Salesforce.com was founded less than 10 years ago, in March 1999. This is hard to remember when you walk into the Dreamforce event at the Moscone and see all the companies, both large and small, proclaiming that they are part of their ecosystem. Salesforce.com, more than any other company, can claim to have popularized the SaaS concept with their catchy "No Software" logo. Today they are announcing their next step forward.
Start-ups should have a simple value proposition that is easy to understand. In a recession, that proposition should be "we save you money, NOW". Or maybe, a tad harder, "we bring you new revenue, NOW". With the emphasis on urgency. You can always save money by making sacrifices. But if you can save money by simply reducing a bill, without reducing the service, who would not do that? That is what Validas says they can do: "lower your wireless cell phone bill". You can cut your landline bills by using Skype, but don't you just love figuring out all the ways your cell phone company manages to increase your bill?
During the PC era, the technology stack was controlled by Microsoft Windows and Wintel - the "Wintel" era. We are now entering a new era, called variously 'Cloud' or 'SaaS' or 'Enterprise 2.0'.
In this era everything is different - the stack, the players and the potential for value creation. Let's outline the basic shape of this emerging era, in particular defining what makes up the new stack.
Recently we noted that some large enterprise software companies were calling SaaS a fad that would soon pass away. We theorized that they were doing this not because they actually believed it, but because SaaS is a fundamental threat to the old way of doing business that they dominate. In this post we look at some of the traditional enterprise vendors who are taking a different approach - embracing SaaS and competing in that market.
Microsoft announced this morning at its PDC conference that the next release of Microsoft Office will include browser-based versions of some of its main office software products - Word, Excel, PowerPoint and OneNote. These will be "lightweight versions", but Microsoft told us yesterday that they'll still have rich functionality and will be comparable to Google's suite of online office applications. The apps will enable users to create, edit and collaborate on Microsoft Office documents through the browser. The apps will work in IE, Firefox and Safari browsers (no word on whether Google Chrome will be supported). Update: Microsoft clarified in an email that these apps will use HTML and AJAX, but also Silverlight components.
Yes there are profitable, self-funded SaaS product companies out there. They're the ones we're celebrating in our Gritty Entrepreneur series. To that end, we recently interviewed Timothy Young, CEO of Socialcast, which is in the "enterprise social messaging" market - otherwise known as enterprise microblogging. The consumer champions are Twitter and FriendFeed. The best known enterprise play (at least known within the Blogosphere) is Yammer, a company we panned. Socialcast not only has a revenue model, it also has profits, so that seemed worth investigating.
As part of our Gritty Entrepreneurs series, we interviewed Frank Zamani, Founder/CEO of Caspio. Their pitch is "no more programming for custom web applications". That is a tough market, which we will explore in this post. But Caspio is bootstrapped, profitable and can point to some real case studies. So they must be doing something right. Let's tell you this entrepreneur's tale and assess their future prospects.
Effective user adoption is the absolute best predictor of enterprise software success. That was one of the key takeaways for me from the OpenAir User Conference this week.
According to a study done by the Sand Hill Group and Neochange, the most critical factor (70% listed it as number 1) for software success and return-on-investment is effective user adoption.
A new report by Forrester Research states that the market for collaboration and productivity web apps in the enterprise (a.k.a. enterprise 2.0) is set for a shake-up, with prices to fall in some cases by over half. Price drops will be especially sharp in blog, wikis, social networking and widgets. The only exception is mashups, which will increase in price over the next 5 years.
Forrester says the price drops will be due to "cutthroat competition, commoditization, bundling, and subsumption", with many startups and established big companies competing for the enterprise dollar.
In downturns there is a "flight to safety". Typically you would put Venture Capital (VC) at the risky end, with something like a Money Market Fund at the safe end. Well today even the safest stuff is looking scary, thanks to the games that the financial engineers have been playing. So maybe investing in a real business that disrupts the old order with a fundamentally new value proposition is actually the safest thing to do. That is "Real Venture Capital (RVC)". But RVC is very, very different from "Momentum Venture Capital" (MVC). MVC is under a significant threat.
