Silicon Valley Watcher - reporting on the business of technology and media: Thoughtleaders Archives

[thoughtleaders] Doc Searls on blogging made easy….

[thoughtleaders is part of a new series consisting of vignettes of advice and observation]

By Tom Foremski for SiliconValleyWatcher

It was a pleasure to meet Doc Searls recently. Doc is what I call a "big link" in the online world: one of the early bloggers, a pioneer of online marketing concepts, co-author of the popular 1999 book "ClueTrain Manifesto," and senior editor at Linux Journal.

Doc said several interesting things during his presentation at a recent Bite Communications sponsored seminar. Doc: "I blog about an hour a day; and I find it easy."

This is an excellent observation on blogging. Doc is right, blogging should be easy. It should be as easy as writing an email to a colleague or buddy. It's not so easy breaking stories, writing news, interviews, analysis and features --the type of journalism that we also have on SiliconValleyWatcher; but the blogging part, like this entry, should be easy. This is my "blog voice," and it is very similar to my "email voice." My blog voice, however, does change according to mood, and how late I stay up blogging (!)

If any one of you is hesitating about writing/starting a blog because you are not yet "ready," I suggest you jump in anyway. It is a forgiving environment; few will read you initially anyway, which means you can experiment with the format and build your readers one by one. And you will understand what this blogging fuss is all about :-)
cd2355

Posted by Tom Foremski on April 22, 2005 6:11 AM | Permalink | Comments (5) | TrackBacks (1)

[thoughtleaders] Exclusive--RightNow Technologies CEO Greg Gianforte has become our first management columnist: Serial advice from a serial entrepreneur

By Tom Foremski for SiliconValleyWatcher

I've met Greg Gianforte several times because my friend Annie Kim used to work at RightNow Technologies before leaving for business school at MIT. As founder and CEO of RightNow, Greg loves to talk about his enterprise "software as a service" company. But if given the chance, he really loves to talk about entrepreneurship and how to build companies.

Greg has a book coming out in September called "Bootstrapping Your Business." His management advice comes from his experience in five startup ventures.

I shared some of Greg's management advice about a month ago, and the feedback was excellent. Greg agreed to contribute more nuggets of wisdom on a regular basis and I promise to deliver them to you in short question/answer format segments.

Greg kicks off our thought leaders series, which will mostly appear on Thursdays, featuring top-notch advice from our Silicon Valley/global business leaders and tech gurus.

Please send questions (tom at foremski dotcom) for Greg. Your name and company affiliation can be withheld from publication if you are more comfortable that way. To get things rolling, I'll start him off with a few questions this Thursday.

Some earlier posts:

Secrets of starting and growing a company

Tales of the newrules enterprise

Posted by Tom Foremski on May 10, 2005 6:00 AM | Permalink

IBM is preparing to launch a massive corporate wide blogging initiative as it seeks to extend its expertise online

By Tom Foremski for SiliconValleyWatcher

Updated

IBM is planning to introduce what could be the largest corporate blogging initiative so far, in a bid to encourage any of its 320,000 staff to become more active in online tech communities.

The world's largest computer company has prepared a broad range of programs and online materials that staff can access to find out how they can start to blog. The move would help establish IBM's "thought leadership" in global IT markets.

The IT industry continues to suffer from lower levels of corporate spending following the boom years of the late 1990s. IBM's most recent quarterly financial report missed Wall Street expectations and led to announced layoffs of 15,000, with more than 13,000 of those lost jobs in Europe.

The company said that the blogging initiative was not related to its recent cost cutting measures and had been planned for several months.

Continue reading "IBM is preparing to launch a massive corporate wide blogging initiative as it seeks to extend its expertise online" »

Posted by Tom Foremski on May 13, 2005 5:26 AM | Permalink | Comments (8) | TrackBacks (46)

Silicon Valley should fight laws controlling innovation, says veteran valley entrepeneur

By Tom Foremski for SiliconValleyWatcher

Silicon Valley could face additional laws limiting technology innovation unless it gets active in politics and lobbies hard to protect its digital freedoms. That was the view of Joe Kraus, a Silicon Valley veteran and an avid angel investor.

Lunch with Joe is always a treat, not just because he picks up the tab but because I get to pick his brains about all sorts of issues and trends. As a veteran of the first search engine wars, when he co-founded Excite, and now heading a corporate wiki company JotSpot, Joe sees a lot more than many, and he has a lot invested in Silicon Valley innovation through his angel investments.

One of the things on Joe's mind is how cleverly Hollywood managed to control innovation. What do you mean by "control," I asked?

Continue reading "Silicon Valley should fight laws controlling innovation, says veteran valley entrepeneur" »

Posted by Tom Foremski on July 15, 2005 12:02 AM | Permalink | Comments (3) | TrackBacks (1)

[thoughtleaders] Most startups should avoid venture funding, not pursue it

A Silicon Valley thoughtleaders column by Greg Gianforte, CEO of RightNow Technologies, for SiliconValleyWatcher

Raising venture capital for early stage start-ups seems to be the prevailing path for most entrepreneurs; however, most would-be founders should reconsider.

Here are some reasons why:

Continue reading "[thoughtleaders] Most startups should avoid venture funding, not pursue it" »

Posted by Tom Foremski on July 21, 2005 2:40 AM | Permalink | Comments (5) | TrackBacks (1)

A community of thought leaders---more thoughts on new rules enterprises

. . plus more thought leader columns from others are on their way

By Tom Foremski for SiliconValleyWatcher.com

In January, I started writing about the "new dotcoms," the ones that will eat lunch, this time around, in the new Internet economy.

The new dotcoms are not technology companies, necessarily, but they are all "technology enabled" companies. And they will play by whole sets of new rules, many of which challenge the old rules, the established notions of business reality.

I call these new dotcoms new rules enterprises, or sometimes I call them newrules ventures [I can't decide which one to use.]

There are new rules enterprises of various sorts, and their distinction is in which new rules they embody, and how many of them. There are already some newrules ventures around, and more are on the way.

They share some of these characteristics: most are small, they have a large impact, and they are very profitable — you have no idea how much money they are making.

They are private, and will remain private, they have first mover advantage, and they innovate through technology enabled business processes.

And they capitalise themselves through creating and selling businesses.

The rules

I don't know how many new rules there are altogether, but I know what some of the rules are, and some of my readers have told also me about some of them.

Here is one of the original new rules of the newrules enterprise, and some from our community of contributors. And please, contribute your new rules, too. Remember, you get a byline and a date stamp!

When you contribute ideas there will always be a permanent link to your words of wisdom. This means you should contribute often :-)

First rule

Continue reading "A community of thought leaders---more thoughts on new rules enterprises" »

Posted by Tom Foremski on August 5, 2005 3:00 AM | Permalink | Comments (1) | TrackBacks (1)

Cisco chief says Silicon Valley public schools are an embarrassment. . .

. . . and names education and healthcare as the two largest issues facing US businesses

By Tom Foremski for SiliconValleyWatcher

I was on a very interesting panel Wednesday morning at Cisco. With 12 panelists, it could have been a bogged-down-and-dreary-event with much waffling about "virtuality" and how it will boost healthcare and education.

Instead, it turned into a very spirited discussion, as the journalists on the panel took on some of the sometimes empty rhetoric of corporate-market-speak from the heads of three large US technology companies: Cisco, NASDAQ and VeriSign, and startup RelayHealth. And in the process, some of the corporate-market-speak at times gave way to a real discussion.

Wendy Kopp, the charismatic founder of Teach for America, made some good observations given that she admitted that she had not a single minute thinking about tech. And Jim Goldman of CNBC rolled with the flow as the panel's moderator, keeping things moving. I know I took away a lot more than I expected from the event. In a first for Cisco, the event was podcast as well as webcast.

[Panelist list is at end of post, along with a link to the podcast.]

The event was to discuss "virtuality" and how this technology would improve healthcare and education.

After ten minutes it became clear that "virtuality" was one of those words that had yet to crystallize around an agreed upon definition; so it virtually disappeared from further use, and the group moved onto a much broader discussion about why public education is so bad, and why the healthcare sector has resisted investments in technology.

Mr Chambers initially presented a rosy view of a healthcare system making use of computer technologies to save lives, and the cost savings they would recover. However, a carrot also comes with a stick, and during a further conversation he warned that large corporations would force changes on healthcare providers.

He said Cisco's healthcare costs had skyrocketed over the past five years - "and we're a relatively young company." It is a burden that cannot be maintained and it requires exposing the healthcare system to direct market forces, instead of the insurance companies. That would then encourage healthcare organizations to invest in IT for the cost savings.

At one point I complained that if Silicon Valley wants to be seen as the premium brand of global innovation, that this is the place where the future is invented, it had better make sure its public schools are showcases, not basket cases.

John Chambers, chief executive of Cisco agreed, saying it was embarrassing that the K through 12 public education system is broken in Silicon Valley.

Mr Chambers has put a lot of work and money into political campaigns around educational issues, such as school vouchers, a sometimes controversial method to prod schools toward higher academic performance.

He admitted that technologies such as distance learning, had not proved themselves as expected. But he said Cisco studies showed they did have value in short 10 to 15 minute online lessons, along with other educational materials.

Continue reading "Cisco chief says Silicon Valley public schools are an embarrassment. . ." »

Posted by Tom Foremski on August 11, 2005 1:25 AM | Permalink | Comments (1) | TrackBacks (0)

A call for a New Rules community platform centered on education and public schools

By Tom Foremski for SiliconValleyWatcher

School Sidecar.jpg I wrote about the issue of Silicon Valley's terrible public schools earlier this year. I got some great responses on the subject. But Dan Gillmor berated me for berating Silicon Valley. "Berating doesn't work," he told me at a recent event.

Well, not berating Silicon Valley doesn't work either then, at least it makes me feel better, if nothing else.

But I also realized that there is a lot of work being done by leading Silicon Valley companies such as Cisco, Sun, HP and many others, around the subject of education. And they all seem worthy projects, yet the results of all that do-gooding are hard to find.

Here's my take for a "new rules" philanthropic education effort, (and it means we ditch the non-profit company approach, even if it means losing that tax deduction, I'll explain.)

And please, take the following and add to it, or change it, or whatever else needs to be done to change things, these are just a few ideas to maybe develop an open source business model that will make a big difference in our communities, and become a blueprint for other communities too. This is a work in progress:

New Rules Community Platform

Continue reading "A call for a New Rules community platform centered on education and public schools" »

Posted by Tom Foremski on August 11, 2005 3:49 PM | Permalink | Comments (3) | TrackBacks (0)

It was the most dull of times, it was a fascinating time when one paradigm was dying and the next was not yet born

By Richard Koman for SiliconValleyWatcher

We're a little behind here, but I want to make sure folks are caught up on the running conversaton between Tom and Network World editor John Gallant. In point/counterpoint fashion, (if some of are still around who actually watched 60 Minutes in the 70s, or Saturday Night Live for that matter), here's a recap of the debate.

In Deadly dull IT markets ..." Tom claimed that three things will keep enterprise IT in the doldrums: Maintenance spending is rising, so there is less money for new technologies; the market is controlled by one or two large players which discourages innovation; there is too much FUD in IT markets; and enterprises themselves will wither under the assault of small, nimble companies and the weight of legacy infrastructure.
John responded that Tom was dead wrong, and laid out exactly why he thinks the enterprise is at a most interesting crossroads:

We are at the end of the client/server era of computing. What the next era will be is not clear yet. That presents vast potential and vast risk to enterprises, who have to navigate major changes in the way they build and use computing, network and storage technology, and for the vendors who have made their fortunes on client/server. Some of them will choose the dangerous and self-destructive path of trying to protect the current ways of doing IT, failing to learn the lessons of earlier dinosaurs who fell in market upheavals of yesteryear.

Where we are today is analogous to the end of mainframe and mini-computer eras and the emergence of PCs, networking, the Web - shifts of vast magnitude. We're on the verge of a revolution because enterprises need IT more than ever to compete in a highly price-competitive, fast-shifting marketplace and they need to do IT better, smarter, faster and cheaper. They have to break the bounds of today's systems and they need much more help from the IT industry to make these changes.

The problems that Tom cites are real. But they are symptoms of client/server's demise. They were caused by client/server (just throw cheap bandwidth, storage and servers at any problem!) and they are exactly the kinds of challenges that must be addressed in the new era. What's more, they are exactly the kinds of opportunities that smart entrepreneurs are setting their sights on today.

Continue reading "It was the most dull of times, it was a fascinating time when one paradigm was dying and the next was not yet born" »

Posted by Richard Koman on August 24, 2005 10:28 PM | Permalink | Comments (0) | TrackBacks (0)

Are IT markets "deadly dull" or "quite interesting? The Gallant/SVW debate heats up...

. . .the Vorticians are coming! (SF Palace hotel October 24-26)

By Tom Foremski for SiliconValleyWatcher
John Gallant is truly one of the leaders among thoughtleaders in the global information technology industry ($1 trillion plus).

My colleague Richard Koman has put together a fine piece of reporting on our respectful digital tussle: It was the most dull of times...

I just wanted to say I am flattered that Mr Gallant, Editorial Director of IDG's flagship IT publication Network World, continues to engage in discussion about my contention that IT markets are deadly dull.

. . .

I still say that information technology is not strategic. What is strategic is the thing that is yours, yours alone, that thing that is proprietary, that is your intellectual property, that only you can do--you can only get it here. That thing that is unique to you.

Information technology markets are open to any buyer. Information technology is like every part of your business, it expresses your strategic value. Your entire business is an expression of your strategic value. Your entire business is an expression of your uniqueness.

. . .

Another reason IT is not strategic:

The entire IT industry has barely been able to measure any value to white-collar productivity from more than 40 years of information technology use and investment. Let alone strategic value!

I would print that in capital letters but it looks ugly, as you can see:

THE ENTIRE IT INDUSTRY HAS BARELY BEEN ABLE TO MEASURE ANY VALUE TO WHITE-COLLAR PRODUCTIVITY FROM MORE THAN 40 YEARS OF INFORMATION TECHNOLOGY USE AND INVESTMENT. LET ALONE STRATEGIC VALUE!

What about bold?

The entire IT industry has barely been able to measure any value to white-collar productivity from 40 years of information technology use. Let alone strategic value!

The times IT might have been strategic are so few that they are probably accidental and an artifact of the law of large numbers.

Most burning question in IT

But Mr Gallant this week has written another column on what is rapidly escalating into the most publicly debated question about the state of the future IT industry today on our respective blogs.

Please read Mr Gallant's column and his Vorticians, and let us know what you think. I'll post more when I finish packing and moving apartments...

[Actually, I think John and I are most probably in larger agreement than smaller. And that the divide between us is narrow, and mostly semantic.]

Network World: Agreeing to disagree, part deux (with some small agreement this time)

Here is a taster/teaser for you from John Gallant's column in which he attacks Steve Jobs (Silicon Valley's Babe Ruth), iPod business calling it (gasp!) the iCon...

-------
(SteveJobsisprobablycrushinghisheadbetweentwowellmanicuredfingersrightnow...[hereletmegetoneforyouSteve:])

Here's John:

First off, I'm not arguing that information technology itself is exciting or fascinating. Yes, some of this stuff is innovative and quite interesting. But far be it from me to extol the sexiness of, say, storage virtualization versus an iPod, the iCon of successful consumer technology...

Continue reading "Are IT markets "deadly dull" or "quite interesting? The Gallant/SVW debate heats up..." »

Posted by Tom Foremski on August 25, 2005 6:00 AM | Permalink | Comments (0) | TrackBacks (0)

Software lemmings head for the platform cliff--a provocative post from Greg Gianforte

A guest column by Greg Gianforte, CEO of RightNow Technologies

How would you feel if your mechanic handed you a 125-piece wrench set rather than actually fixing your car? What if another mechanic then walked up to you with his tools and started arguing with the first guy about whose tools were better? You sure wouldn't feel like either of them was going to help you with your problem, would you?

Yet that's exactly what software vendors are doing today as they engage in platform wars – to the detriment of their customers and the industry.

-Oracle announces its Fusion platform, revealing a grand architectural chart that shows how they will exercise total control over their customers' computing environments.

-SalesForce.com unveils a platform dubbed "AppExchange" that enables customers to engage with unstable, third-rate software vendors more rapidly and conveniently than ever.

Continue reading "Software lemmings head for the platform cliff--a provocative post from Greg Gianforte" »

Posted by Mike Faden on September 30, 2005 11:31 AM | Permalink | Comments (0) | TrackBacks (0)

I told IBM they should buy SAP-- Kleiner's Ray Lane says...

Ray Lane.jpg I've become quite impressed with former Oracle president Ray Lane and his analysis of the enterprise software industry. From his perch as a VC with Kleiner Perkins, he has developed interesting insights into the sector.

A few weeks ago I managed to chat with Mr Lane at a dinner for Virsa, possibly the fastest growing private software company today (it provides SOX compliance).

Before the dinner, Mr Lane made it plain he did not want to hear about how the enterprise software industry was now dead because of Oracle's acquisition of both PeopleSoft and Siebel. "Nothing has changed that wasn't the case before the acquisitions," Mr Lane said.

Which is true; but the acquisitions just reinforced and underlined the fact that two companies control all innovation and buyouts.

Here are some of the highlights from the dinner:

Please also see: Peoplesoft and Siebel considered merging but leadership issue blocked the deal.

Lots of M&A activity ahead

Mr Lane foresees a lot of M&A as thousands of smaller software companies try to acquire, or be acquired, as a survival strategy. Also, there are still thousands too many software startups that "won't ever produce significant revenues and should be closed down."

IBM should buy SAP

Mr Lane is convinced that IBM should acquire SAP. "Earlier this year I told Sam [Palmisano] that IBM should acquire SAP," Mr Lane said. But the IBM chief rejected that advice.

I pointed out that IBM makes more money out of SAP than SAP, because about one in ten dollars is spent on license fees, the rest is for implementation--the IT services that forms about one-half of IBM.

But Mr Lane believes that IBM needs applications on top of its middleware stack. I pointed out that IBM was terrible at enterprise applications and abandoned the market in 1999. "Well, Oracle was terrible at apps too," he said.

I covered IBM for a long time when I was at the Financial Times. Steve Mills, IBM's software chief, has been executing a strategy that has worked well and makes good sense. IBM found growth in providing middleware components to apps vendors, and not competing with them directly.

Mr Lane believes that if IBM had apps, it would be in a better position to sell more of its middleware components, which is probably true.

I would argue that IBM doesn't need to be in enterpise apps because it can let the developers create apps on its middleware platform and then use its massive IT services group to set it all up for its enterprise customers--that's where 90 per cent of the IT spend goes in such things.

A New Rules Car Corp.

I discussed with Mr Lane my description of what the new type of very successful dotcom organization would be, what I call a new rules enterprise.

These are small, highly agile, first mover companies, whose first rule is that they are new--no cultural battles to fight, and no legacy thinking and infrastructure to carry, etc.

Mr Lane agreed, "I think there is a lot to be said for a new rules enterprise. For example, if you were to build another General Motors today, it wouldn't look like GM. In fact, I think it is a great time to start a car company.

You can read more about the rules of new rules enterprises here:

These are the new dotcoms of the new rules economy...]

JotSpot and low end apps tools

Mr Lane said he was a big fan of JotSpot and other types of software that allowed people/small groups to easily create personalized applications. He also said that Kleiner wanted to invest in Joe Kraus's JotSpot when it had an opportunity, but an administrative snafu lost the deal.

Why should startups take VC funding?

That's a question I like asking, because in my view, VCs were needed when startups needed significant infrastucture, such as data centers. Nowadays that infrastructure is already in place, on demand over the web, at low cost. Today it's all about knowledge capital. You just need to have a small team willing to throw their credit cards into a bowl and work for six to 12 months.

Mr Lane says there is still a role for VCs, and that the VCs provide valuable advice. Well, I can see that having Ray Lane on the board of my software company would probably be worth the 50 pounds of flesh; but otherwise, it's an expensive way to get expert advice.

And I come across an astounding level of animosity towards VCs. Too many entrepeneurs have experienced the shenanigans that go on in the VC sector; and they won't seek funding until they've built up their valuations as far as possible through other means.

I think that it's just a few bad apples in the VC community--but then again, I don't know.

Ray Lane Bio

http://www.kpcb.com/team/bio_detail.php?frm_id=10

Posted by Tom Foremski on October 20, 2005 7:00 AM | Permalink | Comments (0) | TrackBacks (0)

Silicon Valley goes to Washington D.C...Network Appliance visits the Hill as Data Protection laws are debated

I got a call from NetApp [NTAP] founder Dave Hitz and team, who are in Washington D.C as part of an East coast tour to visit with large financial services customers and legislators.

Dave Black from Voce fills in the background:

Congress is now considering the Personal Data Security and Privacy Act, and 8 other pieces of legislation designed to impose privacy, notification, and handling parameters on the storage of personal data -- in part due to high profile cases such as ChoicePoint and Mastercard. 30 other states are simultaneously considering similar legislation, and many of these laws actually contradict one another. If the federal government does not pass pre-emptive legislation, we'll soon have 50 slightly different state laws pertaining to data security -- expensive and painful for corporations.

Mr Hitz says he has been impressed by the legislators and their aids and with their understanding of the issues involved.

It is a complex subject because it requires creating best practices policies on storing, safeguarding, and destroying mountains of data that are required to be kept for up to seven years as a result of Sarbanes-Oxely and other regulations.

Silicon Valley is increasingly realizing that it has to deal with Washington D.C and get involved in the conversation--otherwise bad laws will be passed. Joe Kraus, of Excite/JotSpot has warned in SVW, about how other industries can use the law to limit what types of innovation can be done.

Easing on SOX?

Mr Hitz also mentioned that "there is a growing realization that Sarbanes-Oxely is an expensive burden for many US companies and there is talk of possibly easing the burden on smaller companies."

That would be a good thing--it's a tax on innovation, imho. But it wont happen unless there is a visible champion--a captain of industry confident enough to take the heat and the scrutiny. Any takers? John? Andy? Eric?

Posted by Tom Foremski on October 20, 2005 4:37 PM | Permalink | Comments (0) | TrackBacks (0)

A call for a new Manhattan Project on clean energy--continuing the work of Nobel prize winner Dr Richard Smalley

By Tom Foremski, Silicon Valley Watcher

(My apologies, but I am a little behind on my emails and posts following my Oregon trip...)

When I returned on Monday, I found out that Dr Richard Smalley, the nanotechnology pioneer had died. I found this out by reading Irving Wladawsky-Berger's blog, in which he wrote a long piece about Dr Smalley, a 1996 Nobel prize winner for the shared discovery of a new form of carbon: buckminsterfullerene, better known as buckyballs.

I met Dr Smalley late last year at a large chip conference. He was the lunchtime keynote speaker and on the stage alongside him, sat about 20 distinguished chip industry veterans such as Andy Grove, chairman of Intel. The audience consisted of more than 2000 of the world's top chip experts.

He was talking about energy. He said that the growing need for energy was the number one problem facing humanity. If the energy problem could be solved, by giving everyone the energy they needed, it would solve all the other top ten global problems: hunger, poverty, war, pollution, poor education, lack of clean water...

Dr Smalley impressed me with his eloquence and his directness. He was not afraid to criticize the Bush administration, saying the reelection of the president would not be good for science research.

He called for a new Manhattan project, focused on finding an alternative to oil--which he said was just one month or so away from peak production.

Continue reading "A call for a new Manhattan Project on clean energy--continuing the work of Nobel prize winner Dr Richard Smalley" »

Posted by Tom Foremski on November 8, 2005 4:00 AM | Permalink | Comments (3) | TrackBacks (0)

The remaking of IBM: A chat with IBM chief strategist Irving Wladawsky-Berger

By Tom Foremski, Silicon Valley Watcher.com

It's always good to catch up with Irving Wladawsky-Berger, one of IBM's chief strategists and architect of its Linux and open standards policies.

I used to cover IBM when I was working at the Financial Times. It is a fascinating company because it has managed to adapt to the changes in the IT industry with an agility that masks its huge size. It is the world's largest computer company, it is also the largest IT services company, the second largest software company, and one of the largest chipmakers.

And it was the first to recognize and capitalize on the broad industry move to IT services, and outsourcing IT systems.

Now, it is signaling a new direction: becoming a vendor of highly automated business processes. Companies that need to add a business process within their industry will one day be able to buy one off the shelf, so to speak. IBM is collecting best practices within each industry, within each business process, and using applications, middleware, and its integration skills, to create ready-to-go business process modules that can be rapidly slotted into a company's operations.

This means faster time to market, lower IT costs, and having the most efficient business process without having to do it all yourself. It's a compelling vision and one that fits perfectly into the New Rules Enterprise idea that I've been describing here on SVW over the past year.

Continue reading "The remaking of IBM: A chat with IBM chief strategist Irving Wladawsky-Berger" »

Posted by Tom Foremski on November 9, 2005 6:50 AM | Permalink | Comments (4) | TrackBacks (0)

Water into Wine: Monetizing Open Source via On Demand

A SVW guest column by Greg Gianforte, CEO of RightNow Technologies.

If steel were free...

Imagine a car company that got its steel for free. So, instead of spending its money on costly raw materials, this company could invest in high-value differentiators such as better vehicle design, build-to-order manufacturing, and superb customer service.

Now imagine that this company also offered customers completely care-free car ownership; Its customers would never have to worry about gas or oil changes or insurance, because that would all be taken care of for them. All they'd ever have to do would be to get in and drive.

Obviously, that would be a great deal for the customer. Plus, with its cost-of-materials reduced to zero, the company could operate quite profitably while offering its extremely compelling value proposition.

This, in a nutshell, describes the business model of an on demand software vendor using open source technology. By eliminating the cost of databases, operating systems, and other infrastructure components, open source technology allows an on demand vendor to invest more in development, hosting, and services. And by providing software as a service, the on demand model frees customers from the valueless, budget-sucking burdens of IT ownership.

In other words, on demand software delivery is an extraordinarily effective way to monetize open source.

On Demand Applications
To understand how the "water" of open source is transformed into the "wine" of business value, let's first review the case for on demand applications. Customers are embracing on demand applications because they prefer to spend their money on application functionality (which has lots of value to the business) rather than the ownership of IT infrastructure (which has none). On demand vendors enable customers to achieve this objective by hosting and managing the supporting infrastructure for the application; delivering functionality where and when it's needed via the Web.

The customer doesn't care which operating system or database the on demand vendor is using in the hosting facility, as long as the application is scalable, reliable and secure. So on demand vendors are free to leverage open source solutions such as Linux, MySQL, and Apache to keep their infrastructure costs, and thereby invest more in important value-adds such as multi-version hosting architecture, and implementation support.

RightNow Technologies
RightNow offers a prime example of how this formula works. We've pioneered a wide range of CRM innovations, especially in the way our software automatically learns about customers from their behaviors. We've built a uniquely sophisticated hosting environment that has supported over 1 billion customer interactions on behalf of our clients in the past few years at 99.98% reliability. Plus, our enterprise-class hosting capabilities let customers upgrade when they want to, unlike other on demand vendors that force their customers to upgrade simultaneously.

We allocate significant resources to ensuring the success of our customers through a highly differentiated engagement model, closely tracking the effectiveness of their implementations and pro-actively pinpointing opportunities for improving their ROI. We've also grown revenue for 31 consecutive quarters and have been profitable since we went public.

All of this has been made possible because we decided to use open source; rather than become just another distribution channel for monopolistically priced technologies from Microsoft and Oracle. As operating systems, databases, Web servers, and other infrastructure components become increasingly commoditized, there is simply no good reason to pay through the nose for proprietary solutions that offer no discernible functional advantages over their open source counterparts.

So, while RightNow is not an open source vendor per se, it's hard to name a company that's more effectively taking advantage of the economics of open source.

Every business should strive to maximize the value it delivers to the customer and minimize the cost of doing so. The combination of on demand and open source allows us to do exactly that.

-Greg Gianforte, CEO and Founder
RightNow Technologies
www.rightnow.com

Greg has written several guest columns for SVW, including:

"Software lemmings head for the platform cliff"
"Most startups should avoid venture funding, not pursue it"
You can also purchase his latest book, "Boot Strapping Your Business,"
through the affilate link.

Posted on November 29, 2005 3:27 PM | Permalink | Comments (0) | TrackBacks (1)

Network Appliance and its strategy for world domination

Wednesday evening I was having dinner with Network Appliance CEO Dan Warmenhoven and co-founder Dave Hitz. It's refreshing to see a company that isn't afraid to expose its top executives to the media.

It was a small gathering, just four business journalists: Wall Street Journal, Barron's, Reuters and SVW. Such small gatherings are excellent, because you get access to top executives, and you get to hear stories that other journalists don't hear. And as a journalist, you need information that few others have; it's the distinction between publications.

Most recently, I had spoken with Dave Hitz, who called me from Washington D.C. He was out on the East coast meeting customers, and also legislators discussing data protection bills.

Dave is also a keen blogger, and he just recently jumped to a PageRank of 6, which is pretty good. Here is some link-love to Dave's blog.

And here is my latest post on ZDNet, about Network Appliance and its crafty positioning in what could be the control point in data centers.

Posted by Tom Foremski on December 8, 2005 6:33 AM | Permalink | Comments (0) | TrackBacks (0)

A rising star at Intel: Meet Senior VP and head of global marketing and sales

Tom Foremski, Silicon Valley Watcher

On Monday I met with Intel's rising star senior vp Anand Chandrasekher, head of worldwide sales and marketing. Mr Chandrasekher has been in the job less than a year, previously, he headed Intel's Centrino group, one of the most successful Intel businesses of all time.

The Centrino mobile chipset business has been a huge cash cow for Intel. It caught the shift from desktop to notebook just at the right time. And Centrino has been instrumental in pushing Intel's gross margins back up into the 62 per cent range.

These are software industry type margins yet they come from a chipmaker which has to juggle billions of dollars in capital costs in predicting future market needs. On top of that, it has to operate the most expensive and most complex industrial factories of our modern age: the chip fab.

In fact, this is the secret to Intel's success. It is not that it is a microprocessor maker (that's just the app) it knows CMOS like nobody else. CMOS is the dominant process for making advanced, highly complex, microprocessors and other types of chips.

And Intel is utilizing nearly every element in in the periodic table to create new materials that enable it to double the complexity of chips every 18 to 24 months.

Here are some of the highlights from the interview:

[Mr Chandrasekher is Indian, and during our meeting, one of his aides kept him fed with cricket scores, there was a big game on :-)]

Low-power high-performance

Low electric power consuming chips are a prime focus for Intel, says Mr Chandrasekher. "We did a study about five years ago and found that our customers were already complaining about high electric power costs in their IT data centers, so now, our designs are totally focused on reducing electric power usage and performance per watt of power."

Continue reading "A rising star at Intel: Meet Senior VP and head of global marketing and sales" »

Posted by Tom Foremski on December 15, 2005 3:19 AM | Permalink | Comments (2) | TrackBacks (0)

Geoffrey Moore: Disrupting myths of disruptive innovation

By Tom Foremski for SiliconValleyWatcher

Geoffrey Moore, one of Silicon Valley's top IT consultants has published a column disrupting the notion of disruptive innovation, as one of ten myths about innovation.

In "Top 10 Innovation Myths" published on Sandhill.com, Mr Moore attacks the belief that innovation is inherently disruptive.

To be sure, authors like Clay Christensen and myself have spent much of our life's work chronicling the impact of disruptive innovation, but it is only one type among many. And the more established your company, the less likely it is a type for you to specialize in. Alternatives include application innovation, product innovation, platform innovation, line extension innovation, design innovation, marketing innovation, experiential innovation, value engineering innovation, integration innovation, process innovation, value migration innovation, and acquisition innovation.

I respectfully disagree. In this passage Mr Moore applies the term innovation so liberally, that it might seem that he has proved his point by showing innovation in its numerous forms, and that this somehow dilutes the value and the qualities of the term.

I think innovation *always* has to have the quality of disruption. It is something which causes everyone affected by it--to adopt it or die. Innovation is always the better way.

Because if an innovation is not sufficiently disruptive it will not overcome the inertia of the status quo--and will therefore not be classed as innovative. It's a circular argument, but completely within the nature of the term's meaning, imho.

The other forms of innovation that Mr Moore might be indicating I might classify as incremental efficiencies, or what in the the chip industry would be called "design shrinks." That's when chipmakers use their current silicon technology infrastructure to develop ways of reducing the size of their chip designs--producing a few more chips per wafer, and nudging up profit margins.

I think that innovation has to be very disruptive and offer a superbly excellent ROI in order to gain attention, and overcome cost of switching barriers.

And every Silicon Valley startup had better have some kind of disruptive innovation in its garage otherwise why bother?

In the chip industry, innovation comes about every ten years when it retools itself for larger silicon wafer sizes. The chip industry is currently switching to 12-inch wafers from 8-inch wafers.

That automatically improves produtivity by 2.4 times while reducing unit production costs, requiring less human labor, which reduces contamination and improves yields. [The bunnysuits protect the chips from the workers.]

A 12-inch wafer chip production technology is a disruptive innovation--there is no way an 8-inch wafer fab can compete against the massive gains in manufacturing efficiencies.

But each time the chip industry makes the transition to a larger wafer size--the technology differentiation between the chip makers becomes far less dramatic and disruptive.

Please take a look at Mr Moore's column "Top 10 Innovation Myths" He has a tremendous track record and is one of our top thought leaders on IT strategy and author of Crossing the Chasm and other ground breaking books.

And he has a new book to promote :

Dealing with Darwin : How Great Companies Innovate at Every Phase of Their Evolution

- - -

I had an interesting meeting with Mr Moore about six months ago:

Deadly dull enterprise IT markets--Geoffrey Moore and John Gallant hope Vortex conference will spice things up

[thoughtleader thursday] More from Geoffrey Moore and John Gallant on IT strategy. . .

Posted by Tom Foremski on February 7, 2006 11:12 AM | Permalink | Comments (4) | TrackBacks (4)

Richard Edelman meeting coming up . . .

I'm looking forward to meeting Richard Edelman on Tuesday. Mr Edelman is president and CEO of the largest independent public relations firm Edelman.

We had some online debates about the future of PR and so it's great to meet in person and chat about such things with one of the PR industry's top thought leaders.

And it is just by chance that it happens to be Valentine's Day :-)

I've been asking why hasn't the PR industry joined the media industry's hand basket to hell? Media and PR industries have always moved pretty much in tandem--with maybe a six to nine month lag.

Here are some of my recent posts about media and public relations.

Posted by Tom Foremski on February 13, 2006 4:46 AM | Permalink |

Silicon Valley Watcher - reporting on the business of technology and media

Former Financial Times journalist Tom Foremski and team reporting on the business of technology and media . Silicon Valley is becoming a Tech Media Valley.

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