Most CloudAve readers probably know that Zoho is our exclusive sponsor. When we launched in September, the speculation that this will turn us into nothing but a PR outlet for Zoho was inevitable. I think in these few months we have proven otherwise, by being very conservative with Zoho coverage (if anything, we have a negative bias) while generously talking about potentially competing solutions.
But when ReadWriteWeb declares Zoho the Best LittleCo of 2008, it deserves a mention here, too. Besides, it’s holiday time and I wanted to show off their updated logo.
We felt that Web Office vendor Zoho best represented the 'LittleCo' ethos this year, due to its David vs Goliath effort in competing head on with products from several very large companies: Microsoft Office, Google Apps, Salesforce.com's core CRM platform.
Zoho not only competed with these bigcos, they were innovative and scrappy about it. And in a year that will be remembered for the economic downturn, Zoho is a reminder to us all that we can work ourselves out of a down economy.
Talk about working ourselves out of a down economy: Zoho itself was born as a result of a turnaround, when parent company AdventNet had to reinvent itself after the collapse of their then primary market, the telecommunications industry.
Whether they are LittleCo or BigCo today is all relative: with 800 employees, of which 300 focus on Zoho, they are certainly now a scrawny little Web 2.0 startup – but when you compare them to the real Goliath they are competing with, they certainly are still little. Something tells me that even at 2,000 employees in many ways they will continue to act as LittleCo.
Part of the secret sauce of survival and growing has been self-efficiently: they are entirely funded by revenues. I’ve stopped counting the number of products Zoho offers somewhere above 20, for fear I would be wrong, but looking at some of the recent funding news to one-product companies, can you imagine what level of investment would it take to build a business that offers all the combination of Office and Business applications, tools and even the infrastructure to provide it as SaaS?
Not that I am against Venture Funding, in fact via my participation at SVASE I help bring entrepreneurs and VC together, but there is something to be said about bootstrapping, frugality and efficiency as means to prosper, rather than just surviving a recession.
‘Nuff said: congratulations to Zoho, thanks for continuing to sponsor CloudAve as an unbiased Cloud Computing forum, and we now continue our regular programming…
Update: also Congrat's to fellow Editor Ben Kepes, having been marrried for 12 years today.
A good 3 years ago I "discovered" a Norway-based SaaS All-in-One business suite provider, 24SevenOffice, and for a while wrote about them extensively. I truly believed I found a gem. They offered a modular but integrated system to the SMB market with unparallelled functionality: Accounting, CRM (Contacts, Lead Mgt, SFA), ERP (Supply Chain, Orders, Products, Inventory), Communication, Group Scheduling, HR, Project Management, Publishing, Intranet.
I think the reason I fell in love with 24SevenOffice was that they were living proof to my favorite theme, namely very small businesses can now have “enterprise” system functionality. I often referred to 24SO as "the next NetSuite" with a billion-dollar future, if they can execute (this was well before NetSuite's IPO). As typical with startups, they initially put all resources into development, with zero marketing. But they had a one-person marketing machine: Espen Antonsen, a developer, who as co-Founder obviously felt obsessed enough to blog about the company, comment elsewhere online - in a short time Espen single-handedly created 24SevenOffice's online presence - that's how I, Phil and others discovered them.
Soon 24SevenOffice started to grow, expanding from home-base Norway to the UK and Sweden. They hired business management, and ramped up the marketing machine, doing some creative deals like an ad-deal with Norway's leading rally-driver, or the first-ever-in-the-world deal with Fokus Bank, creating a single sign-on Web solution for customers' banking and all other business software needs. (How is that for Banking 2.0, Ben?) Today 24SevenOffice is a publicly traded company in the Oslo Stock Exchange. Happy End for the Founders and investors. But is it really?
They are nowhere near to be "the next NetSuite", and chances are they won't ever be. Instead they are a nicely growing business in a few European markets. And therein lies the rub: there is no such thing in software as a European market: there is only the UK, Norway, Germany ... one by one, each being different, each with their own barriers of entry. If your product is a development tool, or any utility that can instantly be used without localization, you have the world market open to you. (Just check out Zemanta conquering the world from Slovenia). Enter business software, especially if it involves accounting: you have language, regulation, taxation issues: every new country you enter requires significant investment.
I believe 24SevenOffice missed the most fundamental rule of any business, the opportunity that only became available by the very model (SaaS) they are an early pioneer of: with no geographical boundaries go after the single largest homogenous market you can serve. In today's world for business software that's the US. 24SO should have focused on the US market and today they'd be on their way to become the next public SaaS company.
Of course what they achieved is no small feat eather, and they are probably happy where they are today. Espen, my first contact in the company (later I was in touch with the CEO and COO quite a bit) quit, here's his farewell message:
When I started in 24SevenOffice at the age of nineteen back in 2000 we were four guys who tried to build a basic web-based CRM and invoicing system for small businesses. Since then the strategy, product suite and company has grown into one of the two most advanced and comprehensive web-based ERP-solution's in the world. The company was listed on Oslo Stock Exchange last year and now has over fifty employees. Building a CRM-system and being one of the first products to use Ajax has been very interesting and I have enjoyed the years at 24SevenOffice. But seven years is a long time and I do not see myself as a programmer in ten or twenty years. I also prefer to work in a smaller company with more influence over the strategy.
I am confident in 24SevenOffice's success in the future. I am nowhere near the sell-button in my stock portfolio. But I should say that my cravings to see the world and finding new challenges is not the only reasons why I am no longer with 24SevenOffice. Lack of international focus (specially US), choosing to build advanced and complex product modules instead of opting for easy and simple solutions, and little willingness to build cross-platform solutions were issues me and 24SevenOffice's management disagreed on. Advanced is good but additional features should come in later versions and be less visible. 37Signals and Google may lack many features but it is the simple interface and workflow that makes them successful.
From 24SevenOffice he switched to 24SevenTravel. World traveler for a year - and not exactly to posh touristy destinations...
The photo above shows Espen playing table tennis with school kids in Nepal. He is now back, looking for his next gig. Not that he needs to work (so I guess), but it's too early for retirement. (If you're in the SaaS business, you might want to talk to him). In the meantime he's sharpening his blogging skills again. Next up is a product review by Espen - then who knows what's next.
Ben recently reported on how NetSuite is going after Salesforce.com, by announcing their Renewforce program. Today NetSuite is going after bigger fish: the leader in Enterprise Software, SAP.
The aptly named Business ByNetsuite program guarantees at least 50% savings to current SAP R/3 customers relative to - watch this! – the annual maintenance fees they are now paying to SAP. Yes, it’s not a price-to-price comparison. With the perpetual licence model customers pay upfront, but are still forced to pay annual maintenance fees – with SaaS there is only a subscription fee, and now NetSuite proves it can be half of only the maintenance component of traditional software’s TCO.
NetSuite’s timing could not be better: in the middle of the economic downturn SAP just increased maintenance fees – and as fellow Enterprise Irregular Brian Sommer sates over @ ZDNet (emphasis mine):
In light of the current economy, SAP’s timing on this cost increase was unfortunate at best and a strategic blunder at worst. Raising customer costs in a down economy is a gutsy thing to do unless you are absolutely sure of your customers and their willingness/ability to pay more.
Well, apparently not all customers are willing, and NetSuite has already presented a showcase convert from SAP to their own system.
Of course it does not mean NetSuite is ready to replace SAP as such. NetSuite is a very good integrated SaaS offering for small to midsize businesses, while SAP (and next Oracle) is what most large corporations run their business on. Comparing the two would be comparing apples and oranges. NetSuite themselves make it clear this is a divisional offer: they can handle smaller divisions of large companies, many of which likely replaced a legacy system with the parent company’s SAP R/3 as a result of acquisition. There’s no way the entire corporation could switch to NetSuite, which is why the new program offers NetSuite-to-SAP connectors for enterprise reporting.
Would these divisions not be better off with a comparable SaaS offering from SAP themselves? Most likely … and there is one, albeit not highly visible. the Business ByNetSuite name is clearly a play on SAP’s very own Business ByDesign, introduced with great fanfare a year ago.
I’ve seen demos of SAP’s system, and am convinced it is the most functionally complete on-demand enterprise system available anywhere, and @ $149/user it is reasonably priced. After some initial doubt most analysts seem to agree the product has strong feature-set, but they also all point to potential execution problems, as well as SAP’s positioning dilemma.
Business ByDesign is clearly meant for the SMB / SME market, but even there it is facing off with two other SAP offerings: Business One and Business All-in-One. Confusing? Sure it is, even for customers. There functional limitations and BYD is clearly not a sufficient system for a large corporation, but within the SMB range it could very well serve customers SAP would rather see in the other “buckets” for its B1 and A1 products. SAP’s insistence on the strict segmentation is largely myopic: it assumes a SAP-centric world with loyal customers: but they have choices, including NetSuite.
SAP is clearly facing the dilemma of trying to get on the SaaS train while at the same time not cannibalizing their existing on-premise software market. In fact it isn’t simply a SaaS vs. on-premise game, BYD brings in new technology some of which has not yet made it to the main SAP Business Suite. But the best technology and feature set is not enough, it needs clear direction, marketing and sales execution. Announcements around SAP BYD’s delay, then counter-announcements that it’s not a delay, just “reduced acceleration in marketing”, the conflicting then all-but-disappearing messages from SAP at their major conferences certainly don’t help.
SAP has an excellent but poorly-positioned product that is hard to get: that’s an open invitation to competitors like NetSuite, and NetSuite is clearly smart to take advantage of SAP’s blunder.
Last week I was at the SAP TechEd Berlin and in all the press conferences/presentations there was no mention of Business By Design. During the press conference with Leo Apotheker the Co-CEO of SAP when a reporter asked about BBD he referred back to their announcements in June.
As I walked the exhibition hall however, I came across a pod demonstrating an enhancement developed on SAP along with partner Autodesk to integrate changes in the BOM of an engineering design with the data in Business ByDesign.
Given this background I started looking around the web for announcements related to BBD. Below are a few I came across:
Partners Enrich the solution (Oct 21st 2008)
Automatic Data Processing, Inc. (ADP), Roseland, New Jersey, provides integration between its payroll services and the human resources functions within SAP Business ByDesign. Customers using integrated payroll services with ADP retain control over and visibility into its employee-driven business processes while enjoying all the benefits of outsourced payroll. ADP was the first company to commit to SAP Business ByDesign as a complementary content provider
CB.Net, London, United Kingdom, provides SAP Business ByDesign customers with a continuously updated payment reference data service in order to give accurate and critical data necessary for validation and verification of payment information. By using this service, businesses will be able to more easily and accurately check payment co-ordinates, as well as reduce risks and costs in the payment initiation processes.
Crossgate AG, Starnberg, Germany, offers a B2B collaboration service via its global business-ready network that enables customers to electronically exchange business data, such as purchase orders or invoices, with partners independently from document standards, channels or protocols used in the process.
Vertex, Inc., Berwyn, Pennsylvania, delivers automated U.S. sales and use tax processing, aiding customers in their business tax management and compliance. Customers using Vertex® Tax Service will automatically be updated with sales and use tax rates and regulations across all taxing jurisdiction in the United States.
Another Client (June 18th 2008)
Early Partner (March 2008) - Rest of the WorldPerformance management software solutions provider OutPerformance, formerly Maxager, chose SAP® Business ByDesign™, the leading integrated on-demand solution for rapidly growing midsize companies, to support its escalating growth.
After expanding beyond the company’s existing systems capabilities – including solutions from QuickBooks, salesforce.com and additional niche applications – OutPerformance chose to implement SAP Business ByDesign with the goal of installing an end-to-end, integrated system to ensure scalability and complete visibility into all lines of the business. OutPerformance selected SAP Business ByDesign because it is cost effective, easy to use and highly intuitive.
SAP Business ByDesign “early partners” across the initial geographic rollout regions include:
China - 5 Partners
France - 5 Partners
Germany - 8 Partners
United Kingdom - 3 Partners
(Strangely none mentioned for India , which is the 6th country in which it is to be launched)
United States -12 Partners
With all this growing buzz about cloud computing / SaaS, it's really strange that SAP is being so quiet about their offering. Of course there are a lot of conspiracy theories like:
Whatever the reason it will be interesting to see how SAP will take this forward.
Just about every few month we get a high-profile case of someone getting shut out of their Gmail and other Google services. Google is notorious for freezing accounts without a warning, often in the users defence, i.e. when they detect probability of hacking.
When you’re Loren Baker, Editor of Search Engine Journal and blog about your lockout experience, you can guess your issue will soon be resolved.
In Loren’s case it took 15 hours to get his access restored, and I don’t even want to think how long it would take for less prominent users get their account issues fixed.
There are a few things we can all learn from Loren’s case.
If you’re a free user, all you can do is send emails, fill out an online form, then hope. Wait. Often days, not 15 hours. In business this hurts:
Since Google has decided to take my account away from me, the nucleus of our company communications has been taken away and now is replaced by a black hole. My small business communications are now ruined until my account is reestablished.
Is $50/year for piece of mind and access to phone support too much? That’s the cost of upgrading to Premier Service. I admit I am a free user too – we don’t appreciate the value of immediate phone support until trouble hits.
Yes, I realize not having to deal with backups is a main argument for On-Demand services in the first place, but there are ways of doing it painlessly. If you want offline backup, just use an IMAP-client, like Thunderbird. I don’t – even that’s too much hassle for my laziness.
I have several layers of automated online backups though. The first is within Gmail, where I have an archival account – one that I don’t ever use directly. All it does is collect everything from my other Gmail accounts via POP. Yes, I can hear you – how secure is backing up from Google to Google? Most of the trouble we’re hearing about is account-related, it’s extremely unlikely that Google as a whole would get hit – other than temporary outages.
But I do have another backup, outside Google – the recently announced Mail service from Zoho, sponsors of this blog. I have my business Gmail accounts POP-ed into Zoho Mail, which, due to partly the way Gmail stores information and the filtering abilities in Zoho Mail is always in perfect sync with Gmail: even Sent Mail gets in the right place (typically a problem with POP) and I have all the auto-labels replicated from Gmail. It does not matter which service I use to send mail, it shows up in the right place on the other one.
How about backing up Google Docs? There are a number of ways: Zoho has a process for periodic batch import from Google Docs, but if you want an elegant, fully automated solution, you may just use Syncplicity ( my review here).
I can’t fathom why in the age of $6 domains anyone would use generic user@gmail.com type email. It’s Branding 101, use your own domain. You don’t have to be a paid premium uses to do this! Other then the obvious branding reason, using your own domain may help in case of technical trouble, too. Loren complains:
Furthermore, my clients all contact me via email addresses associated with my Google Account. Now, when these clients attempt to contact me, or send over time sensitive documents or reports, these emails are now send to a voided account, and now, since Google has decided to block my Google Account, GMail is now serving this negative message to my clients and business associates :
“Technical details of permanent failure: Account disabled”
Thank you Google, you have shone a most negative light on my business with my clients.
You must be able to reclaim your email address in case of failures like this, and the only way to do it if it’s independent of the mail service provider. Use your own domain and you can always re-route it to a backup provider within hours (may take a day for full DNS propagation). Then once you’re satisfied your primary service is back, re-route it again.
Summing it all up: we have come to appreciate the convenience of online services, and are often dependent on them. If you are VERY dependent (i.e. business), don’t be lazy, take a few precautions to avoid disruption.
It looks like I may have started ( actually, just re-started) a trend discussing How Software Can Be Resilient to Recession.
Sramana Mitra @ Forbes talks about 'SaaS-ing'
Back At The Economy:Sramana focuses largely on the SMB space, while my argument for the SaaS
model's resilience was more enterprise-y: Some of the robustness of SaaS companies comes from the fact that the sector
caters heavily to small businesses. This is because their customer base is more
spread out and not as concentrated as the large enterprise technology vendors,
especially those with heavy exposure to the financial sector. "It is not a
pyramid, it is a thumbtack; it is all at the bottom," says PayCycle CEO Jim
Heeger. "That is where the action is because there are so many companies to deal
with down there."
The secret is the business model: pay-as-you-go. SaaS offers lower risk to enter, no initial cash layout, the subscription fees come out of OPEX vs. CAPEX, and is often approved by the User, not the mysterious Economic Buyer. The barrier of entry is much lower: once you’re in, it’s up to you to grow.
In fact I suspect the looming downturn will accelerate the structural changes in the software industry: SaaS players will thrive, traditional on-premise vendors will shrink, many will disappear.
Fellow Enterprise Irregular Ismael Ghalimi makes a very similar point, and his not as hesitant as I was using the "Big R" word (emphasis mine):
Since we’re now officially in a recession, it’s time for everyone to revisit their plans. Some will gain, but most will lose, and some to be really affected by the downturn are enterprise software vendors selling expensive perpetual licenses for their products. The problem will get even worse for those selling expensive BPM software that can only be deployed by expensive consultants on the vendors’ payrolls.
With the recession coming, IT budgets will be cut, and only the most critical projects are likely to be funded. Projects that require expensive software to be acquired and expensive consultants to be paid will be canned. Vendors relying on such projects will go out of business, unless they find ways to significantly reduce costs internally.
Very well said. Ismael then uses the opportunity to make a cocky offer to his competitors:
Gutsy. But hey, who said anything about not being an aggressive marketer in
a Recession?So here is my offer to my competitors: get in touch with our Vice President
of Business Development (Robert Sepanloo, 650-596-1800), and ask him what it
would take for you to replace your aging process server by our own. We’ll price
it for a fraction of what you’re currently spending for maintaining yours, and
our engineers will help you in the migration. That way, your engineers will be
able to focus on your core application, which is the best thing you can do to
best serve your customers in times like these.
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