The importance of ecosystems

Ecosystems

If you work in the software industry, I am sure that you have heard people using the word “ecosystem”. A good example of an ecosystem is that of Microsoft that spans globally and has more than 500k partners of different types and with different focus. If you want to focus on Microsoft ecosystem, you have to divide it into sub-ecosystems as each of them have their own nuances.

EcosystemsThe included picture shows how a large Microsoft ecosystem can be divided into  sub-ecosystems and in this case a sub-community could be for example business intelligence professionals that work with Microsoft technology in different roles.  The community is built based on interest and maybe having a specific solution that fits into the sub-ecosystem or community.

My personal interest areas within Microsoft ecosystem is anything that has to do with collaboration solutions such as SharePoint. Another area of my interest is Microsoft Dynamics ecosystem, which represents both solutions in enterprise resource planning as well as customer relationship management. I have put huge amount of time in learning about solutions that are built on top of SharePoint and Dynamics CRM. Many new software vendors are building solutions that run natively in Office 365 environment such as award-winning Gradient that has built a native SharePoint scanning solution that works in Office 365. This solution (GScan Online) is a good example of new generation of solutions that you will see “popping up” in ecosystems such as Microsoft SharePoint.

A common mistake that I see many software vendors do is to not do their homework and really understand how an ecosystem works and understand the players within it. Software vendors typically skip the validation phase when setting their business model, assuming that the solution will be well perceived by the ecosystem.

Another common mistake is to not understand the competition. If there is competition, the software vendor has to understand how to position the solution so it won’t be “yet another of these”. Business intelligence is a good example of this. There are tens of different business intelligence vendors in Microsoft Dynamics ecosystem and when you try to differentiate them, they all use the same slogans and terms. How are the end users going to be able to differentiate what the differences are? I was able to see this myself in the latest Microsoft Convergence 2014 event in Atlanta. It was interesting to see and talk to vendors and see how the vendors positioned themselves. I am a true believer in competition but I am also a true believer in differentiation in the same way as you segment your market with your solution. When I run business modeling workshops, most of the focus is always on the value proposition and market segmentation. If you get them wrong, it really does not matter what you do as you will not reach the right audience and you will probably also fail building your solution to be appealing and valued by your customers.

 

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.

Cloud ISV: make sure you understand your ecosystem play – example of Intuit and Microsoft collaboration on software platforms to create a foundation for solution developers

I have written several times in my blogs about ecosystems and the role that ecosystems play. I recently run into an interesting article in the Redmond ChannelPartner with the header “Intuit Extends Cloud Pact with Microsoft”. As I am working with Microsoft ecosystem every single working day, I became interested what the article was all about. Intuit has been building a Partner Platform (IPP) that was reported by Mary-Jo Foley already back in January 2010. I am a longtime QuickBooks Online user so I have a pretty good picture of Intuit’s SaaS delivery model at least from 2003. I believe Intuit was one of the first software companies to introduce a full-blown accounting solution for the SMB market and my company still uses it every single day.

In January 2010 Jeffrey Schwartz reported that Microsoft and Intuit stroke a cloud pact for small business where Windows Azure would be the preferred PaaS platform for Intuit and Intuit App Center.  This value proposition is obviously good for ISVs that can build solutions to the waste QuickBooks ecosystem with integration not only to QuickBooks data but also between QuickBook applications.

The idea behind this Intuit Partner Platform (IPP) is to help developers to build and deploy SaaS applications that are integrated with QuickBooks data and also to give huge exposure for the ISV on the marketplace that Intuit provides for its partners. This marketplace (Intuit App Center) has thousands of applications that can be used with QuickBooks and other QuickBooks third-party solutions.

Let’s look closer to why Intuit and Microsoft need each other. I read an interesting blog entry from Phil Wainewright that includes very interesting remarks about software platform that happens to be the topic of my Ph.D. dissertation (Evaluation of a Product Platform Strategy for Analytical Application Software). The blog entry from Wainewright includes following picture:

 

You can read more about this topic and download Wainewright’s report “Redefining Software Platforms – How PaaS changes the game for ISVs) for Intuit” and this can be found by following this link.

When you review the picture above in more detail, you will find interesting and relevant information how Windows Azure and Intuit IPP platform play together. According to Wainewright, the conventional software platform capabilities are all about functional scope of the development platform whereby cloud platforms add three additional distinct elements according to Wainewright: Multi-tenancy, Cloud Reach and Service delivery capabilities.  The service delivery capabilities have to do with provisioning, pay-as-you-go pricing and billing, service monitoring etc. The multi-tenancy is typically not something that the PaaS platform provides automatically without the application developer building the multi-tenancy logic to the application. I still hear people saying that a legacy application that is migrated to the PaaS platform will automatically become multi-tenant. This is not true as each application has to be re-architected to take advantage of things such as scalability (application increases compute instances based on load).

The idea behind Intuit IPP platform according to Wainewrite is that Intuit has built service delivery capabilities that can be abstracted from the functional platform that is on the left hand side of the picture. The idea that Intuit had initially was to be able to provide support for any PaaS platform to be integrated to the IPP platform which I think is a good idea by not practical considering how fast the PaaS platforms are evolving and the amount of investments that are put into them.

One thing to remember is that all cloud platforms such as Windows Azure has already moved on the horizontal axis whereby the situation and clear cut separation between functional platform and service delivery capabilities is no longer that obvious. This also means that any Microsoft ISV that builds additional infrastructure elements to Windows Azure has to be carefully aligned with Microsoft product teams as there might be a danger to be irrelevant as some third-party functionality will be covered with the functional platform itself (PaaS platform) like Windows Azure. I have seen the same situation with some ISVs working with BizTalk extensions that suddenly have become part of BizTalk itself. Microsoft is very clear with its ISV partners that they should focus on vertical functionality or features that are unlikely to be part of the Microsoft platform in the short-term.

A new post from Jeffrey Schwartz on August 11th, 2011 explains how Intuit IPP and Microsoft Azure will be even more integrated as Intuit will drop its native development stack and instead “focus on the top of the stack to make data and services for developers a top priority” according to Schwartz. In reality this means that Intuit will invest heavily in Windows Azure SDK for IPP and make developing an app on Azure and integrating it to QuickBooks data and IPP’s go-to-market services easy and effective. Microsoft released some more information about this partnership in the Windows Azure blog. The two companies have launched a program for this called “Front Runner for Intuit Partner Program” that explains what the developers get by participating in the program. The site portrays three steps: Develop, Test and Market and there is a video that explains what it means.

So what should we learn from this blog entry? First of all, every development platform (PaaS etc.) will evolve and my recommendation for the ISV is to focus and invest on one that you think is here in the long run. I think this example from Intuit is a great example of a company that was initially in the race of competing in the PaaS space to some extent to conclude that the investments to keep the competition going is just too huge and this led to the conclusion to select Microsoft Azure as the foundation for IPP. Intuit will be much better off by focusing on building logic on-top of Windows Azure by participating in SDK development an ensuring that any solution specific development can be easily integrated into Windows Azure platform. Intuit will therefore focus on providing data and services for developers to use with Windows Azure PaaS platform.

Microsoft has been in the development tools and platform development since its foundation so they are much better off to do those kinds of massive investments. I think this is very smart from Intuit and this enables Intuit to have a scalable solution that developers can rely on even if the decision was not easy according to Liz Ngo from Microsoft. Alex Chriss (Director, Intuit Partner Platform) from Intuit explains this in his blog why Windows Azure is a good foundation for Intuit development. Also, Intuit provides a tremendous opportunity for ISVs like CoreConnext and Propelware report based on the blog from Liz Ngo.

Software ecosystem will continue to evolve and EVERY ISV has to figure out how its solutions will meld to be part of different sub-ecosystems. This will also require efficient and well-defined Application Programming Interfaces (API) from all parties to be able to create an integrated solution based on service oriented architecture (SOA).

Let me known if you know other good examples where software ecosystems mesh nicely with each other.

My personal post mortem of Microsoft Partner Worldwide Conference (WPC11) in Los Angeles 2011

This was my sixth Microsoft Worldwide Partner Conference (WPC) and probably the most useful and effective that I have experienced so far.  Be warned. This blog entry is pretty long, but it gave me an opportunity to reflect on the event and also reflect how my own behavior has changed during the past 6 WPCs that I have participated in.

WPC first weekend: Golf or Educational Sessions

The WPC usually starts on Sunday by a golf tournament or educational sessions. There are two different golf tournaments: Microsoft Invitational and IAMCP tournament. I participated this year in the former as I have done IAMCP many times before as part of my former leadership roles within IAMCP. The Microsoft invitational took place in the gorgeous Trump National Golf Course in Palos Verdes and I had the opportunity to both sponsor the event and also play with an amazing team consisting of one Microsoft executive and two gentlemen from a partner organization. The day was amazing, the weather collaborated with us and everybody was on a cheery mood. What a great start of the WPC week!

If you are participating in WPC first time, I would highly recommend you take some sessions on Sunday so you get some insights to Microsoft and its ecosystem.

Let me explain why I think this WPC was especially effective to me this year. I will start by framing the case so you can put it in historical perspective.

Historical background to my previous WPC events

My first WPC was in Minneapolis back in 2005 and I only had a few days to get ready to that event as I had mostly visited IBM PartnerWorld events for the past 10 years as leader of a business intelligence software vendor.  I did not have any exposure of what to expect in Minneapolis and I did not have any ideas what kind of behavioral patterns one would face during a WPC event. I do not think I was very effective during Minneapolis as everything was so new and I did not really know what to invest in from a time perspective. My recommendation is to learn from the ones that have experience and I have in fact done a few sessions with Microsoft subs to educate Microsoft partners that want to benefit from WPC.

Throughout the years I became more effective, even in Boston (2006) I did my homework before the conference and had some of idea what I could expect from the conference. The next WPC was held in Denver (2007) within the famous mile high environment and 2008 was time for the hot and steamy Houston Texas, my home state. I remember 2008 to be the first impactful WPC for my company TELLUS as that was the first time when Microsoft really also looked at us for working together on the field.

WPC 2009 was held in New Orleans and that year I was the Worldwide President for IAMCP and this meant that I was part of pre-planning team of WPC whereby the IAMCP leadership team visited the location. I was extremely happy that Microsoft put New Orleans on the map again even if people had fear about whether New Orleans was ready for WPC after the catastrophic hurricane Katharina that devastated New Orleans. I am glad Microsoft was bold and had courage to bring business back to New Orleans! I was honored to be one of the ambassadors that year to promote New Orleans as the place for WPC. The event (WPC09) was a huge success and Microsoft partners loved it gave New Orleans a chance to show that the town was back for conferences.

WPC returned to Washington D.C.  (2010) and I felt now that I had the experience and willpower to do what was needed to be done from a business perspective.  Lots of good things came from the conference that year. The Microsoft partner conference history for me has been an evolution and each year I have become more focused and targeted and this has brought new opportunities and also kept the overall experience very nice. Like in any business, focus and segmentation will bring success and that applies also to conferences such as Microsoft Worldwide Partner Conference.

Let me be clear, WPC is by far the  most important event in the year for my business as that is when our strategy gets aligned with the one from Microsoft and myself and my team will define the fall season (half year period) based on what we have heard during WPC keynotes. To be frank, we will already start the process pre-WPC as we have an idea where things are going based on the discussions with the Microsoft field teams. The actual WPC event gives us the confirmation that we are on the right track. I work with Microsoft field teams in different parts of the world and the final quarter of their financial year is not only trying to get good results for the ongoing fiscal year, but also to cement plans for the new upcoming fiscal year. One has to understand the business cycle to be able to align with it.

I have always emphasized in my educational sessions to Microsoft partners that one should divide conference execution into three steps: pre-conference, conference itself and then post-analysis. The pre-conference is where you will define your target partner group that you want to meet and you will approach them with a quality message, not with spamming. You will not have time to meet everybody of the 15k participants so you have to ensure that you selfishly select the ones that you want to meet. Once you have set your target, you connect with the target group by using WPC Connect tool to send a request for a meeting. Unfortunately, what you will find out before the conference is that people are not actively registering to the service which leaves you in the dark whether the meeting will take place or not. I had many that never responded and I also had no-shows. That is life and you just have to accept it. What I do not appreciate is the spamming from people that have not done any homework on what we do with the result of misuse of my time and efforts.

WPC is not just for partners, it is also a tremendous place to meet and greet Microsoft people who are there to figure out how to execute on the new financial year that starts first of July each year. If you did not know, 95 percent of Microsoft revenue comes from the partner ecosystem, whereby the importance of partners is huge and WPC is a good place to get the discussion/negotiation going.

The conference for me is about listening to keynotes and having meetings. If you participate WPC and party during the evenings, I would still highly recommend for you to get to the keynotes as that is where you can “smell and taste” from the key executives what is going to happen for the new fiscal year. Some people say that it can be read later from papers and blogs, but I think it is necessary to be there physically as it is the posture and the way things are said that makes a huge difference. This year, I did not have any time for anything else besides the meetings with Microsoft personnel and partners and based on my experience, I think this was also the most successful year for me as I was able to talk to most of the ones that I needed to. Some of the contacts did not have time to come to WPC Connect, so we agreed to meet at the session that they were driving and met after the session. And I am glad that I did as it also shows commitment from my side that I wanted to make an extra effort to accommodate the other person’s schedule.

If you are attending WPC for leisure, I would recommend you do it somewhere else as most of the participants are there for business. I already see some of the readers react negatively to this, but this is really where partner-to-partner connections take place and people want to create their business and pipeline for months to come. During the morning, you will listen to keynotes, during the day you will listen to sessions or have meetings with Microsoft and Microsoft partners and during the evening you party. Partying is in the DNA of WPC and you will have to live with it. I had probably 3 hours of sleep each night, made connections also in the party sessions. I admit that this year I did a couple of mistakes by selecting a venue that was not effective and impactful to us, but one can’t always look at the business but look at other factors as well.

My week started with an interesting panel discussion that was broadcasted live on the first WPC11 day (Monday) with the idea to discuss about the message from the keynote and what the cloud meant for partners. The panel was led by Kat Tillman from Microsoft and four panelists: Kelvin Kirby from Technology Associates International, R “Ray” Wang from Constellation Research (read his blog “A Software Insider’s Point of View”), Mary Jo Foley from ZDnet blog “All about Microsoft” and then myself representing Independent Software Vendors (ISVs) and System Integrators (Sis) and cloud transformation. The session was also recorded besides being broadcasted live. You should also check out a pretty interesting site that includes lots of good information from Microsoft community at large.

On the third day (Wednesday) I participated in a social media panel where I had the opportunity to speak about why it is important to understand social media and how that can be used to brand your company specifically if you are a small-business owner. The room was packed with people and I think the discussion was also very interesting with good questions coming from the audience.

My WPC week ended on Friday when I delivered a guest speech for Microsoft Public Sector Educational partners (GEPS @WPC) about Cloud Business Modeling. This was a nice addition to the already successful week at WPC and very happy that I did it.

The week had its toll on me. The weekend after WPC I spent mostly in bed recouping and I think that was a smart move as the week after WPC I have followed up with every contact I made which is part of the post-conference activity. How many contacts have you followed up since WPC? My point here is that it is a tremendous opportunity to be “different” and connect and thank you for the meeting/session that you have had with a person during WPC. You can make an impression of professional courtesy and that can lead to anything going forward.

My sincere suggestion for any Microsoft partner that attends WPC is to divide the conference execution in three phases: pre-conference, conference itself and post-conference.

Let me know if you agree with my approach and if you have another one, I would love to hear from it.

Live every day as if it were your last!

A couple of days ago, I learned that a business acquaintance in Finland had died last week. He was only 40 years old, and it is still hard to believe what has happened. This person was not only friendly, but he encouraged partner-to-partner (p2p) networking and was always willing to put an extra mile to help others. I understood that his illness took him in two months and that time he spent in a hospital. I met him first time in a networking event arranged by The Finnish Software Entrepreneurs Association (Suomen Ohjelmistoyrittäjät Ry) that I am a member of.

He still lives in social networking sites such as http://www.isvcommunity.com Linkedin.com, Plaxo.com and many others and this also brought up a question to me: How should I inform a network with hundreds of users and many of them connected to this friend? I have never run into such a situation and I am sure that his footprints will live in the Internet for long period of time as he was very active in the social networking and sharing information.

Remember to enjoy each day, cherish your family, forgive people that might have hurt you in one way or the other as it is not worth to keep your body in a state that is full of feelings that only make you feel bad.

Do you know how to partner in your business?

We talk about partnering in business, but do we really know what it means? Do we rely on our partner prospects? Do we give and not expect to get? Are we openly discussing of leads that we can be working on? These are unbelievably difficult question and tasks for most business-owners and entrepreneurs. Also, partnering means that you can expand your business outside your own country, which is anohter tremendous opportunity for business growth. Partnering leads to success and business growth and when we believe in partnering, everything is possible.

Focus, focus, focus is the key to success

One of the most difficult tasks that we business-owners have is to pick our battles. We see money everywhere and this leads to unfocused business and we do not get anything done. I have been guilty of this but work hard to remember it when I stretch myself too thin. Ask yourself the question how many times you have said to yourself: why I am spreading myself too thin? Focus and the results will come!