Velocity of Business Models

velocity of business models

velocity of business modelsIt is amazing to see how the velocity of business models is changing the entire cloud landscape. I read  an InformationWeek article this morning about Gartner’s Magic Quadrant 2014 for cloud, its winners and losers and how for example Rackspace business model has change drastically the past year or so. Rackspace used to be the poster child in hosting and providing high value services, but now they are forced to look for new market segments besides the more traditional developer market that they have been aiming mostly according to the InformationWeek article.

The price decrease from larger players such as Microsoft, Amazon and many others have forced Rackspace’s of this world to look at their business model and try to figure out what to do to survive in the ever increasing competition.  It is not easy, no question about it. What is interesting to me at least from a research perspective is the speed of change that has definitely increased during the past years in software and IT business. If you look at service providers that used to manage internal IT infrastructure environments are now feeling the pressure of enterprises moving to the public cloud, whereby the service provider has to reinvent the business model as well.

Rackspace is not the only one that is feeling the pressure. According to the InformationWeek article, Dimension Data was in the Challenger Quadrant last year and has now been dropped to the Niche Player quadrant in the same way as Rackspace. WMware is listed as a Niche player this year, but Gartner cautions that they are offering services to managers that are responsible for virtualization and these managers are different from the business managers that want to build next generation solutions and these are typically the ones that will use public cloud such as Microsoft Azure. This is exactly what I have seen myself when working with both software vendors and enterprises. Enterprises especially were slow to move to Microsoft Azure, but that has really accelerated and even Gartner has noticed the rise of Microsoft Azure market share. This was also reported by Redmondmag where there are only two leaders in the Magic Quadrant, Amazon Web Services. and Microsoft. What is interesting in the new Magic Quadrant is that there are no challengers at all in the quadrant.

I think specialization is really what organizations such as Rackspace needs to do. All of my web-sites are based on WordPress and I have selected a hosting provider that is specialized in providing WordPress hosting only. WP Engine does WordPress only hosting and their site says exactly what I wanted “Hassle-Free WordPress Hosting“. What this means in real life is that they know WordPress inside out, they apply all of the WordPress fixes and monitor the security, take backups etc. Yes, all of this would be able to do on Microsoft Azure, but I would have to do it myself, but I am not in that business. I much rather have a premium hosting provider that I know is not all over the map and based on my experience, they really know what they are doing. I am running a solution on Microsoft Azure that integrates our Dynamics CRM 2013 Online and SharePoint 2013 Online and I will post another blog entry about this exciting integration case.

What is it that we should learn from this blog entry? The first learning is that nothing stays the same, even if you are a market leader or perceived as market leader. The second learning is that the change has definitely accelerated and this is causing bloodshed for the ones that have been resisting the change. The third and maybe the most positive thing is that the change is also creating new opportunities for entrepreneurs that identify gaps in the current offerings. We need to remember that business will continue, but maybe with new players. That is the name of the game.

photo by: jpctalbot

The fear of becoming irrelevant in your career and how to avoid it

32-p1I have a confession to make. I have had a fear my entire working career that there will be a day when my skills would not be needed or the space that I am working in would become irrelevant. Let’s call it “fear of becoming a paper pusher”. There are many paper pushers in the world and I am sure you know quite a few of them…

I want to explain in this blog entry how I have managed this fear during my career and what kind of choices I have made to maintain my relevancy. I believe in continuous and lifetime learning and this is the best recipe of keeping the excitement in your career choices and life overall. We spend most of our life working so we might as well choose things that we are passionate about.

I think that is one of the main reasons why I wanted to have my first degree in accounting was based on the feel that accounting was practical and there would be a need for accountants as long as there were companies…. and if you think about it, that is really the case. An accountant is typically the last person to exit the building as assets and other things around a bankruptcy has to be sorted out. I believe it was one of the smartest moves I did in my life. Not only did I learn accounting, but I also got to understand how a company really works from an income statement and balance sheet perspective. I have also been able to coach people in my teams of the accounting foundations and it is so fun to see when a person understands the connection between balance sheet and income statement….

Accounting wasn’t where I ended, computers and software took over and this happened in a class with my dear friend Stefan Westerbladh that was already a nerd when I had my first experiences in computers. I did get my degree in accounting, but with a twist in management information systems (MIS) and I eventually ended up working for an ERP company running software development teams. I got so intrigued in software that I even ended up defending a doctoral dissertation in software platforms and software product line engineering….. This was a run that still keeps me smiling as all of the experiences (good and bad) will never go away from my memories…

I read an article today in Harvard Business Review that made me to reflect my career and the path that I have taken. The article itself was about innovation and how to invest in people, but what struck me strongly was the statement that organizations have to ensure that its people are current in the domain that they are working in. The other very strong statement in the article is that the pace with which things are moving in today’s world, people and their skills are rapidly becoming obsolete unless the company really puts time an effort to it. IDC  Cushing Anderson states that “Knowledge leak is the degradation of skills over time, and it… can kill organizational performance in as little as couple of years”. Read that statement a couple of times, reflect on it and answer the question: are your skills relevant and does somebody want to pay for your skills? If you reflect further on the topic of this article and the fear factor, each one of us have to maintain a skill set that keeps us employable and relevant. This is especially true the older you get, as your life experience can be well respected, but if you can’t deliver anything, then what is the use of that skill set?

What have I done in my career to keep myself relevant (at least tried my best)? I have kept studying topics that I would assume to be relevant not only today, but also in the future. The person that taught me to think about this was my own professor in Information System Science. He asked me once whether I wanted my dissertation to be relevant for more than a year….. I understood the point… I also understood that my objective has to be to be a bit ahead everybody else in whatever I do. I also have to have focus in what I do as generalists are typically not good in anything and there are many generalists in the world. When the going gets tough, that is when people with specific skills are needed and it does not matter what it is… sales, product development, support, pre-sales… whatever make sense for you and what you are passionate about. My son just started his university studies two months ago and I told him that he needs to follow his own passion and not look at what I have done or anybody else that he knows. He needs to pick the subjects and topics that he will be living with during his career. Many parents force-feed their kids with things and I have never really understood this. I never selected my school based on my parents’ wishes, I made my own selections based on where my passions where and this still holds true today. I am responsible for my selections and this is the only way to really survive in the ever changing world.

Running an entrepreneurial company can be sometimes very hard and frightening. When I interview people and explain it what it really means, it is clear to me that many do not get it. If you have received your paycheck your entire life, you have not had to worry about how to generate the money for the paycheck. Some do not understand that the paycheck does not come easily, each and every penny has to be earned and there is not such a thing as “free lunch”.

I have now supported my family for more than 15 years in a market where I am not a native and I have to say that there have been days when it has been a bit scary. Looking back, we have had an amazing run so far and what has really kept us afloat has been my motto that I have kept since I started my career: whatever you do, you have to aim to become the best in the world. I do not accept anything else. This is not arrogance, this is pure attitude that one has to have to be able to survive in the largest economy in the world which is also the most competitive in many sectors.

I was smiling for myself the other day when I got a note in Facebook where somebody was wondering why I tested Visual Studio 2013 RC with SharePoint 2013…. especially as we are specialized in business modeling and helping organizations to grow their business. My point in putting time in this kind of testing is to be able to talk to whomever in the company that I am working with of the foundations of technologies that they are using. I want to be able to talk to any person in the company whether it is CTO, CMO, COO, CEO of the business and the technology and the only way to do this is to keep focus where you want to shine. I spent huge amount of time in specific areas where I want to be the best in the world. I want to be the person that knows everything about app and cloud business combined with software innovation and solutions of the future.

If you are a person that have just started your career, there will be a day when you have to make a decision whether you want to become really good at a specific topic. Once you get to the point where you master it, then it is time to take the next leap of faith and learn something new. Arrogance in thinking that you know everything is the first step in your upcoming failure. I have seen quite a few of these during my career and feel sad about it as these are all good people, but they did not maintain their skills and employability during the career.

 

The art of staying focused and saying NO

Are you ready???One of the toughest things in my entrepreneurial journey is to stay focused. I see so many opportunities in the world where one can make money, but each one of these opportunities will take its due course of effort (sweat and tears).

My career started in international software product development of packaged software solutions in the business intelligence/data warehousing/budgeting/planning space and first part of my career I was completely focused on being evangelist for our solutions and speaking in different forums about these topics. When I became CEO for the software vendor and its US subsidiary, I was initially lost as I did not understand the power of focus, I was selling to any vertical, any market as long as somebody was interested. That did not work well with limited resources (we were self-funded). I tried to be everything to everybody and not many organizations can do that even if there is plenty of many.

One day, my sales director in the company and I decided to put focus on what we are doing and decided to sell into a specific vertical and not long after that we became market leaders in the sector and then were able to have an exit by selling the company to a large publicly traded company. What was funny though is that the solution was still based on same code-base, it was just the fact that we decided to have focus in what we are doing when the results started to come in. It was not easy and YES, we did sell to others by my sales director focused mostly on this given vertical and built a nice pipeline for it.

What is the moral of my story? You have to be able to say NO every now and then and even if it hurts, it is the right thing to do. When you stay focused, you will eventually achieve better results, even if it takes a bit more time. I have now experienced it so many times that I have to believe that is the right approach.

I had the same thing happen to me again (I guess I forgot about this experience) year-and-a-half ago and did a change in direction and have got amazing results due to this. I do not want to do things that do not provide value or add value to what we are doing. Life is tool short to go outside the focus areas as it is almost like a double penalty: you spend time on things you should not spend on and secondly it could be a huge opportunity cost that could take away things from you due to the lack of focus.

What is amazing to me is that we tend to forget about our mistakes and make them all over. The second thing is that we seem not to stop to think about our strategy and direction until it is too late and then we will have to pay for that in one way or the other.

I wanted to share this story today as I had to say no to something that would have been fun, entertaining and given visibility but the target group and the efforts to make that group happy would just have taken too much away from my core that I want to be honing further.

Partner or die – that is the question for you to ask

I run into an excellent blog by Bill McComb, CEO of Fifth & Pacific Companies, Inc. The blog gives examples of failed enterprises that did not understand when to partner and examples where it has worked tremendously well. One very well-known example is Barnes & Noble’s failed strategy in its eBook reader business where it should have partnered with an established hardware vendor to create an eBook reader, but ended up creating Nook that failed drastically. Another well-known example is BlackBerry’s failed attempt to revitalize the BlackBerry platform by introducing a new music service…  I still remember that moment (as a BlackBerry use at the time, now a happy Nokia Windows 8 Phone user) and thought for myself: “why on earth would you do that and there is no way I am going to sign for that”. Even if Mr. McComb is not from  the software industry, the same rules apply well to that as well. I have a passion for partnering and always have.. so this blog entry from Mr. McComb made me smile.

I have had the opportunity to work with and within an amazing non-profit organization International Association of Microsoft Channel Partners (IAMCP), first as President for Dallas-Fort Worth chapter and then eventually global President for the organization. During my tenure with the organization, I also had the pleasure to work with IDC (led by Darren Bibby from IDC) to measure the impact of partnering and the results confirmed that the organizations that partner, will have higher profitability than the ones that don’t. A new study (third one for IAMCP) released during Microsoft Worldwide Partner Conference (WPC13) in Houston, confirmed that this really is the case. You can also download from WPC web-site IDC’s study of successful cloud partners and what it really is that makes them successful. It is a good read for sure!

The latest study done by IDC of IAMCP members show that 25.1 of partners (of the top quartile) had 30% or more of their revenue related to Partner-to-Partner (P-2-P) deals. This is a very telling story why partnering matters and why leadership teams at ISVs and SIs should care about this. I am also tremendously excited about the Managed Service Provider (MSP) space as I did a study of the US markets during spring-summer 2012 to really get an understanding how MSPs drive their business, what their pain-points are and where the revenue earning opportunities are. In the same vein, I looked at distributors and large account resellers (LARs) and to my big surprise, there was lots of investment done in building a cloud business and partnering with ISVs. I think the distributor and LAR business will have interesting and exciting times as they really have to identify their role in the overall ecosystem going forward.

The objective of this blog post was to highlight that partnering does carry results with the right attitude and approach. In future posts, I will also give examples of failed and successful partnering models for both ISVs and SIs as I think it is important for each leader to recognized if he or she has the partnering in the DNA… if not, then partnering might not be something to consider. There is no need to waste time on either side. I have many cases of this as well that I have seen and experienced.

Aligning your business with your ecosystem

Your business is always part of an ecosystem. So is mine. I am completely aligned with Microsoft business cycle that starts 1st of July and ends last of June. Therefore Microsoft Worldwide Partner Conference (WPC) is the most important event for me and my TELLUS team. Why? Because during WPC I will get the first hunch of the direction that Microsoft is taking for the new fiscal year. This year, it will be all about devices and services (with lots of measure around this) and I have to align my services to reflect this direction. What it means in practice is that all our offers have to reflect and build upon devices and services for us to be able to help both Microsoft and Microsoft partners to align themselves with these objectives. If I continue stubbornly to message the “old fiscal year” objectives that do not reflect what the field needs to do, then please do not expect to have much support from your ecosystem, because they are not incentivized to care about that anymore. It might seem shortsighted (which it is many times), but that is they way it is with businesses today. Everybody has to cut their checks and to be able to do that, one has to look at where the money is coming from.

During the years, I have become pretty brutal in focus when it comes to my own business. I have see too many examples of entrepreneurs that are “all over the map” trying to do different things, but really not doing anything well. I do not want to be in that boat. Have I made mistakes? Sure, and lots of them. As an entrepreneur, I see money all of the place and it is one of the hardest things for me to look away from these opportunities especially if they do not contribute anything to the TELLUS “platform”. If these is value add to the platform, then I am willing to invest time in checking it out, but if it is not, then I have to walk away.

Do you have a focus in your business? If you are an SI, do you spread yourself too thin to too many things and then your team is perplexed as they seem not to know anything really well. If you are an ISV, do you have a focus in a vertical or functional area and become world known for it? If not, you need to revisit your plan as being “too many things to all is like not being anything to anybody”. I have witnessed this so many times that it is not even funny anymore. I suggest you run a small exercise using Business Model Canvas to see if your business makes sense.

What I would like you to do is to really contemplate who well you know your ecosystem and the internal working of it and if the answer is: “I really do not”, then you might want to consider doing something about it. Also, if you work within Microsoft ecosystem, you might want to segment it into smaller segments as there are more than 600k Microsoft partner to work with.

 

Keep it simple stupid! Building solutions that people want to use.

I wrote yesterday about the need to read manuals, and today I wanted to talk about the need to build simple and elegant solutions. My popular example is from my own life when I used to run a business intelligence software product development team and we did lots of exciting innovation, but some of this was really for rocket scientists only. We were building a rocket to take off from Houston to moon, while the end user was ok taking a car from Trophy Club to downtown Dallas (30 minute ride).

Yesterday, I got some tweets back about whether a software solution should be so intuitive that there should not be a need for a manual. In some cases this is true, but if you are using a complex engineering product, the case is definitely not about the UI or usability. Some products just have been built along the years with huge amount of features and functions and it is just not possible to explore these features without somebody guiding you, whether it is a video or a manual. I tend to learn more from online video presentations that are more “to-the-point” and will guide you through the process.

In my workshops I remind people that they should not be building solutions for themselves, especially if they have been around for a while (like myself). They should be building for the new  generation of users that are born with Internet and mobility. This generation assume expect Internet and mobility to be there and this generation does not really care about where the data resides… as long as they have access to it.  My daughter Daniela is a good example of the new generation. She would not tolerate an app that “she does not get” and that is not fun to use. That is by the way a common trend among teenagers of today. Try to get them to use a solution that is built 10 years ago with agonizing screens, multiple steps to get the task done. You can’t force these youngsters to use these kind of systems and therefore I believe many mature software organizations are really struggling to create something that is user friendly. One way to do this is by acquisitions as we have all seen happening this year.

One typical approach for the mature ISVs is not to re-create the current solution, but to identify the Minimum Value Product (MVP) that will match the new market entrants and this gives the potential for the mature ISV to get into the game and then add new functional layers on top of the platform itself. When I recognized this, my mind went back to my doctoral dissertation where I was optimized a software product platform for an analytical application software and how this could be used as part of your software product line engineering. Have you look at your software product development strategy from MVP perspective or are you trying to “cloud enable” your existing solution? If not, you should really think through how your transition to cloud and app world will look like especially if you have an existing on premise solution that could eventually become obsolete. These are strong words, but this is what I am seeing out there.

Software vendor: Have you even had the problem of discontinuing a software solution?

There has been an outcry the last few days due to the decision of Google to drop its Google Reader application. Jim Aley concludes in his article that life will continue even without Google Reader, but it is painful to a lot of people that have relied on the service. Google has announced that Google Reader will not be available after July 1, 2013. Reading this annoucement, I reflected a bit on what I have seen during my career in respect to discontinued software solutions and issues around that decision.

What Google did is something that we all have probably run into in some shape or form. I used to run software product development teams earlier in my career and have had to “kill” products due to different reasons; some of them being based on economics and some of them purely on the change in competition and changes in strategy. I have also been consulting software companies that have killed products along the way because they company has had to change direction of their strategy.

When I see companies grown their operations, I have also seen a tendency to increase the complexity of the solution portfolio which typically leads to complexity in the entire operations. Suddenly your operation has become more complex from support and delivery perspective, your channel partners do not understand what you are trying to accomplish and your sales is scratching its head to figure out how to position the solution as there are so many moving parts.

Looking back at my career, I can say that I am guilty of this as well so I have experienced it first hand and have had to do difficult decisions along the way. Just the fact that the software vendor has to inform the customer that something that they use on a daily basis does not get enhanced anymore can be very difficult to message to a customer. How do you inform this kind of decision to an end user customer without getting a blooded nose?

When I select software solutions, I typically also consider the strength of the software vendor whether I will be investing my resources and future into it. There has been a few times during my career when I have “seen the signs” of weakening of a software vendor and then made a decision to transform my operations to something else. I am sure this will be the case also in the future. This is extremely true specifically in the cloud space as the investment to start a cloud business is almost zero (if not considering the labor) from infrastructure perspective so anybody can now come with an idea but for the business to be sustainable, it is another story altogether.

What do we learn from the Google Reader case? In my opinion, we can easily say that even large companies with loads of money will make decisions that can hurt the client base even if it is a non-paid solution. Secondly, I think we need to learn to understand that nothing exists for ever and if you select a solution for your operation, you better analyze the vendor first to see if they are for real or just a hobbyist organization.

A Case Study – Creating a VAR Development Program

This blog entry continues on my first blog entry where I concluded that the channel does not work for the ISV, it is the ISV that has to ensure that the channel has the tools to become successful with the solution itself.

In my second blog entry I highlighted a case study of a successful ISV that was able to grow its business by doing the channel development by identifying an impactful approach where the VAR channel felt that it was a win-win situation for both sides.

In this blog entry I am high lightening the VAR development program (Phase 1) that SolidWorks created for its channel and as I stated in my previous blog, this program was almost like a mini-MBA where the ISV wanted to facilitate and help its VAR channel to run its business more effectively. The program that David Skok highlights in his blog entry as phase 1 of the development program is divided into two main areas: Business Management and Sales Management.

VAR Channel Program-001

From the picture above, the channel assessment was reviewed from these two perspectives and each of these perspectives are divided into smaller components that have relevance specifically when running a VAR business.

Cash is king as they say and I have also experienced this as an entrepreneur. What ISVs tend to forget is that somebody has to fund the activity to build the funnel of the solution that the ISV wants to sell. So lets review the typical steps that we expect to happen when an ISV signs up new channel partner:

  • The ISV wants to ramp up the activities immediately once the deal is signed, which means that VAR technical and sales team needs to be trained and educated of the intransiences of the product and learn how to take objections from the target prospect market segment.
  • The ISV expect the VAR channel marketing team to dedicate resources to start building the funnel and sometimes forgetting that there are other products that they might have in their portfolio.
  • The ISV Channel Account Manager puts effort in getting things going as he/she is the one that will have the pressure of getting first deals going and to ensure that he/she meets the budget.

With all of the effort that has been put into the joint effort, the VAR finally signs its first deal and now everybody can be happy. On top of this, the deal is very sizable and this makes the VAR a bit nervous as there are some financial risks that it now has to carry as it carries the paper with the end user organization.

The project starts, everybody is working hard on getting the client happy but sudden and unexpected issues comes up in the implementation. The customer tells the VAR that it is unacceptable and they will not pay until the software has been fixed. The VAR tells the customer that they do not have the means to fix it as it is the ISV that carries that responsibility. The customer tells the VAR that that is not their problem, the responsibility is with the VAR as that is whom they bought the solution from.

As the invoicing relationship of the solution delivery is between the VAR and the end user organization, the VAR runs into issues as an invoice has already been issued from the ISV and they want to get paid.  This puts the VAR management to sweat and now they really understand the consequences of this and need to do something about it.  The ISV wants to get paid, but the channel partner has not got paid yet. Worse than this, the software included bugs that the VAR can’t do anything about and has to wait for a fix. The ISV still wants to get paid, no matter what as its view is that this issue has nothing to do with them. I am sure you get the scoop of the vicious circle.

If the ISV is reasonable, they will work with the VAR and the end user customer to get it right, but unfortunately I have seen cases where the VAR has really run into a wall. I can’t imagine how that feels as I run my own business every day and have to consider risks and rewards when conducting the business. In large organizations with huge cash piles, this might not be a problem, but for the majority of ISVs, SIs and MSPs, this could be a huge issue.

The scenario above describes some of the areas where the VAR has to pay special attention when running its business. The number one in business management side is cash flow and how to manage it when dealing with ISVs and purchase management overall. I have run companies with high growth and one of the most pressing issue seems always be cash flow. People want growth, but with growth you need cash flow. Sales in your books does not mean that you have money in your bank account. Having lots of receivables might feel good, but you can’t feed your family with receivables.

The second area is “Sales Capacity” where typically small VARs become the victims of their own success. Skok concludes that a typical successful VAR is where the business owner is number one in sales, but one person does not scale up to grow the company. There needs to be more than one to scale the business. If the owner becomes the gatekeeper, then that becomes the bottleneck for the growth for both the VAR and the ISV.  What a VAR needs is a strong sales manager that can scale the sales, follow and create processes and the owners should keep away from that (my observation).

Also, what is typically undervalued among VARs and ISVs is market research and what sales people tend to use as an excuse for poor sales is that the “market segment is saturated’. Good research includes information about market size, market share, historic customer growth rates and sales coverage etc..

According to Skok, one of the most difficult task that VARs are struggling with is the requitement. I can really believe this. The key for success is to build an interview process to identify the right candidates and even if you become good at this, you will still fail. I have.

What an ISV might see with its channel is that VARs are hiring new employees, but there are more leaving the company that coming in. So what will happen is that the VAR has new people that are learning “the ropes” and then the ones that have learned are leaving for different reasons. The VAR ends up having a situation where the skills don’t meet the demand of the market.

One key thing that is often ignored is to ensure that the employees have a good view of their professional development,  like sales people having strong  product training, presentation training, and  sales management training.

And finally, and probably one of the most difficult tasks: how to manage and review the pipeline that everybody presents to the management. How should the VAR and ISV ensure consistency in the pipeline? One of the key things for both ISV and VAR is to create a standardized view on the pipeline, not based on each and every sales persons personal definition which is typically biased to his/her own preferences.

The question is what kind of deliverables can an ISV and VAR expect from both Business and Sales Management exercise? The way Skok defines them is in following way:

VAR Channel Program-002

It is obvious that each one of these need to be worked on and each ISV will have to estimate how much to put effort into this exercise. Also, what something might work for one organization, could be very different for another.

The next phase of this case study I will discuss about the way that the case study ISV segmented and categorized its VARs and their ability to grow. Stay tuned for more.

The App Economy – How should we view app monetization?

The blogosphere is all about apps and how different ecosystems compete for the eyeballs of these and the money of course. You might still remember the the news when a far app pulled as much as $10,000/day in revenue but since then there is tens of similar applications on the marketplace. This started a trend where people left their well-paid jobs to chase their dream of creating apps and living a life without pressures. The growth of app economy is one of the most promising trends, but people/organizations that want to make real money of it, need to include some risk management into it as well. The app industry has become similar to film industry where relatively few people make money and the ones that make, are hugely successful like Angry Birds phenomenon from Finland.

One might of course ask oneself is whether this is a shift in our society and how work is performed. according to Erik Brynjolfsson (director of the M.I.T. Center of digital business), “technology is always destroying jobs and always creating jobs, but in recent years the destruction has been happening faster than the creation”. There is no question that technology is creating new jobs and apps can be part of this opportunity as can be seen in many of the reports that have studied this trend towards “app economy”.

What I have not seen many discussions around is how the app economy is linked with the enterprise software business. I have researched around this and identified the “dimensions” that are typically linked to the app business, but not that much is said how established software vendors should view this space and how these vendors can make a entry to the app space in a way that makes sense and where there is also a sustainable economical model.

So, the question that we should ask ourselves is how much of the app business is truly geared towards the consumer business and how much of this will gradually move into enterprise business? Should software vendors keep the app business in their plans when building enterprise solutions specifically using the cloud? If they should keep this in mind, what kind of pricing should the ISV use? Maybe free as the real money comes from the enterprise solution and not the app that accesses it? As you can see, it is not that clear and my own experience when working with both small and large enterprises, the app business hardly ever comes up in discussions. I am convinced that this will change and it will change very quickly. One of the drivers will be Windows 8 and Windows Phone 8 developers that will create solutions that will be based on app technology and not on traditional desktop app architectural model even if these will be able to run in Windows 8 Pro environment.

Another valid question that we need to ask ourselves is whether app economy should be see purely from mobile app development perspective or should we view it from a perspective where the device is just the means to get to what you want and the backend (typically the cloud) is the one that provides the services and brokers the interaction between different services. Shouldn’t we in fact be talking about services economy instead where organizations build apps to consume and combine information from different sources using different SOA interfaces that organizations/developers have exposed to the world. Isn’t this what we have always dreamt about?

NokiaExpressI downloaded today a Windows Phone 8 app (Nokia Xpress) to my shiny Nokia Lumia 920 and this app really demonstrates where things are going. After having installed the app, it asked me whether it can use location information (which most apps want to use), but what really made me to think about the future of apps is that developers really have to think “outside the box” on when developing apps. The thing with this Nokia Xpress app is that it enables users to store and read articles on your phone (locally) so when you travel, you do not have to use expensive data roaming. I know.. there are many of these apps from before, but what this app has specifically thought of is to really monitory and minimize data usage and provide a combination of technology such as Microsoft SkyDrive technology to store videos and images without having to use the data plan. Why is this relevant to me? Just this week, my son’s data plan was going over the limit and I found out that it was all about video streaming and 2 gig data plan does not cope well with this.

The topic of “app economy” is very interesting to me as researcher, but also as practitioner. A recent paper written by Dr. Michael Mandel and Judith Scherer (commission by CTIA (The Wireless Association) and Application Developers Alliance provides an interesting view on the app economy. According to Mandel, the entire “App Economy” was coming to use in early 2009 and was popularized by a cover story run by BusinessWeek in November 2009.

The way that Dr. Michael Mandel describes App Economy in his February 2012 report resonates well with what I have educated my customers in respect to ecosystems:

“ App Economy is a collection of interlocking innovative ecosystems”. Each ecosystem consists of a core company, which creates and maintains a platform and an app marketplace, plus a small and large companies that produce apps and/or mobile devices  for that platform. Businesses can belong to multiple ecosystems and usually do”.

There is no question in my mind that this topic is relevant to anybody that works in the software industry and it is fascinating to see how this evolves with time and what kind of new companies will rise to take advantage of this.

If you work in the Microsoft ecosystem, I highly encourage you to read the article “Microsoft’s cloud vision: Why Azure is the linchpin of the firm’s new devices and services strategy”. Another great article from Information-Management.com that predicts Enterprise Apps to go mobile big time and that money apps will move to the cloud. The article lists quite a few things that are very interesting and I encourage you to read that article as well.

Stay tuned for more, there will be more to come on my research on different topics and this app economy being one of them!

Cloud ISV: What technology will you be using when supporting different mobile and tablet devices?

I explained in my previous blog post that the cloud era is here to stay and with this new era, there are also quite a few technologies that the ISV has to select to build a solution. One key thing is to select the cloud platform but an increasingly important technology that the ISV has to evaluate is what development environment to use to support hundreds of different mobility devices, both smart phones as well as tablets.

When I look back not more than five years, the requirements for applications were much different that today when it comes to consuming information. Today, the end user expects to be able to use a smart phone and tablet to view/update information using a solution that typically is built on cloud technology. Flash used to be the main technology to build applications for the Internet browser, but with the decision that Steve Jobs and Apple did on Flash of not supporting Flash on Apple iPad, the success of Flash is doubtful in the future. Consumers do not care about technology, they care about having the ability to consume information and this is something that the technology industry forgets every now and then. If somebody has any doubts about this, just look at what is happening on the US markets and what has happened for example for RIM and BlackBerry market share on smartphones. It is brutal.

Back in 2010, there were quite a few articles of whether HTML5 will kill Flash. There are millions of Flash web sites whereby I do not think Flash will go away anytime soon, but the real question is whether the ISV should believe that Flash is going to survive going forward. My personal opinion is that I would not invest time and money to Flash anymore as we all know it is not going to support all of the relevant mobility interfaces and I do not think that for example RIMs approach by marketing its BlackBerry PlayBook to support Flash makes a difference in the large scheme of things. The question that each ISV needs to evaluate is what technology it expects to support from a long-term application development perspective.

We already know by now, that Flash will not survive in the long run and has already become a major limitation for many ISVs. When you really think about it, users have already won the battle by ignoring the Flash and showing this by buying iPads even if they know it won’t support Flash. Can you afford building sites and ignore the millions information consumers? I do not think so. Many entrepreneurs (me included) have made the decision not to allow any Flash technology  to be used on the web-site as most smart phones and tablets do not support Flash and Flash not optimized either from SEO and SEM perspective. Check your web site analytics/statistics and you will find out that smart phones and tablets are becoming more relevant in information consumption.

I believe that the next wave of innovation will be coming from software vendors that are able to combine the cloud and mobility in a way that helps end user organizations to become more effective and productive in whatever the application area happens to be. I read an interesting article “Building An Enterprise Software Company That Doesn’t Suck” where the author described how large enterprise software packages are losing the appeal from both end user organizations as well as users. People are sick and tired of complicated and hard-to-use software solutions that do not bring any value add to a user’s daily life. Organizations have forced users to use software to fulfill some type of compliance rule but I my bet is that with the new generation of users, this will change whether organizations want it or not. The new generation entering the marketplace is fluent mobility users, they use social networks as we used to use the regular phone and they would not care less about the corporate compliance stuff and based on research, they won’t even apply to organizations that are old-fashioned way of viewing the world.

Technology selections for an ISV business is always tricky and I have had to do this many time during my career and I have also had a few misses such as selecting an application development tool from Synon (acquired by CA) called Obsydian that never really took off in the marketplace and my developers were never really able to use it effectively. The same applies to the selection today in respect to mobility development. Can you afford making a mistake, spend money in development and then suddenly realize that something else should have been used. I do not think so.

I recently read an interesting article “Seven Reasons HTML5 is Killing Flash” with some interesting points of why HTML 5 could potentially kill flash. According to the article, there are more than 109 million mobile users with HTML-5 ready browsers, but by 2016 the estimate according to ABI Research is that there will be more than 2.1 billion mobile users with compatible browsers. According to ABI Research, there will be 25 key features that will make HTML 5 competitive and the seven that was picked in the article are as follows:

1)      Video Play: HTML5 includes a tag for videos that allows it to play with the start, stop, pause etc.

2)      Video Record: This will become even more important going forward as mobile phones have video recording and HTML5 will support this

3)      Audio Play/Record: Today, the user needs, Flash, QuickTime or Java to play or record audio, but with HTML5 it is just another tag.

4)      Apps: HTML5 allows Web pages to access the same routines that make browsers work and enables them to become like any application. I think this is one of the key things when you think about mobile application development using HTML5

5)      Rich 2D Graphics: All types of sophisticated two-dimensional graphics will be built into HTML5

6)      IM: Instant messaging will be built into HTML5 by virtue of Web sockets

7)      Real-time Streams: Web sockets will also allow any Web-page designer to easily add real-time data streams to the application.

HTML5 could become the best friend for the ISVs going forward as it will provide the broadest support from a device/browser perspective and when smart phones will get HTML5 compliant Internet browsers. HTML provides a better way to support multiple devices as is explained in the article “Enterprise App Stores Harness HTML5” by Colin Johnson.