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Google and Microsoft now driving SaaS’s disruptive innovation

Google Chrome OS and Microsoft Office 2010As incumbent companies go through their own versions of Clayton Christensen’s disruptive innovation, I imagine early observations about the changes-to-come are similar to these seen last week with Google’s Chrome OS announcement

Item #1:

But while I’m sure Chrome OS will pick up some fans, I have a hard time seeing this as the way of the future for computing.

Nick Mediati, PC World, Is Chrome OS The Future Of Computing? I Hope Not.

Item #2:

It’s certainly interesting and ambitious to state that the entire application platform will consist of web apps. If anyone was going to build such an OS, it’d be Google. Much of the initial commentary regarding Chrome OS has been wholly positive, but one common note of skepticism has been with regard to the “web apps are the only apps” aspect, with the frequent point of comparison being to the 1.0 release of the iPhone OS.

John Gruber, Daring Fireball, Putting What Little We Actually Know About Chrome OS Into Context

Item #3:

Netbooks may be important, but they remain a tiny part of the world’s PC sales. Google’s bet is predicated on strong demand for weak computers.

Google is counting on users of small computers not being tied to specific applications and being willing to accept low cost and, perhaps, ease of use over a more familiar and more powerful environment.

Nick Coursey, PC World, Five Reasons Google Chrome OS Will Fail

The quotes above reflect a rationale perspective on the fate of netbooks and an-all SaaS computing experience. After all, no one does that today. Most people haven’t even looked at the web-only alternatives out there. Microsoft Office is a client app. Adobe is a client app. File directories are client apps for files on your hard drive.

Why does anyone need a web-app only experience? Well, note Microsoft’s announcement of its web-based Office 2010. Something is afoot. Both Google and Microsoft are pushing forward significant initiatives that will increase the percentage of computing done via SaaS. What does Clayton Christensen’s theory say about this?

Disruptive Innovation

A disruptive innovation is one that upends the existing structure of an industry, often sending incumbents into niche positions, and niche players into incumbent positions. Three qualities define it:

  • New technologies start out less functional than existing technology
  • New technologies find their niche markets
  • At the outset, it’s really hard to believe the new technology will ever displace the incumbents

Pretty much sums up the idea of all web-based computing.

Check out the chart below, which diagrams sustaining and innovation over time and performance:

Disruptive Innovation Graph

Probably the single most important thing to note about this graph is that the incumbent companies (blue line)  continually add features to their products. This effort expands their addressable markets, as more and more niche segments are covered. It’s a rationale, smart way to grow.

But at some point, the incumbents’ innovations overshoot what mainstream users need. As Christensen notes, performance exceeds what customers can utilize. This is what happens as companies expand into niche markets.

Which brings us to the PCs of today. They are marvels, providing a slick experience for users and able to accommodate a host of new applications. But if I were a betting man, I’d say the most common activities people do with their computers are:

  • Surf the web, engage in social media
  • Email
  • Write documents
  • Build spreadsheets
  • Create presentations
  • Consume and work with media (video, music, graphics)
  • Use web-based business apps

Among those activities, what’s the magic of client-based computing? The media-related activities perhaps require the horsepower of a client app. But even those are getting better with web apps.

Web-based apps fulfill the first bullet of early disruptive innovation above – they’re not as full-featured.

Second bullet is the initial niche that wants to use the less powerful alternative to incumbents. For web-based computing, I can see two markets:

  1. Small businesses – lower cost, less hassle than installed apps
  2. Students – more comfortable with third parties holding data, low cost, activities are mostly writing and web access

Those are the initial toeholds into the operating system market. Getting significant share in a couple segments is critical to getting the attention of application developers.

The Web Apps Are Coming Along

Let’s start with the apps most commonly used in work contexts: documents, spreadsheets and presentations. Zoho has been at it for a while now, and provides a very functional set of apps. Google Docs continue to evolve toward better functionality. And of course Microsoft has joined the SaaS movement. The TechCrunch article about Microsoft Office 2010 notes:

Most certainly a direct challenge to Google Apps, Microsoft is rolling out lightweight, FREE, Web browser versions of Word, PowerPoint, Excel and OneNote. All based in the cloud, the web-based versions of these products have less features than their desktop cousins but still let users that users basic tools to edit and change documents.

Already inside the enterprise, wikis are quite functional. As alternatives to writing up documents and emailing them around, they are quite powerful. Atlassian Confluence, Socialtext, JSPwiki and others are highly functional. They offer a formatting experience similar to the most commonly used functions of document applications.

And for graphics, a new company Aviary got a great review in NetworkWorld:

It’s true that there are a number of graphics editors online, but most fail to come anywhere close to the functionality of Adobe’s iconic software. Until now.

The ecosystem to provide online apps with functionality comparable to client apps is growing.

My Personal Evolution to SaaS

I’m a former banker, then I did product management at eFinance and Pay By Touch. In those jobs, I never bothered with hosted apps. I certainly never thought about wikis. I did my writing in Microsoft Word. At Pay By Touch, I was introduced to the Confluence wiki. I used it because engineering wanted me to, but only as a centralized document repository. I’d rather have emailed the documents around.

It was at Connectbeam that I started to really *get* wikis. The ease of writing on them. The value of a common place to find and share documents. I found the core rich text editing functions of a wiki to be quite sufficient for what I need.

Now you can’t get me off the wiki.

When I was noodling on a business idea 18 months ago, I wrote everything up on Google Docs. It was an easy way to share the documents while updating them as often as I needed to.

More recently, the client applications TweetDeck and Seesmic have been getting a lot of attention. I’ve resisted them, because I just can’t see downloading and running these apps. They take their toll on your PC, as Louis Gray wrote:

For those Web-addicted souls who spend a good deal of their day buried in Twitter, seeing their friends updates and exchanging conversations, most software options have required the installation of Adobe AIR software, which to date has whirred your CPU to life, turning on laptop fans, and chewing through memory. The work to throttle down load on RAM and CPU is a constant battle, which both Loic’s team and Iain Dodsworth of TweetDeck have been working on since their products debuted.

In contrast, logging into the new Web version of Seesmic doesn’t feel like you’ve sacrificed your computer power to get your Twitter fix, and you don’t give up features either.

In short, whenever I can make a move to web-based apps, I’m doing it. I’ve come a long way from my Bank of America days.

Google Chrome OS and Microsoft Office 2010 – Forever Changing the Game

Certainly the idea of PCs as basic on-ramps for doing work via the web has been around for a long time. In 1996, Larry Ellison believed that network computers would outsell conventional PCs by 2000. Well, we see how that turned out.

In 2009, things have changed remarkably. First, usage of SaaS for applications has grown significantly, although it’s still small as a percentage overall. Second, people’s comfort with web-based computing has grown tremendously. Most enterprise software is now delivered as a web application. Salesforce has been a tremendous trailblazer here. And Facebook is fostering a greater comfort with sensitive data held by a third party.

Finally, Google is a titan. Oracle was (and still is), but in 1996 it was the database company. No one knew what to make of its network computers. Google is an entirely different animal. It has established credibility with its Google Apps. And presumably, any web app will work well on the Google Chrome OS. Including Microsoft’s new cloud Office offering.

This doesn’t stop Microsoft from coming out with its own web-based OS. Expect that if the Chrome OS seriously threatens. A lower cost OS for low-cost PCs to use low-cost web apps.

Microsoft’s announcement is huge because the Office suite is a brand used and trusted by millions of people. With their marketing heft, this is a significant boost in the credibility of SaaS computing. Microsoft also is a student of history, and clearly doesn’t want to risk the marginalization seen in Clayton Christensen’s studies of disruptive innovation.

The past two weeks have seen two significant milestones on the SaaS front.

This brings me to my final point. Market transitions don’t happen that quickly. The Google and Microsoft offerings won’t be ready for a while. And existing hardware, software and habits are going to change overnight. We will still have client-based applications for quite a while.

But let’s see how the small business and student markets take to these efforts.

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My Ten Favorite Tweets – Week Ending 061909

From the home office in Tehran…

#1: RT @Brioneja The Future of Energy: A Realist’s Roadmap to 2050. Which technology will finally free us from oil? http://bit.ly/FXg7A

#2: People’s interest in the real-time web is as much a social thing as it is a need to stay on top of events as they happen.

#3: In case you didn’t know…Atlassian’s new release of Confluence 3.0 includes status updates: http://bit.ly/yNZn4

#4: RT @rhappe the tight engagement you build with a small group will go viral… a big group with a lot of ‘extras’ won’t have the same

#5: RT @prwpmp Very insightful article in today’s WSJ about the power of daydreaming! http://bit.ly/2hJZMs {Daydreaming = AHA! moments}

#6: Which are most likely to survive in social media-driven news world? The mega global media (e.g. NYT), regional newspapers or local papers?

#7: New Spigit blog post: Kaiser Permanente Crosses the O-Gap in Innovation http://bit.ly/PNcom #innovation

#8: What is the magic number where the size of a group outstrips its ability to stay on top of everyone’s ideas? 25? 50? 100? #innovation

#9: Is there such a thing as the “avg distance” between a firm’s employees & its customers? SMBs’ avg distance < enterprises’ avg?

#10: ABC7 prediction market: Will the Dow Jones Industrial Average end 2009 below 2008’s year end close? http://bit.ly/1rjAt My vote = NO

Get a $5 Enterprise Wiki and Help Some Kids: Atlassian’s Stimulus Plan

atlassian-logo

Last week, we saw a fun race to a million followers on Twitter, where the real winners were people around the world suffering from Malaria. Business combined with charity.

This week, Atlassian is running its own special event: the Atlassian Stimulus Package. Here are the details:

  • $5 annual license for Confluence wiki
  • $5 annual license for JIRA issue tracker
  • Available to teams of up to five people
  • First year comes with support and maintenance included
  • Proceeds go to Room to Read, which builds much-needed schools and libraries in developing countries
  • Pricing is available for five days from April 20 – 24, 2009

Not too shabby, particularly when you consider that both Confluence and JIRA start at $1,200 each. And considering where Gartner positioned Atlassian in its Social Software Magic Quadrant

gartner-social-software-mq-2008

…it’s not a bad way to get your feet wet in the social software world. And help some children in need as well.

My Ten Favorite Tweets – Week Ending 010909

From the home office in Chicago, IL…

#1: RT @natenash203 Back to project planning for BPM implementation @ Afghanistan Ministry of Commerce. {Whoa! BPM? Things progressing there}

#2: “Businesses needed to have 20-30% engagement rates” by employees in social software to achieve ROI http://bit.ly/3aTs #e2.0

#3: RT @technacea OH: “I don’t have a blog – I guess I’m just a nobody”

#4: @LLiu Good one Lawrence. Bookmarked “The Emerging Math/Rules of Social Networks – Magic Numbers” http://bit.ly/S4J5

#5: Atlassian blog takes up the 2009 Email Brevity Challenge: http://bit.ly/TEWg

#6: What would be nice: Summize (er…Twitter search) tracks a conversation. It’d be cool to have a single link to that conversation.

#7: Note – if you make a comment on my blog and mistype/misspell something, never fear. I’ll go in and fix it.

#8: Slate’s nice historical perspective of newspapers’ reactions to disruptive technologies http://bit.ly/JE3I including the 1947 fax machine.

#9: RT @jimmyfallon @joeypfeifer I hope to. I want to see how we can play with [Twitter] on the show maybe. So far, I’m addicted.

#10: Runner geeks, you hear about Palm’s new iPhone competitor The Pre, do you think “Steve Prefontaine”? Can I get a witness?

*****

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The Top 10 Enterprise 2.0 Stories of 2008

The enterprise 2.0 space saw good action this year. I’ve had a chance to see it up close, starting the year with BEA Systems (now Oracle) and closing out the year with Connectbeam. I think it’s fair to say that in 2007, social software was still something of a missionary sale. In 2008, company inquiries increased a lot. The burden still falls on the vendors to articulate business benefits, adoption strategies and use cases. But enterprise customers are now partners in this work.

So let’s get to it. Here are my top ten stories for the year:

1. Activity Streams

Facebook really got this going with its newsfeed, and FriendFeed took it to an art form with its lifestreaming service. In 2008, many vendors added activity streams to their applications: Connectbeam, BEA Systems, Atlassian, SocialText, Jive Software and others.  Activity streams are great for improving awareness of colleagues’ activities, and adding a new searchable object: actions.

2. Forrester’s $4.6 Billion Forecast

Forrester Research made a splash with its forecast that Enterprise 2.0 will be a $4.6 billion market by 2013. The ReadWriteWeb story about it has been bookmarked to Del.icio.us 386 times and counting. Forrester’s projections provided a solid analytical framework for the different tools, used internally and externally. According to the analysis, social networking will be the most popular tool for companies. Whether you buy the forecast or not, they remain the best-known, most visible numbers to date.

3. Oracle Beehive

Larry Ellison is fond of essentially dismissing SaaS. He does not have Oracle invest much in the trend. But Oracle did seem to embrace Enterprise 2.0 in a big way this year with Beehive, which is an “integrated set of collaboration services.”  The New York Times quotes Oracle EVP  Chuck Rozwat: “It is a product we built from scratch over the last three years.” Now since Oracle is a huge enterprise software company, there’s plenty of skepticism about the capabilities and innovation of Beehive. But there’s no denying that Oracle has the ear of the enterprise, and picks up a lot of market intelligence through its customer base. While Beehive itself may or may not succeed, the idea that Oracle came out with Beehive was a big story.

4. AIIM/McKinsey Surveys

Research and consulting firms AIIM and McKinsey each came out with surveys of corporate interest in enterprise 2.0. The AIIM survey looked at levels of awareness and interest among different Enterprise 2.0 technologies. AIIM also took a fairly expansive view of social software. The top 3 “Enterprise 2.0″ technologies in terms of corporate awareness? Email, instant messaging, search. That’s actually a funny list, yet there are lessons there for vendors and consultants in the social software industry. If those are entrenched, can you play nicely with them? One other quote I like from the report:

This study of 441 end users found that a majority of organizations recognize Enterprise 2.0 as critical to the success of their business goals and objectives, but that most do not have a clear understanding of what Enterprise 2.0 is.

McKinsey’s survey of enterprises looked at the interest in various tools as well. It also asked respondents what the leading barriers were for success of social software initiatives. Top three were: (1) Lack of understanding for their financial return; (2) Company culture; (3) Insufficient incentives to adopt or experiment with the tools.

5. Facebook Co-Founder Leaves to Start an Enterprise 2.0 Company

Facebook co-founder Dustin Moskovitz and colleague Justin Rosenstein announced they were leaving the hot consumer social network to start a new company. The new company will “build an extensible enterprise productivity suite,” with the goal of “making companies themselves run better.” Why would these young guys, sitting on top of the leader in consumer social networking, choose to exit? As I wrote at the time:

The Enterprise 2.0 market is still quite nascent and fragmented. Combine that industry profile with projected spending in the category, and suddenly you understand why these guys are striking out on their own.

Assuming they’ll be able to tap the mother ship for help, I think this was a fairly important story this year.

6. Microblogging Enters the Enterprise

Joining wikis, blogs, social bookmarking and other incumbent tools this year was microblogging . Given the way Twitter is used by Enterprise 2.0 aficionados, and is enjoying skyrocketing popularity, it’s no surprise we started seeing microblogging emerge for internal use. At the mostly consumer-focused TechCrunch50, enterprise microblogging start-up Yammer won the top prize. Other start-ups in the category include SocialCast and Present.ly. SocialText added microblogging with its release of Signals.

7. Gartner Narrows its Criteria for Social Software

Gartner came out with its Social Software Magic Quadrant in October. As SageCircle notes:

Gartner’s Magic Quadrant is probably the iconic piece of analyst research. With its visibility and status, it also has enormous influence on vendor sales opportunities, especially when it comes time for IT buyers to draw up the all-important vendor short lists.

So it was with great interest when I read that Gartner had narrowed the criteria for whom it puts in the Magic Quadrant:

Added blogs and wikis to the functionality requirements

The effect of that is to establish those two tools as the de facto standard for enterprise social software inside the enterprise. To the extent corporate buyers are listening to Gartner for signals about the market, this will make it a bit more challenging for start-ups with interesting offerings that address other parts of the social software market. Yammer, for instance, won’t make it into their Magic Quadrant.

8. Enterprise RSS Fails to Take Off

RSS is one of those technologies that you know has huge value, and yet continues to struggle for awareness and adoption. Google tracks the leading “what is” searches. The fifth most popular on its list? “What is RSS?” Take that as both good and bad. Good that people want to know, bad that awareness continues to be a struggle.

Forrester analyst Oliver Young has a sharp write-up that shows enterprise RSS did not expand inside companies as many had thought it would this year. As he notes:

Of the three enterprise RSS vendors selling into this space at the start of 2008: KnowNow went out of business completely; NewsGator shifted focus and now leads with its Social Sites for SharePoint offering, while its Enterprise Server catches much less attention; and Attensa has been very quiet this year.

RSS is a great way to distribute content inside companies, but its ongoing limited adoption was a big non-story for the year.

9. IBM and Intel Issue Employee Social Media Guidelines

IBM and Intel each established guidelines for their employees who participate in social media. As I wrote, this essentially was a deputization of employees as brand managers out on the web. These market leaders were essentially saying, “have at it out there on blogs, social networks, Twitter, etc. But make sure you know the company’s expectations.” These guidelines represent a milestone in large enterprises’ comfort with social media. I expect we’ll see more of this in 2009.

10. The Recession

This affects all industries, globally, of course. And Enterprise 2.0 is no exception. Jive Software made news with its layoffs, but the effect was industry-wide. And of course, corporate buyers aren’t immune either.

Those are my ten. Did I miss a big story for 2008? Add your thoughts in the comments.

If you’re interested in tracking what happens in 2009, I encourage you to join the Enterprise 2.0 Room on FriendFeed. It is a centralized location for tweets and Del.icio.us bookmarks that specifically relate to Enterprise 2.0.

*****

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Atlassian’s Confluence Wiki Gets Social: Embed Your Favorite Social Media

Zoli Erdos has a nice write-up of enterprise software company Atlassian, titled Business Models and Right-brained Geeks. In it, he notes the culture of Atlassian is different from many enterprise software companies:

Atlassian is a “different” company in so many ways… no wonder they are still hiring while the rest of the world is busy downsizing.  But one thing I’ve not realized until now is they have a backup business plan. They could quit Technology tomorrow and become a Creative Agency overnight.smile_wink Need proof?

We use Atlassian’s Confluence wiki in our office, and I’ll bet a lot of you do as well. It’s easy to use, and I’ve become a big fan of it versus using Microsoft Word.

So it’s no surprise that the latest release, Confluence 2.10 has a really cool feature: the Widget Connector. Uh…come again?

The Widget Connector. It is a lightweight way to embed content from 16 different social media sites:

atlassian-confluence-connector-widget-supported-sites

I have to say, that’s pretty cool. The ability to embed media created elsewhere is a wonderful feature for any site. I’ve embedded my recent SlideShare on the About Page for this blog. And the ability to embed Vimeo videos was great for a recent post where I talked with MADtv’s Chris Kula.

LinkedIn recently started doing this as well. You can add content and applications from 10 different sites to your profile. It’s a smart play for companies. By letting you bring content from elsewhere, these sites become valuable platforms for getting business done.

Considering the Widget Connector in a Business Context

The interesting thing here is that these sites are indeed social. So the content that will be included is likely to be that which is OK for public viewing. Which means some sensitive internal content won’t be found on these sites. I know many of these sites allow private, restricted access content. It’s unclear whether restricted access content can be embedded though.

But a lot of what businesses do is perfectly fine for public consumption. Well, make sure you embed it in the wiki! Conference presentations, product demos, marketing media, product pictures, etc. In fact, the bias should be to have this content public and findable unless there is a real concern about loss of confidential information. Being a presence in the industry means getting out there with information and ideas that you share. Of course, not everything should be accessible. For instance, a webinar should be public, while a customer presentation will stay internal.

The reality is that companies are expanding their presence on social media sites, even if it is happening in a halting fashion. Turns out consumers are starting to expect it. As use of these various social media sites expands, having a central place to view and track the content on them makes a lot of sense.

Another use I see for this is collecting information from various services and users to build out research on:

  • New product or service initiatives
  • Competitors
  • Customers
  • Regulatory and standards development

Consider Atlassian’s release of Confluence 2.10 another step forward in expanding the use and value of social media for business purposes.

*****

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My Ten Favorite Tweets – Week Ending 120508

From the home office in Truth or Consequences, NM…

#1: Love this post by Atlassian’s @barconati Connectbeam Connects | Confluence Customers Beam http://bit.ly/5VhY >> why E2.0 integrati …

#2: Noticing that my tweets that hit 140 characters are having text cut off well before 140. Anyone else?

#3: @twitter A bug. Char. < and > are stored as 4 char. in ur DB, not 1. Means each use cuts max char. of tweet by 3. This tweet’s max=134

#4: One effect of BackType – I am more conscientious than ever about commenting. Comments have the effect of Google Reader shares.

#5: Lump by Presidents of the USA comes on radio. Says 20-something, “Oh that’s the classic rock station.” Lump is classic rock? Ouch!

#6: One thing vacations with little kids ain’t…restful.

#7: RT @timoreilly Derived intelligence from large data sets is a kind of interest or “float” on data. Analogy of Web 2.0 data to capital.

#8: The H-P Social Computing Lab is doing some really interesting research http://bit.ly/k7dI

#9: RT @jbordeaux re: enterprise 2.0 “And like pornography: they’ll pay too much, get over-excited after tiny results, but soon regret it.”

#10: But at least I’ve got a Sam Adams.

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