Software as a Service OR is it Community as a service

I was recently talking to a large online brokerage and they were making a business case around launching a website on the lines of SocialPics

the discussion was - should the website be exclusive to the customers of the brokerage house or should it be open to all. The general thought in the group was that a service like that should really be exclusive to the customers as it would be the "Value Add" on their current web site , a diffrentiator from their competitors , one of the reasons for propects to become their customers and hence a justification to charge more premium per trade.

The discussion was near completion when a 20's something executive (who has a blog on blogger.com) raised the question - "So how are you going to build your community with all these barriers to entry" . The whole point of having a community like Social Pics is to leverage the knowledge of wisdom of crowds. If you are making this crowd as an exclusive club what is the value of such a community.

The world of software has changed in the last 5 years. 5 years ago putting the software like that of SocialPics on the website would be viewed as a value add. Things like Financial charts was a differentiator. Today Everyone gives a good Financial charting capability free , what people are interested in is the community like this or this or this(for a specific Stock)

Let me make a bold statement and say that "Software in itself as no value in a Web2.0 world ". It is the community , the volume of usage , the masses that you bring along with a successful software that has the value.Once you have the volume (as a measure of usage OR as a measure of community involvement) you will probably have the best software - because you have the best usage data collection , best feedback mechanism (Concept of continuous and never ending Beta )and maximum user community to improve your software.

Irony in the insurance space

Here is a list of top 5 adwords on Googles adsense program (sep ,2006 information)

$82.92 - austin dwi
$78.01 - school loan consolidation
$76.54 - college loan consolidation
$74.93 - car insurance quotes
$74.78 - auto insurance quotes

The $ cost is the CPC (Cost Per Client for 1000 page impressions)

Car insurance and Auto insurance are number 4 and 5 in the list and yet most of the business done in the insurance space is via traditional agents. Isnt this a classic case where the demand exists but the carriers just resist selling direct for reasons listed here

Another irony I noticed is that when I searched on car insurance on google , the first link I get is of Allstate insurance which is an Agent driven carrier to the core. If allstate has to spend advertisement dollar for market capture and also continue on its traditional agent driven model who long will it be when people like Geico take over there market share ?

The question is : Does the desktop matter anymore?

On my first reading of the blog entry Does the desktop matter anymore? I kinda agreed to the discussion until a thought came to my mind. Here goes...

In today's world what is the desktop ? about 90% MSFT and 10% rest of the world.

So to me the question is really "Does microsoft's PC strategy matter any more?" OR put it in a different way - Since computing is moving on the server and network is really turning out to be the computer , Do we need to bother about who controls the desktop. My answer is - Damm well we do.

If MSFT had its way in 1996-2000 the world would probably be a different place. The millions of mobiles devices we are talking about would have only synced up with your Windows operating system. Who knows instead of WIKI's and blogs , FileSharing would have evolved into a social network. And the worst nightmare could have been that the desktop still played a *VERY CENTRAL* role in a highly networked world by having a set of standards for the web that required you to be on a MSFT PC . (example - Microsoft Sharepoint). And we probably would not be having this discussion today that the desktop is irrelevant.

So in my opinion desktop applications innovation (via open office , linux , Mac , etc ) has to and should continue to be able to give a new avatar to the traditional PC in a Web2.0 world.

Refer also to the post of why open office and google documents need to integrate.

Does open source make ecomonic sense ?

this is a topic talked about at several places including here (Jonathan) and here (Red Monk) all of which are perfect arguments ?

A point I felt that was not clearly articulated in my earlier readings was that I look at open source as just a different Market Capture Strategy.

You have a choice today. Do you want to spend millions in Marketing and Sales of your product or do you want to spend those millions into the product and follow the route of Bottom up marketing. ( and refer : death of cold calling)

Refer to what an a CEO of Major insurance carrier says regarding barriers to entry. I shall explain in a different blog entry of how the barriers can be eliminated in Web2.0 world.

Keeping the discussion to making money in open source. Once you leverage open source to overcome the barriers to entry you have several ways to make money including :

Business Models
- Donations : Apache , Debian
- Advertising : Sourceforge , O’Reilly Media, Sys Con
- Membership : Eclipse , Java.net
- Conversion :
--- Maintainence / Support / Subscription : JBoss , Solaris
--- Brand ownership - IBM (Eclipse)
--- MEdia Kit - Suse Linux
---- Add Ons (Dual License) - Niku Clarity , mysql

- Software as a service - Google with GMaps and a bunch of other services . Frankly if you are in SaaS world there is an even better case for you to go open source as the customer is interested in the service and not the software.

- Professional Services - interface21 (Spring framework)

Also note the Demand supply equation in the open source world works like this

Supply side:
- Technology Vendors : Achieve critical mass and gain market share aggressively
- Technology Vendors : Share cost of development and testing
- Individuals : Solve a particular problem and make the solution available to the world
- Individuals : Get involved in an areas of interest to learn , contribute and help career.

Demand Side :
- Lower Total Cost of ownership
- Transparency and freedom to enhance , modify the products to suit specific needs
- Better quality as a result of large user community base and hence more testing and improvements
- Demand side decision influencers generally involved in open source world


Understanding the type of payer you are in the open source world and understanding the kind of leverage you are looking for from this type of model is key for Enterprises.

Here are some personality traits of open source players

Three kinds of players
»Innovators – Model : Build Great Products - Achieve Critical Mass very aggressively ---Make $$$ by any/all of the Business Models
- Hibernate , Spring , Linux : started by a developer to scratch an itch and then they got a life of their own
- Eclipse , Netbeans , Tomcat : started by Big product companies as a strategy to achieve Critical Mass ASAP and leverage economies of scale

»Contributors - Ride on the success of a good open source product. Strategy is to start contributing to successful products. Come on the main contributor list and then you sell your expertise in that area by virtue of having IP on the product. Example JBoss/Tomcat story , numerous one person outfits.

»Consultants - Neutral parties who look at open source as another IT Solution for the their client. Build the expertise by working on the technologies and tools

How do you find a sponsor for an SOA program ?

SOA has an Enterprise wide impact and the question I run into from architects from various organizations I work with is ?

SOA is great and I want to get this into my organization , but the business does not care about SOA. How do I get the funding for an SOA program in my organization ?

So here is what I have been saying to my client?

Get SOA into the organization under the pretext of a a Portal Project or a BPM Project

A portal is something that the business can relate to customer experience and the BPM tools with the capability of defining business processes and visual rules engines is something they relate to their efficiency.

and a catchya situation : I have also seen Architecture groups in organizations start an SOA Framework Project that basically assembles the plumbing for future SOA projects. Most of the projects like these (with little business context) either are not completed or the results of which are never used. I call these approach as Architectural Waterfall..