cloud computing

I watched Dave Duffield and Aneel Bhusri kick off this year’s Workday Rising conference yesterday morning, and their stuff was spectacular.  While unfortunately I can’t give you all the cool details (I’ll let them break the hot news, and trust me, there’s some good stuff coming), I’ll take a few moments and share some high-level notes.

Dave Duffield

• Stressed keeping Workday’s commitments despite economic slowdown.  Workday continues to invest and hire.
• Drew parallel between the emergence of SaaS/on-demand and the client/server revolution that pushed big iron away from computing’s leading edge.
• Spoke about how the SaaS business model is particularly relevant in today economy.  This comes from the obvious cost savings, but also the not-so-obvious shifting of datacenter and IT operations to specialized companies.
• From a study with current customers, showed data illustrating that Workday is 50% less expensive versus legacy on-premise applications.
• 67 customers and rising steadily.
• All four updates this year have been delivered on-time to customer population.
• Reasons Dave is optimistic (but realistic) about 2009: (1) shift to SaaS gaining momentum; (2) Workday is financially stable; (3) dedicated focus on customers’ continued success; (4) experienced management team; and finally (5) customers, who are the best salespeople Workday has (seems Workday truly understands the power of word-of-mouth).

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Jeff Kaplan:

Despite the economy, election and lingering questions about whether Software-as-a-Service (SaaS) is enterprise-ready, this week’s Salesforce.com Dreamforce conference drew nearly ten thousand energnetic attendees and exhibitors to celebrate the power of the ‘cloud’.
The event not only dispelled any questions about whether the SaaS movement can withstand today’s economy, it also helped to resolve the needless debate over whether there is a difference between SaaS and cloud computing.

Salesforce.com succeeded in dissolving any line of demarcation which may have existed between the SaaS and cloud computing worlds by:

• Using the terms interchangeably throughout its keynote and breakout sessions
• Unveiling a new round of cloud-based applications and platform capabilities
• Expanding its strategic alliances to include two more pivotal ‘cloud’ players

Salesforce.com’s two most significant announcements were its move into website hosting services, and new alliances with Amazon and Facebook.

10,000 attendees?  Amazing.  I think we’ve reached the tipping point, folks.  Hang on to your hats.

Related: Vinnie Mirchandani’s The Unsung Innovations at Dreamforce

Be fearful when others are greedy, and be greedy when others are fearful…What is likely is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

—Warren E. Buffett (discussing when to buy)

I was at the HR Technology conference last week in Chicago, and I want to share with you a few thoughts about the tenor and mood of the vendors and attendees at that show.  If you off-the-cuff think everyone was walking around with a gun to their heads, you’d be wrong, full stop.

First and foremost, yes, people were incredibly willing to talk about the economy and the state of the nation in both financial and political terms.  That’s unavoidable.  We’re well into reality-land these days, and the question of whether or not things are going to get tighter isn’t a question anymore.  People were voicing their concerns to me in the plain light of day, which I found to be refreshing.  People weren’t holding their cards close to their vests; they were openly discussing how to weather the storm and trying to get their heads around how long it might last.  I think people realize that everyone is sailing in the same uncertain waters.

Some folks told me that they’re cancelling or deferring their remaining 2008 HRIT/ERP projects and putting 2009 in a holding pattern to see how things shake out.  I think it’s safe to say a lot of people are fearful, and when fear happens, the standard corporate organizational response is to flow into pure cost conservatism and horde.  I know firsthand, because I’ve seen it in spades in my former life.

But what impressed me the most is how many said that this is the time that they’re moving forward, in some cases very aggressively.  More people than not simply smiled and said that yes, times are rough and we have to hunker down, but we are in a fantastic place of leverage.  We can invest at bargain prices, squeeze software vendors for incredible deals, and at the end of this financial weirdness, come out of it ahead.  Ahead as a company, of course, but more importantly ahead of our competition, which is letting their fear compromise their strategic vision outright.

And let me tell you, this wasn’t one or two people with this outlook.  More people than I ever expected said they are investing now so they can reap the benefits on the back end of this financial storm rather than waiting it out and hoping necessary projects begin again sometime down the line.

Sometime down the line.

While some companies will wait for “sometime” to become “the right time,” other companies will carry forward and implement their next-generation of HRIT/ERP software applications.  And these folks not only will get a deal of their lifetimes, but they’ll also have strategic momentum when things open back up.  Their competitors will be just coming up for air, and meanwhile the more shewd organizations will be in full stride.

What are your thoughts?  Which way are you leaning as you look to close out 2008 and move into 2009?  Would love your thoughts in the comments or via email directly.

Say what you want about him, but Larry’s never been one to mince words:

"The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do. I can’t think of anything that isn’t cloud computing with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?

"We’ll make cloud computing announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of cloud."

Of course, Oracle has its cloud-based offerings and will only continue to grow that base and development budget.  Cloud computing, from and end-user perspective, really doesn’t mean too much: cloud or no cloud, what does it matter to the application being served to the user?  You still need some sort of network voodoo, some type of middleware logic to handle data interfaces and messaging, and of course the end-user application and platform OS or browser.  No matter if the infrastructure is on-premise or not, the user still has to interface with the app to accomplish his business goals – whether the app server resides in-house or in the cloud somewhere. 

It’s really a matter of technical semantics more than anything else.  Of course, on the the cost-benefit front, a cloud-based approach is favored by many due to lower support costs and increased portability and access.

I think what Ellison is getting at is the fad-like obsession the tech world has with trends and the hype marketing that surrounds them.  “Cloud computing” is a hair away from being found on cereal boxes, and I think it’s this hype cycle that Larry finds somewhat insane.

(Counterpoint: it’s this very hype that will drive tons of interest in Oracle’s cloud offerings and make Ellison’s numbers continue to glow, but that’s an aside.)

Of course, I find almost all enterprise software marketing almost totally insane, but that’s just me.  It’s all crazy, it’s all 60% gibberish, it’s all buzzword soup.  Why get ruffled now?  Software marketing reform should have happened years ago.  Anyone remember BullFighter?

Detroit folks: MiPro is co-hosting a breakfast seminar with Workday about the increasing attention to the on-demand model of business application delivery.  If you’re in the area and would like to attend on the morning of Tuesday, October 8th, we still have space.  Workday will be there to explain its version of on-demand means, and Christine Ferguson, VP of HR Strategy at Workday, will give a demo of Workday’s HR and Payroll solutions.

The location is the Townsend Hotel in Birmingham, MI, and if you haven’t been there before, it’s the hotel.  It’s impressive.

Again: we have space and would love for you to come.  If you’re at all interested in what Workday is and what Dave Duffield has been up to, click below to learn more and register for the event.

BusinessWeek’s Steve Hamm’s insightful piece about Workday absolutely nails what we are hearing ourselves from our customers and prospects:

Ever since veteran software entrepreneur Dave Duffield launched his new startup, Workday, a year and a half ago, people have wondered if it could become the next Salesforce.com (CRM). Marc Benioff, Salesforce.com’s chief executive, had shaken up the customer-relationship management software world and created a company with a market cap of $8 billion with an online service that replaces expensive and complex traditional software packages. Could Duffield and Workday do the same? Just now, there’s growing evidence they can.

Workday has landed three large companies as customers—important votes of confidence that it can be trusted to handle some of a corporation’s most crucial computing tasks. Flextronics (FLEX), the biggest of the three, plans on rolling out the Workday human resources management system worldwide for more than 200,000 employees in the next two years. “Workday could definitely be the next Salesforce.com,” says David Smoley, Flextronics’ chief information officer. “Their model is in line with companies like us. We want to keep things as simple as possible and keep costs as low as possible.”

The other major customers are Chiquita (CQB), with 25,000 employees, and Life Time Fitness (LTM), which plans to adopt all three of Workday’s services, adding accounting and payroll to human resources management.

If Workday does a good job of serving these clients it will gain credibility with large corporations that are looking for alternatives to traditional software packages. “They’re in the phase where they’re getting big customers. If they do well with the rollouts they’ll get the attention of a lot of mainstream corporations,” says analyst Jim Holincheck of market researcher Gartner (IT). David Dobrin of B2B Analysts is even more effusive: “Workday is like the iPod for enterprise HR software. It’s a better and simpler way of doing things, and people can see it.”

Right now, ERP and SaaS have a (relatively) symbiotic relationship, even within the same enterprise.  But SaaS is clearly the emergent, progressive concept (intelligently discussed here in what is must-read reading for anyone interested in the space) and will likely attract an increasing number of devotees — eventually at the expense of in-house software.  ERP certainly has its strengths, but the SaaS model is becoming more validated every day, which accelerates the maturity/acceptance curve.

(thx Jeff)

Businessweek recently published a surprisingly negative article about SaaS, saying that its hype can be largely undeserved for a number of reasons.  Now, I like BS-calling as much as the next guy (maybe a bit more, actually), but I found Gene Marks’s reasoning to be too generalized and all-encompassing.

Marks says:

Myth 1: SaaS is cheaper. No, it’s not. In fact, it can be a lot more expensive. Most service providers charge each user by the month. If you’ve got 10 people using a product, and they’re costing you 50 bucks a person each a month, that’s $6,000 a year. Most in-house systems have one-time licensing fees and optional support agreements. Spreading out the payments is nothing new, either; tons of software leasing companies will finance your purchase and spread out monthly payments over time. When you look at SaaS over the long term, it’s usually not a cheaper option.

Considering that on-premise enterprise software for a large firm can easily run into the millions just for new license acquisition, this argument pales quickly.  And support (maintenance) agreements for such systems are not “optional” — they’re mandatory.  Seeing how I’ve seen annual maintenance bills upwards of $400K/year, we’re not talking spare change, either.

And really — let’s not get into the costs associated with new hardware investments or modifications to existing infrastructure.  Let’s not get into new servers, new application security policies, network provisioning, desktop client modifications, and permissions.  Let’s not get into end-user performance issues and the time and expense needed to troubleshoot and remedy them.  And let’s also not get into aggregate IT staff allocations on a man-hour basis, because the numbers get crazy quickly.  Suffice to say that all of these get figured into the equation when trying to calculate the TCO of on-premise enterprise software.

SaaS may not be cheap, but it certainly might be cheaper.  And there is value in having fewer on-premise headaches with trashed servers, corrupt databases, and angry end users that the internal helpdesk must deal with.  It becomes an intangible quality-of-life discussion for the enterprise.

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