A light has gone out

Dr_James_MartinJames Martin died recently. He was 80 years old. He died swimming off his house in Bermuda — there are, I’m sure, worse ways to go.

Dr. Martin was a formative thinker on technology and software development. Many of the ideas we consider foundational today — rapid iterative development, reusable component libraries, fourth-generation software languages — were all ideas he either created or greatly advanced. In his 1978 book The Wired Society Dr. Martin predicted how revolutionary what we now call the Internet would become. He was nominated for a Pulitzer for that book, which was just one of more than a hundred books he wrote.

There would be no agile-development-based, SaaS global talent management industry today without Dr. Martin’s many contributions to computer science. He invented new ways of working for programmers, analysts and engineers. He also made major contributions in other fields. He even, over dinner one night at his house on Agar’s Island in Bermuda, dreamed up the idea for what eventually became known as Bowie Bonds, the bundling of intellectual property like song rights into pre-packaged and market-priced revenue streams (and yes, David Bowie and his wife Iman were guests at the dinner).

When Ray Ruff, Michelle Sparks, Emily Chan and I started NetDimensions in 1999, a lot of people told us we were crazy. They said a Hong Kong-based, globally-focused, enterprise technology company that was not even VC-backed (we were effectively employee owned) had no realistic chance of survival.

One of our few industry friends in the early days was Headstrong, a consulting company James Martin founded and chaired. The Headstrong folks did take us seriously. They liked our approach and were willing to partner with us when we most needed the support of a serious industry player. So I am grateful to Dr. Martin and to all of the Headstrong executives who were willing to listen to a new company with some new ideas, including Steve Kucia, Paul Kidman, Liviano Lacchia and Peter Deacon in Asia, Rinze Koornstra and Cor Broekhuizen in the Netherlands and all of their wonderful colleagues in Chicago.

That was almost 15 years ago and we did survive. Now we’re listed on the London Stock Exchange AIM and traded in the U.S. on the OTCQX. We have offices in seven countries and hundreds of clients productively using our solutions in more than 50 countries around the world. Our software touches millions of lives today.

So we are grateful and I’d like to say thank you to the folks at Headstrong who supported us early on.

On behalf of NetDimensions we wish you well and we remember Dr. Martin with the deepest respect.

SaaS – A “Disruptive Technology” and more (part 2 of 2)

In part 1 of this post we analyzed SaaS as a “disruptive innovation” and what that may entail in terms of value to clients and SaaS providers.

Although SaaS is a well-understood model today, there are differences on how SaaS providers define SaaS (or their preferred flavor of SaaS). A number of leading SaaS vendors have claimed multi-tenancy as a necessary component of any SaaS offering. There is a fair amount of controversy here, but is multi-tenancy what defines SaaS?

As a quick backgrounder, multi-tenancy refers to a software architecture where a single instance of the software runs on a server, serving multiple tenants, where tenants are separate companies, or in a broader sense, any application – either inside or outside the enterprise – that needs its own secure and exclusive virtual computing environment. So how does multi-tenancy come to play?

SaaS – A “Disruptive Technology” and more (part 1 of 2)

SaaS is, according to Clayton Christensen, Harvard professor and author of “The Innovator’s Dilemma”, a “disruptive technology or “disruptive innovation.” In a very basic way, it is disruptive to the way software has been traditionally marketed, sold, delivered, and maintained.
As a “disruptive innovation,” there are some fundamental truths that we can’t shy away from:

  1. Like every new “disruptive technology,” SaaS is probably not as good a solution all-around as an on-premise deployment. In a lot of cases, SaaS is still challenged in terms of interactivity, flexibility to customize, ease of integration, and security. However, what matters is not whether SaaS is as good a solution as on-premise deployments (or whether it will ever be), but whether SaaS is good enough to meet the needs of most companies – and this is really the tipping point.
  2. SaaS was built on the premise of delivery of software over the internet. Five years ago, this was challenging in terms of available web application technologies, enterprise integration points, and network bandwidth. Today, this is not the case as internet bandwidth and web services have rapidly progressed. Another tipping point.
  3. SaaS offers a cost advantage over on-premise, license-based software delivery models. This cost advantage is based on virtualization and resource sharing on the vendors’ side, but it also translates into more flexible, usage-based or pay-as-you-grow models for buyers.  And this advantage is not relevant to just small companies anymore, but to enterprise and global organizations as well. Yet again, another tipping point.
  4. As with every “disruptive technology,” the leading vendors of the prior generation of the technology, which is software here (see Oracle, SAP) are not likely to lead in the new generation, and new leaders are likely to emerge (see Salesforce.com, Workday). This is because leading companies tend to focus on immediate customer needs and short-term license revenue targets. Also, fear of cannibalizing their profitable product lines prevents them from making the necessary investments on disruptive, but necessary innovations.
  5. The best way for an existing leading company to become a serious player in the new generation following the “disruptive innovation” is to set up a separate entity with a different P&L center that will invest in this “disruptive technology” without any interference from existing lines of business.  Cannibalization down the line is inevitable, but at some point, if that new entity does indeed build a business off the new “disruptive technology,” it can become a catalyst for change for the entire company and into the new generation.  It’s probably too early to say, but SAP seems to be trying to follow this approach based on their actions after the acquisition of SuccessFactors.

In part 2 of this post, we will review the definition of SaaS and how it matters for vendors and buyers at the end of day.