Impact on business and society

Social CRM has two major and very different aspects:

1) The sCRM Product Solution Aspect

As CRM is under huge pressure from the open and collaborative social media space, CRM vendors (first was Oracle) decided to promote the idea of “Social CRM”. Even so there is no real product and no real product definition, it is the vendors interest to close the gap between the wide open social space and the very close enterprise software space. Other than integrating twitter streams and other social chatter, nothing has materialized, where an enterprise sales or marketing organization would fall in love with.

2) The Philosophical Aspect

Consultants in the sales and marketing field understood the need for a change. Not just an upgrade but a significant shift in the customer interaction model. sCRM sounded like the bridge between those tangential drifting continents. As such the definition is eroding more and more every day. To some it is a future product solution, to others it is Twitter, Groups and communities done right, yet to others it is just a “strategy” and again others see multiple facets of the above – and then there are groups who see it emerging without being able to exactly articulate what it may be in the future.

My personal opinion:

If $100 Billion in aggregate (SAP, Oracle, Microsoft, and about 20 other CRM vendors) now promote sCRM and do nothing but bolting the “s” in front of the CRM – the vision of the SCRM strategists will be overshadowed and no way of creating a more social business relationship with customers, prospects and partners will remain a dream.

If instead we work with a new vision, new business processes and as a result completely new products, we may see where the new world leads us to.

SRM – social relationship Management is an attempt to make that shift. As we define SRM and build SRM products, we also define new business processes. Not driven by efficiency or automation but driven by customer requests for a better business relationship with their respective vendors.

See the Definition of SRMAxel
(my social map)

I just read a few articles about sCRM. One was a post on a blog where the blog doesn’t allow comments (very social). The other was talking about Ajax enabled technology that revolutionizes CRM (OMG) and yet another one described the advantage of getting Twitter streams and Facebook wall entrances all feed into the CRM system for better customer information (yes more data). Another system suggest that it takes everything a sales person ever needs so they never have to leave their CRM system (wow – how about leaving the company to actually deal with the customer?). The worst are the ones who still promote the “low touch sales model”. Automation is still the big word. Didn’t we automate already to death so that the customer doesn’t want to speak with us any longer?

NOW – CRM was always a hard nut to crack. Mostly beloved by executives to get data and hated by sales people who (in my personal opinion rightfully) prefer to deal with customers not with data administration and data analysis. I joined – really just for the fun of it – three sCRM and related presentations and was shocked what a sales or marketing person would have to do to “leverage” all the wonderful options of triggers, automated nurture programs, forecast granularity adjustments and a gazillion other options. Social CRM now feeds even more data to an already overwhelmed sales person. There is no word about the actual customer relationship – zero – nada – nothing. Is that how we bring the economy back?

A friend of my (a sales person): “Axel, that is today’s reality. We are customer data admins, not customer relationship managers. We manage the theoretic aspects of the relationship but I am about 10-20% of my business hours with a customer – at best.” What do you do all day long? “I try to reach customers based on a suggestion list, call and call and typically leave 10 voice mails – I know nobody will listen to, in many cases don’t even get to voice mail and one or two people I may be able to talk directly. If I’m on the road I prepare my trip, travel optimization, planning, arranging meetings which is a just an enormous task in itself and so forth. Weekly forecast review, weekly planning for the review meeting, again data into and out of the CRM system – the whole nine yard.” OK and 1 out of 8 hours a day with customers? – “As you can see now – AT BEST. Other activities are reviewing the lead process, the nurturing process, we have very sophisticated processes and it takes a lot to actually go through them every day”.

Bolting an “S” onto the CRM seem to make it harder not better. Of course in the days of Social Media companies need to do something. But sCRM seems to be the opposite direction. sCRM seems to be accelerating the disaster we have on the sales side. Not only because if the incremental information flow but also because of the farther automation instead of the social engagement. Living in a CRM system – that’s what CRM vendors like to see. But don’t you want to see the sales person be with the customer and spend only a fraction of the time with ANY system?

I love Brian Solis statement: “Take the C out of the sCRM”. As our networks grow exponentially, we also may need a good tool, but we need a tool that helps us with the actual relationship – not with the data we aggregate.

Social Relationship Management as it is is currently defined may be a solution to the problem as it focuses on the relationship – not at the data.


How Teenagers Consume Media
the report that shook the City | Business |” ( This Link )

What is shocking to me: What pretty much everybody is talking about finally shook the British Guardian.

More shocking: There is no way to comment on this report. It is electronically “printed” with no way to interact. I have to admit I haven’t been on a news paper site for quite a long time and recognized that this seems still to be the standard.

At the New York Times you have to sign in to “recommend” an article. But also wait until all adds are loaded.

However on SF Chronicle you can provide a comment on pretty much everything. So why spend $200 Million on a new printing press?


Axel Schultze Axel Schultze MyXeeSM

Cisco, IBM, Walmart, Wholefoods, Starbucks and others invest millions in their social web presence. The investment is more on the human resource side than on systems. They don’t advertise what they are doing but they are moving fast.

The Social Media Academy provides some insight in this week’s complimentary webinar

– The impact of social media on businesses across all industries

– Identifying the largest pool of business opportunities

– Assessment of a company’s social ecosystem

– Developing a comprehensive social media strategy

– Creating a social media plan

– Reporting and analytics in social media – over 100 reporting tools

– ROI, resources and budget considerations

– Social media as a cross functional business accelerator

– Competing for mind, – and market share

– Building a successful social media practice

This Friday 4/24 – 9:00AM (PDT) Online conference (no charge)

As sad as it is, industrial media killed itself. It is NOT the Internet or technology for that matter that killed publishers it is the change of their business model from independent content circulation to advertising distribution.

A publisher used to make money by providing a given audience latest news, well researched and easy to consume. Readers paid for the news and publishers made a profit by balancing cost of news gathering and distribution with newspaper revenue. Rather simple model.

I explaind the shift in process here a few weeks ago:

About Newspapers
Read the Article at HuffingtonPost

After focusing my blogging on Xeequa and lately on Social Media Academy I decided to to do some personal blogging once in a while. And as such I revitalize this blog here at Blogger.

And of course – in the typical spirit of Silicon Valley – here are some more predictions:

YouTube will have much more users then MySpace
Web 2.0 will enter the business world
LinkedIn will go public
Investments in traditional software will be next to nothing end of 07
– The number of Internet users: 1 Billion
will become the “number of the year” for all marketers
– World of Warcraft may be another IPO candidate
but may be purchased by Sony and runs on the “cell”
Xeequa will have more customers by end of 2007 than SFDC
(just kidding – but you get the ambition)
Second Life will become the leading virtual business party spot
– TV and print adds will further plunge to total none importance
– Relevance as measured by Technorati, Alexa and others
will become the market cap index for private companies

Let me know what you predict :-)

An interesting conference – somewhat competing with Saascon in San Francisco. While Saascon was directed to SaaS End Consumer and bringing SaaS closer to the broader public, “OnDemand” was a conference for industry leaders discussing the future of SaaS.

The first few presentations reflected the clear trends and expectations that SaaS is going mainstream and many speakers and panelists predicted that SaaS will replace many on premise applications in the next few years. However some on premise applications like global large scale ERP implementations will remain behind the firewall for quite some years. An analogy was drawn to the 80’s when PCs replaced terminals – yet today – 25 years later – mainframes and even terminals are still in business. The SaaS future seems to be in the hands of the new generation software companies who are built for SaaS from ground up. Discussions made obvious that companies who need to change from a license product business to an on-demand model will have a very hard time. While some predict that most license software companies will fail to make the move, others put the example of Concur up, who successfully made that transition in a two year effort.

An interestingly large portion of the conversation on the podium and on the floor was around indirect channels. While sales organizations are not large enough and marketing budgets are limited, SaaS vendors need to find ways to attract partners to spread the word and help implement their solutions. Some companies present their successes with channels.

SaaS is all different and so is their TCO discussion!
The discussion about the total cost of ownership for SaaS solutions is on the rise. In my last 5 years of selling SaaS solutions into corporate America – customers range from multi billion dollar global enterprises where we installed truly global solutions spanning multiple continents and even multiple external legally independent but connected organizations – the question of TCO was present, yet the conclusion may come as a surprise.

Let me start with the “good old days of IT”. Total cost of ownership was the “sum of all fears”. And they came in various flavors and shapes. The calculation typically started with server systems, backup capacity, network infrastructure, routers, hubs, cables, then of course the respective software, the operating system, the database, the applications itself, the tools, update cost, migration cost, maintenance contracts for software and hardware. Then we got more sophisticated and included air-conditioning, the floor space, energy, related facility cost and of course the personnel to run the whole show. Lately there is even more cost involved such as rising security cost, disaster recovery management related cost and also all the management overhead. As we try to customize the solution more and more – sometimes we customize us to death – we have cost that is even harder to calculate. With all that, financing the whole structure became another none negligible cost item.

To get even more sophisticated we added opportunity cost, downtime cost, resources that needed to be available in case something goes wrong. In the 90s we learned that the actual software for instance is actually just some 15% of the total cost (depending which calculation you use and which consultant you ask). And at the end we even had to purchase software that helped us to calculate the TCO which came on top of the TCO.

After about 20 years of TCO discussions it is interesting to note that there is still no generally accepted method or formula to calculate TCO in a way that we can compare values, benchmark ourselves and our vendors. Even worse – TCO became a ever more fuzzy marketing weapon with no real value associated that either financial analysts can build a judgment on, executives can base decisions on or purchases can be measured by.

Now let us look into the TCO calculation for a modern software as a service based information system: Let me take the same buckets: Server, backup, software, operating system, database, updates, migration, aircon, space, infrastructure, support, services, teams, financing and all the rest of it. Isn’t it interesting that we get all that for $20-$200 per user per month from a SaaS provider depending what we are using? What do we do at BlueRoads,, Tanooma or who ever in the SaaS space for customers large or small, regardless whether it is a multi billion dollar Avaya or a 10 Million Dollar medical device startup. We, the SaaS providers, own and run the data center. We do OS upgrades; we manage the database servers and build the application around the database we choose. We do not need to worry about compatibility with 3 database vendors and their 50 different versions. We deployed the application, we provided the update, we manage the data migration at major updates, we support the user because we ARE the technical back end, we pay for energy, the server space. We do the system financing, the depreciation, the planning, the disaster recovery. The monthly software fee BECOMES the TCO unless we do something that is simply yesterday IT – we force the vendor to deploy it behind the firewall, customize it, put it on the customer’s server, and ensure compatibility to their database…
But that is NOT Software as a Service – this is an in-house web based application server, no different from any client server application.

Now the magic question: How on earth can a SaaS provider do that all for 60 bucks a month? Well if you think of it, spreads their IT cost over 20,000 companies – not 1. But also for smaller SaaS companies – IT cost is may be still 1/1,000 of the cost of an internal IT organization simply by spreading it over 1,000 customers.

My conclusion – put the TCO discussion to rest (Sorry Gartner) – and may be worth mentioning there is no OWNERSHIP of the application, it is a service.

As we progress with our prototyping effort it was time for us to decide what kind of technology we will use for our final application. So I had several conversations with executives from Macromedia trying to understand their strategy around ColdFusion, I explored Ruby on Rails, considered an Ajax/JavaScript pure play and obviously the traditional Java world. I learned a few interesting things: the most prominent community and also one of the top 10 sites in the Internet: is built on ColdFusion. I noticed that my Bank of America online banking application is a vast ColdFusion site. I was reminded that Java and JavaScript are two very different things and Ajax is a JavaScript based environment/methodology. Yet the richest and most widely used user interface outside HTML is Flash. The world is not as homogeneous as it was. It is no longer Java versus .net like it was C++ versus Basic.

Clearly Java is a very powerful development environment and a developer can pretty much do anything – but also make any possible mistake and take for ever to debug their code. It very much reminded me at the assembler days. Assembler was this powerful, development environment which produced lighting fast code. How ever development took for ever, mistakes were difficult to debug and changes to difficult to implement.

In the fast moving SaaS and Web 2.0 world we are at a similar crossroad. Do we go with the traditional Java code or do we rethink even that. In Tanooma we came to the conclusion that we choose speed over secure tradition.

The soon to be ready for Beta of Tanooma is a multi tenant multi organization cross communication application. Meaning multiple accounts such as SaaS vendors will use it, unlimited users will look at the respective offerings, consultants will be able to connect with vendors but also with users and investors will be connected with any company they are invested in or interested in. A technology which I call “Account Bridge” supports that cross organization cross communication. The development environment needed to allow that kind of complexity, support clustering to support a large amount of users to be simultaneously logged in and perform their activities. While Java seamed to be the logical choice – we decided to go with ColdFusion, AJAX, JavaScript, ActionScript and Flash. It took only 3 month to develop a functional prototype. The application is richer than pretty much anything on the market today – but at one price: There is no longer this one “language” we use. It is a collection of best of breed tools which all promised to interact – and we are very lucky: they do. But Tanooma is not the only company that questions Java as a development platform. Many of the new apps whether they come from Google, AjaxLaunch or many others avoid the long and rather complicated development cycles and leverage the rather new and much more user attracting Flash and Ajax world.

I remember the days where Internet Explorer was 97% of the used browsers. Right – that was after the time where Netscape was 90% and IE was 5%. But if I look at my stats today IE is down to 62%, Firefox is 23% and – check this out Opera is 10%; others 5%.

Now a related dynamic: new Web 2.0 products like AjaxSketch or AjaxWrite are only available for Firefox. Isn’t it a bold move to develop something and ignore the dominate technology? Well there is stuff out there that is simply not possible in IE.

Talking about Web 2.0. I found a great chart at oreilly’s site, explaining Web 2.0 versus Web 1.0:

Web 1.0 Web 2.0
DoubleClick –> Google AdSense
Ofoto –> Flickr
Akamai –> BitTorrent –> Napster
Britannica Online –> Wikipedia
personal websites –> blogging
evite –> and EVDB
domain name speculation –> search engine optimization
page views –> cost per click
screen scraping –> web services
publishing –> participation
content management systems –> wikis
directories (taxonomy) –> tagging (“folksonomy”)
stickiness –> syndication

Also checkout it’s a great site to be up-to-date with Web 2.0

Many people think about OpenSource and where it goes and so do I. One comment stroke me in particular at one of the recent conferences where somebody stated that OpenSource is good for lot of things but there is no TRUE innovation. “OpenSource projects today are pretty much improving what others did before – but there is neither a new technology, no new methodology and no truly new functionality”.

Past 10 years OpenSource
In the past 10 years OpenSource has come a loooooong way. But still people are not sure about the relevance for the business and how opensource engagements can fuel the industry other than how it does today. The fundamental issue – it seams – is the reward system. Clearly it is rewarding to see how software evolves. There is a reward for contributing by using code others contributed and there is a reward by recognizing increase in quality through the respective contribution of all kinds of expertise. But like one developer stated “I love it but it doesn’t feed my kids”.

OpenSource and SaaS
With Software as a Service a new question pops: How do you deal with OpenSource distribution license when there is nothing to distribute – other than the service over the net? Will OpenSource dry out when no code is distributed any more?

Rewarding Contribution
Let me contract the above issues all together and think:
— How about bringing opensource developer together to contribute to innovative and new projects that will be delivered over the net, regardless of the fact that there is only one instance of the code?
— How about a reward system that includes some monetary opportunity by incorporating the contributors into the success?
— How about creating an OpenSource Contributor Option Plan that gives out shares of the respective company for those contributors who truly contributed to the success of that company?
This is not a cash reward like with an employee but rewarding contribution to innovation. Would’nt that be one further step towards individuality where at some point in time a company is really a “company of people” with their respective contributors participation in the success – still maintaining the fundamental concept of capitalism? I will work on that idea further and I am really interested to know what you and others think. Feel free to comment and let me know.

Lot’s of discussions around the technology model (single tenant, multi tenant, hybrid model). Some say only a multi tenant architecture is a real SaaS play. I’d like to challenge all of us (at least the technologists) with some thoughts:

Let’s look at today’s multi tenant architecture. The easiest way to do that is to check out the literature which exposes the architecture for developers. What we find is a data model with the traditional hierarchy of an account, organizational structure and users. We find objects such as leads, opportunities, cases, documents etc. and we find some basic processes to manage those objects based on certain criteria or events. Every new tenant is bound to this architecture (which is well thought out) and is therefore able to use the application very quickly. All it takes is an underlying or overarching model that allows every tenant to use the model in some variations, add custom data fields etc. without interfering with other tenants. demonstrated that it works, is pretty secure and flexible enough to have many companies using the application and still have some freedom for customization. So far so good. As long as we continue to think in our boxed world (our companies’ 4 walls) that is all fine.

Now – outside this box: It’s no longer just the company but there are partners who deal with us, and also with other companies. There are suppliers who provide us with additional material, resources and other services. And oh – there is this thing called “customer”, in case you forgot – it is the entity that pays the bills (mostly). Customers deal with us, with our partners and of course also with other companies and competitors. And here is the challanging question: What role is the customer playing in this new multi tenant architecture based SaaS model? Today: None!

How will we integrate partners, customers and other constituencies into a meaningful information and process flow? It’s not a question of whether we will do it or not – but how and when. Multi tenancy still works inside the box – for one corporate entity. But as soon as multiple legally independent entities need to collaborate, we’ll hit the wall. Yes, we can use SOA, WDDX, XML and what have you, but we are back to square one – like in the previous stage of software we relay on interfaces, APIs and the big hope that it’ll work together. Of course it is much easier but still time consuming and risky. Architecturally Multi Tenant Architecture is a very economic model to drive efficiency and I don’t want to belittle it in any way – it is a major step forward yet we need a new model.

Rather than thinking from the inside out we have to begin thinking outside in. We will need to make it MUCH easier for customers to interact with companies and for partners to do business with their vendors and their customers. Suppliers need to be able to collaborate with all sort of customers without the need to interface all those applications with each other. CommerceOne failed by trying and others didn’t even get there. People asked me whether Tanooma will build interfaces to connect all the SaaS players. The answer is “no”. 400 vendors today – 2,000 in may be 2 years from now. And even if we would, it would still be an “internal vendor play” – it would still only represent the old way of thinking in integrations. So to build interfaces with all those companies would be the wrong approach. We all need to elevate ourselves and our respective technology to a higher model where we think and more importantly ACT outside our 4 walls. The challenge is to move from or skip a multi tenant architecture and develop a truly networked interaction model where tenants are no more an encapsulated entity but an organism like cell that is able to seamlessly interact with others: customers, partners, suppliers and must importantly: we need to begin thinking of the “user” not the “account”.

Creating this new model – or architecture may go beyond what a single company can do. It may be an “open mind project” (like opensource). It may even require cross technological expertise that goes beyond the knowledge of our own industry. I decided to start this in the next few days.

The SaaS Summit in Napa Valley this past week was a very interesting and well organized event by OpSource. I’m sure Amy Wohl and others will cover it and you may also want to read Rather than providing redundant viewpoints, I’d like to comment on 1 particular topic: I call it

“The Enterprise Software Chasm”
Tien Tzou from made a very clear statement about the On Demand world and the death of the enterprise software sales model. He said, and pretty much everybody nodded their head agreeing that this new world is a “Google World” – an inbound world where inside sales people are the heroes and the traditional and very expensive direct sales model is vanishing away. VCs in a later podiums discussion at the same conference agreed and pointed to the successes in the SaaS world with short sales cycles and large number of users. The traditional enterprise sales model with their traditional long sales cycles is something investors would no longer accept.

Future software investments go into those companies who build a product, bring it to the market and if people pick up on it – this is considered success. No more outgoing sales and definitely no long sales cycles. If you need to mess around with a customer for several weeks – stop it and find customers who buy it because they like it. Well, a very logical and from an investors point of view very economical strategy.

This, and previous discussions with various investors lead me to believe that there are only 2 companies on the planet that will continue to invest in the enterprise software model: SAP and Oracle. That also tells me that with no other engagements and investments, SaaS for the enterprise market is at least 5 years out – enough time for both SAP and ORACLE to reengineer their respective companies and make them ready for a SaaS oriented enterprise business. New innovations for enterprise software will therefore not be seen on the market before 2012. Since 2003 almost nobody invested in enterprise software anymore – despite the fact that enterprises still exist (and I’m sure we do not expect enterprises to go away any soon – but read on). This development will create a big chasm between enterprises and smaller more agile companies who will be able to use latest Information Management tools (on demand and omnipresent). The SMB part of the world may actually catch up more than normal simply because of tools, systems and methodologies which are not available for a complex enterprise.

The point I’d like to make is that this interesting development may change the face of our business society in a rather unexpected way. It is not because the technology couldn’t be available – it is because there is no investor who is interested in an enterprise play, dealing with the fact that enterprises have different needs to modernize their business and need people who have the patience to work with 10 different departments at the same time and analyze business impact of a software that may be run within a 20 Billion $ company and be used by 20,000 people in very different capacities. This has nothing to do with “stubborn and old sales guys who can not adopt”, it also has nothing to do with “IT old timers” who are unable to take on new technology. It is about the complexity of an enterprise and in order to reduce complexity for the users and increase simplicity of processes – the tools to make it happen will most likely become even more complex – and at least right now nobody want to invest in it.

SaaS is becoming a demarcation of a growing chasm between enterprise software and any other software.

Regardless of the reasoning – the SMB market has an unparalleled opportunity to grow and compete with the dinosaurs. I use the word dinosaur not as an often used term for something old – but to draw a parallel to evolution where larger and more complex beings were replaced by smaller, highly agile and flexible ones. If a company spends $20 Million every year on IT in order to run it and customizes those solutions so far that it is no more economical to update, did that company reach a point that sheer size made it less competitive? Is it a point even so operations and production is highly optimized, the brain of that entity is no longer capable to evolve any further? Is the Enterprise Software Chasm an early warning indicator that super complex global enterprises after decades of mass consolidation by acquisition are in great danger? Did the gigantic acquisitions in the Automobile Industry here in the USA that ended by having only 2 massive and barely profitable companies left over, proven to be a mistake? The reason for the car industry consolidation was the believe that so many car manufacturers have no chance to survive because they don’t have the critical mass. Today we have more car manufacturers on the planet than 1950 – and today there are percentage wise way less US cars in the country than 1950. Porsche is one of the smallest car manufacturers on earth – yet one of the most profitable.

The Enterprise Software Chasm can not be crossed for quite some time. I wonder what dynamics and evolutionary effects it will have on the SMB space – and the “Porsches” of the other industries.

Information Technology without Technology?

I wrote quite a bid about the disruption, the growth and the strategic values of Software as a Service. I shared with many of you my vision about this industry and where it can go. In an earlier post I stated that we may run a business with nothing but SaaS. Today I’d like to take you out into a near future office environment (a few calendar quarters from now).

OK – So our new office needs some basic communication with internal and external people. We need something for our bookkeeping and write invoices. We need to do some HR work, payroll and expense management. Our sales team need to manage customer contacts, our marketing team needs to manage campaigns and initiatives as well as partners and alliances. We also want something to manage our service teams’ requests and cases. And finally will need to manage our products, projects and entire logistics and warehouse.
So let’s put up our sleeves and start:

Communication: We may start with Yahoo email and calendar. It is free and allows us to work in a team and see each others calendar. We may then select Webex to communicate with our customers and partners in a more communicative way.
Office: While checking out Webex we find their office products and actually find the necessary office software to run our day to day documents, lists and data tables. And in the future we may consider Office Live from Microsoft.
Customers & Marketing: The obvious first name is But there are others like RightNow and Sugar CRM and already many more. Let’s pick SFDC for the fun of it and take RightNow to mange service requests. To write optimal proposals, we may consider Offermatica. If we now want to better plan out marketing campaigns we may come across Eloqua and take them to do the campaigns – may be we also choose ResultsMail to do the sending and tracking of email blasts and manage the ones who want to opt out. And if we want to integrate our partners we go with BlueRoads for channels and Loyalty Lab for retail customer loyalty management. Our call center may be entirely distributed across the nation using Five9.
People: To mange HR related activities we may see EmployEase and may be Expenseit to do the expense reports. To better manage personnel development we may use Successfactors. Additional hiring may be supported by LinkedIn.
Bookkeeping, Orders & Logistics: Now when we get orders we want to choose a complete ERP solution and may stumble over Intacct or NetSuite. We may track all our contracts with Encover. We may also choose one of the project management systems, SCM tools and other products out there for our specific needs.

As you can see we pretty quickly are able to replace every single software today with SaaS solutions. And guess what, all of the above can be done already today. I found over 300 vendors in some 30 categories who all can make this a reality. There is not a piece of software that I need to put on my computer other than a Browser and an OS of course.

But walking through this new office environment I discovered some totally new challenges: My SaaS applications are sometimes so cheap that I may need to connect with other users to find out the best usage – hard to call the Yahoo hotline and ask for somebody to come in and help us optimize the use of yahoo mail in a team environment. Another issue I’m facing in that office is that I don’t just start the software – I need to login and provide a password and do so for 20 different applications. Also I may need some tool – at least an online spread sheet – to track all the licenses and keep up with expiration dates. And when I begin to put this all together I would welcome some knowledgeable person to help me find the best solutions for me TODAY (since I don’t worry about tomorrow – because I simply switch if I need to).

The advantage how ever are big enough to go forward: We don’t need to mess with servers, with backup, with software upgrade and updates. We don’t need an engineer who puts this all together for us. We don’t need to allocate $250,000 capital expense for software and hardware. We don’t need to worry about service and maintenance contracts and we don’t need to plan amortization and think about what software is right for us today and how this decision may affect us in a year or two from now.

Tanooma will soon be a showcase for a completely SaaS based business – we have no software that runs on our servers (hence no servers). Tanooma is running a completely “Technology Free IT” environment. Simply because it is less expensive, requires no investment, requires no staff and allows us to pick and choose what is best for us TODAY and end of the year we may switch to what ever makes sense then.

Competitive advantage: We have the most flexible office IT infrastructure and can afford to pick the best possible solutions that fit our most current needs. While others may be limited by the investments they already made – we will have the best solutions for us when ever they are available.

P.S. Ismael Ghalimi, another fellow blogger said it this way:

From 1 Million to 100 Million SaaS users in 5 years

I guess we all pretty much agree: The SaaS Industry will grow fast. How fast – we will see in 5 years from now. But a few interesting indicators show where this all goes:

1) Investors
On conferences publicly and in individual conversations privately we hear it over and over again: “We will invest in SaaS but we will probably do no more investments in traditional license software”. For investors it is the recurring revenue model but also more and more the underlying technology. I may be totally off – but I can see more investments into SaaS in the next few years than into Internet in the crazy days. Why? When the railroad boom slowed down with it’s crazyness in the old days – the real investment started in building the transportation infrastructure.

2) Technology
When it comes to Rapid Software Development, SaaS certainly outperforms any other software model. Deploy it now – get feedback – fix it on the fly – mature to a product that is not build for an audience but actually with an audience. SOA, Web Services, open source are just a few key ingredients to build a software so fast that no other technology can compete on a time to market scale. With the speed comes more variety and more diversity.

3) Economy
SaaS is cheap – period. Even so we all hear from the legacy software maker that SaaS is more expensive in the long run – I just hope that who ever says that has a calculator handy. We all agree that the actual software and hardware cost is less than 40% of the overall IT spend. And we also agree that a SaaS vendor is able to split their operations cost amongst 1,000 and more companies versus only one IT organization. Enough said.

4) Popularity
SaaS is simple in the first place and vendors have an unparalleled interest to keep it that way. This will motivate less computer savvy users or industries to investigate software and IT solutions. SaaS will go way beyond application software. Any kind of Tools, Games, Hobby and Entertainment Solutions will get into the market. Manage your wine cellar online, keep your library online and get additional information about the author, play games online and develp your identity and earn points in a new gaming world, begin not only filing your TAX online but actually interact and communicate with your insurance and everybody else in an online home office infrastructure where you find all your documents even if your home burned down.

500 Million PCs (our todays installed base) will use SaaS partly or entirely one way or the other. It may be 100 Million already within the next 5 years.