The Business Web 2.0

Should Software-as-a-Service vendors make the switch to charging for their offering based on business outcome? Laurent Lachal of Ovum believes so.

I was a delegate at the Cloud Computing World Forum a couple of weeks ago and out of a day of interesting presentations, the one that fascinated me the most was from Laurent Lachal, senior analyst and the guy leading Ovum’s Cloud Computing research.

The statement Laurent made during his 15 minutes presentation that made me sit up was his assertion that Software-as-a-Service (SaaS) vendors, specifically CRM system vendors, should look towards moving to their fee model to one based on business outcome: “Why not have a CRM vendor charging for their software by the number of leads?” he asked.

As someone involved in what we used to call “Hosted CRM” it hit me hard. Salesforce.com, in particular, has moved the Customer Relationship Management software market on by ridiculing the old model of customers paying a vendor heaps of money up front to install a complex system only, in many cases, to see it fail. SFDC has done much to champion the cause of Software-as-a-Service, delivering business applications over the web for an ongoing subscription fee, spreading the cost of applications over their lifetime as an operational expense, as an alternative to a large upfront capital investment. In fact, Salesforce.com has build an entire platform on this principle with the support of many other software companies whose applications are now available on the same basis. Even Microsoft, which has got the size it has through selling software licences, often emblematically packaged in a box, is now deploying applications over the web on a subscription basis.

“Success, not software” shouts the Salesforce.com website. But Laurent’s point is that customers are handing over money whether they are successful or not. Why can’t what you pay be linked to the rewards enjoyed by using the software?

I had to know more about want Laurent was thinking and he was kind enough to spend an hour with me this week to discuss the logic behind his comments.

Laurent harks back to the roots of Cloud Computing, where applications ran on remote mainframes. An example he gives is High Street travel agents, who sell flights from a screen linked to an airline reservation system – a “hosted application” a la SaaS. The application is available to them all day long and is pivotal to their business, but the service is provided free, with fees only paid when airline tickets are sold. Granted, the business model isn’t quite the same as, say, a consultancy company using a CRM system to track complex opportunities with their customers, but Laurent questions whether the same fee model couldn’t be used all the same.

His logic is that Salesforce.com, again as an example, holds a lot of back-end data on how many contacts each of their customers hold in their CRM systems; how many leads they have; what proportion of those convert to opportunities; and then statistics on revenue generated from those opportunities. Salesforce.com has the data to prove its system is helping to close leads and generate business; to shorten sales cycles. Why doesn’t SFDC bill based on the tangible difference it has brought to the performance of a customer sales team? Another example: email marketing applications from Vertical Response or Constant Contact bill you for emails sent, but they also hold data on who clicks through, so why not bill on traffic sent to your website instead?

It’s an interesting thought and it hadn’t really occurred to me that this data might exist and be usable. Laurent suggests that a vendor gives you the application for free but supports your own objective of gaining business benefit; and let’s face it, if the CRM system is making a big difference to your business then you’re unlikely to have an issue paying more than the current, for Salesforce.com, £65 per user per month for it. Those that need help to see business benefits would pay less, possibly nothing in the worst cases, but could be provided, potentially sold, additional services to improve uptake, increase data relevancy, refine sales processes, better use the marketing tools or whatever to see more effective use of the system: more leads, better conversion rates, shorter sales cycles, a bigger revenue contribution per sales head. The aim for both sides would be achieving greater business benefits from the system, bringing them to a point where they are paying a fair amount for the application, proportional to business outcome.

Outwardly this would seem to sway all the benefits in favour of the customer, and all the risk to the vendor, but if you think that it would be very much in the CRM vendor’s interests to see the system being used well and bringing real benefits to customers, then the balance evens out if the vendor is living up to its promises. It’s No Win, No Fee application provision.

I raised with Laurent the issue of data privacy, but we concluded that a vendor wouldn’t need to know the detail of a customer’s customers, just a rolled-up and anonymised view of overall performance for them to measure the efficacy of that customers’ use of the system.

Laurent’s thinking is so far from the norm that you can’t help but pick holes in it compared to what we have in place today. But traditional on-premise vendors started taking a kicking ten years ago when SaaS vendors like Salesforce.com, Salesnet, Upshot (which got bought by Siebel and is now part of Oracle) and Netsuite pitched in offering a subscription model which has since become the norm. With a stack of data now able to support claims of real business improvement, is it time to look at the fee model again?

Could one of the many new entrants to the Social CRM space looking to dislodge the new encumbents similarly upset the market with a billing model linked to business outcome?

Laurent has not yet published anything on this, but he’s serious about his thoughts and seems convinced that it’s likely to be the way SaaS application vendors will head. After an hour in his company I think it has merit and we are seriously considering it for our own Social CRM application.

I’d be interested to read your thoughts.

Ian Hendry
CEO, WeCanDo.BIZ
http://www.wecando.biz

As Google and Bing scrabble to lead the move towards Real Time Search, are they missing the point?

I admit I've always had issues with search engines and the SEO/SEM industry that rides its coat-tails. First off, if I am looking for something specific I rarely want 48,000,000 pages to sift through to find it. I'd rather have a handful and for them be highly relevant. If I asked a friend for some opinion or advice and they reeled off for several hours about a whole load of stuff that barely brushes on what I am talking about, Rain Man like, I'd probably never bother asking them again. And yet it seems totally acceptable for search engines to do the same.

An example. Search Google for "PR companies Huddersfield". It comes back with 146,000 responses. Now, there are only 11 PR companies in Huddersfield and the town only has a population of 146,000. Unless every single resident has PR expertise, or those 11 companies have managed to generate over 13,000 of content each, there is a whole heap or barely relevant tripe that Google is feeding back to me. Only 4 of the 11 companies actually get a mention on the first page of results and, as we know, not many people go beyond that first page when looking for answers. So at best Google has come back with worse than 40% accuracy on my request.

Good enough? Well, potentially not as good as asking people you know for a recommendation of a PR company in Huddersfield, which is what social media enables you to do. More and more people, especially those with Twitter desktop (and mobile) client TweetDeck open all day, are simply turning to Twitter to ask their followers for specific recommendations. They may not get a response -- and it may not be immediate -- but when they do they'll get something very, very relevant, usually with the value of a word of mouth recommendation attached to it. Google knows this is happening and is panicking enough to rush Real Time search results into the mix -- you can now filter Google results by those posted in the past hour, for example.

But whether it's real time or not -- and I don't believe "Past hour" IS real time -- it misses the point of why people are gravitating towards asking for business recommendations of contacts on Twitter and other social networks rather than turning to Google for responses which aren't in the slightest bit considered. In fact, the only level of qualification, if you can call it that, is that the ones you get first in your results have mastered search engine marketing and search engine optimisation, rather than than the PR, printing, telesales or skills you're actually looking for. The best at providing the specific service you need don't get listed first, as might actually be useful.

All this reminds me of a debate I got into with the managing director of an online business directory some time ago in a forum. We discussed his site, a pure directory of businesses, against mine at WeCanDo.BIZ where we have a directory (it's just a part of our site) but listed first are those with the highest number of endorsements from customers. He smugly pointed out to all reading the forum that he'd searched his site for an accountant and got 24,000 results; he'd searched our site and (at the time) got 6 results. I pointed out that no one wants 24,000 accountants, they typically want just one and for them to be good -- and being able to pick the most suitable from a short list was more useful than throwing a dart at a wall papered with Yellow Pages listing. He didn't argue against it.

So what could Google or Bing offer as a more credible alternative to pages or irrelevant twaddle, placed only through the "skill" of a search engine guru? Well, Twitter-like networks of their own that could be polled for a response might be a solution. But many have tried to emulate Twitter from scratch and failed. Perhaps being able to simultaneously tweet your search request to your own network of followers would help, so that as well as the 146,000 results from Google's servers you could have a proper real time update of responses from your Twitter followers on the same page? Twitter offers OAuth to enable us to be logged into Twitter while on other sites which can then use Twitter's features, so not hard to do if Google or Bing felt so inclined.

Or you could wait to see what Facebook does now it has web search on its site and Friendfeed waiting to be integrated into the site proper. It would be quite possible with the tech they've got to offer alongside traditional web search an ability to simultaneously broadcast your request to your Facebook users, as well as potentially any other network (including Twitter) you have connected to your FriendFeed. Could the social media sites themselves point to a new future for search?

Either way, "search" is changing with the power of crowd-sourcing attached and I, for one, cannot wait!

Your thoughts are always welcomed; just post a reply below.

Ian Hendry
CEO, WeCanDo.BIZ
http://www.wecando.biz

Google has turned each of the one million plus Google Apps customer domains into an OpenID provider, enabling millions of people to sign in to OpenID-supporting websites with their work, school or organization identity.

Good news, you'd think? Well, not all are reacting that way.

The way Google has achieved this is by extending their Google OpenID Federated Login API to refer to Google Apps custom domains if a "valid" OpenID identity -- in essence, an URL to a profile with an OpenID provider -- isn't found.

An example of how this looks can be found in my company's press release on the subject at http://wecandobiz.wordpress.com/2009/07/28/press-release/.

Although this feature usefully extends OpenID, it adds a "proprietary" feature to the way that OpenID sign in occurs on a site if the user is to be able to login using their Google Apps custom domain. It's this that has got members of the OpenID Foundation worried (see the OpenID discussion pages at http://openid.net/pipermail/board/2009-July/).

OpenID always sounded great and I've blogged before on the race for adoption between it and Facebook Connect as the most dominant identity for shared sign in. A year or more further on, I can see a role for both -- and later entrant Twitter OAuth -- as people typically maintain several identities when using the web (e.g. Facebook for personal use, OpenID for business use) and so support of all leading shared identity systems is important.

But speaking as someone who support 6 different methods of sign in on his (business focused) website other than the native sign in, OpenID identities currently make up some 2% of third party sign ins. Twitter sign ins account for nearly 50% of sign ins (the full breakdown can be found at http://wecandobiz.wordpress.com/2009/07/17/which-identities-people-use-to-sign-in-to-wecando-biz/).

EDIT: I should point out that 2% of sign ins are using an OpenID URL sign in, whereas Yahoo and Google e-mail address sign ins, which also use OpenID underneath, account for another 22% of sign ins. Thanks to Tore Steen of JanRain for reminding me I should make the disinction.

Google's move may indeed add some proprietary elements to an open standard, but they make it a lot more usable and also bring more clout to an initiative that deserves to succeed because it benefits everyone.

I can understand the frustrations of the "purists", but use of the Google API is optional and doesn't stop standard implementations from working; it just means a whole bunch of sites may opt to make it easier for the millions of Google Apps users to sign in.

We've been happy to add it to our site using JanRain's RPX solution and I'll be reporting back in due course on whether Google's move has given OpenID the boost I hope it does. With the excitement surrounding Google Wave -- part of Google Apps remember -- promising a further boost to numbers, OpenID may have a great future ahead, even though not all OpenID Foundation members may appreciate it.

As ever, I welcome your comments.

Ian Hendry
CEO, WeCanDo.BIZ
http://www.wecando.biz

Google's new Wave service is billed as revolutionising e-mail. But it might not be existing e-mail and messaging vendors that feel the pinch first.

You've probably heard about Google Wave. Revealed at the Google I/O developer conference in May, it demos Google's evolution of e-mail, a method of communication that hasn't really moved on any in 40 years. The techies were cock-a-hoop and quite a few of those who've seen videos of the demo are just as excited.

(Here's a great 10 minute breakdown of the key features:

I fall into the camp labelled "Excited" as it genuinely seems to bring together the best of e-mail, instant messaging and newer initiatives like Twitter. Move to Wave and you could have all three working in harmony in your browser. So who will fear Google Wave most? Microsoft, which dominates the e-mail client market? Companies like Yahoo, AOL and Skype who depend on instant messaging for users? Or even Twitter for taking its concept and integrating it as just one form of conversation?

Well, probably none of these as much as traditional forums, which I would elect are likely to be first in the firing line.

Now not everyone uses forums. They seem strangely old fashioned, being evolutions, as they are, of bulletin boards which have been around as long as the internet has. But they are also a great example of User Generated Content and all that Web 2.0 is about.

As a big fan of social media I should love forums; and I am active on quite a few, which I won't name here. But I also hate them, because in amongst the useful posts is inevitably hundreds of contributions from people who have an opinion on a topic and know enough to be dangerous. If you're looking for value, you need to spend some time separating the wheat from the chaff.

And this is where Google Wave could come in. Imagine a web-based forum where you can attach yourself to specific topics, because you are interested or have expertise. The topic may be born on the forums site, mainly in order that anyone can start it and watch the thread evolve; but what if your contribution could be done within Wave? As your input is needed, so the Wave flashes to let you know. Contributions from others add to the Wave; and because each contribution comes from a "real person" rather than a masked identity on a website there is a chance their input will be a little better considered. You get what you need without ever needing to leave your Wave browser window.

And that's the thing: if this was a way to tap the thoughts of others, en masse as it were, why would people ever spend time on forums wading through the rubbish to try and find the stuff Wave could easily locate for them with a widget and a ready method of reading and contributing to the thread?

Forums could already be considered a speciality interest lacking the fashion of Twitter or, now, Wave. But could Google Wave kill them stone dead?

I'd be interested in your thoughts.

Ian Hendry
CEO, WeCanDo.BIZ
http://www.wecando.biz

Twitter co-founder Evan Williams’ Google Apps account getting hacked has got a lot of coverage this week. And it’s reaised a lot of questions about just how secure The Cloud, hosted business applications and Web 2.0 services are.

I write this as the former managing director of an information security company, long time hosted applications user and founder of a Web 2.0 company -- and I have to say, the biggest threat to online security is ignorance and laziness!

First off, let’s be clear, it was not Twitter the Application that was hacked in this affair, but Twitter the Staff -- it was actually Williams’ Gogle Apps password that was compromised, giving access to the documents now in circulation. Twitter staff got targeted because they are high profile and the hacker knew the press would be interested in the story.

How did this happen? Simple: Williams’ password was guessed. Or to put it another way, he simply didn’t set a strong enough password and has now paid the price.

There are very obvious benefits to using web based services, not least of all in their convenience and availability. Because they are web based, so available to any member of the public, they are at greater risk that an application or data store on a stand alone server in a locked office that you need to walk over to to use; but that isn’t very convenient. Broadly speaking, the risks of attack are offset by the convenience of the services -- there is risk, but it’s worth taking for the upside.

But whether you use Cloud based applications or on-premise, it pays to follow these basic rules on password security:

1. NEVER write your passwords down — make them easy to remember but personal to you so you don’t need to write them down

2. Use a password system no one could ever guess. Here’s a suggestion: take the first letters of a sentence you can easily remember, e.g. Ian Watches Formula 1 Every Other Sunday would become IWF1EOS — who is ever going to guess that as a password? Factor in that the sentence could be about ANY aspect of your life and it becomes harder still for anyone to guess

3. Never use the same password on more than one website — introduce just the smallest change between them, inspired by something about the site or service, e.g. add BA at the start or end for your online Barclays account, HO for Hotmail, WE for your WeCanDo.BIZ login etc.

4. If you are asked to set a password reminder question, make it the most obscure option offered (things like your date of birth or mother’s maiden name may not be hard to find out) — make it something very few, if any people at all, know about you. You might even want to lie about the answer, but if you do make the answer memorable!

Your comments and questions welcomed, just post below.

Ian Hendry
CEO, WeCanDo.BIZ
http://www.wecando.biz