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Blog Entries from Mural Ventures Team Members
March 2007 - Posts
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Whenever I speak with Service Providers or customers about SaaS applications invariably the conversation touches on mobility. Mobile email (GOOD, BES, Active Sync) is a well established and well delivered SaaS mobile solution. But core applications delivered Read More...
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I attended a networking lunch today sponsored by the Mid Atlantic Venture Association.
The key note speaker was Fred Schaufeld, founder and Chairman of NEW. If you’re not familiar with NEW – they are a $2BN company (founded in 1983 with $79.00). Today they are the industry leader in service contractor administration. If you don’t know what service contract administration is – don’t feel bad. You’re not alone. In summary, NEW is probably one of the biggest little companies that you’ve probably never heard of. They work behind the scenes and partner with large retailers like WAL-MART, Best Buy, and Circuit City to provide extended service contracts and replacement plans designed to give consumers enhanced product coverage. In other words, they sell “just in time” insurance policies to consumers to cover things like Plasma TVs and refrigerators.
Without a doubt Mr. Schaufeld was one of the most interesting, entertaining, and authentic personalities I’ve seen in a long time. On one hand, he came across as incredibly smart and shrewd. On the other hand, he came across as a blue-collar kind of guy who deeply understands how normal every-day people sell and buy things.
One thing Mr. Schaufeld said really stuck with me and made feel more confident than ever before about the business my partners and i are building at SMBLive. It was a comment about the tremendous power of distribution and existing customer relationships. Specifically, he was reminiscing about a company called Crazy Eddies -- a dominant retailer in the 70s and 80s in the New York Tri-State area with a distinct reputation for aggressive sales tactics and poor customer service.
So what's the lesson of Crazy Eddie? According to Mr. Schaufeld there are actually two lessons:
Lesson #1: people buy from people they know and trust.
Lesson #2: even if they don't entirely trust them -- people still buy from people they know
Incumbent broadband service providers such as BT, Telmex, Telus, and AT&T have millions of existing billing relationships. And although they have their share of challenges when it comes to customer service -- the fact is that customers will still buy from them -- which is good news for SMBLive (and reassuring to yours truly).
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Was looking at a very interesting tool today called HiTask (www.hitask.com). It's a VERY web 2.0 product, from the logo (think YouTube) to the interface, and I really liked some of the features and how they relate to the Conversational Web. It's free to try (I said Web 2.0 didn't I), and therefore worth a spin. Some of the features I really like:
1. Integrated Chat - This is a big item we've talked about in Web Conversations. Consolidation of tools into the context of how I get work done. IM is a great example of a tool that businesses have not been able to tame. You can lock down protocols, prevent AOL and Skype and Trillian, and a service like HiTask pops up with IM integrated into the product itself. Just like that the information you could have controlled at the desktop level is off in the wilderness. But it makes sense in this context, because I DO want to use chat and IM to talk/converse with the people with whom I do work. If I'm thinking about a task list, I might have a quick question about that task....which brings me to....
2. Drag and Drop - Nearly everything in HiTask is drag-and-drop enabled, just like my desktop. Even cooler, I can drag-and-drop that task I had a question about into the chat window, and it gets assigned to the person I dropped it on. The context of IM and the context of my task list make for one, seamless web conversation. Or if it's just a note, I can send it off to someone in my buddy list (again through drag-and-drop) and get a response back (instead of an email from another system).
3. Runniny History - All these actions are captured in a running history of the conversation with my team member, and that history was saved between sessions. Where were we? Now I know this will become burdensome, because I can't find anything in my Skype history from people with whom I have a long-running relationship. Maybe I didn't dig in too deep, but a quick ability to save off and tag those chats might be good conversational context.
There are some things I didn't like (why Birthdays?), but in general the IM integration is a great example of the Conversational Web concept in action.
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Was reading an article by Joseph Carrabis, CRO and Founder, NextStage Evolution and NextStage Global titled ' Websites: You've Only Got 3 Seconds " and thinking about how it applies to SaaS. In general, people expect to trial a product online. Read More...
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What in the hell is a Ferrit? If you guessed a fury little animal then you're right. If you guessed an online Shopping Service powered by an incumbent telecom carrier, you're also right.
I am specifically referring to a service called Ferrit which was recently launched by Telecom New Zealand. In many ways, Ferrit is quite similiar to the BT Tradespace service launched recently by BT.
I spent some time on the Ferrit site this past weekend (role playing as both a buyer and a seller) to get an idea for the overall ecosystem. It's a nice service. Definitely very easy to use. If you're a small business in New Zealand looking for a simple way to promote your business, attract new customers, and conduct commerce on the web, then Ferrit is definitely worth a look
While it's still in the early going, i think the both Ferrit from TNZ and Tradespace from BT have huge potential in terms of:
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Mike Volpe, from Hubspot, recently blogged about how 'Internet Marketing is Dead'. In it, he writes:
"The ability to have a website that helps you do search engine optimization (SEO) automatically, manages your search engine marketing, makes building landing pages a snap and automatically optimizes conversion programs on your website. A system that gives you as much data as possible about your website visitors, and presents that data to you in a format that means something to you and helps you actually act on it to get results. This is especially true for the millions and millions of small businesses who don’t have the luxury of a huge marketing staff and an IT department."
A great example of this simplification for small businesses is BT Tradespace, built by SMBLive. The platform is pre-built with SEO optimization, provides 'just the right amount' of web marketing data, and takes the confusion out of blogging, PODcasting, etc....all the web marketing stuff small businesses think they should be doing, but have no tolerance for learning about.
The success of these types of tools is in the application of the Conversational Web philosophy. Don't let the tool define how you work.
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I recently posted this blog titled 'BT Workspace - 5 Conversations in Action' and made the following comment:
"The challenge, of course, is that educating customers and employees to act in a certain way takes time, but like any conditioning the effort is worth it."
This got me thinking further on what it really does take to get customers and employees to adopt a 5 Conversations model of interacting on the web. I dug up an article from Chris Dowse, Founder & CEO of NeoChange, Inc. titled :
3 Things You Must Know In Order To Achieve Effective User Adoption With SaaS
His second insight (and one that is very interesting from the concept of the Conversational Web) is that "Good Software Isn't Enough". Translated, tools alone cannot satisfy the promise of SaaS or the Conversational Web. Chris goes on to provide detailed instructions on driving organizational commitment, specifically:
"Managing expectations and concerns accelerates effective user adoption and helps avoid unnecessary adoption risks. Ideally, organizational commitment efforts will position stakeholders as owners of software-enabled process change and less as its victims.
- Market the Value - quantify and repeatedly communicate the value of effective usage to the organization and develop “what’s in it for me” messaging for critical stakeholders
- Proactively Influence Stakeholders - create opportunities for stakeholder involvement, design usage metrics and incentives to align behavior towards buy-in
- Maintain Strong Governance - execute active executive sponsor involvement, define performance outcomes to direct and track success, hold managers accountable for progress"
This means that the success of the Conversational Web, and the context in which it's used, also comes from the organization's beliefs and commitments to the concept. Tools provide functionality, but the context if how those tools are appreciated and used, the surrounding business processes, and the dedication of the users governs success.
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This case study on Microsoft's bCentral talks about how Henmore Marketing uses BT Workspace to change the context of her online conversations with clients and employees:
http://www.bcentral.co.uk/business-technology/hosted-services/henmore-marketing-uses-bt-workspace-for-virtual-communications.mspx
Specifically, rather than trying to navigate a pool of emails, Henmore uses a series of 'client workspaces', each with a discussion forum, document library, contact list, task list and milestone calendar. The client workspace provides the context for all of the associated conversations with that client. Please-do requests go into the task list. Status updates go into the discussion forum. Milestones go into the shared calendar.
The point is to create a single, controlled and consistent context for how all web conversations with their clients occur, and to get away from letting individual tools dictate. The challenge, of course, is that educating customers and employees to act in a certain way takes time, but like any conditioning the effort is worth it. Elimination of email mass, reduction in risk of lost files, and a consistency of work experience (which translates to a consistency of customer experience and satisfaction) make it worth it. This is a good example of the Conversational Web in (infant) action.
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Gartner Group reports that the global SaaS market reached $6.3 Billion last year and may hit $19.3 Billion by 2011. Those are big numbers. HUGE numbers. The type of numbers that attract the biggest players in an industry to the feast. Historically, that hasn't been the case.
Says Ben Pring, Gartner's Research VP, "For large, established IT solution providers, the SaaS market so far hasn't appeared to have enough incremental growth potential to meaningfully contribute to revenue growth."
But with $19.3 Billion in play, the opportunity to carve off even a small but appreciable percentage chunk can move the revenue dial. And so while we've already seen folks like Microsoft (with OfficeLive) and Google (with GoogleApps) enter the field, you might expect to see similar announcements from IBM, HP, Sun (Star Office Online anyone?) and Oracle. Many of these big players do have services available, but they aren't hanging their hats on them like Microsoft is.
One unsubstantiated claim from an industry conference was that Microsoft expects 80% of SMBs (a global market of millions and millions of buyers) to sample a SaaS solution in the next year or so. That's likely a gross exaggeration, but one that, if only partially right, is exciting for the players involved. All the more reason for the evolved broadband providers to take a lead position now.
More coverage of the Gartner announcement under Network News at OneStopClick. Direct link to the story here:
http://www.onestopclick.com/news/Global-SaaS-market-reaches-$6.3-billion_18084463.html
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In November 2001, Yahoo Inc. and AT&T (the RBOC formerly known as SBC) announced a "landmark strategic alliance" that would link the telecom and Internet worlds together.
This morning, the Wall Street Journal reported here http://online.wsj.com/article/SB117340663471431826.html?mod=home_whats_news_us
that the alliance is in serious trouble because now AT&T no longer needs Yahoo the way it did nearly six years ago, when it was struggling to acquire broadband customers.
The situation illustrates how fragile partnerships can be between telecom carriers and large software companies. Why does this happen??? The answer is simple. Because, strategic interests diverge over time.
In this case, broadband in suddenly in demand and AT&T now wants to keep 100% of it’s subscription revenue. Bam! Take that!
Of course, the interesting question is how far is AT&T willing to go to leverage their new found strength? Will they innovate and take control of their own destiny? Will they make an effort to innovate new products and services on their own? Will they evolve their broadband platform to deliver integrated communication and software service bundles?
Or will AT&T toss Yahoo aside and accept payment from Google which would, yet again, relegate their broadband platform to commodity status?
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A federal jury found Vonage guilty of infringing on some key VoIP-related patents held by Verizon http://www.itworld.com/Net/3303/070309vonage/. Vonage was ordered to pay Verizon $58 million in cash and a 5% royalty on future services. Ouch!
As you would expect Vonage’s PR folks are doing their best to make the best out of a bad situation. But, no matter how you slice it, this is seriously bad news for Vonage and the rest of the “wanna be” VOIP service providers.
The news is also a subtle, yet powerful, reminder that the future of broadband services is DEFINITELY NOT about being a low cost provider of commodity voice services.
Instead, the future of broadband is about creating innovative and simple-to-use bundles consisting of BOTH “communication-style services” (fixed and mobile voice, email, IM, etc.) and, “productivity-style applications” (web marketing, web commerce, collaboration, etc).
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Gary Turner, in his Memoria Technica blog, wrote this article titled Counterfeit Business Plans that really resonates with the Broadband Evolved concept. Specifically, these 'counterfeit' businesses represent the thousands of fish in the SaaS marketplace that are trying to lay claim to the SMB space. They jam together some functionality, wrap a web presence around it, and expect the world to beat a path to their door. To quote Gary, "they don’t have two customers to rub together, otherwise poor quality, zero supporting infrastructure etc. the list goes on."
This is where the evolved broadband provider comes in. The incumbent carrier DOES have customers....millions of them. These are customers they have been serving for over a hundred years. Existing billing relationships are gold in the SMB SaaS space. And they certainly have the infrastructure to support an offer (including a number of correlated communications tools that serve as the foundation for web based applications - see www.5conversations.com for thoughts on that). Sometimes they take hits on quality, but partnering with third party ISVs to build the quality (at a scale that matters), solves that problem. You can read an article on how large hosters or carriers can partner to addess this space in this CRN titled Hosting Partners Cast Wary Eye at Microsoft OfficeLive.
Customers, a network and the trust of the tech-wary SMB space mean evolved broadband providers aren't the fake-rolex in this space.
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There was an interesting article written today by Barb Darrow in CRN http://www.crn.com/software/197800215?pgno=2 about how channel and hosting partners are keeping a weary eye on OfficeLive and Google Apps.
If you get a chance take a quick read. You'll see how my company SMBLive is delivering hosted applications to the SMB market by partnering with incumbent broadband service providers such as Telus, BT, Cybertrails, and soon others.
In terms of the big picture -- it's becoming increasingly clear. The fact is that OfficeLive and Google Apps are not channel friendly. Microsoft and Google are noth giant software companies with an enormous appetite for growth, and both companies seek to create direct subscriber relationships with SMB customers. As a result, broadband service providers, hosters, and VARs would be very wise to protect their existing SMB customer relationships by evaluating options for creating SaaS offerings of their own.
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In this blog entry titled What's the Problem with Web Conversations I made the argument that web conversations are overly complex because everyone is choosing different tools, and every tool it trying to drive its own context for the exchange. Here is another way to look at it....
In Simon Dickson's blog titled BT's Myspace for business, he writes about BT Tradespace (a simple tool for SMBs to create an manage an online web presence), that:
"The heart of the service is the blogging component, labelled ‘News & views’ - presumably so as not to scare the non-tech audience away."
The tool (a blog) not only confuses the distorts the context of the conversation, it even confuses and distorts the understanding of the person who is supposed to use it! So the non-tech, SMB audience looks at a tool called a 'blog' and says 'I've heard about those, but it seems too technical for me. I'm not sure what I'd even use it for. Is blogging even a word?'
By highlighting the intent of the 'tool' within the context of a web presence (e.g. - Talk about your business news and views on your industry here), BT does a great job of bridging the gap for how this specific tool is intended to be used in a web conversation between the business and current customers or potential prospects. One conversational web, one context, all is happy.
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Interesting article on CNet talking about the BT Application Marketplace here http://news.com.com/2100-7345_3-6161402.html?part=rss&tag=2547-1_3-0-5&subj=news. This article talks about how BT and Microsoft are teaming to deliver a suite of hosted applications to the SMB space via a single marketplace gateway.
A great quote from Microsoft's Karl Noakes re-affirming the concept that evolved broadband providers are the future of hosted applications for SMBs:
"BT has customer reach, (and) we have a bunch of ISVs that have traditionally been more sales-led, but are wanting to move to being marketing-led," explained Karl Noakes, director of partner development and marketing for Microsoft. "There will be an element of survival of the fittest here, and customer demand will win out."
The comment "BT has customer reach" is the crux of everything. SMBs are just moving into the majority on purchasing applications in a SaaS model. They have the infrastructure in place (broadband) and the market has educated them to the point of tolerance on security, data protection, etc. But they still want to buy from someone they know....like someone that's been around for 100 years delivering them 'always on' dial tone. People expect dial tone to have an SLA of 100%. Not three 9s or four 9s or even 5 9s. 100% availability all the time. I pick up the phone and it's there.
Same story with hosted applications. I open my browser and it's there. So the trust the incumbent carriers have established over years of service plays into the buying decisions of those SMBs. And since BT already has the billing relationships in place with these SMBs, they are in a powerful position to make their customers 'aware' (through marketing) of hosted application options (through the BT Application Marketplace) and capitalize on under-served (today) customer demand.
BT's focus on this space extends beyond bringing third party ISVs to the table in a centralized marketplace though. They are also actively innovating on the Microsoft platform and building hosted applications to be delivered to SMBs under the BT brand banner as well. See BT Workspace and BT Tradespace for examples. We would expect to see more of this as the BT Application Marketplace evolves and matures. Specifically, BT will identify the 'core' (be they commodity or not) applications that SMBs are willing and eager to consume online, will look for ways to augment those applications with their essential communications tools (VoIP, Phone, IM, etc), and bring a 'complete' solution to the marketplace under their brand.
This concept, called The Conversational Web is talked about in this blog titled 'What's the Problem with Web Conversations'. Highlights the fact that selling a bunch of disconnected tools, each trying to drive its own context for web communications, creates confusion and inefficiency. It's the communications giants (BT) that have the background, core capabilities and customer reach to bring it all together into a single Conversational Web.
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It was about a 1 month wait -- but I finally received access again to my OfficeLive Beta site http://officeliveblog.spaces.live.com/Blog/cns!7A0018FE70A946FB!508.entryI and I am now upgraded to the lastest version http://office.microsoft.com/en-us/officelive/FX102176651033.aspx.
If you’ve not signed up for your own – I would highly recommend doing so. It's truly an interesting experience interacting with Microsoft in this manner and it's definitely a sign of where things are headed in terms of how smll businesses will consume software applications for many years to come.
As you might expect with any beta, there are some "positives" and "negatives" to report.
The positives include:
The neagtives include:
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The sign-in experience told me that i had access to two different domains -- which i found extremely odd, because i only registered one. Turns out that the second domain was a sample -- but i had no idea, becuase they did not tell me.
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Overbearing from an ad perspective. I understand that it's free and i don't mind seeing one, or maybe two ads, but three is too much.
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Site builder (while powerful) is overly complex and incorrectly assumes the user has some basic IT skills
In summary, I found the latest version of OfficeLive interesting, but, overall I think it’s still to hard to use for the average small business with limited or non-existent IT skills. The level of complexity, or lack of simplicity (depending on your perspecitve) explains why Microsoft included the “marketplace” feature found on the left nav bar. When you click on it you are given a message that says, “The Microsoft OfficeLive MarketPlace for your market is coming soon”.
At first I was a little confused, then I realized that is NOT really a marketplace at all. At least not in the traditional B2C sense (seller meets buyer). Instead, (when it’s ready) this will eventually become the area within OfficeLive where you (as the small business owner) will go to find qualified third-party IT service providers who (for a small fee) will help you make the most of your OfficeLive service.
To be honest, I am not sure if this is a good thing or a bad thing? I am actually sort of hoping that OfficeLive will be simple enough some day that I will be able to manage it own my own without the assistance of any IT professional. We’ll see?
In the meantime, service providers, hosters, and VARs need to be paying very close attention to OfficeLive. As far as I can tell they have two options. 1.) Wait to see where OfficeLive ends up in terms of channel opportunity, or 2.) Take control of their own destiny and deliver hosted apps themselves directly to the SMB market.
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Put simply, the problem with Web Conversations today is the tools. Oh and the people that choose and use them.
First - There are five different 'participants' in the Conversational Web, hence the '5 conversations' in the blog name. They are: with oneself, with employees, with external partners (vendors, distributors, contractors), with key customers, and with the general public. Thanks to Isabel Wang at http://www.thewhir.com/blogs/isabel-wang/ for helping us to distill that statement into something lucid. First pretty picture.
Second - Each of those different participants uses different, disconnected tools. iCal invite on an older Mac anyone? Second pretty picture.
Last - All those disconnected tools create isolated, walled-off conversations. The tool defines the communication channel, the participants, and the context in which the conversation happens. Unfortunately, every tool wants to define its own context. Email wants you to use your Global Address List. IM wants you to use your Skype list. The result is a hodge-podge of conversations over the web. No consistency. No uniformity. Third pretty picture.
That's the challenge that must be solved for small and medium businesses. Those organizations can't make massive IT investments and instead must traditionally assemble tools in a piece-meal fashion. They need a unified Conversational Web. And here it is....
If you want to see some of the Conversational Web in action, visit www.smblive.com.
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