Posts Tagged ‘software’

The Second Coming of Technology

Success has a lot to do with timing. When I graduated, it was almost the end of the technology boom of the 90s and we saw one of the worst periods in software business in the next few years. While the technology industry was struggling, boom was happening in finance. Most of my batch-mates who went on to do MBA and landed jobs in investment banks quickly rose to senior positions while raking in big bonuses in the first half of last decade. No boom lasts forever, so finance crumbled in last few years. However, boom does have a tendency to reappear and it did–once again in technology. Internet companies are seeing another dream run but this time muted in PR albeit sky high in valuations. How are you participating in this wave?

Marc Anderseen, the founder of Netscape and now a legendary venture capitalist, wrote an op-ed in Wall Street Journal on why software is eating the world. In his article, he made the case for pervasiveness of software in all industries and in many cases software-based business models trumping the old models. My enthusiasm doesn’t scale the same heights as Marc but I agree with his point of view. The software industry is one of the fastest growing and highly profitable with long-term sustainability. The current boom is second coming for software companies. This time they have real business models, revenues and profits with the same agility and ability to start with minimal cost. The technology entrepreneurial dream lives on!

Internet pervasiveness and mobile device explosion has provided a robust platform to Internet companies to realize their unfulfilled dreams of the 90s. Innovation is happening at all levels of the stack–hardware, devices, OS, delivery, software applications, and consumption. Apple and Google are changing the way we stay connected and consume Internet, datacenters are building backbone of the Internet, cloud companies like Salesforce are providing anywhere access to business information, social networks like Facebook and Twitter are enabling constant contact, and many more. The good news is you can participate in this boom irrespective of your technical skill set. So don’t wait–the timing is just right!

Are You Ready to Think “BIG” Again in Technology

One man’s dream is another man’s reality. Yesterday, I saw it in real at the Salesforce conference held in NYC. It was amazing to see so many cool applications and technologies that I could only dream about a few years ago. Have you ever imagined creating a web application without programming in less than 10 minutes, publishing it on the web by click of a button, and scaling it up or down based on the number of users through your iPhone? I witnessed it done in less than 15 minutes! Five years ago, there was no iPhone, web applications were created by expert programmers, and specialist administrators used to spend hours hosting and managing such applications. Now one person can do it all in matter of minutes, maybe hours, but still 100x better than before. Maybe I was oblivious to innovation taking place in the software world but I can’t be so much out of touch. After all, my wife complains that I read, blog and surf technical stuff all the time. What did I miss?

 Sometimes I wonder if we are driving technology or technology is driving us? The Internet changed the scene in late 90s, but with dot-com burst we thought it had reached its pinnacle. However, not only was the Internet alive but also it came back with a vengeance with web 2.0 that unleashed the second wave of innovation in terms of collaboration and social networking. In a few years, almost 700 million people started facebooking, another 100 million started tweeting, and not to mention many millions who are talking through other social networks. While Facebook and Twitter are considered consumer networks, Salesforce and the likes are bringing social networking to the corporate world. I was stunned by how far human imagination can stretch, when Salesforce chatter service announced that now your employees, clients, partners, data, reports, and dashboard- all will start chattering.  It means when you “follow” a report like you “follow” a person on Twitter, the report will start tweeting information to you. Similarly you can follow data, documents, presentations and anything you can think of in your daily work for it to chatter back to you. Wait a second, weren’t we struggling to implement that large, monolithic ERP application a few weeks ago? 

I am convinced that human will and intellect can move mountains and make impossible possible. Add crowdsourcing to it and things start to move much faster. I believe the innovation I saw at the conference is not just one company’s achievement but a culmination of many discoveries by different companies across industries. The Internet is obviously the backbone of this ecosystem offering great improvements in speed, reliability and pervasiveness. Device manufacturers like Apple, Samsung, RIM and others pushed the ball forward to make the “always connected” dream possible. Finally, the software companies completed the picture by continuously innovating technologies such as visualization, search and social networks, and streamlining the development and management of web applications.  Suddenly the world is moving much faster due to interconnected innovations and economies of scale. I can’t think of the next big thing but I can sense that we are building an “Internet” kind of revolution again. I am excited about the future and ready to dream big. Are you?

How to Make Your Product “iPhone” of Your Market

I had an insightful conversation with a fellow product manager about how to increase a product’s value. While there were many good ideas from improving usability to building features for a broader client base, I was surprised to see resistance against opening the product for other application providers to build add-on modules. I wonder if in today’s software world, where freemium and open source are considered viable business models, there is a place for close-ended software?

The argument against open platform is simple – the competition will get a foothold in our install base by building products on our platform. It will reduce opportunities for upsell and services dollars. Agreed, on the face of it these concerns sound valid. How about the long-term sustainability of your platform? I am using product and platform interchangeably here but a product that is widely adopted in an industry behaves like a platform. Think of SAP ERP, which is a core product and almost essential software to run a business in many verticals. SAP can choose not to expose any integration capabilities for third-party providers to control that market. Is it the right strategy?

In one of my MBA classes, I learned about network externalities. The more companies build around your product the more valuable your product becomes. It is not rocket science; just think of iPhone. No doubt it is a wonderful device but majority of its value is derived from many entertainment and productivity applications built on it. Now think of switching cost of this device. Even though Android phones have similar or maybe more features and cost much less than iPhone, customers think about applications before switching!

At first the business model is not obvious, but any product that becomes a standard can offer huge value to clients, manufacturers and industry at large by becoming an open platform. Salesforce makes tons of money by selling its CRM solution, but it found a much bigger growth engine in app-exchange and force.com platform that enables small but innovative companies to build productivity applications on its CRM solution. Salesforce couldn’t have thought of and built all those applications on its own. With other companies building these apps not only they are increasing the value of Salesforce solution but they also are providing Salesforce a new revenue stream by giving it a cut on every sale. A win-win for everyone – clients get better products, partners get a platform to sell on, and providers make more money while keeping attrition rate down.

It happens rarely, but in this case I could convince my group members of the value proposition of network externalities. The next challenge is to build a business case and sell to the technology team. Who said life was easy for a product manager?

Enterprise Software Needs a New Business Model

Long sales cycles, even longer implementation cycles and questionable solution value define the enterprise software business. Having worked in this space for almost a decade, I saw it up, close and personal. It was not easy for an engineer to transition to sales – presentations, demos and sales anxiety were big challenges.  However, a non-commercial, yet analytical and curious engineering mind questioned the ways of business. An enterprise software company spends hundreds of thousands dollars on a sales cycle with no guarantee of winning the business. Software vendors fly around teams frequently, build expensive proof of concepts and entertain clients, all on their dime. However, the moment a client signs on the dotted line and writes a fat check, the tables turn. Now the client is spending millions of dollars in the hope of realizing value presented in jazzy slides and achieving the streamlined workflow shown in the Proof of Concept.  More than half of these implementations either completely fail or run many years and multi-million dollars late achieving a fraction of the value promised.  Can such a business survive?

When I bought my Audi, I did my research, paid my tributes to the dealer by spending eight hours haggling, and finally wrote a big check. However, I received the product as specified, albeit four weeks late [the dealer provided a rental car for that duration], and now I am enjoying the great driving pleasure [read value] as promised. A simple transaction where both parties are happy. Yes, car buying can be further simplified by reducing negotiation time and optimizing the delivery process but it still is an efficient process with minimum surprises on both sides. Why doesn’t enterprise software work the same way?

Today, when mankind is obsessed about productivity, innovation and simplification of all things possible, why enterprise software–a $220B a year industry–is not on the list? Software companies should investing more in R&D than lost sales. Clients shouldn’t struggle to find the right solution and labor to get the promised results. It should be a simple and efficient transaction like buying office supplies or utilities. There is some hope in software as a service [SaaS] business model, where clients pay as they use the software and can theoretically turn it off if missing value or a drop in utilization. It is a great step toward simplification but still far from perfect. Any decent size organization ends up customizing hosted software and finds itself in the same rut of enterprise software.

Salesforce.com started only a decade ago. It now has a market cap of $18B and sells at 260 times earnings because it successfully commercialized the SaaS model in an otherwise mature enterprise software space already taken by biggies like Oracle and SAP. However, Salesforce.com can soon become the “Google” of this space if an innovator simplifies the business model to become the “Facebook” of enterprise software.

Product Manager’s Dilemma #69: Re-write or Package?

Recently I found myself in re-write vs package quagmire for one of our products. It is our market leading product that was written twenty years ago and grew big and complex over time. Hundreds of clients are happily using it and love it for its functionality and stability. However, the product failed to keep pace with technical innovation on usability side with limited ability to integrate with new age applications. Many users are asking for modern web based user interface, industry standard technology platform and an API for integration. After some deliberations we came up with two options – rewrite the product or shrink wrap the core under modern technology. For sure, I was not the first Product Manager facing this situation.

The meeting with technology and business teams was tense with different sides having conflicting agendas. Technology team wanted to rewrite as it gave them better control on the code and a clean slate to begin. Their typical reasons were no different for any other technical team:

  • Existing code is spaghetti and difficult to manage. It is our chance to fix it forever.
  • Repackage means we will be building on a weak foundation.
  • Why not start with a clean slate?

Having come from technology side, I could empathize with their situation and understood their rationale. However, my businesses alter ego and rest of the business team questioned this strategy. The business heads were thinking pricing, balance sheets and revenue goals. No wonder teams are important in business! Some key business concerns were:

  • Why will clients wait all these years to get same functionality in a different package? More so when there is a backlog of pending enhancements.
  • What is the business case for this gigantic investment? M&S alone can’t justify it. Will clients pay substantially more for old wine in new bottle?
  • How sanctimonious is this multi-year timeline when R&D struggles to deliver even regular releases on time?
  • How long will it take us to stabilize the new product to match the robustness of the current solution?

Like many situations in business, this one was also not black or white. While the rewrite option had above issues the repackage option was also marred with concerns of long term viability of the technology and client adoption. Despite a lack of clear answer the odds were clearly stacked against rewrite. Even some industry veterans have also vouched against it. We decided to go for a hybrid approach of encapsulating the core around new technology architecture and building new features using modern interfaces. The goal is to chip away at the core over a period of time. Not only it helps us meet client requirements but also continue to strengthen the product with new enhancements. So far clients have positively responded to this strategy and I am glad that sanity prevailed.

RIP re-write!

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