SAP issued the following press release this morning:  SAP and SuccessFactors Accelerate Unified Product Direction which covered their product direction across core HR, Talent Management, HCM Analytics and Integration and I thought I would outline my initial thoughts on each of the main points.

Product Direction Across Core HR, Talent Management, HCM Analytics 

• SuccessFactors Employee Central solution is the go-forward core human resources (HR) offering in the cloud. Backed by more than 25 years of experience from SAP in core HR, the solution is poised to grow exponentially as SAP will boldly invest in it. SAP will continue to offer the SAP® ERP Human Capital Management (SAP ERP HCM) solution on premise for core HR, now with regulatory support for 51 countries around the globe and an innovation road map of significant investments in functionality, user-experience, mobile and in-memory technology capabilities in the future.  My Take – Pleasantly surprised as it appears that SAP is going to build out Employee Central and finally have a large enterprise cloud offering to compete with Workday and other cloud based competitors. When you hear “bold investment” I equate that to a major commitment and it will be important to get clarity on the timelines on when customers can expect enhanced functionality. My understanding in talking with industry analysts is that Employee Central has about 100 customers though needs to be built out further to support larger customers. In addition for SAP to truly have a full HCM cloud solution they will have to build out or partner in areas such as Payroll, Time Management and Benefits. 

• For talent management, SuccessFactors Performance Management, SuccessFactors Compensation Management, SuccessFactors Recruiting and SuccessFactors Learning Management with social learning from SuccessFactors Jam will be the go-forward solutions. Talent management components from SAP ERP HCM will be continued with selected innovations for the next decade. My Take – Pleasantly surprised and commend SAP for providing clarity that the SuccessFactors solutions will be the “go-forward solutions” as I believe that is the right course of action. The On-premise talent management solutions such as Performance Management, Enterprise Compensation Management (ECM), eRecruiting and Learning (LSO) will  continue with “selected innovations” which says a lot as well as it is obvious the investments will be minimal in these areas.  It is important to note that each of these has had a lot of new functionality released in enhancement packages (EHP1 -EHP6) and are very solid offerings.

• Analytics will continue as an important focus area within both SAP ERP HCM and the SuccessFactors product portfolios, leveraging significant assets such as SuccessFactors Workforce Analytics, SuccessFactors Workforce Planning, the SAP HANA™ platform and solutions from the SAP® BusinessObjects™ portfolio. People analytics will be revolutionized by putting SuccessFactors Workforce Analytics on SAP HANA. Together SAP and SuccessFactors can make unparalleled aggregate HR benchmark insights available in the cloud to hundreds of thousands of customers. The combination of SuccessFactors software and SAP HANA is one of the key priority areas for development of the BizX Suite, as it will help increase customer value by dramatically speeding existing processes, enabling access to large amounts of data in shorter periods of time and providing real-time access to information tailored to individual requirements. My Take – It is no surprise to see that SAP plans to focus on getting the BizX Suite up and running on HANA especially given the announced plan that the Business Suite will be available to run on HANA by the end of 2012. I will need to get a little more clarity on what the marketing jargon “unparalleled aggregate HR benchmark insights available in the cloud ” really means as it is a important area for customers.

Open Integration for All Customers 

• SuccessFactors will continue to support an open approach to connecting with third-party solution providers. Approximately fourteen percent of SuccessFactors customers currently run their systems side-by-side with SAP. In addition to providing enhanced value for joint customers, SAP and SuccessFactors will accelerate the development of integration solutions with third-party solution providers. For SAP customers, the two companies intend to deliver integration packages between the two offerings: Cloud-based talent, core HR, recruiting, learning and social solutions, and workforce planning and analytics solutions from SuccessFactors; and On-premise core HR from SAP. My Take – As expected SAP will deliver integration from SAP On-Premise to Successfactors and in talking with customers this is one of the most important items and will be a significant undertaking. On a side note it will be interesting to see how the “social solutions” meaning Jam are integrated with On-Premise and what that means for StreamWork in context of HCM as it was on the roadmap to be incorporated in certain areas.

Overall I am impressed as it appears some tough decisions were made especially in some of the areas where there was product overlap between SAP and SuccessFactors. I would have expected to see some reference to mobility given that it is one of SAP’s core 4 areas of focus but it is not the first time communication has lagged on the mobility side. The bottom line is I think it is a great start given the deal was only made official last week and expect SAP to provide customers a lot more concrete information, roadmap and timeline at the latest by Sapphire in May.  One of my favorite quotes is by Walt Disney “The way to get started is to quit talking and begin doing” and many people will be watching to see if SAP is able to bring these large changes into the marketplace with little disruption for customers and quickly or as some would say “in cloud time”.

Image credit: Helian Unbound

I didn’t see this one coming – but it makes perfect sense.

Cisco communicates to the EU that Microsoft and Skype together may not be such a good thing for the industry, and thus appealed the approval of the merger to the EU. That isn’t in itself too surprising until you consider that the EU and the US have already approved the deal, and that the EU and US has already heard Cisco’s concerns. There is a very good chance that the decision won’t be changed. But there is also the chance some detail gets revised. There are two issues here: why did Cisco do this and is it a reasonable claim?

Why they did it largely falls into the nothing to lose category. It’s like challenging a referee’s call. There might be a small price, and it might be futile, but the call isn’t likely to come back any worse and there is a chance the outcome gets changed. But even if the EU makes no change in their decision, it slows down the merger. At the current rate of change, delaying things a few months is eternity. A lot can happen.

Consider how much has happened just since Microsoft announced the acquisition:

• Skype continues to penetrate business. At the time of the acquisition, it was considered much more to be a consumer app than it is today.
• Video is coming fast. As I wrote in this post, almost every major unified communications vendor is now offering desktop video solutions – most of which can only communicate with internal peers. As organizations deploy desktop video software and webcams, if you want to vtalk with an external partner or customer – Skype is likely your best option.
• The expansion of desktop video solutions puts more unwanted attention on telepresence or room systems. The holy grail solution is clearly becoming one that seamlessly interconnects rooms, desktops, and mobile devices.
• Cisco killed its UMI home telepresence solution earlier this year. Also in Feb 2011, Cisco killed its enterprise email offering in WebEx. Effectively, Cisco conceded two important battles to Microsoft.
• Skype is in a firestorm of video, mobile,  collaboration, and Internet – four super hot categories in one solution – backed by a huge base of users.

Is Cisco’s claim reasonable?

• There is an element of hypocrisy. Cisco is not exactly an open company – its telepresence and video solutions involve multiple proprietary components. But Cisco’s degree of openness is not in question. Various governmental organizations are evaluating MS and Skype – not Cisco. Isn’t an expert at proprietary technologies best suited to identify them? The fancy features of Cisco’s telepresence systems are proprietary, but Cisco does adhere to basic H.264 standards and does in fact offer basic interoperability. More so than Skype or Microsoft Lync can claim.
• Cisco is the enterprise market leader. According to Wainhouse research (Q311), Cisco is the undisputed market share leader in terms of revenue. Polycom shipped more endpoints, so Cisco is also the price leader. That’s a tough position to cry unfair competition.
• Thirty+ vendors organized and created the UCI Forum in the Spring of 2010 – to improve interoperability among vendors – particularly regarding video conferencing: Cisco (and Avaya) refused to join. Ironically, Microsoft and Polycom led the charge.
• Skype is unabashedly proprietary. (See: Skype: Interop is a Waste of Time). Microsoft Lync is proprietary – Microsoft invented a new codec for video. So far Lync and Skype are not interoperable, but that is likely to change.
• Cisco has been in this very hot seat back in 2009 when it offered to acquire Tandberg. To close the deal, the EU required Cisco to divest and open source its TelePresence Interoperability Protocol (TIP) and a library of associated software. Cisco + Tandberg became the largest enterprise video vendor, but had nowhere near the 700 million users as Skype does.

Here’s the Reality of the Situation

Cisco blew it. They coulda shoulda bought Skype. They blew it, and evidently figured out it was a big mistake.  They say hindsight is 20/20, but I have two claims to fame here:

• In August 2010 (9 months prior to Microsoft announcing its intent to acquire Skype) I wrote Cisco and Skype made a lot of sense.
• The day before Microsoft’s announcement to acquire, I wrote that Microsoft should acquire Skype.

Cisco had the chance. It would have been a defensive play to keep others from buying Skype, and it would have been an offensive play to expand its room based dominance to the desktop. Cisco was pre-occupied with its stock price  - acquiring Skype just wasn’t in the cards. In fact, Cisco was busy divesting itself of consumer stuff  (Flip) and back then most saw Skype as a consumer play. Of course, we were also talking about the consumerization of IT and it now seems pretty obvious that Skype and Cisco were actually competing in the same tournament.

The final point is, sad as it be, it isn’t clear that interoperability is feasible. The patent system is stifling competition (again). Even Google’s “open source” webM, is embattled in patent issues. Apple worked to kill flash – and now its savior Google has dropped Flash support in Chrome for Android (Google liked Flash as it was Apple’s enemy, but now Google is more excited about WebRTC).  As much as the users complain about interop – the vendors do fine without offering it (Skype, FaceTime, …). Perhaps the best option is a new breed of video interchanges such as Vidtel and BlueJeans.

Related articles

• Cisco complains to the EU about Microsoft/Skype deal (go.theregister.com)
• Cisco worries about Skype, Microsoft Lync integration (zdnet.com)
• Why Cisco Is Challenging Microsoft-Skype Merger (informationweek.com)

(Cross-posted @ TalkingPointz)

When Amazon announced the release of DynamoDB, I argued that it was their first step towards joining the PaaS game in its next iteration.

I am completely clueless on where Amazon is going but if Amazon has a plan for PaaS (which I am sure they have because PaaS is the future of Cloud Services), DynamoDB is the first step for them to enter the game in the next iteration of PaaS. If their agility in the cloud market is any indication, they may even iterate PaaS to the next generation much before other players. Of course, Salesforce and IBM are trying to do the same coming from the application side of the things. We will have to wait and see who gets the next version of PaaS first.

If DynamoDB was the first step to building next gen platform service, today’s release of Simple Workflow Service is the next critical piece to the puzzle. This powerful orchestration tool could turn out to be the most powerful part of Amazon next-gen platform toolkit.

According to Amazon CTO Werner Vogels,

Today AWS launched an exciting new service for developers: the Amazon Simple Workflow Service. Amazon SWF is an orchestration service for building scalable distributed applications. Often an application consists of several different tasks to be performed in particular sequence driven by a set of dynamic conditions. Amazon SWF makes it very easy for developers to architect and implement these tasks, run them in the cloud or on premise and coordinate their flow. Amazon SWF manages the execution flow such that the tasks are load balanced across the registered workers, that inter-task dependencies are respected, that concurrency is handled appropriately and that child workflows are executed.

If anyone thinks after today’s announcement that Amazon has no clue for the future dominated by PaaS, I think they are fooling themselves. By now, it is pretty obvious how Amazon is approaching the platform game and with this announcement, they are clearly showing their cards. Game on!!

Update: Here is Jeff Barr’s post on the announcement

AppSense, the NewYork based company focussed on Virtualization solutions, today announced their research wing, AppSense Labs, focussed on bridging the gap between personal services and enterprise. They also announced their first product under AppSense Labs called DataLocker (iTunes link for iPad and iPhone). This got my attention for two reasons:

• As the so called consumerization of enterprise gains momentum, the IT departments are going to face tremendous pressure to support the consumer services which might not meet enterprise standards of security. If they don’t support such services, enterprises users are anyhow going to bypass their instructions and user services like Dropbox. It is a much bigger nightmare than actually supporting these consumer services. A tool like DataLocker can help IT tackle this problem
• People love Dropbox but somehow I never got to like the service like many other pundits in the wild. Part of my reluctance is the trust factor. I just didn’t like how they handled one security issue and a privacy debacle in the past. I am pretty sure the service is well matured now but I still couldn’t come to trust them (yet). A tool like DataLocker can help people like me trust cloud services (or in some cases cloud itself) which we never managed to trust.

DataLocker boosts trust by eliminating concerns people have about consumer cloud services by encrypting sensitive information without sacrificing the convenience offered by cloud based services. They are releasing apps for Windows, Mac and iOS devices. The app can be downloaded here.

Will solutions like DataLocker change how enterprise IT views these consumer services? I don’t think so. It is not going to change overnight and enterprise IT expect more features than mere encryption, like features that will still keep them in control over the data. However, tools such as DataLockers can help avoid nightmarish scenarios which will happen otherwise. We will have to wait and see how these tools get adopted in the enterprise.

By now the rituals of Demo Day are familiar. The opportunities are great both for startups to tell their story, and for investors to see a lot of deals in a very short time. So why wouldn’t the reverse be true?

Introducing the Valley’s first Reverse Demo Day, where the investors sell themselves to entrepreneurs. Inspired by Betaworks‘ and AOL’s New York VC Demo Day, I’m working with Orrick’s TOTAL ACCESS program to hold a Reverse Demo Day.

This event puts angel investors on stage and gives them up to five minutes to deliver their elevator pitch to entrepreneurs. (The succinct can take less time if they wish)

For startups, it’s the perfect opportunity to get a better sense of some of the names you always see on AngelList. Remember, you can fire employees, but you can’t fire your investors.

If you’re an angel investor and want to be one of the speaker, please see below for details.

Date: Thursday, February 23, 2012
Time: 9:00 am – 11:00 am (registration starts at 8 AM)
Location: Orrick’s Silicon Valley Office (1100 Marsh Road, Menlo Park, CA)

Are you an accredited investor who’d like to present? Please email Joyce Chuang at jchuang@orrick.com and include your AngelList profile.

If you have any questions regarding the event, please feel free to contact Chad Lynch at clynch@orrick.com.

Big thanks to Jeff Clavier and Dave McClure who stepped up and volunteered to anchor the event!

P.S. Like this concept? Upvote it on HackerNews.

(Cross-posted @ Adventures in Capitalism)

It’s been a busy few days. First a post on ZDNet by Eric Lai invented a few problems for Cloud, or rather SaaS, and especially multi-tenancy: inflexible, less secure, less powerfull and maybe more costly – is what Eric claims multi-tenancy SaaS to be.
Thomas Wailgum neatly nailed that via a counterpost, as did Frank Scavo, to whose post Eric commented, and back again

The circle of Inspiration? Yes, it evolves hardest and finest on Twitter. And here are my thoughts: we need to grow up

First, now I’ve got your attention anyway, a minor disappointment maybe: ERP in this title and post doesn’t stand for SAP, but for the epitome of enterprise IT as we know it

Good and bad arguments were made in all posts and their comments, but there was a lot of comfortzone involved – and I’m challenging that very comfortzone: enterprise IT is a multi-billion dollar industry where customers get very, very little value for money
Surely it employs many people and that huge discrepancy between investment and return gave a great boost to India and other low-labour-cost countries, but let’s face it: this industry needs to mature

1. The foundation of IT

In the beginning, there was a bit.
Then, it was assembled into bytes.
And bytes formed a double-word – and then the story really started

A poetic attempt at sketching the genesis of computers, but I really want to stress the fact that IT all started with hand-crafting something out of nothing.
Over the past decades, however, standardisation and tooling slowly took away the burden of doing everything yourself. Compared to writing, you could buy ink and goose feathers in stead of making your own. You could go out and buy paper, in stead of making your own parchment

In IT, various “straight jackets” saw the light: hardware first, then software, and in between the wiring: network protocols. Choices became economically limited to a few dozen, and those became half a dozen. Standardisation always starts at the infrastructural level, at the very bottom of the IT foodchain. Compared to housing, the foundation is standardised exceptionally well across the globe as the choices are simply very limited when you have a cost-efficient solution in mind

Right now, in Enterpise IT, we have a few choices in hardware. Half a dozen choices in operating systems. Over a dozen choices in programming languages. A few dozen choices in program language interfaces, and over a dozen dozen (sic) choices in applications: the closer you get to humans, the more diverse the choices you have

2. The IT exception and rules

The odd one out there is ERP. There’s SAP and there’s SAP. And then there’s Oracle. Wait a minute – we’re 1-on-1 customer-facing and we only have 1.5 choices? That can’t be right…
It isn’t, in my point of view. The diversity fans out bottom-up.
One more time, with feeling:

• We’re settling into the infrastructural machine layer all the things that we take for granted: the simple, static stuff that doesn’t change, is highly structured, rigid even. The data, the smallest building blocks, bits and bytes. Order reigns here, where everything is subjected to business rules, and automation can thrive. It’s boring and it should be: it’s the foundation to our “homes”
• Facing the very end, humans, the opposite takes place: we encounter complex, dynamic stuff that changes all the time, unstructured, flexible itself and requiring the greatest flexibility at the same time. It’s where knowledge and information flows freely, uncapturable. Chaos thrives here, exceptions are the rule, and automation usually is impossible. It’s where Social sees the light

3. How the one-size-fits-all oxymoron survived

So how come ERP is where it’s at? Well, only because it’s customised to death. I’ve been told that you can buy ERP for amount X, and will need to spend an additional amount of 7 X’s to make it work for you. That is caused by three phenomena:

• An enterprise-wide system is high up in the IT stack, yet if you want to ship & sell it off the shelf it needs to be as “flat” as possible: offer as little rules as it can (and that’s rather easy to achieve, and achieved). There are no global rules, nor exceptions
• All kinds of industry-specific, national, regional, local, partner-specific, customer-specific and department-specific rules and exceptions, as well as regulatory compliance issues, are impossible to keep up with by one global system. Technically, as well as economically.
  Here’s where Push is replaced by Pull (John Hagel and John Seely Brown can enlighten you on this one). There are many local rules, and exceptions
• Vendors, but particularly System Integrators, love to provide you with people on a Time & Material basis to achieve your goals, meaning: building in all the business rules and exceptions that you need. This might take many months, even years. The long payback time on ERP investment usually means any cost here gets sanctioned

Invest a few million in getting ERP, then being confronted with having to invest yet another few times that in actually getting what you want, slam onto that the annual “support” fee of 22%, and you’ll be glad to pay off that initial investment before you die – it’s an obscene lock-in. That initial 3-year horizon and payback time will slowly turn into a 20-year one, and keep you from further growth even.
A proper ERP implementation will lock you in for 15-20 years

4. The blame game and the solution

Is it the fault of ERP? Of SAP? Of Oracle? No. We still adhere to our Genesis: hand-craft from scratch.
ERP mainly is a, albeit rather huge, manifestation of our desire for one-size-fits-all customisation – which is an oxymoron by default

Look at housing: the fundament is standardised, as are the bricks, but everything else is up for grabs
Look at transportation: the roads are standardised, but you can pick a variety of vehicles to travel upon them
Look at the sky: the airports are fixed, but the variety of carriers is offering you all the choices you’d like
And then, look at IT: one choice of ERP is all it offers. Well, 1.5 maybe…

The message is clear: standardisation at the bottom allows for customisation on top of that. Customising the standardised parts itself? Ridiculous

Software as a Service comes to the rescue here: it will offer standardised solutions. Multi-tenancy, of course. They will offer you vanilla out-of-the-box and not much else. It’ll be old-fashioned ERP as it came on the CD, yet pay-per-use
Where will the required standardisation come from? The need to comply with regulatory laws?

5. Turn the tide

From another SaaS, of course – or you can build it yourself, or maybe someone will offer it on-premise – or all of that combined. Do you need a business case for that? You could shop together your desired functionality online, just like a regular consumer. I hope Marc Benioff is paying attention…

SaaS will make this industry mature. It will straight-jacket enterprise IT buyers, and finally put an end to the ridiculous customisation on top of multi-million dollar ERP packages. Much like the car industry, it will force you to choose a brand, make and type, and allow you a few accesories – and that’s it. If you need anything else, go get it and plug it into your Enterprise Integration Hub

SaaS your tertiairy business processes, or get them off-the-shelf.
SaaS your secondary business processes, or find a local shelf to pull them off from.
SaaS the boring core of your primary business processes, and create the specials yourself just like currently ERP makes you do so. But now, you can choose to buy local, Private SaaS them, or make – or any combination of that

That will leave you with a few disparate solutions to integrate – but SAP nor Oracle have solved that problem for you, now have they? At best, ERP’s lack of strategy and consistency regarding Integration has cost you dearly.
And you know my answer and solution to that last question, of course

IT needs to mature, and become an adult industry. Pun intended. That’s a multi-billion dollar business as well, yet I hear a lot less customer complaints from them.

(Cross-posted @ Business or Pleasure? - why not both)

Content collaboration is an area of rapid development and organizations seek to manage the complexities of agile project approaches, distributed teams, a deluge of information and ever increasing complexity. One of the key drivers and challenges of this is the move to a more mobile work force with employees needing to have visibility to their data across multiple devices and form factors.

As the amount of data available increases however, there is a need to intelligently manage what data is available on different devices to ensure security, but more importantly appropriate fidelity for the context of the particular employee.

This is where a new development from content collaboration vendor Huddle comes in. Huddle Sync is being dubbed an “intelligent file synchronization tool”. Essentially it utilizes aggregate data from employee usage patterns to determine which files are most relevant to users and these files are fully synchronized between devices – the idea is to save bandwidth and precious storage on mobile devices and also to offer users a faster collaboration experience.

In making this move Huddle is shooting over the bows of two distinct groups;

1. Other business collaboration tools like SharePoint and Box.net whom it seeks to differentiate from with a smarter system that is tailored to individual use
2. Consumer synch tools like iCloud and others that don’t have the security and flexibility that enterprises demand

In a nod to the demands of enterprises, Huddle provides IT with full transparency of where data is stored, who has synced what files and full audit trails, it also has a remote wipe capability, so that should a device be lost or stolen, or an individual leave the company, data can be remotely deleted from the endpoint.

Huddle has some IP locked up in the intelligent sync offering – they weren’t prepared to go into too much detail but did tell me that;

the engine works uniquely for each user and will consider who you are and your permissions, the files you access and how often, who you collaborate with and how often you access their shared files, and much, much more in order to measure relevance. Then relevant files are automatically delivered to your Huddle-enabled devices so that you never have to manually locate and download them. And as time goes on, the engine learns from your workflow and becomes more accurate at delivering the most important content. Of course, if Huddle Sync didn’t anticipate the need for a file, you always have the ability to manually download it.

Even more interestingly, the tool has the ability to go beyond a users own files and be exposed to data that they didn’t even know existed. The example Huddle gave me went as follows;

if you’re working on a cancer research project and there is useful (but siloed) research data spread across branches of your organization, Huddle Sync locates those relevant files (which you may not even know existed) and delivers them to you

That’s a pretty compelling proposition, and it will be interesting to see how much traction the new feature gets once it comes into general availability.

(Cross-posted @ The Diversity Blog - SaaS, Cloud & Business Strategy)

There are cloud offerings and then there are cloud offerings. As of today, Tier 3 just loaded up some big guns. Over the years Tier 3 has provided an Infrastructure as a Service (IaaS) play using various geographically located data-centers with high level disaster recovery, high availability (99.999%), utility compute, and high speed storage to enterprise customers. Today Tier 3 has stepped beyond just that service offering and is moving toward what I’m assuming is a Cloud Foundry enabled Platform as a Service (PaaS) offering to pair with their IaaS.

Tier 3 is in a great position with their current offering to outpace others with regard to on-premise and cloud-based federated systems across geographic or limited to specific geographic areas. But it doesn’t stop there. Tier 3 sees this as merely the onset of bridging resellers and white label sellers together to bring more geographic capabilities and extend future capabilities more rapidly. This will enable capex spending to be distributing or removed from the bottom line of companies looking to use these systems. This advantage however won’t make their existing investments redundant and economically unattractive. This is a huge win in enterprise spaces since so much capex has already been expended on systems that now exist under the “legacy” of the businesses. This magical pairing of IaaS and PaaS will dramatically improve the ability for enterprises to make progress into and take advantage of cloud computing.

Tier 3 Global Geographic Layout

Of course all of these capabilities are problematic with the slower pace of development and lock in with .NET Applications. Well Tier 3 hasn’t sat idly by to wait for the next thing to move .NET along, instead Tier 3 forked the Cloud Foundry PaaS Software Solution and built Iron Foundry that works seamlessly with the Cloud Foundry Software to enable .NET. In addition to .NET Support the Iron Foundry Project has also enabled SQL Server Support and it looks like they’re working on even more.

I personally, have been impressed by the rapid progress of Tier 3 & the team there. Myself as a developer, I look out and see an active social media presence by the developers (and even CTO Jared Wray @jaredwray), the active forum and code commits against the Iron Foundry Project and there is no doubt that Tier 3 is making some huge strides into the enterprise cloud computing space! Further proof of their amazing progress is available with Tier 3′s news about attaining the VMware vCloud Powered Validation.

Stay tuned to Cloud Ave for more about Iron Foundry and Tier 3. Also, if you are a coder, jump into the Iron Foundry Project and check it out for yourself!

(NOTE: This is a Cloud Ave exclusive.)

Related articles

• Tier 3 Takes on Microsoft in the Cloud with an Open Source Platform (ostatic.com)
• .NET comes to Cloud Foundry (gigaom.com)
• Tier 3 to Bring Enterprise-grade Virtual Private Cloud to New York with New Data Center (prweb.com)
• Tier 3 Enterprise Cloud Platform Attains VMware vCloud Powered Validation (prweb.com)

(Cross-posted @ The Cloud)

I find it ridiculous that people are blaming Apple for job creation in China as opposed to in the US. People are also debating how US might in-source some of these manufacturing jobs to compete with China who has sophisticated manufacturing abilities and large skilled labor force supporting these operations. They are all missing the point. This is a wrong debate.

The US lost manufacturing jobs to other countries a long time ago. I find it amusing that people expect the high-tech companies such as Apple to create manufacturing jobs in the US. If Apple were to even consider this option we would not have seen the tremendous success of Apple as a company and its products. What Apple created is an ecosystem of people and companies that are doing amazing things with their platform and their devices. It’s a different kind of ecosystem and America should focus on that innovation as opposed to bringing those manufacturing jobs back.

On one side we are whining about the loss of manufacturing jobs and on the other side we have shortage of skilled IT workforce. Try hiring a good developer in the Silicon Valley and you’ll understand what I mean. And yet as a nation we are behind in retraining our existing workforce, attracting students to engineering majors, and fixing our immigration policy for highly skilled foreign workers to meet the increased demand of IT-driven jobs. And, of course, while we wait, Apple is quadrupling its IT investment in India.

America should not play the manufacturing game with China or for that matter with anyone else. We are at such a loss. Let’s play the game that we know we can win — technology-driven innovation. When I work with customers’ on daily basis I come across so many opportunities that we are not looking at. We can use the technology, that we have built, to our advantage in the industries such as healthcare, agriculture, public sector etc. A combination of cloud and mobility could take us long way.

We’re looking at the wrong side of the IT ecosystem. I don’t expect the hi-tech companies to hire low-tech workers in the US. But I do expect hi-tech companies to create jobs in the US at the other end of the ecosystem via the opportunities to consume their technology and innovate in a different sector. A lot of people are missing this point. I’m talking about an ecosystem where Apple has paid out more than $4 billion to the developers. Why are we not talking about these jobs? Apple has more than $100 billion in cash, but what doesn’t get much discussed is that a large part of this cash is overseas. Given the current US tax laws, Apple can’t/won’t bring this cash back into the US. This might make Apple acquiring or investing overseas. We do have an opportunity to reform the tax laws to deal with such a global situation (that we never encountered before) to encourage the hi-tech companies to invest into R&D in the US and not overseas.

When you look at the big picture, having a job is merely one piece of contributing to good standards of living. What about access to affordable healthcare and college education? There’s a significant opportunity to apply technology built in America to innovate in these areas. We are barely scratching the surface of what’s possible in healthcare as well as in education. We are living in such an antiquated and inefficient system.

Another industry that has seen less than desired technology innovation is agriculture. Take a trip down to central California to see the potential. At 2008 Olympics in China, Michael Phelps winning 8 gold medals was obviously the biggest highlight for us, but people in Watsonville were super excited because China allowed the US to export Watsonville strawberries for the Olymipcs. Recently, India relaxed the laws (that are still being challenged) to allow 100% foreign investment in the retail sector opening up the doors for Wallmarts of the world. Any guess what’s the biggest challenge in retail operations in India? A non-existent cold supply chain and lack of reliable infrastructure. We take a lot of things for granted — nationwide freeways, strong governing bodies such as FDA, and size of the country. We do have an opportunity to excel in certain agriculture areas and employ a lot of Americans. We need to recognize what our real strength is and look forward as opposed to look backwards.

I am a geek and a technology enthusiast, and perhaps a little naive. But, I know for sure, we aren’t pushing the technology envelope as much as we should.

Photo: Looking Towards Tomorrow

(Cross-posted @ cloud computing)

I’ve been going through the Gartner hypecycle these last few weeks, regarding Big Data. I’ve been through the Through of Disillusionment and back, and rocked back and forth a bit even, and I now figured out what’s been bugging me so much about it.
It reminds me a bit of #E20…

First, I didn’t think much of Big Data. Then, I thought it would be a great next new thing and bandwagon to jump onto: like datawarehousing it’s closely related to Integration so I might get some spin-off.
But, that whole last idea quickly faded.
And then I went to Pervasive’s integration World and got sucked into it all by Mike Hoskins‘s enthusiasm. Petabytes, exabytes, zettabytes – if you count all the bits and bytes there will be an awful lot of data to crunch in the next decades

I see the largest growth in machine-generated data. Measuring and spitting out data at increasingly closer intervals, I’ve seen it happen in my own profession: Enterprise Integration.
We used to do things in batch, once a day. Synchronise databases across space and / or time, our own company ones or those of partners, suppliers, customers

Then, the batch windows would grow smaller, or rather: the demand for updates would increase. So next to pushing data out in the evening once a day, we’d also allow inbound pulls during the day. We’d change the batch job at the end of the day into an hourly job that would aggregate changed data, add it to a file and mark it as processed. Our eager friends would call in (via a perfectly secure hard-coupled leased line) at regular times during the day, gather the little intel present, and figure out for themselves the pointer to their last piece of information

Then, demand increased even more and our hourly batch job turned into a real-time job, adding data by having that being triggered by data-changing events. Still, connectivity was kind of costly so that new info was still pulled from the outside.
A little later, pull changed to push: for the really time-critical stuff we’d not only build up new data event-driven, but also push it out on the spot to that very select group of the best of our friends and partners.
Just a little after that, connectivity costs dropped dead to almost zero and all of a sudden we considered pretty much everyone to be our best friend

From batch, we went to event-driven – it’s unclear whether increased time-to-market demand increased the scale of connectivity so much that its cost flat-lined, or vice versa – but probably both. The end result? The same data being available to everyone else within seconds or minutes, versus once a day after close of business or just before that

What changed, was the speed at which information came available – nothing else. But decisions could be made sooner, and there was a minor trade-off there of course: we’d now also send out e.g. orders in the morning that would get cancelled in the afternoon, whereas this situation would result in no record whatsoever in the old situation

I envision something similar with Big Data – yet very, very different. It’s not called Big Information, it’s called Big Data: you now get data at the speed of light, or you can process it at a ridiculously high speed (for the record, I do drool at the showcases where millions of records get processed per second).
But you’ll still have to turn all that data into information yourself

I can picture the typical vendors smiling brightly. I can also see new vendors rise and shine, and preach the gospel of Big Data and how it will save you from purgatory. I see hardware sales increase, software sales and licenses explode, and a whole new service will see the light: BIaaS

That’s right: Big Information as a Service (coined on the spot, btw LOL). Why is it going to be the next big thing?

• Turning Big Data into Big information? No, that’s not going to happen. Business Intelligence hasn’t been successful at all, datawarehousing neither, and Business Process Management suffers the same ill fate: it takes ages to structure unstructured anything – especially if both unstructured and structured keep changing, which is going to happen increasingly faster, parallelling what we witnessed in Enterprise Integration.
  Occurring from both sides, the sandwich image is clear
• Dragging Big Data indoors even? Hell no, the new bottle neck here is bandwidth. All fair and square that you can analyse petabytes of information within hours or even minutes, but where do those gazillionbytes come from? Outside our data centre, where ever that maybe.
  Currently considered okay bandwidth for those? 2-3 Gbps, given a few thousand users. Big Data? Coming to you at a few Terabytes at least, preferrably Petabytes. Bytes versus bits there (a factor 8), and Giga versus Tera (a factor 1,000) or even Peta (a factor 1,000,000).
  Looks like DHL and UPS might make a good buck from transporting Big Data – redefining the meaning and use of the carrier pigeon, hey?
• Getting Big Data? Well, I don’t know about you but it seems to me that we find the most interesting that which doesn’t belong to us: houses, jobs, cars, women – the list is endless. And while we’re on the subject: that involves money, right? A lot of it, usually? Yes

So, what’s the business model going to be? Like in the old-fashioned days of Integration, batches of Big Data will be waiting for us to pick up from some gateway or server, at 2 Gbps, while the data is 2 TB? That means a 24-hour download for just one file, if absolutely nothing goes wrong, and then to analyse it within 5 minutes – where’s the gain here?

My guess is, we’ll quickly follow the path travelled by Integration: forget batch, we’ll go straight to real-time. In stead of big batches of data, we’ll get very small real-time bits and pieces: Small Data, not Big Data.
Maybe even tiny Data – but that doesn’t sound so sexy now does it?

I see a good and sensible solution to bandwidth spoiling the Big Data game: owners of Big Data providing the service of Big Information. After all, one Terabyte of Data will give you only a few Megabytes of Information at best. Possibly incredibly valuable Information, but extremely limited in size

Big Data? We need a whopping 2,000-lane highway in order to make that happen without constantly being stuck, waiting to make it to our destination – to spend another few days or weeks on turning that same data into information.
Oh, and act upon it…

(Cross-posted @ Business or Pleasure? - why not both)

Tracy DiNunzio isn’t your typical Silicon Valley startup founder. She’s a painter and a self-proclaimed Bohemian. She did her first tech startup after the age of 30. And she didn’t start her company in Northern California.

Tracy built her company, Recycled Media, out of necessity. She hasn’t raised any venture capital. She drove her company to profitability before paying herself a modest salary.

She leveraged herself and even sold many of her possessions to get started. And when her assets were tapped she rented out her bedroom and even her couch on Airbnb to afford her year-one operations. More on that later.

She actually IS the prototypical entrepreneur. Just not the kind you would initially read about on TechCrunch. That may soon change. And that’s what I love about her narrative. It represents the great majority of entrepreneurship and eschews the fairytale rags-to-VC-riches stories we so often read about in the press.

Here’s what I learned about Tracy:

1. She started her business from a personal need
Tracy was an artist throughout her 20′s but she watched her then husband found a tech startup. She learned at the kitchen table as so many spouses do. After some encouragement from him she decided to launch her own website – Recycled Bride. This was the first in her string of web properties.

The idea came from having been recently married herself and seeing how expensive it can be to buy a new wedding dress. So many women aspire to wear Vera Wang, but few can really afford the dresses. Weddings are a bit like college degrees – they often set you back financially for many years after the event.

And further, Tracy felt the calling to try to build something “green.” Recycled Bride became the perfect endeavor: Less money, less waste.

Unfortunately Tracy would learn first hand not much later that the business model has two components: both buying and selling. And her marriage headed in the wrong direction she found herself up one wedding dress too many.

While she remained friends with her now ex husband, she was truly on her own. She put all of her savings into her company. She sold many of her possessions on Craigslist and even sold her paintings and materials at less than cost.

2. She found non-traditional financing
But Tracy did what entrepreneurs do. She never gave up. Tracy started renting out her bedroom on Airbnb. She did the math and realized that she could bring in more money through Airbnb than she could by having a roommate. She not only rented out her room but also rented the couch. On occasion she even slept on the couch in order to make more money.

In one year of Airbnb Tracy netted more than $28,000. Without this money she wouldn’t have been able to finance operations. Oh, and one of her roommates would later become her new husband! So her wedding story had a happy ending.

One of the many things you become expert at when you launch your own company and have no money is SEO. If you want traffic you need to learn the tricks of the trade. Tracy studied SEOMoz and several other online sources of SEO tips.

She not only became an expert in SEO, she began consulting in SEO to continue to make ends meet and she became a speaker on the topic. How’s that for an ex painter?

When Sam Teller first encountered Tracy he knew instantly he wanted to work with her. Sam is the managing director of Launchpad LA and we were about to pick our 2012 class of entrepreneurs. Sam just told me, “You HAVE to meet Tracy. In the first 5 minutes you’ll realize that she’s a classic entrepreneur. She’s infectious.”

He was right. By the time we had met Tracy she was running a profitable business, was paying herself a salary and was on the verge of launching her second (related) Internet business called Style Trader (more on that in a minute). Now she had an extra $50,000 to start building out her team.

3. She focused on her customer
Tracy is knowledgeable enough to talk tech and swap design & product stories with other founders, but she realized early that networking amongst this group and reading and writing in their journals would not bring her more customers.

So Tracy began keeping a blog about …. (what else?) weddings. She became an authority on the topic and her blog helped her to both elevate her status in her industry as well as to bring great link juice to her website and improve her SEO.

4. She became part of the fabric of her community
Instead of doing guest posts on TechCrunch or speaking at startup conferences, Tracy became a regular contributor on wedding and women’s lifestyle blogs. She first had to hound the editors of these journals until they were charmed into letting her a do a guest post and once she had established herself they couldn’t get enough of her.

If you haven’t read my blog posts on why Tracy chose the right strategy it’s worth a read. The premise is that you should blog for your customers, suppliers and ecosystem – not for your peers.

I blog on entrepreneurship & VC precisely because entrepreneurs and other VCs are my customers.

Tracy realized her constituency and being a public figure helped elevate her.

5. Once off the ground she could attract mentors from her industry
And through this industry legitimacy she was able to get the ear of Dany Levy, the co-founder of Daily Candy. Daily Candy was one of the earliest successes in the newsletter business, which ultimately sold to Comcast for a reported $125 million.

Danny became a small investor in Recycled Media (the parent company of Recycled Bride) and became one of Tracy’s lead advisors.

6. She is building deflationary businesses with volume
One of the things I like the most about Tracy’s businesses is that she is focused on volume & deflationary economics (which is my main investment thesis as I covered in this post). In her first business she decided not to charge for women to list their dresses or to buy one.

In stead she had the goal of attracting a large audience that she could monetize in other ways. She’s now the leading marketplace for women’s used wedding dresses and accessories and ranks 2nd in Google for the term “Used Wedding Dress.”

She currently makes money in two ways: First she has sponsored dresses. She has data the shows that sponsored wedding dresses sell faster than others for people motivated to move their inventory.

Second, she sells advertising, which given her tight demographic and the big spending that comes when one is planning a wedding she can monetize really well.

But most importantly, Recycled Bride just served as a launching pad for Tracy’s second business: Style Trader. This business will launch soon.

Style Trader takes women’s closets and turns them into virtual bazaars of clothes that can be traded with other women. Tracy claims that only 30% of clothes in a woman’s closet is actually warn.

So this business plays right into the theme of peer-to-peer marketplaces that has seen so much success over the past several years. It enables women on a budget to be able to get new outfits without outlaying tons of money to buy them first hand. And all they really need to do is free up clothes they aren’t even wearing in the first place.

7. She now recognizes the need to have co-founders
When Tracy started her company she didn’t have a technical co-founder. She floundered a bit working with contractors before finally settling on an agency to build her first site for $20,000.

She now recognizes this was a mistake and that getting a technical partner early in the company can have an enormous impact on your chances of success.

Now working safely inside the confine’s of Launchpad LA’s offices in Santa Monica and surrounded by the tech community, Tracy is out interviewing technical co-founders. She would encourage others to solve this problem earlier in your existence.

8. She exudes many of the characteristics of a successful entrepreneur
Tracy isn’t your quintessential Silicon Valley startup story. But when I look at my list of what it takes to become a successful entrepreneur Tracy is all over it: she hustles, has street smarts, is persistent, has domain knowledge and is still standing despite having a tough few years of bootstrapping.

If you want to watch a video with Tracy & me talking about her lessons and how she built her company check out this YouTube link or click the image below for our session on This Week in VC. I think you’ll enjoy it.

(Cross-posted @ Both Sides of the Table)

Alistair Croll, Chair of Cloud Connect event, gave a brilliant keynote which gets everyone thinking. For the sake of those who didn’t attend the event, he has put up a video of his keynote. We thought we should share it with CloudAve readers who didn’t attend the event. Enjoy Alistair’s keynote that could get us thinking hard.

As pundits in the Silicon Valley bubble (including the ones whose ideas are shaped by what is happening in the valley) focus more on the AWS, OpenStack and VMwares of the world, there is a company, mostly operating under the radar of these Valley pundits (which includes me), which is slowly but steadily gaining the cloud marketshare among the SMBs. The company is Parallels, a leader in the traditional hosting world focussed on SMBs. Last week, I had an opportunity to attend Parallels Summit and it exposed me to a world outside the Silicon Valley bubble. Parallels is smoothly transitioning from the traditional hosting world to provider of automation solutions for the cloud. As someone who is strongly advocating the idea of federated clouds, I found Parallels strategy interesting.

Parallels takes an entirely different approach to cloud like what they did in the case of virtualization. Unlike VMware and others in the virtualization space, Parallels took a container based approach to virtualization than the hypervisor approach. Even though the hypervisor based approach is the predominant approach to virtualization in the enterprise, the container based approach of Parallels gained significant traction in the SMB hosting market. The container based model is a good fit for SMB market because

• it offers better performance as there is no hit due to hypervisor
• it offers much higher density for hosting providers

On the flip side, it cannot meet some of the enterprise advantages offered by the hypervisor based virtualization like

• secure isolation of virtual machines
• ability to run multiple OSes on the same server
• Easy portability

With SMBs caring less about security and ease of portability, it makes sense for cloud hosting providers in the hosting market to embrace the container approach to virtualization (in this regard, I will refer to a post by Sam Johnston on different types of cloud). Parallels is targeting this segment and are offering an onramp to hosting providers in Parallels ecosystem to transition into cloud hosting providers. With a potential SMB IT spend pegged at $1.1 Trillion, Parallels has a plan to capture the big chunk of this pie.

Their Parallels Automation for Cloud Infrastructure offering helps service providers build scalable multi-tenant cloud infrastructure using container virtualization or Virtual Machines. They offer everything needed to build cloud infrastructure including virtualization, automation tools, billing tools, customer service tools and an online store. A comprehensive end to end solution that will take small hosting providers to transition into a cloud hosting provider seamlessly. Their modular approach also gives options to these service providers to use other third party tools wherever necessary.

Some of the features of Parallels Automation for Cloud Infrastructure include

• An intuitive configuration screen to order and resize cloud servers aided by a REST API
• Ability to offer pay as you go offering
• Ability to run containers or VMs and private networks to securely connect the servers of one customers
• It will also be integrated with Microsoft System Center and Plesk Panel
• An integrated customer control panel for self service

This along with their offerings to help ISVs embrace SaaS puts them in a pretty good position to gain the marketshare in the SMB cloud market. Their plans for cloud service brokerage and enhanced cloud support in the upcoming Plesk 11 Control Panel bodes well for a future defined by a federated ecosystem of cloud providers. If you are following the cloud infrastructure space, I suggest that you keep Parallels in the list that contains OpenStack, CloudStack, vCloud, Eucalyptus, etc..

disclosure: Parallels took care of my travel and stay during the conference

Related articles

• Parallels Summit – Birger Steen (zdnet.com)
• State of the SMB cloud market (ecoinsite.com)
• Trends For Cloud Service Providers and Traditional IT Vendors in 2012 (clean-clouds.com)

Picture Credit: spatiallyadjusted.com

Today there was a debate among the #clouderati about whether OpenStack should standardize their APIs around AWS APIs. Even though two years back I had an opinion that standardizing around AWS API will be good because of interoperability advantages, I have since changed my position and I now feel that it is too early to standardize the APIs. The back and forth debate on Twitter brought in enough emotions, marketing pushes, etc.. I thought I will do a quick post to list out my arguments against standardization (keep in mind I am not arguing against standardizing on AWS API but rather I am arguing that we don’t standardize now against any API). Here are some of the reasons why I am against standardization.

• We are still very early in the cloud services maturity. Any efforts to standardize at this point will stymie innovation. Using Simon Wardley’s (one of the biggest proponent of standardization around AWS APIs) own technology lifecycle model, it is my argument that we are still either in the innovation part or early custom development part of the curve for cloud infrastructure. We can worry about standardization when we get to the products stage of the lifecycle. There is no need to short-circuit this natural evolution and productize everything around AWS APIs. Update: Simon is arguing that my application of his lifecycle model is not right. He says it has to be applied for infrastructure as a whole and see cloud as the utility phase. He may be right in the application of the lifecycle model but I still feel that it is too early to standardize the cloud infrastructure because it is a very tiny piece of the entire infrastructure market.
• AWS APIs are proprietary and Amazon hasn’t open licensed them. Even though we could reverse engineer the API and take advantage of DMCA safe harbor provisions, it is still not worth the risk when we take into account the fact that we are still in the early stages of cloud infrastructure technology.  I will be suspicious of Amazon’s future intentions in spite of them having a large ecosystem. Just ask some of their ecosystem players how they feel after being poached by Amazon.
• Even though AWS has wide reach and many want compatibility with AWS API, there are third party tools that ensure interoperability. One of the criticisms against the use of third party tools is that it works on lowest common set of features. I do agree with this argument. However, the pain levels among the customers hasn’t reached a point where there is large scale demand for standardization. Whenever the pain levels becomes intolerable, there will be enough market pressure calling for standardization with all the players sitting across the table and working things out (much like the election year payroll tax cut in US politics). Till that point, any efforts to standardize the APIs is premature.
• If reliance on third party tools is the case of compromising on lowest common set of features, premature standardization on AWS API is a case of stymying innovation around what AWS APIs can allow.
• One of the arguments put forward for standardization around AWS API is the guestimate putting AWS revenues at 1 Billion. Even though it is a big number if we just consider the cloud segment, it is peanuts when we consider the entire IT. One cannot standardize the future of IT based on such small marketshare.
• If PaaS is going to be the future face of IT, why bother about standardization at the infrastructure now stymying any potential innovation up the stack?

Anyhow, I always tweak my models based on the real world data, as opposed to economists approach of wanting real world data to fit their models, and I am ok with changing my opinion (didn’t I do it already on this topic?) if there are enough evidence to demand an early standardization. Till I see any need for it, I will keep arguing against any standardization around AWS APIs NOW.

Dion Hinchcliffe wrote a very interesting piece, and I missed it. But thanks to John Rymer I picked it up.
John shared an interesting question indeed:

Client gives up on enterprise PaaS deal with #Salesforce.com, asks me for options. Focus is “systems of engagement.” Interesting question.
— John Rymer (@johnrrymer) February 16, 2012

We had a small conversation on that and I read Dion’s post.
While I disagree with some statements like

But systems of record are increasingly 1) becoming commoditized by SaaS and the cloud and 2) most organizations have reached the carrying capacity of the approach: There’s very little left to store and automate that isn’t already

I do adhere to the idea that we’re settling into the infrastructural layer all the things that we take for granted: the simple, static stuff that doesn’t change, is highly structured, rigid even. The data, the smallest building blocks, bits and bytes. Order reigns here, where everything is subjected to business rules, and automation can thrive

What is left and floats on top, is what is closest to humans: I said it 15 years ago and will keep repeating it, but humans will always stay on top of the food chain.
It’s where the opposite takes place: Complex, dynamic stuff that changes all the time, unstructured, flexible itself and requiring the greatest flexibility at the same time. It’s where knowledge and information flows freely, uncapturable. Chaos thrives here, exceptions are the rule, and automation usually is impossible, and when it seems to be so, that often turns out to be a very dear fata morgana

Systems of Engagement – that would be a good name for that all, but regardless of that, it’s the very place where they would reside. Dion gives a few examples of SoE (just making up the abbreviations as we go here) but I’m not too fond of “online communities, crowdsourcing, Social CRM, open APIs” as SoE’s, although they’re Dion’s invention of course, and it’s hard to automate what can’t be automated, like I showed

But maybe I just have to sleep on it and, as the hardcore business application guy I am, who thinks anything can get automated, everywhere, and effectively and cost-efficent even: have I ever envisioned what the future of automation is when indeed most is automated, and what remains simply can’t be automated?
No.
But I know what it will look like. It goes something like this:

As discussed above and in my freeBook, Social is all about people-stuff, and comes with all the mentioned characterisations and attributes. And that is far, far away from infra. So can it be automated even? Well no, hardly. It’s a bit like the cop standing on a highway, redirecting you to different lanes because one or two have been closed down due to an accident. Yes it’s a rule, but is it worth automating? No. Never. Or hardly ever

So, back to John. PaaS? Salesforce? To “do” Systems of Engagement? There couldn’t be a worse place. Yes you can PaaS your communities and run your default bulletin boards on them, but if you really want to fence them off you need good… customisation! And that you do close to the customer, local, with the vendor or an SI.
While I personally (hope to) see an end to both their ways, there’ll be a few Winters and Springs before any bark will set sail in that direction. At the top of the foodchain customisation will reside, as always, and it will be lifted up from down below by SaaS driving the tertiairy and maybe secondary business processes to a company. The primary business processes are by nature what distinguishes them from the competition, and will never be SaaS-ed

Having said all that, it seems that Dion’s Systems of Engagement will reside in the same place where a company’s primary processes will be automated: the top-notch stuff will be developed in house or maybe outsourced, but certainly not will they be fit for SaaS

PaaS? If you think PaaS is a good place for your Systems of Engagement, why don’t you just hand over your money to me? I promise I’ll spend it all in one night at a bar, and that will ROI more than what you had in mind.

(Cross-posted @ Business or Pleasure? - why not both)

I do product management for Spigit. I’ve done product management for other companies as well. And let me tell you, the easiest thing in the world is to fall into the trap of focusing on how customers are using your product. Product forms your relationship with customers. It’s how you know them. They will tell you about your product, and the features they want improved. You can’t not listen to that. Of course, you’re going to improve your product.

But don’t confuse that with understanding what your customers need.

Just because you’re on top of what you’re customers need from your current product, doesn’t mean you’re on top of market changes. Two titans of the television industry remind us of that. They have, in recent weeks, been dismissive of a rumored Apple HDTV:

Sharp isn’t paying much heed to rumors that Apple is developing an HDTV. Nor does it have much reason to, says Kozo Takahashi, head of the company’s operations in North and South America.

All Things D

“TVs are ultimately about picture quality. Ultimately. How smart they are…great, but let’s face it that’s a secondary consideration.” – Samsung AV product manager

TechCrunch

And there you have it. Apple HDTV? Whatever.

Of course, one might be reminded of the comment by Palm’s CEO before the Apple iPhone was introduced: “PC guys are not going to just figure [phones] out. They’re not going to just walk in.” Ouch!

What we’re seeing is incumbents falling back on the thing that got them to their position: features. This is feature-led innovation. It’s got its place in the market, but relying only on it puts companies at risk for missing either (i) critical market shifts; or (ii) emerging needs that will drive organic growth.

Divergence between Product Features and Jobs-to-Be-Done

In the graphic below, a typical scenario for feature-led innovation is depicted. What happens is that over time, companies lose touch with where the market moves, with customers’ changing jobs-to-be-done.

When a company “makes it” in the market, it has the features that meet what customers are trying to get done. On the graph above, that’s set as “Time 0”, where features match Job 1. Given this is the ticket to success, a company will of course to continue to develop these features. And the people who were looking for Job 1 fulfilled will follow along as the new features are rolled out.

Somewhere along the line, a new job-to-be-done emerges. Call it Job 2. New jobs enter the market all the time, via what Re-Wired Group’s Bob Moesta calls the “push” force. After Job 2, Job 3 emerges. And on and on.

But many companies are never aware of this. There are too many customers. Product is selling. You know your company’s product, and you’ve gotten lots of feedback for improvements. Systems are in place to reward and nudge you further along the path that fulfills Job 1. When they do solicit feedback from customers, it’s all Net Promoter Scores, focus groups for new features, surveys, customer service ticket analysis. Believe me, I really can appreciate how companies get lulled into this cycle of feature-led innovation. Professor Freek Vermeulen of the London Business School calls this the innovation “success trap”.

Meanwhile, customers cast about for ways of fulfilling their new jobs-to-be-done. They improvise. They settle. They experiment. They’re open to new entrants that meet their emerging jobs. And this is how it happens to companies.

Let’s look back at what the Samsung product manager said: “TVs are ultimately about picture quality. Ultimately. How smart they are…great, but let’s face it that’s a secondary consideration.”

Here are three jobs I’d personally like fulfilled that aren’t about picture quality:

The first two of those jobs have emerged based on new technologies in other arenas (recommendation engines, social networks). The third is a tried-and-true job that’s been around forever. Might there be a play to improve that via my TV?

All three of those jobs-to-be-done are divergent from the ongoing focus on picture quality espoused by the incumbent TV leaders.

Parable of Digital Cameras

The feature race of the HDTV manufacturers has a parallel in the digital camera industry. A key feature of digital cameras has been the megapixels. The higher the megapixels, the better the image quality. It has been escalating so much in recent years, Consumer Reports ran a piece wondering when the megapixel arms race would cease.

But in another case of new jobs emerging, lower end digital cameras are seeing their sales decline. Why? As the L.A. times noted in December 2011:

According to a survey by NPD Group, 27% of photos and videos taken this year were shot with smartphones — up from 17% last year.

Wait a minute. Are you telling me that with all that megapixel firepower, we’re gravitating toward phone cameras? What’s wrong with people these days?

Nothing actually. There’s always been the job-to-be-done of capturing moments. It’s just that lugging around a separate camera everywhere you go is a pain. But people want to be connected – talk, messaging, email, surfing – and will gladly carry their phone with them. Which is quite sufficient to fulfill the job of capturing moments. Megapixels be damned. Of course, the megapixels are getting better on smart phones too. Clayton Christensen must be amused by the ongoing disruptive innovation.

Sharp, Samsung…heck, all companies…are you listening? How well do you know the emerging jobs-to-be-done by your customers?

(Cross-posted @ I'm Not Actually a Geek)

CloudConnect 2012 at Santa Clara, the conference organized by UBM, has come to an end. This week, there were quite a few OpenStack (previous CloudAve coverage) related news and I thought I will do a single blog post talking about them. Some of them came during the event and some outside of it. This post is a roundup of all the news with my brief take added to the mix. One thing is clear. There is continuing buzz around OpenStack and they are driving the discussions around cloud infrastructure market. There are promising signals about what they can deliver. Now it is time for them to actually deliver. OpenStack has moved from childhood years where they were given free pass through all their troubles, to adolescent years where they will be watched more closely. It is time for them to actually show that the parents (those of us who are advocating the project around the blogosphere) can trust them to stay out of troubles and, actually, deliver on their promises.

Two things I would expect to definitely happen this year

• Full maturity of the compute code
• Keys to the doors of the foundation handed over completely to the community

Even though OpenStack has a vibrant ecosystem around the project with some exciting startups betting their business on them and many service providers announcing cloud services based on OpenStack code, the lack of maturity on the compute part is giving an opportunity to the competing cloud platforms to hit back at them. I think they are now at a stage (adolescent years) where this lack of maturity will not be dealt with kids gloves.

Cloudscaling Bets Big On OpenStack

After riding with Cloud.com’s CloudStack (previous CloudAve coverage) initially, Cloudscaling (founded by fellow CloudAve blogger, Randy Bias) is now betting heavily on OpenStack. This week they moved from a services company into one that offers productized versions of their services (aka solutions) by announcing the release of Open Cloud System (OCS). Even though their launch party was briefly disrupted by the criticism of the way they used the “open cloud” term (check the bottom of this post for my brief take), this is a significant announcement in the OpenStack ecosystem. With this announcement, they are signaling telecom carriers, large service providers and enterprises that they can help them put cloud inside their operations using OpenStack. If I have to simplistically define OCS, I would say it is a repackaging of OpenStack with a few additional components which optimizes the deployment on certain commodity hardware. They have taken what they learned while building cloud for large telecom providers like Korean Telecom and others, standardized it and are making it available for any organization wanting to use OpenStack for their cloud needs. In short, they have made OpenStack palatable to large telcos and enterprises. Yes, we can harp on their open cloud claims and miss the significance of this announcement but I would rather focus on what it means to OpenStack in the big picture. Along with the offerings from Piston and Nebula (who are their direct competitors), Cloudscaling’s OCS has the potential to put OpenStack in more places. In fact, Cloudscaling’s past success with Korean Telecom and others will go a long way in getting telcos and enterprises trust OpenStack as their infrastructure platform of choice. This announcement is big for Cloudscaling and there is no second opinions about it. In the bigger picture, this push by Cloudscaling may end up being one of the biggest contributors to the “eventual success” of OpenStack. Unlike in the case of Piston and Nebula (where we are still waiting to see them showcase big success stories), Cloudscaling’s success with the past consulting projects will help them (and OpenStack) big. I am really looking forward to Cloudscaling showcase few more large success stories using OpenStack this year. Randy, can you do it?

OpenStack targets developers with TryStack

Another really interesting news that came out today is the availability of TryStack, a free OpenStack sandbox put together by several OpenStack ecosystem players like Dell, HP, NTT and Rackspace hosting. The idea behind this free sandbox is to let developers test out how their application communicates over OpenStack API without going through the hassles of a testdev implementation on their own. According to their release,

TryStack is intended to provide users the ability to launch instances in one of several TryStack zones, representing different OpenStack reference architectures and geographical locations. The first zone available now has 156 cores, 1040GB memory and 59.1 TB of disk storage running the latest OpenStack release (code-name Diablo), Dell™ PowerEdge C6100 and C6105 servers and libvert/KVM.

They will let developers lease resources using the credits given to each registered users and they have 24 hours to test their code after which the instances will be reclaimed for redistribution to others in the waiting list.

This is a pretty smart move on the side of OpenStack because one of the biggest hindrance for large scale developer adoption of OpenStack infrastructure is the difficulties associated in setting up a sandbox for testing. In my conversations with many developers, this is one of the reasons they have quoted why they go to AWS even though they have open source in their DNA. Before they can invest or convince their bosses about using OpenStack based infrastructure, they want an easy way to test their code on the infrastructure and Trystack offers that opportunity.

Rackspace partners with Redapt

Rackspace and Redapt, a Redmond based company that offers packaged IT infrastructure to large organizations, announced a partnership that will put more OpenStack based private clouds in more places. This is yet another channel for Rackspace Cloud Builders to put their OpenStack powered Rackspace Cloud Private Edition.

Cisco showcases cloud management software on OpenStack

Cisco revealed their hands about what they intend to do with their OpenStack support by talking about how their cloud management software now works with the Diablo release of OpenStack running on Cisco UCS. More info on how Cisco’s cloud software is integrated with OpenStack can be found in this post.

My brief take on Open Cloud fiasco

Clearly, the use of Open Cloud by Cloudscaling is a usual marketing nonsense. Even though I agree with Randy Bias of Cloudscaling that open protocols and open source is important, I do not agree with the use of open hardware, a term he uses for commodity hardware, in the definition of open cloud. If cloud is about abstracting away the hardware underneath, I should NOT worry whether it is commodity servers or mainframes. As long as it offers all the characteristics of cloud, the underlying hardware is immaterial.

Jeremy Lin is the talk of the NBA. Sportswriters everywhere are busy cranking out column inches on what people have called the ultimate Cinderella story: The emergence of an Asian-American Harvard graduate, seemingly from nowhere, as one of the NBA’s biggest stars.

On February 3, Jeremy Lin was the Knicks’ third-string point guard. Less than two weeks later, after leading the Knicks to six straight wins, including two consecutive games in which he scored the winning points, Sports Illustrated announced that they would put him on the cover of the February 20 issue with the caption, “Against All Odds.”

Yet one group wasn’t surprised by Lin’s success. A new breed of basketball statheads (the hoop equivalent of the SABRmetricians popularized in “Moneyball“) had predicted Lin’s success from the start.

Prior to the 2010 draft (where all 30 NBA teams passed on Lin) their analysis ranked Lin #10 out of all players, and #1 among undrafted players. This analysis is purely statistical; the models don’t consider height, vertical leap, foot speed, and perhaps most importantly, skin color. They simply look at statistical contributions made during basketball games.

Statistical analysis continued to rate Lin highly on his rookie season. He produced .157 wins per 48 minutes played, or more than 50% better than the average player, who produces .100 wins per 48 minutes played. (Incidentally, Carmelo Anthony produced .140 wins per 48 minutes played that season).

He also shone in the NBA’s Developmental League (a minor league of basketball), where he produced at a .211 clip.

In other words, when you looked at pure production, Lin was a top prospect. His rise only seems unlikely when you consider non-basketball factors, like his race or educational institution.

Trendy sports blog Deadspin tweaked the madness best, titling a February 7 blog post, “Asian Harvard Grad Somehow Succeeding In New York.”

It’s a funny one-liner, but it underscores a more serious issue.

Lin’s high school coach noted that his star player wasn’t recruited by any colleges, despite leading underdog Palo Alto High to the California state title. He also noted that the following year, a number of scouts came to games to watch another of his players who wasn’t as good, but was African-American.

Stereotyping has legitimate purposes. If you knew that Harvard University had produced twice as many presidents (8) as NBA players (4), you would be right to guess that any generic Harvard basketball player would be unlikely to make the NBA. But stereotyping only makes sense in the absence of better data.

In the case of Jeremy Lin, publicly available statistics proclaimed his value, but scouts preferred believing in stereotypes to trusting in data.

Sadly, this kind of bigotry isn’t limited to the world of sports. Even here in Silicon Valley, where we like to think of ourselves as a meritocracy, we practice a particularly pernicious form of stereotyping on a daily basis.

Investors love to talk about “pattern matching.” A common expression is, “I’ve seen this movie before.” There’s a reason why entrepreneurs constantly pitch themselves as “the AirBnB of ice skating” or “the iPhone of Valentine’s Day cards” (hmmm, that actually doesn’t sound so bad….).

This made sense in the absence of better data. When investors had to make decisions based on a PowerPoint deck and some rough prototypes, falling back on stereotypes was a good strategy. Indeed, I like to describe the default investing strategy of Silicon Valley as “invest in charismatic 20something Computer Science graduates from Stanford, MIT, and CMU (with Berkeley, UIUC, and Harvard as fallbacks), as long as they’re male and either Caucasian or Asian.”

In today’s world, with the ability to judge entrepreneurs based on a vast amount of publicly available data, ranging from social media to GitHub, with the ability to launch MVPs and generate tangible engagement and conversion statistics without raising money from investors, we now have the better data we need to make stereotyping AKA “pattern matching” AKA bigotry obsolete.

But old habits die hard. Just in the last few months, we saw a CNN special on black entrepreneurs in Silicon Valley. Whether or not you feel that CNN used ambush tactics to help stir up controversy, the fact is that African-Americans make up only 1% of venture-backed entrepreneurs nationwide. And just last month, Whitney Hess conducted an analysis of top venture capital firms that showed that the most gender-balanced firm was Kleiner Perkins at 23% female, while the majority of those firms had zero female investors.

Discussing such topics makes people in Silicon Valley uncomfortable. Few of us like to think of ourselves as racist or sexist. Yet I know of many entrepreneurs who feel that they are overlooked because of their skin color, gender, ago or simply because they didn’t go to the right schools.

Jeremy Lin has been called the Asian Tim Tebow (or is it that Tim Tebow is the white Jeremy Lin?); we need to extend the lessons of Jeremy Lin beyond sports to the startup world. Decisions need to be based on performance on the field of play, not race, gender, age, or education.

And for those who are the first to recognize “pattern matching” for what it is, the rewards can be great. How many of those other 29 NBA teams could use Jeremy Lin on their team right now?

UPDATE: #Linsanity continues. Jeremy Lin had 10 points and 13 assists in 26 minutes of play during a blowout win over the Sacramento Kings. 7 wins in a row.

UPDATE: Looks like this post struck a nerve. Head on over to Hacker News and upvote, please.

(Cross-posted @ Adventures in Capitalism)

Nest hit a nerve.

Thermostats are not the most popular topic for high-tech and Internet blogs – but Nest hit a nerve.

Nest offers a thermostat for the home. Probably because it’s a San Francisco start-up, possibly because it has some leadership that once worked at Apple, or possibly because it has a nifty display – it became an instant darling of the high-tech blogosphere. It became the most boring got-to-have item in consumer tech. I love high tech gadgets, including thermostats, and have more than my share in my current home – more on that below. I found the Nest thermostat interesting, but hardly worth blogging about (initially).  It took several characteristics of high-end thermostats and made it round and used a clever digital round display. I don’t believe it has any unique features compared to whats available on the market. This post lists several alternatives available.

I’ve heard people excitedly talk about the Nest thermostat.

In my home, I have the Home Automation Inc (HAI) system – and several Omnistats on the walls – more than I care to admit. These high-end thermostats offer many of the same features-  including:

• Adjustment wheel
• Large easy to read display
• Colored background
• Usage Meter
• Displays outside temp
• Controllable from PC or mobile phone (or NEC DSX phone)

I’ve had them for several years, so I never understood why the blogs went crazy with Nest. But now, it is newsworthy because Honeywell is suing Nest for patent infringement. The problem is big for Nest because the patent infringement claims hit several major features. From GigaOm:

So what technology is Honeywell talking about specifically? Oh, only the some key features of the Nest device including the outer controlling ring dial, the interview questions to start programming the thermostat, tech around being able to control the thermostat via the Internet, the Nest “Time to Temperature” function, and the way that the Nest thermostat diverts small amounts of power from the house’s electrical load to power itself.

But wait, those are some of the same features I”ve enjoyed for years. Looks like the Patent infringement nonsense stifling innovation in smartphones could spread to my thermostat.

I also think it is interesting that Honeywell is naming Best Buy as a defendant. I do agree with Honeywell that Best Buy is guilty of promoting Nest as Innovative, but that’s what sales is all about. Every retailer claims to be a retailer of innovative products. The Uniform Commercial Code protects resellers and retailers from liability against such vendor intellectual property claims.

What concerns me the most about this ordeal is how ridiculous patent claims are becoming – I sorta get the smartphone IP battles – billions of dollars at stake, but thermostats? I hate to complain about something where I don’t have a recommendation – but the patent system is clearly broken. Its intent is to create an environment for innovation, but its result is the opposite. The Nest thermostat is clearly a unique offering that resonates with many – something that Honeywell could have created, but never managed to do so. It’s not that Honeywell is doing anything particular vicious or unusual by playing patent offense. Patent lawsuits have become so prevalent in technology that Google cited them as one reason it wants to pay $12.5 billion for Motorola Mobility.  The Verge identifies the patents in question:

• U.S. Patent No. 7,634,504 - this patent was filed in 2006 (issued 2009) and covers displaying grammatically complete sentences while programming a thermostat.
• U.S. Patent No. 7,142,948 - this patent was filed in 2004 (issued 2006) and covers a thermostat figuring out and displaying how long it will take to get to a specific setting, like temperature. The Nest definitely has this feature; it’s a main selling point of the device.
• U.S. Patent No. 7,584,899 - this patent was filed in 2006 (issued 2009) and covers a thermostat with a face movable (e.g., rotated or turned) around a central display. The display shows a change in a setting as the face is moved.
• U.S. Patent No. 7,159,789 - this patent was filed in 2004 (issued 2007) and covers a thermostat having a rotating selector, a potentiometer and a non-rotating element (like a display) on the front face. The non-rotating element is fixed to the thermostat housing with a support member offset relative to the rotating selector.
• U.S. Patent No. 7,159,790 - this patent was filed in 2004 (issued 2007) and covers a thermostat having two laterally-offset rotation axes. (The Nest doesn’t have these, as far as we can tell — we’ll see what Honeywell means by this.)
• U.S. Patent No. 7,476,988 - this patent was filed in 2005 (issued 2009) and covers a power stealing system that transfers power from the switch to a storage device when the switch is off, and powers the controller from a secondary power supply if the power at the storage device is insufficient.
• U.S. Patent No. 6,975,958 - this patent was filed in 2003 (issued 2005) and covers a method of controlling an environmental control system from a remote to adjust the settings of the system.

Did Honeywell really get a patent for grammatically complete sentences on a thermostat? Would Nest be accused of infringement if they remove the period at the end making it grammatically incorrect? A rotating dial is protected? Remote control of the thermostat is patent-able? This makes no sense. I hope Nest has some deep pockets to argue the validity of these patents. Or else, a lot of good products – products that have been on the market for years – are doomed. Come to think of it, it’s odd that Honeywell is going after Nest – how many could they have sold in the past few months?

The question is who is this patent really protecting? Speaking for Honeywell, Bruce Eric Anderson, the company’s director of external communications, said  ”We have 20,000 engineers that come here every day and it’s about protecting those individuals.” If those engineers he refers to are the ones that got a patent for grammatically correct sentences and rotating dials – they should be ashamed.

In a statement to Mashable on Feb 8, Nest called the lawsuit a “patent-attack strategy to stifle competition” and said it will vigorously defend itself. If Nest is, as it claims, the victim of a lawsuit brought on solely to shut it down, it wouldn’t be the first startup in its position.

“We have the resources, support and conviction to do so,” the statement reads.

I am a big a fan of home automation – but it isn’t exactly intuitive or cost effective stuff. My biggest complaint about these smart thermostats is they are regularly marketed as cost saving devices. There is no doubt they have the potential to save energy – but probably most don’t. Wild swings (turning the temp down 10 degrees while the household members are away for the day) is not practical or efficient with in floor radiant heat. But even if they do save energy – they will never pay for themselves. These smart stats are too darn expensive to be justified in anyway other than emotional gratification. Connected thermostats have been around for a decade and prior to the Nest were off radar for non-geeks. The prices need to drop below $100, and Nest is in the wrong direction. Honeywell just raised prices across the entire industry.

My final point – back to telecom – is I’ve been experimenting with the NEC DSX phones that integrate into the home automation. This makes the thermostat controllable from the phone-top (digital or VoIP). This is very smart – it means the device on the bed stand – you know the one with the big display and real keypad – can adjust the temp in the room (as well as a lot of other items). I wonder if this infringes on US Patent No 6,975,958. I sure hope not, because it is brilliant – more so than anything I’ve seen from Honeywell.

(Cross-posted @ TalkingPointz)