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Enterprise software

MB: Multi-packaged software has a huge issue—the combinatorics of the QA problem in the enterprise software market. The problem is that you have to support the software on every platform imaginable, and it has to connect to every version of every other package of software imaginable.

MM: And not to mention the desktop clients.

MB: Yes. The desktop clients, as well. The problem here is that the combinatorics of the testing space are just huge. Function points aside—just testing the basic 50 functions across it is difficult. You end up in a space where your cost of creating and testing and delivering that software in a robust way is really expensive. The cycle time to deliver new releases is long, and the upgrade cycles become tedious and difficult. So the quality of the software fundamentally is lacking.

MM: Let me come back to my basic proposition. If 50 or 100—it’s really a talking point whether it’s 50 or 200—but when a tenth of 1 percent of the function points deliver 95% of the value, what’s the value of a magic quadrant analyst thing that says, “Completeness of vision and ability to execute?” if all you have to execute on is 50 or 100 function points.

Isn’t the baseline by which to compare and contrast enterprise software and/or SaaS a baseline of value in tangible, tactical, strategic or transformational? And isn’t the offsetting axis—the Y-axis or counterpoint—isn’t that time to value fast, moderate or slow?

So doesn’t that form, essentially, the value proposition of software in general, and SaaS in particular, which is, “I’m going to deliver tactical value in days or a week,” and as a function of that, I can deliver strategic value in days, weeks or maybe a month. And because the SaaS—as you were talking about it—the SaaS platform you can’t drive innovation almost on a weekly basis…Thereby, you’re driving innovation into an operation or supply chain 10-, 15- or 20-times faster than these big 2- or 3-year build-outs on enterprise applications.

MB: I’d tend to agree. You get acceleration from the fact that as a SaaS vendor, you get to select a platform and stick with it, and are able to focus on adding value for your customers. And the fact that there isn’t a very difficult software deployment at the base of all your customers means that you can roll out new functional value for them in a much more straightforward and easy way. To me, the case is so compelling.

The point you made about the magic quadrant, I’d claim that in some sense, the defenders of the magic quadrant would agree, but that all rolls up into a completeness of vision.  It’s a good vision if you recognize that most of those function points aren’t needed.

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50,000 function points for what?

MM: I’d like to address one issue, there, Mike. As a CTO of a SaaS company, I’m sure you’ll have some things to say about this.

When I look at an enterprise application—whether it’s a supply-chain management system or ERP system—generally most of these enterprise applications have anywhere from 20,000 to 50,000 function points in them. Would you concur?

MB: Yes. Very large and complex systems.

MM: Very robust. Okay. Then when we look at the deployment of those systems, the core user of those systems barely uses 200 of the function points.

MB: Correct.

MM: Then if you look at what 95% of the value is that most users generate from that system, it boils down to maybe 20 to 50 function points.

MB: I would agree.

MM: If you’ve got 50,000 function points and 50 are delivering 95% of the value, what do you call the other 49,950 function points?

MB: Well, some of them are legacy — right? They’re there because of the way you got to what you’re selling today.

MM: What do you call it in economic terms?

MB: Low leverage. That’s what I’d call it.

MM: I would call it, “massive overhead.” Massive costs.

MB: Yes. But I wouldn’t even blame it on the function points, interestingly enough. To me, if you have a functional aspect of your system and it’s debugged and documented and so forth, then the cost of continuing to deliver that function in a new version of your product is not that high.

MM: But you know that when you come up with a new module or a new extension of it, oftentimes that’s the source of the bug. A previously well-behaved documented debugged piece of code all of a sudden becomes the errant citizen in the new release.

MB: Well, I would say that that’s true because of the…

MM: Bad architecture?

No. Not necessarily even because of bad architecture. One of the reasons I work in a SaaS company is because I could no longer see a need for multi-platform packaged software any more.

MM: Exactly.

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Game changer

MM: SaaS represents another development—almost a second or third wave development of the Web. The idea then is that you don’t have to install software or train a whole IT service management staff for managing and provisioning a service. But you can simply go to a provider such as Oco to get a capability that might’ve cost 5 or 10 million dollars for a hundredth or thousandth of that.

MB: Yes. It really changes the game tremendously. There’s been a lot of argument over, “What really is SaaS?” People have various definitions of it—some broader and some narrower. My definition of it is pretty simple.

SaaS is a service you utilize instead of buying software. It’s defined by what you don’t have to do. You don’t have to buy, learn, modify, install, and maintain software.

MM: I think that the analysts have all kind of gotten together and shared some basic definitions of SaaS V1 or 1.0—which was a point solution that wasn’t really set up to interoperate. It might pass data, but it wasn’t really set up to interoperate with other SaaS applications or installed on-premise applications.

MB: I think people talk about the SaaS 1.0 versus the future of SaaS. It’s true that the first wave of SaaS introduced applications like Salesforce.com. Some people would even put applications like Webex into that category. I don’t. The alternative to using Webex is not buying a software package. The alternative to using Webex is getting on an airplane to go give a customer presentation.

MM: I think the Go To Meeting Citrix people would probably argue with that, but that’s okay.

MB: I mean the alternative to these online demo and meeting systems — Webex or the other services like it—is if you don’t want to use one of those, you can’t buy a package that solves the bridging problem between you and whomever you need to give a demo to. I suppose you could host such a thing on your own corporate website, but I don’t recall many people doing that in the days before Webex.

In any case, the point is that these applications didn’t involve integration. We have moved into an era you can call SaaS 2.0, if you want, where the applications are starting to involve the core activities or functions that businesses do, such as business intelligence or ERP and so forth.

So yes, there certainly is a qualitative shift, there. But some of the industry people who I have some disagreement with would say, “It’s not SaaS if you can’t download it yourself,” or, “It’s not SaaS if it doesn’t have self-installation and free trial.”

They basically are narrowing the definition in ways that I don’t believe are required. As far as I’m concerned, if an alternative to a solution requires that you have to buy software and install and maintain it, then it fits the category of SaaS.

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Process maturities for marketing operations

PvT: And how have you seen organizations change or shift their global marketing efforts based on these changes.

MM: Most, now well. Why? Most of the major organizations, with the exception of those that area really far down the maturity process model of say, Lean, Six Sigma, or something like that – some other management process-control framework – most companies do not have the operational capability for engaging in the customer-making process as an integrated process.

I believe that innovation has undergone a fundamental discontinuity. And in turn, that continues to disrupt marketing as we know it.

You know, when the 1990’s came along, we had saw a number of enterprise software firms emerge: operating systems, office applications, financials, databases, and so on. You could say that the 1990’s brought a fairly uniform wave of innovation to large and small business, with a whole bunch of little micro-specialties in it; but the overall wave of innovation move everyone off of batch data centers, into more online interactive systems with enterprise software, and enterprise databases, and enterprise reporting, and all that kind of stuff.

A whole wave of innovation just washed across large, medium, and small enterprises.

With the Web, and the Internet, we all experience another wave that roll through from say 1996 through 2007.

We now find ourselves in a new era; as a function of advances of web services, service-oriented architecture or SOA and application mash-ups, we’re not just talking about mashing up content or on-demand applications. This calls attention to the wonderful, stupendous, and almost unimaginable implication of the Apple AppStore: the near complete dis-integration and dis-entanglement of hundreds or thousands of single-function capabilities of large, complex, and bloated software suites, including enterprise software applications. I have already seen very sophisticated, enterprise applications built from the mash-up of dozens of software widgets—all within an iGoogle framework.

Functions-as-a-service at 99 cents

While this puts a lot of stress on integration, user requirements, and just-in-time training, it brings us the reality of “function as a service“—sold at the AppStore or the Google equivalent of for $0.99. And, yes, that will transform the iPhone tablet computers and those running Android-Chrome into the next trillion-dollar market. Trillion with a ‘t’!

Right on the heals of that we will have the next wave around the semantic web and semantic applications—where everyone can exploit industry metadata standards and schemas, innovation will not just accelerate; it will hyper-accelerate.

We now live in an era that Michael Schrage– I think he’s with MIT – speaks about; the age of hyper-innovation.

50-plus Innovation Vectors

The age of hyper-innovation means that enterprise planners no longer grapple with two to five major innovations that influence their ability to market and innovate. Enterprise planners must now grapple with 50,100, or potentially hundreds of innovation vectors, any one of which could disrupt their market.

So most marketing organizations are, I would say, suffer a deep myopia as to what drives or will soon drive marketing and innovation in their particular businesses.

It’s as if you’re just out flying down the road, 90 miles an hour, fogbound with, you know, 20 feet of sight. At some point you’re gonna hit somethin’, and at some point there’s gonna be a big splat.

And so the inability for marketing organizations, 1) to prioritize innovation vectors, is a pretty serious challenge. Then the next thing is mastering the operational capability to incorporate those innovations, that is building new or enhanced operational capabilities with the technology.

We’ve found persistent trait in execution systems: change generally and, innovation in particular, become sand in the gears of execution.

Calls for innovation leadership

Most medium to large size companies do not have a structured repeatable process for innovating new processes.

Now I know that sounds circular, almost tautological nonsense, but it is fundamental to the challenge that confronts most global marketing organizations. They do not have an effective change management practices or disciplines as it relates to fundamental changes in marketing and innovation across the customer-making process.

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Masterclass interview by Michael Moon with Rudy Thurston, Chief Operating Officer at Omnifuse, on developing social media infrastructure for networked consumers

Professional background

Rudy Thurston has decade of experience developing infrastructure and software architecture to Omnifuse’s clients. Before co-founding Omnifuse, Rudy served as the enterprise open-systems configuration management director for the Automobile Club of Southern California, where he oversaw the source code and build automation of mission-critical business applications. Previously, Rudy owned a consulting company developing software solutions for many FORTUNE 100 companies, including Microsoft and its Windows 2000 operating system development. Rudy holds a bachelor’s degree in business with an emphasis in economics from the University of Maryland and a master’s degree in engineering in Applied Computer Science from the University of Southern California. A former competitive tennis player, Rudy works today with youth tennis programs to pass along his vast knowledge and experience in the sport.

MM: So as we start this, why don’t you just start off with your name, title and an overview in terms of Omnifuse?

RT: Sure. My name is Rudy Thurston. I’m the COO of Omnifuse, a social media marketing and technology company that started in earnest in 2003. We’ve been working on our social media platform for a little over seven years, now. Almost going into eight years, now.

MM: As a social media developer, this means that you develop a technical platform and license, or provide it to other companies?

RT: Yes. That’s one facet of our business. Our flagship product is FUSION. That’s a traditional social networking application.

We also provide strategy consulting for clients who already have existing social networks, where we help them with memberships. We help them with identifying their target demographics, and inflection points of social media into their social networks, to get more excitement, or to drive more specific types of traffic to their communities.

We specialize in building communities. Whether we’re using the technology that we created to build those communities, or using our community expertise to continue to build those communities.

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