened management and instantaneous internal communications, separated into the former operations v. marketing silos.

At the same time, large companies, especially public companies, are still guided by SEC regulations. This leads the CEOs of many publicly traded companies to fear social media, which can be a valuable marketing and customer service tool, and shy away from it. The SEC, however, changed its rules to include blogs as a means of disclosure, so there’s a real reason to be proactive in the IR area, if only to create another arena beyond the Yahoo Finance boards that challeneged companies in previous decades. Sun Microsystems has been a pioneer here, and the National Invetor Relations Institute had a program about how Sun, whose CEO was one of the first CEO bloggers, evolved its IR portal. EBay went so far as to Tweet its earnings calls, which brought the company to the attention of the SEC and forced some guidelines.

But truthfully, IR is perilously close to marketing, and a perilously small part of any enterprise. The PR/IR people are the “controlled” bloggers and tweeters, who have absorbed the caveats and best practices of social media, and can probably (if they are good) get away with a fairly wide social media presence without running afould of rules.

It’s when we get into the employee guidelines for social media that we can get into trouble in the enterprise. Every company now needs policy guidelines as to what an employee can and cannot say on a social media platform, and those are probably best developed in conjunction with HR, and disseminated when the employee is hired as part of orientation. Policy guidelines could include how an employee represents the company outside the work environment, what the company policy is toward certain language, and certainly instruction on how to represent the company’s values and corporate culture. This will become increasingly necessary as ordinary employees begin to monitor sites like UserVoice and GetSatisfaction and participate in dialogues with customers around issues like product development, product roadmaps.

These are not simple questions, and this is an evolving arena. It’s complicated. I need your help here, especially the help of people who are in HR or legal at large corporations, or who have been on the employee end of some good policies. How is this evolving? How can it evolve? Are there any “best practices” that are enterprise-wide rather than just marketing-centric?

Please comment below, or let me know on Friendfeed or Twitter

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What is Necessary for Sustainability in Business?

Information. Sustainability initiatives can’t succeed unless you know where you are starting out, what you are doing, and where you are going. Especially if the Obama Administration’s cap-and-trade bill becomes law, which seems likely, companies will need good raw data, because that information will be translated into dollars on the carbon market.

If you were the person in charge of writing the Corporate Social Responsibility Report for your company, and you wanted to make sure you had accurate data on your carbon management, greenhouse gas emissions, and sustainability practices, where would you look in your organization: the ERP system, the EMS system, the BI application? Data from each individual facility? Probably all of those. And on somebody’s Excel spread sheets, too.

Enterprise software was sold in pieces, each piece promising that it would be a “total solution.” Ironically, only twenty years after the first adoptions are we realizing that we need to see across facilities, departments, and processes to figure out how to build sustainable businesses.

That mean building “bridges” between systems so they can talk to each other. IBM’s new Green Sigma(TM) initiative is the first time industry leaders are coming together to work collaboratively to address greenhouse gas and carbon management and sustainability enterprise-wide. Charter members of the Green Sigma™ Coalition are Johnson Controls, Honeywell Building Solutions, ABB, Eaton, ESS, Cisco, Siemens Building Technologies Division, Schneider Electric and SAP. The coalition members will work with IBM to integrate their products and services with IBM’s Green Sigma solution.

Robert Johnson, CEO of ESS
, one of the charter members of Green Sigma, explained it simply: “In order to address GHG, carbon and sustainability across your company, you have to get all the data collected and rolled up. In the past, it’s been in silos, and companies have had difficulty getting it out of the different vendor systems.”

The Industry has evolved with vendors working in isolation doing their own thing, because companies have never had to collect and merge data before for any real purpose. The systems they have in place were bought by individual departments to handle certain situations, and were never designed to be integrated.

But things have changed with the increased emphasis on the environment. Green Sigma is a group of leaders, typically in corporate IT environments, who have decided to help clients by making it easier for systems to talk to each other. It is based on Lean Six Sigma, a business strategy for carefully analyzing operations to improve overall efficiency, lower costs, increase quality, and add, change or eliminate activities and processes to improve overall performance.

ESS is excited because it is the only small independent company on the charter founder roster. The next smallest company is over a billion in market cap. But Robert Johnson has been an evangelist on the subject of unified platforms for years, and ironically the company has had some big successes in China, where the US wants to sell its green products and services as it retools its own economy. ESS is already the environmental health and safety platform for China Light and Power, China National Petroleum, and PetroChina. If anyone can help the big guys pull together their disparate efforts into actionable information, it’s a small company.

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Novel Concept: UserVoice Has Users, Gets Funding

Picture 2Last fall, I worked a little bit to advise a company called UserVoice, which was (and still is) a way for companies to get direct customer input and feedback about their products.

The founders of UserVoice are serious entrepreneurs; they all live in one home, and work out of a co-working space in Santa Cruz, CA. When I met the company, they already had thousands of  users, though their product was free. The founders in the process of monetizing it.

When Marcus Nelson, one of the co-founders, asked me about expansion capital, I was really skeptical despite my love of the UserVoice concept. I gave him my customary advice: “don’t waste too much time getting funding. Startup funding is hard to get.” After all, the time  was November 2008.

Still, there were all those users…really liking the product. I made a preliminary phone call to Howard Lindzon, one of the bravest, most contrarian investors on the planet. And then I went back to tweeting Marcus every once in a while.

Then I get an email from Marcus, asking to meet last week. I refuse, because I’m still in Phoenix. But Marcus is releasing big news on Monday. He sends me some language: “…drawn to the UserVoice vision, Baseline Ventures recently led a group of angel investors in an $800,000 funding round. Baseline was joined in the round by Dave McClure at FF Angel LLC (seed investing vehicle for Founders Fund), Betaworks, David Shen Ventures, TAG, Vincent Worms, and Howard Lindzon. As a group, the angels give UserVoice excellent business connections; expertise in messaging, marketing, product design, and international exposure.

And about a new member of the Board of Advisers to the company: “as the former vice president of communities and conversations at Dell Inc., Bob Pearson bolsters the hands-on, enterprise credibility at UserVoice. At Dell, Pearson led IdeaStorm, developing an industry-leading approach to the use of social media that included 25 blogs, forums and wikis in seven languages worldwide with 200 million page views of annual interaction and coordinated the company’s approach in Twitter, Facebook and other key sites.”

Pearson likes the company even more than I did: “UserVoice is democratizing the idea generation model, so customers can plug and play at their convenience, gain feedback from customers, and do so without a major investment of IT resources. It’s very complementary to the great work of Salesforce.com for IdeaStorm and, in many cases, will extend the reach of existing idea communities worldwide.”

And now for the real good news: It’s spring, and UserVoice has additional hundreds of paying customers that run the gamut from technology to more traditional organizations, including Intuit, NASA, Facebook, Xing, Nielson, Genentech, Blackbaud, University of Wisconsin, Animoto, Seesmic, Stumbleupon and TweetDeck.

Marcus and his housemates are going to use the money to do a white label product, so any company can communicate with its customers in the product development cycle, and find out what’s working and not working before it’s too late.

Whooo..hooo! I’m always so proud to be wrong.

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The Evils of Cloud Computing

Like everybody else, I’ve been migrating my information to the Cloud. I started with GoogleDocs, but now it’s almost ALL all there: my social graph, my online banking, my online tax filing, Facebook, Twitter, even my business bookkeeping and some of my medical data. My hard drive is pristine, except for my music and my iPhoto library. For me, it seems like such a convenience to sync everything to MobileMe that it’s been a no-brainer of a switch. Until I heard Brad Templeton, President of the Electronic Frontier Foundation, speak at BIL.

Templeton reminded me that as I had suspected, “cloud computing” began with the mainframe, which made timesharing necessary and popular, because computing time and cycles were scarce and expensive.

Timesharing gave way to the disruptive force of personal computing, and then of client/server computing. Ironically, cloud computing has brought us back to timesharing, albeit in a different format..

Facebook, Templeton says, is the best example of timesharing and its potential dangers. When you use Facebook, your information is not on your hard drive, but on Facebook’s own site. Then Facebook has these other “apps.” They sound so cool and innocent. But every time you use an app, you are granting it permission to take your information and perhaps put it in the wild. As Templeton said, “data exported is data lost.”

Templeton takes this further, believing that data in the hands of third parties does not have the protection of the 4th amendment (the right to privacy). With the exception of certain types of data, such as email and medical information, which have statutory protection, the data we transfer to the cloud stands unprotected.

Using a little hyperbole,Templeton refers to this as “Erasing the 4th Amendment,” and counsels us to at least think about what we’re doing before we rush headlong into what he visualizes as a potential mushroom cloud.

“Should we erase the Bill of Rights so casually,” Templeton asks, “when if the same data remained on your own hard drive, it WOULD be protected.” What’s the rush to get it into the cloud?

Simple. It’s too tempting to migrate and take the chance, , because you miss out on all the coolness if you don’t contribute your data.  You don’t get to participate. Facebook reverses the signup dynamic. You can sign up easily, without much barrier to entry, and without entering much information. But over time, more and more information is added, until Facebook knows everything about you! And then there are those Facebook apps — effectively another company’s web site inserted into a Facebook page, asking to get your data so it can recommend a movie for you, or find you a friend. What have we done?

We are enjoined to consider the balance between privacy and openness, and at least think when we change it. We are really shifting the balance between the public and the private as we speak.

Why does privacy matter? Because in shy people, behavior is different when you think you are being watched (Heisenberg Uncertainty Principle) There are two choices: Let the privacy people have their way, or OR, if you want privacy, you can’t use our cool new app. We need something in between.

A long web form is an impediment, but what you make easy to do you make easy to ask for. Thus, ease of use and data portability are really bugs. They make it too easy to ask for information. End-user control inhibits negotiation – you can opt out, but only out of the whole thing. You can’t negotiate which parts of the agreement you want to participate in.

So ironically, cloud computing inhibits the power of the user, even if it makes things more convenient. In the cloud, I can’t make Facebook faster by buying a faster computer,nor can
I switch away without a huge re-export of my data (data portability). Templeton refers to this as BEPSI, the Bulk Export of Your Personal and Sensitive Information. And once data is exported, it is lost.

How all this data in the cloud could be used also frightens Templeton, who says the history of humanity is a long chorus of police states punctuated by a few staccato notes of freedom. We must take care not to build the infrastructure of a police state.

Cloud computing is actually changing the world. Once we put all our data thru somebody else’s pipes, they can throw the lever toward a police state. We probably don’t want to be the inadvertent cause of that eventuality.

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Alcoa Receives Green Enterprise Award: ESS Celebrates

While ESS, a company in which I’m a shareholder, is congratulating Alcoa for receiving Oracle’s Empower the Green Enterprise award during a ceremony today at Oracle OpenWorld in San Francisco. But I’m congratulating ESS.

Oracle Board Chairman Jeff Henley and CIO Mark Sunday presented the award to Alcoa, which was recognized for adopting green business practices – including effective use of advanced information technologies – in order to protect the environment, reduce costs and risks and enhance operational efficiency. Alcoa was one of 15 organizations selected to receive the award. The big news here for me is that Alcoa won the award because ESS made it possible, which is a big win for ESS–part of a week of big wins I can’t talk about yet.

Oracle chose Alcoa for the award based on its successful implementation of ESS enterprise software – installed on Oracle 10 – as its unified platform for EH&S sustainability management throughout the company’s global operations.

This is a case of technology making something possible (I refuse to use the over-used word “enabling”) that was not possible before in the enterprise: almost real-time tracking and reporting of Alcoa’s emissions so Alcoa can manage them.

The Oracle ESS combo lets Alcoa simplify ISO 14001 compliance so the company can continue to be certified;
improve its data analysis capabilities to improve decision making and reduce emissions; and analyze emissions data daily rather than annually.

Nice to see ESS CEO Robert Johnson get those wins!

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