Pulse Day 1, SaaS, and Why I’m Late with this Blog

I missed our filing deadline,  I’m pretty sure means there will be only a very few hardy souls reading this blog this evening.  However, my reasons pertain to both Pulse and SaaS, so maybe there’s a glimmer of hope.

At 4:04 today, I was working on a wrap up of the day’s general sessions and keynotes, with conspicuous attention to theme and nuance, when I received a phone call.  My presence was requested in the Speaker Ready room, as one of the speakers from my 6:00 Birds of A Feather session on SaaS ERP In Emerging Markets needed some additional guidance on how we were going to structure the presentation.

I packed up and headed down to the Speaker Ready room, which is pretty much as advertised-  where speakers go to prep for their sessions.  I inquired about which of the several gentlemen in the room was the one who needed prep, and I was pointed to a man sitting hip deep in his iPad in the back of the room.

People, I was the soul of kindness.  We discussed the email that had been sent out for the panel [he hadn’t gotten it], we discussed the project he wanted to share in the panel [he had no idea what he’d submitted in his abstract] and we looked at the speaker bio list to make sure he was pleased with it [he wasn’t in the speaker list.]  At some point during this exchange my ipad crashed, but I felt as though in general progress was being made and that we would unknot soon enough all of the worry that had welled up on the way towards the panel.

It was at this moment my phone rang again, with the speaker ready room number on the id, even though I was 10 feet away from the caller.  I got up to inquire as to whether there had been a mistake, a so-called butt dial as it were, but no. Apparently the person who had requested me was growing still more anxious that I wasn’t showing up.  ??? Wait for it…wait for it…apparently I was supposed to go talk to the large group of people seated at the round table at 11:00 [aka ‘those people’] rather than the lone person seated at 11:30 [aka ‘that guy.’]

I couldn’t manage to explain myself to the mistaken panelist. I just gathered my stuff and sat down with the group, pretending nothing odd had happened.  Through the power of positive thinking, sometimes we can keep things from sliding even further out of hand.  So it was either positive thinking or abject denial that kept me going.  After a few fits and starts I managed to make the same amount of progress with this new group as I had with the guy who had just been minding his own business in the back of the room – we agreed on a format and a time to meet in the room.

The companies included on the panel were ABT, from Australia, Senior and EngineBR, both from Brazil.  As a side note, I love love love presentations with a Brazilian co-speaker because I know every other Brazilian person at Pulse will show up.  They roll hard in the paint at IBM Brazil, supporting each other even when there’s an open bar open somewhere else. So even though it was 6:00, headed into hour 10 of the day, the house was relatively packed.

I’ve been studying midmarket [and here I define that as companies from 1000-5000 employees] for quite a while now.  We’ve also done a lot of work strategically trying to support traditional Software Integrators who are making the transition from managed services to SaaS Services.  In these three cases all three companies were working with SAP or ERP systems.  And there were some interesting trends to be noted, some specific to emerging markets and some that are universal.

1) Approximately 90% of the original integration clients had been agreeable to moving to SaaS.  The 10%  continued to find comfort in seeing the blinking lights of their own servers.
2) Pretty much all of the new clients being brought in to all of these groups were SaaS customers – while there was a willingness to work on older delivery models it was no longer the delivery model of first choice.
3) Contract lengths were much longer than those normally requested for IaaS or even PaaS, with clients accepting three years as a minimum term, some customers going as far out as eight years for predictability sake.  The reason here is that ERP has a higher sticky factor than system management or middleware
4) SaaS substantially levels the playing field for smaller and medium sized companies.  Larger companies who could once differentiate themselves by simply throwing iron at a problem can no longer rely on that to run the little guy out of business.  This has been revolutionary in emerging markets such as Brazil
5) While the initial trend for SaaS uptake, maybe 2 years ago, was for smaller companies to use it to eliminate scale disadvantages, the current trend is now headed towards bigger shops – between $30 and $50 million in turnover per year – to look to SaaS models
6) Emerging markets struggle with growth – particularly in the areas of regulatory compliance.  Brazil, for example, has regulations that can change almost monthly.  If smaller companies are left with the responsibility for managing their compliance to laws that change this quickly, they go under from the expense or the threat of an audit.  Moving to a SaaS model eliminates having to worry about audits.

And then finally, the top reasons noted for moving to SaaS are initially cost savings…and then predictability.  Another session that I sat in on, “Not your Daddy’s IBM” brought up a similar point. Customers, according to this panelist, “.. see SaaS models as getting rid of ‘necessary evils’ in their environment…a way to stop spending hours to maintain solutions they hope they’ll never use.”

So SaaS and the power of positive thinking triumphed in the end. Hope you get to read this! Onward to day 2 of pulse.

College is Coming: What every parent understands about Midmarket Priorities

My three year old daughter  recently picked up the habit of using a paper towel role as a telescope.  She looks through one end of it and shrieks “I can see you!!!” with a glee level adults only summon when they imagine winning a record Powerball jackpot.  Given how important it is in my house to emphasize scientific exploration,  the purchase of an actual telescope – one that succeeds in making objects appear closer than they are – would be a natural next step.  But how complex does an optical toy need to be in order to truly fit her needs?  The cardboard towel roll is neat, but what really would be the options and the theoretical ROI if we were to step as a family into telescope purchase.

Level One – the kid’s telescope.

Please note, this is not my daughter.

Please note, this is not my daughter.

Lets face it, she’s not going to plot the face of mars with this one. It’s relatively cheap, it’ll be thrilling for a little while once she figures out which end of it she needs to look through.  Build to withstand childhood,  it’ll hold up as long as she doesn’t jump on it, and it’s accomplishing the relatively modest organizational goal of magnifying far away objects.  It can’t be re-used as a microscope, but it doesn’t require a great deal of setup either, so she’ll use it on the car ride home.

Level 2 – The adult’s telescope.

Adult Telescope
This one will hang around for life, but it’s going to be a beast to carry everywhere.  One solid smack with an mischevious three year old hand and you’ll spend the rest of the evening re-calibrating it, missing the pass-by of the international space station.  By god it’ll show her some stars though.  It might spark that elusive passion for science that kids talk about with fondness during their commencement speech from MIT.  But more likely it’ll end up in the closet gathering non-astronomical dust.

Level 3 – The weekend trip to the McDonald observatory.

McDonald Observatory
Since wealthier folks than I  have already built the biggest telescope in the western hemisphere, why not just pay the $10 to look through that?  Aside from the fact  you’re driving for ten hours,  I know from experience she’s too small to look through the lens, and there’ll be the predictable meltdown over a t-shirt at the gift shop. Plus they only let the public in on Wednesday nights, which kills almost a week’s worth of vacation without seeing the ocean.

Level 4- Buy an expensive pair of binoculars.  Only pull the lens cap off one side.

Expensive Binoculars
This accomplishes everything the adult telescope would have for about the same amount of money.  Binoculars aren’t expressly designed for the job but they accomplish the same thing that we started out looking to do on paper.  When she’s old enough to be interested in birds she will be mighty pleased to discover the whole other side of the binoculars. Until then we’ll just invest in both sides, wait and see what happens.
Level 5 – what most of us buy in the end.
She’s happier than any adult can imagine with something bundled with another the bulk paper towel purchase she actively attempted to obstruct by pulling the Costco cart over on its side.   Let her keep playing with the paper towel roll and put the money towards the next pair of orthopedic shoes or orthodontic spacers.  You know something bigger than it appears isn’t that far away anyway-  even when you look through a purely financial lens this is a widely accepted reality of being a parent.  The paper towel roll is fun for the discussion and all, but in the end you have to keep the lights on, the tuition checks from bouncing, and the servers rolling.
And its here my metaphor gives in.  When build for small companies we’re not competing with other software companies.  We’re competing with their need to make fundamentally sound financial decisions. Approximately 30% of the opportunities in the Midmarket [space will go by the wayside at any given time for reasons outside of any feature/ function debate but because the company has other financial priorities. Value here isn’t in the acquiring of a vast number of unneeded features, an increased complexity, or retrofitting something too big or unfit for purpose.  It’s in accomplishing the small mission quickly.

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