Tag Archives: ISV

The 3 U’s of Business Technology

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I attended yesterday the annual customer event of Creativ Software, and was dazed to see Business Technology at the down-to-earth level.

Creativ is a small ISV with a big part of the Swiss market for non-profit organization management software. Their customers are non-nonsense people who do not care much about technology, and the nature of their business forces them to run a lean operation with a very compelling and personalized attention to their constituencies.

Yesterday, I witnessed some 100 such users express “wows” and “aha!” and wide smiles when the Creativ team showed them their new “OM V10” product. It was not about the visual design, which is great. It was about the small things that you wish every day were done with more insight into your work. It starts with context persistence across the board, and reaches as far as automated background updates of the contact addresses via third party services. All of that, of course, without having to install anything on your workstation or device…

You may ask at this point where Business Technology comes into this. In my view, that IS Business Technology. It is the intimate and extended use of technology that performs parts of the business. Creativ’s solution is a useful and usable part of the NPO business environment and it is also used – in personalized and fit for the purpose variations – not only by a few subject matter specialists but by the broad community of stakeholders.

How did Creativ achieve such a feat?

About two years ago, when I worked with Magic Software on the elaboration of
the uniPaaS RIA platform, I met with Andy Schwengeler – Creativ’s CEO – to get his reaction to Magic’s new offering. Andy was adamant about usability and architecture. He told me that he was willing to go as far as to redevelop his entire solution if he could achieve a rich user experience as well as the latest flashy and intuitive designs, with zero Client management (or in other words a Cloud based RIA architecture) and a SaaS capability. He finally chose to work with uniPaaS RIA and the Extreme Programming methodology, and brought into the loop one of his most demanding customers as a watchdog. I heard very little from him until a few weeks ago, when he surfaced and invited me to the event.

I had the opportunity to chat a bit with some of the developers and get their take about this achievement. What they said further confirmed the blurring of the distinction between business and technology. In fact, technological advancement further challenges solution vendors for line-of-business expertise.

So there are some things that stay the same even in this age of accelerating change. The well-known recipe for success is still a valid one. If you want to be a successful solution vendor, you must know the relevant business practices better than most of your target customers. Because in order to achieve Usefulness, Usability and Usage, you will have to deliver a solution that embeds and abstracts much of the particular processes and practices which are the fundamentals of their business.

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How to survive the dark side of Cloud Computing

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The last couple of weeks were rich with meetings and discussions about SOA, RIA and Cloud, in between the Forrester IT Forum in the US and the SOA Forum in Switzerland. What strikes me is the “lemming behavior” of a lot of software vendors who decorate their offering with Cloud and XaaS feathers, oblivious of the revenue precipice that aTransition to a Cloud related revenue modelwaits them right ahead.

I have touched upon this subject in my article on RIA and Cloud Computing Apps, as well as in a blog post last year (The coming out of the hybrid SaaS model). It’s ripe for an update.

What we have seen in the last couple of years is an increasing offer of Infrastructure As A Service (IaaS) providing quite elastic on-demand pricing, and an increasing number of software vendors using such infrastructure to offer Cloud hosted applications. The evolution of IaaS technologies facilitates the deployment of traditional on-premise applications over the Cloud, and tempts their vendors to slap on those “Cloud Feathers”. What seems to be put aside are the business model implications.

What the pure SaaS vendors (such as Salesforce.com) experience is a growing pressure of SaaS users towards more granular pricing – real pay per use and not only flat subscriptions. And sooner or later we will see this becoming more and more available. The consequence is a further reduction of software usage costs for customers, and by implication lower revenue per user for the vendor. Vendors will try to compensate by looking for cost reductions – both in developing and maintaining the software and in deploying it. So how can software vendors make money and increase shareholder value in such conditions? They would have to look for more productive and cost efficient software platforms, and implement new business models that tap into the entire ecosystem for shared revenue. And they should be prepared for a very tough transition, which might become fatal.

I recently came across a comment by a Magic Software shareholder that “the licensing model is difficult to understand and costly compared to other tools many of which do not even have licensing models. (this makes MGIC less attractive to potential new developers)”. What is perceived by the commentator as a limitation is in fact one of the bright spots which gives this company a much better position in the growing Cloud market. Magic software already creates most of its revenue using a shared revenue model – tapping into its ecosystem for shared revenues with its customers and partners. It gives the company a very robust outlook and resilience to the upcoming shift in the software business model.

I’m looking forward for your opinions.

The Extended Enterprise – from vision to reality with Rich Internet Application technology

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In the past year I wrote frequently about the manner in which enterprises approach Rich Internet Applications (RIA’s) and Cloud Architecture. I’m happy to see now tangible evidence of this. During the last couple of weeks I received several case descriptions of productive systems, and I’d like to share a couple of particularly interesting cases. For some reason, the more interesting stories come from the Netherlands – I did not figure out yet what’s behind this, but the first RIA example that I described in “More about Enterprise RIA in practice” also originated in that country.

The “Flower Shop” solution is an Enterprise RIA coming from a joint venture of Extendas (ISV specialising in eCommerce solutions) and Van Delft International (one of the leading suppliers of cut flowers in the Netherlands and award winning early adopter of mobile software technology). This application spans the entire supply chain from the FloraHolland exchange through the flower trader (such as Van Delft) to the flower shop. This is an Enterprise Class application, requiring a rich user interaction and transactional capability that is beyond browser based applications. Implemented with uniPaaS, the application is available simply via a URL and login credentials. It is presently being rolled out and is expected to be used by some 1500 flower shops, streamlining the short-lived flower trade, accelerating logistics and reducing overhead.

Another amazing customer of Magic Software is the VanDrie Group, the World’s largest veal producer. VanDrie already had a browser based application, VealVision, providing the full historical details about your piece of Schnitzel from the farmer to the supermarket. This has been now replaced by a fully interactive RIA, enabling each party in the supply chain to feed the system directly – streamlining the short-lived veal trade, accelerating logistics and reducing overhead

As Redmonk analyst Michael Coté commented on these stories, Enterprise RIA’s bring the “boring back-office applications” to the Web era and the usability level which the millennial generation expects from IT. They also remind us the Cloud Computing is not only infrastructure on demand, but has a far reaching business impact and that its adopters already gain a lot from it.

More action in the Cloud with VMWare+SpringSource – and ISV’s getting encouraging results

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The proliferation of “everything-as-a-service” acronyms is often confusing, and merits an explanation and simplification. The VMware acquisition of SpringSource is an excellent illustration of the architecture. At the infrastructure level we find Operating System resources, which VMware encapsulates and virtualizes, offering shared hardware multitenancy but very limited elasticity. In order to increase the resource elasticity – which is the key factor of cost savings – virtualization needs to extend to the application level. That is the next layer, and I would expect that a tight integration of SpringSource with VMware would in fact provide this for Java based applications.

 This evolution has a lot of similarities to Microsoft’s move with Azure. Whereas Azure offers Cloud enablement for .NET applications, VMware+SpringSource would do the same for Java applications. However, in both cases this applies rather to newly developed applications – existing applications need to be redesigned in order to take advantage of the virtualization and resource abstraction features.

As I have noted in other posts, ISV’s who want to extend their portfolio and take advantage of the growing demand for SaaS need to work across multiple deployment models, where development and maintenance costs can double if they need to create the same application in more than one format.

 So the main challenge for most ISV’s is to manage an extended solution portfolio, continuing to service their current customer base with current deployment models while driving growth through Cloud Based deployment. VMware+SpringSource will facilitate this for Java oriented ISV’s, as the announcement states support for both traditional JEE deployments as well as Cloud based deployments.

 An alternative to the bottom-up approach of system infrastructure vendors such as VMware or Microsoft, comes from some Application Infrastructure vendors such as SalesForce.com or Magic Software. These vendors provide for some time already PaaS and SaaS/Cloud Enabled Application Platforms (SEAP), which deal with virtualization and elasticity by abstracting system resources from the applications, so that XaaS can be achieved at conventional data centres.

 Today I came across an account of a UK based ISV whose been there and done that – successfully, even in the present economy climate. Take a look at the story of FactoryMaster and how they manage take advantage of the new platforms.

The widening gap between SaaS demand and supply

The growing customer demand for SaaS solutions and the shift from perpetual license models bears mostly bad news to the traditional software industry. The high margins of applications vendors cannot be sustained in a SaaS model, nor the extensive and expensive on-site consulting and services of large SI’s. Worse, the switch to the new models is very costly. In order to develop and deliver a SaaS solution, a vendor needs twice the capital – and it takes at least twice as long to break even. Vendors who already service a customer base have thus to more than double their costs by maintaining virtually two businesses – one to continue and serve their on-premise customers, and one to develop and later deliver the SaaS version. Once this is achieved, they have to maintain two code bases on two different platform and technologies.

In the current business and investment climate, it is almost impossible for vendors to engage in such transitions and investments – they are more busy with survival.

So at present we have a growing demand for SaaS, and a stagnant supply of some 40 successful SaaS solutions that has little chance to grow and match the demand for more variety, due to the technical and financial barriers mentioned above. Consequently, we could expect some M&A activity as successful SaaS vendors would acquire failing traditional vendors with good IP, and then start porting that IP to their platforms. But that would take a few years – until new solutions become available in quantity.

Which means that we have a growing vacuum – on one hand stagnant supply, and on the other growing demand. Hence the increasing recognition of hybrid models and the appearance of application platforms such as Longjump and Magic Software’s uniPaaS, positioned to can take advantage of that vacuum and grow on it.

SaaS Enabled Application Platform (SEAP) vendors who already have an ISV ecosystem, like Magic Software, might alleviate this situation. I’m familiar with Magic Software’s ecosystem, so I’ll use it as an example. It consists of quite a lot of ISV’s (about 2500) with a broad variety of vertical solutions. Many of them are small, but their continuing existence over the years means that they have good competence in their line of business and loyal customers. Some of them are more professional and have compelling and leading solutions, such as Intelys (French market leader in Real Estate ERP), Creativ (Swiss market leader in NGO ERP) or Dove Tree Canyon (US leading provider of Warehousing and Distribution solutions). Many of these ISV’s see the expansion of their offering to SaaS as their growth path. To do so, they’ll have to migrate to uniPaaS and RIA they will have to improve their User Experience and processes to match current best practices. Yet all this effort would require a fraction of the cost and time compared to traditional vendors, and be much more sustainable. They would be able to pursue a more balanced business model with both short-term on-premise revenues and longer term SaaS based revenue, and fill up the growing vacuum in SaaS solutions.

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