Pedersen sees the consumerization of IT trend as an opportunity make people more productive by incorporating consumer elements into enterprise applications. Key points we cover in the video include:

• Users of all ages want their enterprise applications to reflect the user experience their consumer devices are able to deliver.
• Many of the consumer tools that are making their way into ERP (e.g. Yammer) are doing so because employees start using them on their own.
• The consumerized experience is changing the ERP user experience paradigm to one where users expect to be able to customize their experience down to the task level.

• Ben Kepes, Principal Analyst at Diversity Limited
• Matt Brace, Senior Engineer at Invodo and,
• Don Fornes, CEO of Software Advice

In the first video, we discuss some of the challenges presented by Cloud computing and ways to get beyond those challenges. In the video, we discuss:

• Coming to terms with outsourcing your data and traditional IT controls.
• How to determine whether the Cloud is a functional fit for your business.
• Why CEOs and SVPs need to educate themselves about the true costs and benefits of the Cloud.

In our second video, our panel talks about common mistakes companies make when transitioning to the Cloud and some current limitations to making a full transition. Key areas of consideration include:

• You have to design for failure and have multiple backup plans ready in case of an outage.
• The costs go beyond the monthly subscription fee. You need to provision for Internet connection, bandwidth requirements and network needs.
• Not all applications are ready for the Cloud. For instance, at Software Advice we have difficultly running our telephony in the Cloud due to high call volumes and network limitations.

What are your thoughts on making the Cloud transition? Please leave any advice or personal experience you have to offer in the comments below.

“Everyone is talking about Cloud, but there are so few people that have Cloud skills. There’s a real void of talent.” – Ben Kepes, Principal Analyst at Diversity Limited

For IT professionals, maintaining a job in the age of Cloud computing requires developing a new set of skills to match evolving IT roles. Through analyst interviews and discussions with IT professionals, I’ve identified five skills IT professionals need to position themselves for a career in the Cloud.

1. Learn the C-Suite Vocabulary

For years, there’s been talk about the IT department becoming a “strategic partner” of business. In the age of Cloud computing, this means developing deep knowledge of the range of Cloud-based technologies on the market and how these technologies impact the range of C-level priorities.

Learning about the range of solutions on the market–from IaaS to SaaS technologies–is something that most IT professionals are already undertaking. These days, however, just knowing the solutions isn’t enough.

MR Rangaswami, co-Founder of Sandhill, believes IT professionals also must know how to “map Cloud systems and divide functionality between Cloud and on-premise systems.” Understanding these functional divisions drives efficiencies by ensuring the company has the right mix of technology.

Beyond that, IT professionals must convey to the C-suite (where technology expertise varies) how a recommended Cloud technology supports practical business needs. For instance, some executives may think that everything is ready to move to the Cloud while others have lingering security and privacy questions. IT professionals must be able to deftly navigate this terrain.

2. Become a Developer

In the old world, development and systems operations were two distinct IT functions. The Cloud–and straightforward development frameworks like Ruby–is blurring this division. As Ben Kepes notes, “today’s modern platforms are sufficiently robust and self-contained” to eliminate much of the leg work of deploying and maintaining an application.

Current demand is high for individuals that can code, develop and deploy applications because there are so many applications to build and so few talented next generation developers. As a result, IT professionals are increasingly managing custom development for out-the-box solutions or simply building applications from scratch.

As such, skills working with popular Cloud platforms such as Force.com, Microsoft Azure and other PaaS options that come with development tools is a must, as is a familiarity with popular languages such as PHP, Ruby, JAVA or .NET.

3. Learn Cloud Integration Technologies

Of course, as Cloud applications proliferate in the enterprise, integration skills become essential for IT professionals. Rangaswami says that he’s “spoken with companies that have as many as 10 SaaS and Cloud-based systems deployed.” This creates a need to integrate Cloud applications to one another and to existing legacy systems.

Successfully integrating applications is complicated by the number of integration options and methods at the disposal of IT professionals today. To excel, IT professionals must be versed in third-party Cloud-based integration services such as Boomi and Informatica as well as integration appliances like Cast Iron. When these third-party tools are not sufficient, the IT department may be asked to build a custom integration using SOAP, RESTful APIs or a custom integration server.

With all of these integration needs, Rangaswami believes that there will also be a need for “skills around Master Data Management and Enterprise Architecture” to successfully manage the flow of information between applications.

4. Master Mobile Security

In addition to managing information flow, IT professionals must now manage information access on multiple mobile devices. With roughly 500 million smartphones out there today, and an increasing number of companies allowing employees to ‘bring your own device’ (BYOD), enterprise mobile security is one of the most important IT issues in the Cloud era.

Unfortunately, there is no accepted standard or certification for managing permissions and access to company information from both company issued and personal mobile devices. However, the industry is gravitating toward the OAuth certification standard according to Tom Patros, Principal at IT consultancy Red Argyle. IT developers should be familiar with this and other emerging security measures.

5. Get Certified by One or More Cloud Providers

A final area of focus for the IT community is to obtain Cloud certification from a Cloud provider to show your skills are vetted. A wide range of programs are currently offered by providers such as Amazon, Salesforce, Rackspace and others.

Obtaining certification from a Cloud provider is tactical relative to the strategic areas highlighted here. However, certifications can help add to Cloud skill marketability. And, ultimately, being able to market this new Cloud skill set is crucial to getting, and maintaining, a job in the age of Cloud computing.

IT professionals that proactively seek to develop these Cloud skills will position themselves to have a thriving career in the era of Cloud computing. Since these skills are currently in high demand and short supply, developing this skill set will also ensure a smooth professional transition as the Cloud continues to expand in the enterprise.

What skills do you think IT professionals should develop for the Cloud world? Please leave me your thoughts in the comments section below.

Thumbnail image created by Dmitri Hon. 

The Winners

1. Bill Gates of Microsoft (1978 – 2006)
Dropping out of Harvard doesn’t necessarily make you a failure. The obvious poster boy for life after dropping out is Bill Gates, who left Harvard to follow his passion for his fledgling startup, Microsoft. He and his friend Paul Allen played a huge roll in the desktop computer revolution of the 1980s and 90s. Gates revolutionized personal computing by offering an operating system that could be used on computers from different manufacturers, and by expanding Microsoft’s product offering into the Office suite many of us rely on today. Not only did he grow his company to a 94% market share, and subsequently swallow competition, he guided his company through an antitrust case in the late 90s on his way to becoming one of the greatest executives in history and one of the wealthiest men in the world.

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Market Cap

• Start – $700 million (when first traded in 1986)
• During – $600 billion (on January 1, 2000, when he stepped down as CEO)
• Currently – $253 billion

2. Steve Jobs of Apple (1996 – 2011)
There may be no more admired executive than the late Steve Jobs–also a college dropout. While he was known to be difficult to work for, he was respected and loved by those who worked for him. Though not an engineer, he is widely known for introducing many of our most beloved tech gadgets including the Mac, the iPod, the iPhone and the iPad. His relentless drive for product perfection resulted in aesthetic beauty in devices so intuitive that anyone can use them, young to old. Under his leadership (the second time around), Apple enjoyed the second most remarkable gain in value of any company in history.

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Market Cap

• Start: $3 billion
• During: $376 billion
• Currently: $460 billion

3. Mark Zuckerberg of Facebook (2004 – present)
Third place features yet another college dropout, but this one had a couple of role models to follow. What started as a dorm room operation with a zero-dollar bankroll has since exploded into an $80-100 billion company that is expected to have its IPO any day. Not a bad return for eight years of work. What is most impressive is the fact that Facebook is not a traditional product-driven company like the others on this list; therefore, Zuckerberg is noted as one of the greatest executives of all time because he has created this massive market cap with a very untraditional product.

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Market Cap

• Start: Raised $2.8 Billion
• IPO Valuation: $80 -100 billion
• After: TBD

4. Mark Hurd of Hewlett-Packard (2005 – 2010)
While he did graduate from college, Mark Hurd didn’t invent anything or start a company; he is a manager who worked his way up through the ranks of Corporate America. In 2005, he took the reigns at HP, a large company with a troublesome board, legacy products and a rich history of internal strife, and turned it around in less than two years. In fact, during his five-year reign as CEO, Hewlett-Packard was a world-class performer. Not only did HP stock gain $50 billion under his leadership, Hurd led HP to an impressive six-percent increase in sales (as reported in CNN Money) during the Great Recession of 2008. HP stock gave back that $50 billion within a year of his departure.

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Market Cap

• Start: $57.01 billion
• During: $107.48 billion
• After: $51.18 billion

5. Eric Schmidt of Google (August 2001-January 2011)
Google. Enough said. No, but seriously, you can’t create a list of successful tech figures like Steve Jobs and Mark Zuckerberg without the mention of the all-powerful Google and its three-headed Hydra of Larry Page, Sergey Brin and Eric Schmidt. After raising just $1 million from family, friends and other investors, Page and his partner officially launched Google in 1998, and ever since it has been an impressive chain of product launches and acquisitions that has helped transform Google into a verb spoken by people around the world. Between buying YouTube in 2006 for $1.65 billion in stock and Google’s employee-friendly super campus work environment, Page has not only built up a baffling market cap of $208.55 billion, but has created a culture that has become a household noun-turned-verb that we could never imagine a life without.

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Market Cap

• Start: $1 million
• During: $208.55 billion
• After: TBD

The Losers

1. Steve Ballmer of Microsoft (January 1, 2000 – present)
Now that we’ve witnessed the winning side of tech execs, Steve Ballmer has to be tops of the The Biggest Loser within the industry. When Steve Ballmer took over as CEO of Microsoft on January 1, 2000, the market cap of the mega computer monopoly was just over $600 billion dollars. Within months, that number plummeted by $350 billion, among the worst declines of any company in history. You can hardly blame Ballmer for the dotcom bubble bursting, but in the last 12 years he has failed to capture any momentum. The current value of Microsoft is almost exactly the same as it was after the crash, and over the last four years half of Apple’s gains seem to match Microsoft’s losses. Critics attribute the $150 billion dip in the last five years to Ballmer’s winning personality, collaborative approach and vision for the company–not.

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Market Cap

• Start: $600 billion
• During: $237.43 billion
• After: TBD

2. Leo Apotheker of Hewlett-Packard (2010 – 2011)
The motto of many lean startups is, “if you are going to fail, fail quickly.” This is less of a virtue when you run a company worth over $100 billion and failing means destroying half that value. When Leo Apotheker took over as Hewlett-Packard’s CEO, the move ushered in a reversal of HP’s typically positive numbers. Cutting the market cap nearly in half during his 10-month tenure, Apotheker’s failure can be attributed to the fact that he tried to turn HP from a consumer products company into an enterprise computer services company that could go head to head with Oracle and IBM. He quickly destroyed the Palm hardware unit and planned to sell off the computer division so he could focus on fighting his personal battles with Oracle and IBM. Cutting the value of your company in half in less than a year is a definite fail.

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Market Cap

• Start: $107.48 billion
• During: $87.36 billion
• Currently: $57.00 billion

3. Jonathan Schwartz of SUN Microsystems (2006 – 2010)
As the CEO of SUN Microsystems, Schwartz somehow managed to take a company on the climb and launch it into a disaster in free-fall. Under his watch, SUN experienced a string of failures, including losing its main computer server market to HP and an unsuccessful attempt to monetize the Java development environment–a blow that caused the company’s shares (and market cap) to plummet and thousands of employees to lose their jobs.

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Market Cap

• Start: $16.77 billion
• During: $8.18 billion
• After: $3.86 billion

4. John Sculley of Apple (1983 – 1993)
Don’t let the numbers fool you. Despite the fact that John Sculley was able to increase Apple’s sales 10X from $800 million/year to $8 billion/year during his decade in charge, many still consider him one of the worst American CEOs of all time. Not only did he force out Steve Jobs, he squandered a 10-year lead Apple had on the competition. It wasn’t until Windows came out in 1993 that the PC industry have anything remotely competitive with the Macintosh OS. Sculley thought marketing was everything and tried to battle head to head with IBM by selling computers aimed at the enterprise, turning Apple from an innovative, product-oriented company to a manufacturer of generic beige boxes. A prime example of his leadership is when he gave each Apple employee a copy of his own book, at Apple's expense, in the hope of inspiring "excellence." Presumptuous much?

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Market Cap

• Start: $2.4 Billion
• During: $4 Billion

5. Gary Forsee of Sprint Nextel (2005 – 2007)
Last but not least on the list of “tech executive failures” is a man that didn’t necessarily have the big shoes of a former success story to fill, but rather, Gary Forsee managed to underperform all on his own. While the numbers are not all bad during his stint as CEO of Sprint Nextel, Forsee’s attempt to merge with Sprint coupled with driving away millions of subscribers and his $5 billion investment in a failed WiMax network proved to be catastrophic miscalculations that have kept Sprint a distant #3 in the U.S. wireless market.

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Market Cap

• Start: $23.35 billion
• During: $70.26 billion
• After: $49.73 billion

We hope you’ve enjoyed this list of successful tech executives and the peak at the others that weren’t so successful. Above all, we hope you’ve learned a thing or two and that you’ll only follow in the footsteps of the first five!

I think we’re at a point when we need to start thinking about creating a set of standards for what a Cloud-based application should look and feel like. Moving toward a set of standards will by no means be an easy undertaking nor will it be a goal we’re able to realize quickly–which is why we need to start the conversation now.

Consistency = Usability = Productivity = Cost-Savings

Inconsistency is the enemy of UI design. When users were interacting with only one Cloud app per day, there wasn’t a problem. Today, users might work with several different Cloud apps on a regular basis. The lack of consistency among them can result in longer learning curves and errors. A more unified experience would boost productivity.

As Shawn Edmondson, VP of Product Strategy at rPath notes, UI standardization “reduces onboarding time for new applications, so you can get value out of applications quickly.” Even if a more familiar application usage experience reduced the need for training on a particular app from just three days to two, the cost-savings for a large company with hundreds of users could be significant.

Moreover, injecting a certain level of standardization will help reduce user mistakes and the need for technical support and detailed documentation, as users will more readily understand how to use the application.

The Evolution of a Cloud UI Standard

“Cloud apps” is an incredibly large field. A Cloud UI standard needs to accommodate a broad range of application functions and levels of complexity. An accounting system is vastly different and more complex than an email marketing system. As such, the goal isn’t so much to standardize the specifics as to standardize the general.

Consider any two Google apps, say, Google Calendar and the word processing application in Google Docs. They obviously serve very different functions. But when you look at them side-by-side, they look and feel surprisingly similar, and they do share some consistent UI elements. If you’ve mastered one, you can master the other much faster.

Note that Google takes an iterative approach to UI design, and it works well. Google has evolved each of their applications’ UIs gradually over time, and not all of their UIs evolve in lock-step. This is partly because they’re continually learning what works best, and partly because Web technologies are evolving in parallel, too, presenting Google with new UI capabilities all the time. A Cloud UI standard could evolve in a similar fashion–with lots of iteration and never quite “finished,” but with the end goal of reaching something pretty good across the board from a usability standpoint and relatively consistent across vendors.

We have another rough model for this: desktop computing environments. The earliest versions of Microsoft Windows and the Macintosh operating system shared only a handful of UI elements, like the concept of folders, double-clicking, and a garbage can/recycle bin. Over time, though, their UIs evolved significantly. Today, they still feel unique and yet similar. People who have never used a Mac but are familiar with Windows can still figure out the basics fairly quickly. That’s generally not the case today going from, say, Salesforce.com to Oracle Fusion Financials. But it could be, someday.

We Need a Tech Consortium to Make it Happen

The benefits of creating a standard are straightforward. However, formulating and moving to standards will be difficult–if not impossible–without support from major industry players.

Brian Sommer, Founder at Vital Analysis, believes that it can only happen if “a vendor with a huge SaaS presence publishes a great library of standards to move to anything like a set of UI principles.” When I asked who might be the ones to do that, Sommer mentioned Oracle, SAP and Salesforce as top candidates to rally the industry.

These are certainly the heavyweights that can influence standards in the enterprise world but it would seem that we could use a little help from the consumer world, as well. Companies like Google, Adobe and Apple deserve to have a seat at that table. With the industry recently coming together to collaborate around a set of standards for Cloud portability, I think it only makes sense that the user interface–and usability–be part of the standards discussion.

Again, achieving this won’t be easy and it will have be a gradual evolution that adapts to the innovation the Cloud affords. But that only means that it’s something worth thinking about and discussing today.

What are your thoughts on creating a set of standards? What do you think needs to happen in order to get there? Please leave a comment below.

A special thanks to Helmut Buchmasser of Folio Cloud for adding their thoughts to this article.

As exciting as SaaS is, the vast majority of software used in the world today is still installed on the device on which it is used. These applications range from the Microsoft Office suite for a few hundred dollars to advanced simulators for everything from semiconductor design and oil exploration that cost hundreds of thousands and sometimes over one million dollars per license.

With all the benefits that SaaS provides, some would think that traditional installed software would disappear. In this article, I outline the reasons it won’t, from two perspectives: why software vendors will continue to invest in developing installed software, and why software buyers will continue to buy it.

Why Software Vendors Still Invest in Installed Software

Despite the predictions by technology prognosticators that installed software will disappear and be replaced by SaaS applications, investment in traditional software development continues apace. The primary reason for this is business model inertia.

SaaS may have higher growth rates, but the installed software industry will remain several times bigger in revenue and market share for several years to come. Revenue estimates vary, but recent reports from PwC and Gartner place the non-SaaS enterprise software market between $130 billion and $150 billion in 2015. And growth rates aren’t bad, either. In another report released by Gartner in June 2011, they forecast that by 2015 worldwide enterprise application software revenues would grow by 12 percent. With sales and growth figures like these, software vendors will fight to protect their traditional software businesses.

One reason: it’s hard to abandon the pricing model. As consumers, we buy a one-time license to use installed software and then typically don’t make another purchase from that vendor until a new version of the software is released a few years later. In contrast, businesses purchase annual licenses to use software and pay the vendor an additional 15-20 percent of the license fee for access to software updates and technical support. This is a lucrative, high-margin business.

The market capitalization, share price, and therefore returns to investors in all of the companies that generate these billions of dollars at high margins are dependent upon their existing revenue streams and business models. This alone makes a transition to SaaS easy for vendors to resist.

On the product side of the equation, software vendors have spent decades developing, testing and refining millions of lines of code. The drive to entice a customer to upgrade to the next release is invariably through incremental development rather than deep innovation. Re-writing code under a completely different architecture, using different languages, programming models and user interface philosophies is often perceived as too large an investment and extremely high risk.

Even if the decision were made to re-write their products for SaaS, the vendor would have to either re-train all their developers or hire a new team. If you’ve tried to hire a competent SaaS user experience architect or developer recently, you’ll know how difficult a proposition this is.

An additional complication that a move to SaaS presents is building the Cloud infrastructure to run a new multi-tenant SaaS application. As Infrastructure-as-a-Service (IaaS) vendors continue to compete and differentiate their offerings, this aspect of the challenge should diminish over time. However, as with any business, vendors must identify and invest in their core competency. To stray away from this is expensive and risky.

Why Software Users Still Purchase Installed Software

We’ve covered the supply side. What about the demand side of the software business equation? If SaaS is so compelling, why are enterprises still buying installed software? Five reasons jump out.

• Security. This is the most frequently cited reason for sticking with installed software. Corporations don’t want their intellectual property (IP) outside of their corporate firewall and potentially “mingling” with their competitors’ IP on a multi-tenant SaaS platform. As the recent migration to Google by the Spanish bank BBVA shows, this is a barrier that is starting to erode, but it’s still very real for many corporations.
• The business model. Counter-intuitively, one of the biggest inhibitors to moving to SaaS is the business model. While switching from a capital expense to an operational expense can be attractive, the inherent unpredictability of SaaS application usage complicates the budget process for many enterprise purchasing departments. While not a huge impediment over time, it weakens one of the vaunted strengths of the SaaS model.
• The need for speed. Processing speed is a legitimate reason for not moving to SaaS for many high-end software products. Applications that perform graphics rendering and manipulation for massive computational problems such as simulation (DNA folding, fluid dynamics, aerodynamics, circuit design, etc.) need the performance of compiled software. The interpretive languages of the Web and SaaS are simply too slow to deliver the performance users require.
• The ecosystem. Big-ticket software applications rarely operate in isolation. Whether used for movie production, pharmaceutical development or chip design, software applications are invariably “modules” in a large and complex flow of software applications from different vendors. The resultant whole is much greater than the sum of its parts.
• Customization. Large consumers of software require from their vendors specific features or interface interoperability between different applications. This is often harder to deliver with SaaS than with installed software.

How Installed Software Can Leverage the Cloud

The issue of installed versus Cloud software isn’t completely exclusive. Installed software can use resources in the Cloud, too, in mostly the same way it would use a traditional data center. The key difference is that the virtualized resources of a Public Cloud result in much more efficient hardware utilization.

High utilization is particularly helpful for software used in High Performance Computing (HPC) environments. In HPC, a massive number of computations are executed across multiple machines in parallel, instead of sequentially on a single machine. Using HPC can therefore deliver results in hours or days for what used to take weeks or even months.

A Public Cloud can be seen as a source of effectively infinite compute resources available on short notice, thus enabling high scalability and flexibility. And because the underlying IT infrastructure is managed by the Cloud provider, this helps lower costs considerably. The combination of installed software with the infinite computational resources of the Cloud can provide a “best of both worlds” solution.

There are other combination installed software/Cloud opportunities, too. For instance, some vendors offer to install customers’ software in their Private Cloud. This model can deliver high-value services with the software, a proof-of-concept experiment, or as a way to sell the customer more licenses when they don’t have the in-house resources to run them. In addition, “Hybrid Clouds” offers an independent environment where end-users can more easily work with software from multiple vendors without violating any licensing constraints.

Summary

Installed software isn’t going away anytime soon. Software vendors will fight to stick with their high-revenue, high-margin businesses, and corporate customers still see a variety of benefits from it. However, new Cloud models are emerging that enable some crossover between installed software and the Cloud, and business models will continue to evolve in all arenas. Things are just getting started.

Is the relationship between the Cloud and public-sector organizations truly oil-and-water? In this post, I explore the issues stifling Cloud adoption in the public sector and highlight strategies for promoting it in one area in particular–procurement–that has a high probability of success.

All About the Benjamins

The Cloud offers a number of benefits over traditional enterprise software alternatives: a smaller upfront investment, subscription pricing, increased accessibility for users and a flexible architecture that easily scales to accommodate fluctuations in organizational size, among other benefits.

Which factor has the greatest potential to impact the public sector? Cost. That is, according to Alan Webber, Partner and Principal Analyst at Altimeter Group.

“It’s just a hard thing to take [cost] off the table,” says Webber. “Considering the current economic situations that public-sector groups are in, it’s the number one decision criterion these days.”

That’s not surprising, given the federal budget deficit of $1.3 trillion and the debt approaching $56.5 trillion. Cuts in key government programs are unavoidable, and IT spending will surely take a sizable hit. If cost is the defining factor in government technology decisions, the low implementation costs and flexible subscription model of Cloud solutions are ideal. So what’s holding back the public sector from moving to the Cloud?

Security, Ownership and Control are Cloud Deterrents

There are many concerns within the public sector about migrating to the Cloud, particularly in the interrelated areas of security, data ownership and control. There is a widespread perception, if not reality, that data stored in the Cloud is more vulnerable to theft. This could be especially problematic with classified or otherwise sensitive information, which is common in the public sector.

There is also a perception that applications and data stored off-premise are not under the control of the users’ organization, coupled with confusion over whether a Cloud application vendor–not the public-sector entity–“owns” the data stored in its systems.

Stratfor, a security think tank and government intelligence partner, was hacked on December 23, fueling arguments that it’s premature for the public sector to embrace the Cloud. However, Webber asserts that data storage concerns will lessen as government groups move forward.

“One of the biggest questions in government IT is, ‘Where is the data going to be stored?’” says Webber. “I think that’s a fascinating question. At the same time, I think it’s an irrelevant question.”

Webber points out that any method of data storage is subject to security breaches without proper deployment and security protocols, regardless of whether the software is on-premise or Cloud-based. And misplaced concerns about data ownership and control will largely resolve themselves.

“As an organization, if the differences are inconsequential, then why not go to the Cloud?,” argues Webber. “I’m not saying it’s a simple cost-benefit analysis…but that’s what it really comes down to.”

Moving Public-Sector Procurement to the Cloud

The specific ways in which the public sector can adopt Cloud-based solutions will vary by the function of that group, its size and the type of applications it requires to operate. One of the more exciting areas is in procurement. With government purchasing and sourcing, the potential cost savings through adoption of Cloud-based e-procurement solutions are substantial.

Private-sector procurement has embraced the Cloud. In a recent conversation with a software company executive, I was told that private sector customers are adopting Cloud-based versus on-premise procurement solutions at a rate of 3:1–an about-face from only a couple of years prior.

I feel that software vendors should utilize two strategies to improve their product and increase their ability to serve the public-sector procurement user. These strategies would help alleviate the perception of Cloud security issues and focus on increasing workflow efficiencies.

• Private Cloud deployment — So-called “private Clouds” are worth considering for many government groups. By shifting ownership of application infrastructure to the customer, government groups can reap the benefits of the Cloud while maintaining tighter control over the application and its associated data. Webber believes that the private Cloud will be a popular option for many public-sector groups, and adoption may in fact move faster than in the private sector.
• Public-sector specialization — Vendors that offer Cloud-based solutions which manage and streamline the highly regulated manner in which public-sector procurement is conducted possess a distinct advantage over vendors that merely re-package their private sector offerings for the public sector. Functionality that focuses on the eccentricities of purchasing and sourcing at the federal, state and local level are essential to public-sector procurement groups.

In addition, two trends within the public sector will create an opportunity for the Cloud in public-sector procurement.

• Increasing prevalence of P3s — Mary Scott Nabers, a government procurement consultant, sees the increasing prevalence of public-private partnerships (P3s) as having a big impact on the solutions that public organizations will choose. These partnerships, commonly used to bring-on private firms for large projects such as road infrastructure improvements, have long been commonplace throughout Europe. Nabers believes P3s will now become more popular in the United States as groups look for private funding. And like Webber, Nabers affirms it comes down to cost for these groups selecting new technology solutions–opening the door for subscription-based procurement software.
• Software buying groups — Even groups at the municipal government level can benefit from adoption of Cloud-based solutions by banding with similar organizations and forming software buying groups. For example, instead of multiple school districts purchasing an on-premise solution, they can jointly adopt the Cloud-based alternative. Webber notes that buying groups have become popular and successful within local public-sector groups in Texas.

Cloud Coexistence

Despite the benefits of Cloud-based software, traditional enterprise software won’t completely disappear in either the public or private sector. Webber likened it how consumers have found it common to store music on their personal computers as well as stream their own collections (and others’) online.

“I don’t think on-premise will ever go away,” says Webber. “There will always be a place for both.”

Do you feel that the public sector is ready for the Cloud, or are the aforementioned deterrents too great for government groups to move beyond? What benefits do you see Cloud-based solutions having within the public sector? Please leave a note with your thoughts below.

Thumbnail image created by Karin Dalziel.

CRM Experts by Lauren Carlson

Michael Fauscette, Group Vice President, IDC – A highly-respected industry analyst, Michael is the go-to guy for anything related to enterprise software. He has a breadth of knowledge that spans industries, which gives him a very unique perspective. It also makes him one of the best resources we have.

Paul Greenberg, Owner, The 56 Group, LLC – They call him the Godfather of CRM, and for good reason. One being that he pretty much wrote the book on it. Paul is passionate about the world of CRM, and his commentary and analysis are almost always spot-on. He is an innovator in his field, and yet humble enough to always lend a helping hand.

Carlos Hidalgo, CEO, Annuitas Group – Carlos is a lead management guru and an expert in MarComm and brand development. He heads up the Annuitas Group and is Executive Director of the recently-launched Marketing Automation Institute. His industry expertise and first-hand experience with marketing automation has been an invaluable resource for us this year.

Brent Leary, Partner, CRM Essentials – An expert in social CRM, Brent has been extremely useful in helping us—and the rest of the industry, for that matter—sort out the social sphere. He has an impressive depth of experience in IT and management consulting, and his blog is an industry favorite.

Denis Pombriant, CEO, Beagle Research Group – With his spot-on market analysis and witty industry commentary, Denis has been a regular source of inspiration for us as Software Advice. He is CEO at Beagle Research Group, and despite being in high demand, he is always available to lend his intellect and advice.

Brian Solis, Principal, Altimeter Group – Brian is recognized as one of the foremost thought leaders in new media. He has authored several books that illustrate how new media is affecting the convergence of marketing, communications and publishing. His commentary on this emerging space has given us a unique perspective on the industry as a whole.

ERP Experts by Derek Singleton

Brian Sommer, Founder, Vital Analysis – Brian Sommer is a great resource for any topic related to enterprise software, but he's especially knowledgeable in the enterprise resource planning (ERP) software space. He has deep insights to offer on market trends and the business implications of software solutions. His thoughts were particularly helpful in crafting a Software Advice take on the IBM Merger & Acquisition Strategy.

Chad Smith & Carol Ptak, Partners, Demand Driven Institute – Chad Smith and Carol Ptak have an incredible wealth of knowledge on all things related to manufacturing strategy and technology. They are currently making waves with their new approach to material requirements planning (MRP): demand-driven MRP. The new strategy helps manufacturing companies improve production by planning closely to actual consumption patterns.

Marc Wulfraat, Founder & President, MWPVL Supply Chain Consulting – While we didn’t come into contact with Marc Wulfraat until the end of the year, Marc quickly became a valuable consultant for supply chain and distribution topics. Marc is a supply chain and logistics consulting veteran with more than two decades of experience advising on everything from lean distribution to material handling systems.

HR Experts by Kyle Lagunas

Meghan M. Biro, Principle & Founder, TalentCulture, LLC – Megan Biro welcomed me to the TalentCulture family with open arms, which went a long way to connecting me to the HR and recruiting professionals working in the trenches. Not only is she an expert in talent acquisition, personal and corporate branding, and new media strategies, she’s the leader of a game-changing Twitter chat. With #TChat entering its second year, I’m excited to be on her side of the ring along with Kevin Grossman, Maren Hogan, and Sean Charles.

Matt Charney, Social Media Engagement Manager, Monster – My go-to guy for connecting with need-to-know people. It’s not easy being the new kid on the block, but if I am trying to get in touch with someone–BAM! He makes it happen. Having worked in talent acquisition for Warner Bros., The Walt Disney Company, and now Monster Worldwide–the world’s largest online recruitment solutions provider–he’s got a sharp mind for innovation in social media and recruiting.

John Sumser, Principal Analyst, HRxAnalysts – John invited me to coffee shortly after I started here at Software Advice. I thought we were going to talk about an article I’d shared with him. Two cups o’ joe and a whirlwind later, I walked away with no fewer than six people he wanted me to contact and the realization that success as an HR analyst is no cakewalk. As one of the premiere HR analysts around, John’s received all manner of accolades. For his kindness and expertise, I’d like to offer him my humble thanks.

Medical Experts by Katie Matlack

Justin Barnes, Vice President of Marketing, Industry and Government Affairs, Greenway Medical – During my first weeks Justin provided important context for my work here writing about electronic health records. Justin also helped me understand where healthcare is headed in terms of both Health IT and accountable care.

Dr. Jeff Beard, my go-to for a doctor's opinion - Jeff provided helpful insight for my article on social media in medicine, and has been invaluable as a friend and healer to my dad too as a physician who truly puts the patient first.

Mary Jo Pfaff, my former girl scout leader, good friend's mom, and home health physical therapist – Mary Jo talked with me about transitioning to electronic health records and how she thinks it will affect her and her colleagues. Mary Jo was patient in spite of my poor cell reception and made time for me in spite of her busy schedule characteristic of caregivers in her line of work.

Retail Experts by Michael Koploy

James Dion, Founder and President, Dionco Inc. – James has a great amount of expertise working with both the technology- and the sales-side of retail. A highly-recommended resource on both where retail has been and where it’s going. James manages his own retail consulting firm, Dionco, out of Chicago.

Doug Stephens, President, Retail Prophet Consulting - Retail Prophet Consulting is focused on providing strategies that help retailers transition and prepare for the future of retail. Its ability to do so is in large part because of Doug’s experience, foresight and talent. Doug has been a great resource, and just a great guy to bounce ideas off of.

Joseph Tarnowski, Director of Integrated Content/Technology Editor, Progressive Grocer – Joseph has been an active voice in grocery news media for a decade, and was great to share some of his insights and opinions on the market. As more speciality stores find their niche, hubs such as his new Independent Grocer Network will grow into incredibly valuable resources.

Supply Chain Experts by Michael Koploy

Jason Busch, Founder and Managing Director, Azul Partners – In addition to his consulting work, Jason operates one of the most prominent and resourceful spend management websites, Spend Matters. He’s constantly in demand and extremely busy–but still incredibly approachable. He was kind enough to leave a long after-hours voicemail sharing his thoughts on the procurement software market earlier this year.

Sherry Gordon, President at Value Chain Group – A board member of the Institute of Supply Management SCRM Board and frequent speaker at numerous global supply chain conferences, Sherry is a leader in supplier performance and evaluation. Her ability to discuss, converse and clarify many of the misconceptions in performance management are top-notch.

Dr. George Harris, President, Calyptus Consulting Group – George has nearly four decades of experience specializing in both procurement and lean processes. His consulting firm, Calyptus Consulting Group, advises both private-sector and public sector groups across the globe. George is an extremely valuable resource with insight on both supply chain strategy and technology.

In fact, a recent report by Kelton Research indicated that 90 percent of IT managers intended to implement mobile applications this year. The report is an indication of what some analysts are calling the move to a post-PC world – heralding the smartphone and tablet as “enterprise terminal of the future."

92% of the Fortune 500 companies are testing or deploying the iPad.         - Tim Cook, CEO of Apple

So it comes as no surprise that the enterprise is calling on Apple for design inspiration as vendors develop for the mobile world. I see three ways that Apple – and the ubiquity of the iPhone and iPad – is influencing enterprise software development and its approach to mobile technology. Today, enterprise software vendors are:

1. Trying to create a mobile user experience that mirrors that of iOS.
2. Creating an ecosystem of mobile app developers.
3. Selling apps in their own enterprise apps marketplace.

This approach is a decidedly different take on how enterprise applications are designed, developed and distributed.

1. Vendors are Focusing More on User Experience

While Apple may not have been the first to design for a mobile platform, they were certainly the first to nail it. As a result, they’ve become the gold standard for design simplicity and usability. The impact has been so significant that ERP users are starting to expect the same iOS experience in enterprise-grade apps.

Key to creating a pleasant user experience is an interface that incorporates multiple data sources in a way that’s easy to use. As Brian Sommer pointed out in a recent article, users want to work from a single platform that draws on the functionality of multiple apps, without dealing with the multiple screens and security protocols. For instance, an HR manager working from their iPad may want to check employee performance from their talent management system and then move on to accessing their business intelligence features to analyze expense report data.

That notion is only partially hypothetical. Here are two examples of companies that are making this a reality:

• Workday released a native iPad app that incorporates an activity stream from Salesforce's Chatter. HR staff can use it to stay up to date on employee projects, quickly approve a time-off request, etc. The app also includes business intelligence features.
• SAP released an iPad app for their Business ByDesign product that provides dashboard view of the data analytics stored in ByDesign. Users can also access a graphical view of their sales revenue and analyze their profit margins, among other things.

Both of these examples represent a decidedly different approach to enterprise software and provide a unified experience while offering employees a better way to perform their job functions.

2. Vendors are Building an Ecosystem of Mobile Developers

Today, building one app with an elegant user experience isn’t enough. Users have come to expect options when it comes to mobile apps. To satisfy that desire, some enterprise vendors are building out a developer ecosystem. Recognizing that much of the success of the iTunes App Store is a result of their developer network, enterprise vendors are creating a developer community that can establish them as the enterprise app pioneers. The hope is that these developers can cater to unique market needs and allow the vendor to rapidly seize market share in an open field.

In Apple’s case, the developer ecosystem has been essential to creating the more than 500,000 apps that are available in the iTunes App Store. The fact that Apple provides the platform for talented developers with a good idea has democractized the development process. It’s transformed a resource intensive process into one that can be managed by three programmers in their garage.

When you don’t have to worry about the distribution and platform issues of developing an app, the barriers to entry for any commercial software developing firm are virtually non-existent. – Brian Sommer, CEO of Vital Analysis

Recognizing the payoff of building a development ecosystem, enterprise vendors such as Salesforce and SAP are providing app developers with a native platform to develop on. Salesforce is already off to a great start in building out a development community by attracting mobile developers to their Force.com platform. To date, Force.com developers have built more than 1,300 apps for Salesforce customers using the tools provided to them via Developer Force.

3. Vendors are Creating Their Own Apps Marketplace

Of course, building out an ecosystem of developers doesn’t mean much if you aren’t successfully distributing and selling the apps. As enterprise vendors build out their development ecosystem, they’re also monetizing apps by distributing them through their own marketplaces. Apple has made it clear that app stores aren’t just about extending useful software functionality to the masses – they’re also about improving the company’s bottom line.

Apple had enough vision to realize that there was money to be made off an active community of mobile app developers. At Apple’s recent Let’s Talk iPhone conference, Scott Forstall noted that Apple paid out $3 billion to their developer community. Given that Apple takes a 30 percent commission on app sales, we can guesstimate that Apple brought in revenue somewhere near $1 billion for simply providing the development platform and distributing apps other people built. It’s a win-win situation for the vendor and the developer.

Enterprise vendors are realizing the value of adopting this model of app distribution in exchange for a licensing fee. SAP recently created their own apps marketplace designed to cater to their Business ByDesign product. Other notable examples include Micrsoft’s CRM app store and NetSuite’s Suite App website.

Meanwhile, Salesforce’s AppExchange marketplace recently hit the 1,000,000 download mark – making them a nice chunk of change in the process. Salesforce monetizes their app development by charging a $300 fee for a security review in the first year of development, and $150 for each year of subsequent development. It's an easy, and steady, revenue stream that's largely untapped. Gradually, I think this will become the rule for mobile app development rather than the exception. 

Clearly, Apple’s success in the consumer world is bleeding into the enterprise and pushing development toward a new paradigm in the process. As the enterprise looks to capitalize on the red-hot trend of enterprise mobility, Apple is inspiring enterprise vendors to change the way they design, build and sell for mobile devices.

What do you think? How else do you see the Apple iOS impacting enterprise application development? Please feel free to leave your thoughts in the comments section.

A special thanks to Philippe Winthrop of TheEMF and Brian Sommer of Vital Analysis for sharing their insights on this article.

Hastings and the entertainment industry have been blindsided by the impact of Internet streaming on their businesses. Hastings thus acted in what he believed was best for the long-term prosperity of his company.

Many independent software vendors (ISVs) selling enterprise systems are facing a similar challenge and have a similar decision to make. In an attempt to not be left behind by the shift to cloud computing, many on-premise providers now offer software-as-a-service (SaaS) solutions. But are these ISVs moving boldly enough? Many are simply sticking their toe in the water, while cloud upstarts race forward with a singular focus – and platform.

As we approach a day when many providers will have to make a decision similar to Hastings’, I think the enterprise software industry can learn from the Netflix/Qwikster split.

Move Positions Netflix to Survive DVD/Streaming Transition

Media, investors and customers alike have chastised Hastings’ actions. Since then, Netflix shares have dropped from a peak of $298.73 on July 13 to under $130 at close on Sept. 23. Customer backlash has been intense – with the consensus being that the service has become too expensive, doesn’t offer enough quality content and will soon become too cumbersome to use.

Personally, I think Hastings’ move was a bold one that may be looked back upon as a deciding moment for a company and an industry. Yes, he may have damaged the Netflix brand, created a case study on “how not to do PR,” and lost some customers along the way. But Hastings is doing what Netflix has always done: charge forward as a leader in media entertainment services.

Hastings sucked it up, faced the brutal facts and made what he believed to be the best long-term move. Will on-premise ISVs do the same?

Some Band-Aids Are Better Ripped-Off Quickly

Through all of his missteps, this may be the lasting message of Hastings’ decision to not be left in the digital distribution dust. In his official announcement, Hastings even justifies his decision as one for the future livelihood of his business:

"Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business…Companies rarely die from moving too fast, and they frequently die from moving too slowly." – Reed Hastings, Netflix

Netflix has already been the cause of a direct competitors’ collapse. Blockbuster, the former media rental giant, is now bankrupt, defunct and forgotten – a Goliath slayed by Netflix and other subscription rental companies. Though Blockbuster entered the home delivery rental arena and played with a “no late fees” policy near their end, it was a case of too little, too late.

Blockbuster decided to ignore shifts in consumer demand, believing they could continue to focus on what they did best and survive. And like AOL and Borders, they were wrong. Hastings’ decisions, while negative for the short term, will position the company to be successful as the entertainment industry transitions to online streaming.

Successful ISV Transition to the Cloud is Possible

When it comes to enterprise software, there are clearly more variables to the equation. Netflix’s decision to raise prices and split into two companies didn’t change the core business model, which has been subscription based since 2000. For ISVs, however, a move to only offering subscription-based SaaS solutions would mean an immediate loss in licensing revenue. In addition to hampering the ability to invest and develop internally, lower revenue forecasts never make investors happy.

But I believe that the transition can be achieved in enterprise software – and actually, it has. Ariba, a provider of procurement, spend and contract management software, decided to make the switch to pure SaaS solutions back in 2004. In an excellent interview with Phil Wainewright in 2009, Ariba’s Chief Technology Officer Bhaskar Himatsingka explained that the transition was necessary and logical for their customers and the future viability of their offerings.

In the span of three years, Ariba effectively moved their offerings to being entirely SaaS and paid for by subscription. Financial data obtained from Ariba’s 10-K filing shows that revenue growth was stagnant while the company made the transition from license-based to subscription-based revenue:

Meanwhile, historical stock price performance shows that investors were hesitant through the movement to SaaS. But as subscription revenue approached that of licence revenue in 2001, stock prices began to rise:

Ariba not only made the transition, but they are now in a great position – and stand to continue growing in the future because of it. Following the Ariba model, ISVs that decide to make the transition to SaaS should anticipate the following:

1. Subscription-based revenue will slowly eat away at licencing revenue, but slowly grow as the company – and customers – transition, to eventually reach original licensing levels.
2. Investors will be hesitant while overall revenue growth remains stagnant, but will switch back to a buy mentality as subscription licensing shows continual growth.
3. This will take a long time, and cash flow dynamics will prevent the company from executing on too many initiatives outside of the shift in business model.

A Lesson Learned for Enterprise Software

As we’ve seen with Blockbuster, AOL and Borders in media and countless ISVs – like McCormick & Dodge, Cullinet and SSA – a company that refuses to change gets left behind and leaves investors, employees and customers in the cold. So kudos to Netflix for making such a bold move.

Clearly, we can all learn a lot from Netflix. Most notably: if you do rip off the Band-Aid to make sweeping changes in software service delivery, it needs to be because it’s in the best long-term outlook for both the company and your customers. And from a PR perspective, the changes need to be clearly articulated to all parties – especially to paying customers.

What do you think is ahead for ISVs determining how SaaS will be a part of their long-term plans? Will they continue offering both? And what do you foresee as the implications of these changes for the company, brand, investors and customers? I’d like to hear your thoughts in the comments below.