All your apps are in the cloud(s) now.  It’s OK.  Photo: Paul VanDerWerf, Potts Harbour, Hartswell, ME.  CC license. 

Hyperscale computing (HC) may sound like something only NASA and Google need.  But any business doing any kind of commerce with web sites can potentially benefit, as can brick and mortar companies who are highly dependent on 24 x 7 x 365 operations and no longer want to buy and maintain servers.

Hyperscale computing is computer processing power and storage that can be scaled up or down instantly, in large amounts.  Hyperscale computing relies on distributing computer tasks to multiple servers (distributed computing). You could do this on your own, duplicating your server environment and buying extra servers and the software needed to distribute tasks, but all of this is already available in the cloud, by many reputable firms, at costs that are not only low but predicted to go lower.

Why should you care?  Here are two scenarios where you might benefit:

1. Your product is sold at brick and mortar stores as well as your own web site.  Your retail customers (stores) use your primary site to place orders and as a selling tool in their stores.  You frequently promote your products to generate sales, so traffic and transactions on your site fluctuate a lot.  In this case you have to manage high traffic in a high- responsive way, and you need alternatives for backup if your primary servers fail.  Again, you can manage the hardware physically, but the most efficient way will be to virtualize your servers with scaleability built in, which is the whole purpose of hyperscale computing.
2. You don’t sell a thing online but your 24 x 7 x 365 operation is highly dependent on e-commerce with other companies and your own ERP system, the hardware for which is hosted by you or by an external company. Most companies have redundancy backup internally, or they make sure that apps or services they use are hosted by firms that also have redundancy backup.  But what if your vendor has the traditional one or two server backup, and one or both of those fail?  As companies more and more adopt SaaS for applications solutions, they can’t just assume that their SaaS vendor has adequate backup/scale-up capability.

Think of it this way, in simple terms: what you used to think of as big computers in some refrigerated room running all your stuff is now available online, not only in the quantity that you want, but with much more capacity and speed and at much lower cost; but more importantly agile enough to expand instantly as needed, or failover automatically — both data and software — to a redundant environment in cases of disaster, virus, or overload.

Photo by Meredith Cook at Breckenridge, CO on a “blue bird” day, a clear day following a fresh snowfall.  It’s unrelated to SaaS or Cloud (or is it?); just nice to look at.

SaaS and cloud are starting to be used interchangeably (“we’re looking for a cloud solution”) but they really are not the same thing.

Software-as-a-Service (SaaS) is: software that is made available for use based on access to features, time, number of transactions, number of users, or a combination of variables.  A ‘cloud’ is simply a server – a computer you don’t own or maintain – that sits somewhere other than in your building, that you access to run applications or store data.

SaaS describes a type of software, cloud describes a type of platform.

So you can see it’s possible to take applications that you own, and put them in ‘the cloud,’ and also possible to use software you don’t own, but pay for based on usage, that is sitting in your data center with all your other applications.

But there are more important distinctions.

Type of Software-as-a-Service: Is it software that only you access (single tenant), or is it an application that many other people or companies use (multi-tenant)?  Multi-tenant is generally lower cost, but with less specialized functions for your particular enterprise.  Is it truly SaaS, or just a full cost, configured-for-you application hosted by someone else whose costs have been spread out monthly over 5 years to look like a SaaS solution?  True SaaS works like a subscription: sign up, pay by month and use it; when you no longer need it, you cancel.

Type of Cloud: Is it a private or public cloud, or a hybrid?  A private cloud is a single tenant environment (your enterprise) where you control access and have firewalls for security and where you can define the hardware.  A public cloud is where you are paying for a part of an existing cloud server environment; here, you “rent” space and the advantage is flexibility, low cost, and the ability to scale capacity up or down based on your needs.  Hybrid clouds offer both private and public spaces for you to use.

Let’s look at examples; in both cases we will use the scenario of a manufacturing company selling to major retailers in the U.S. and Canada.

True SaaS:  You contract with a company that offers tools for analytics (software) together with point-of-sale (POS) data for your products for your largest retail customers.  You pay by month to access and analyze POS data. The costs vary depending on how many report levels you want to see.  You access the application via internet, anyone in your company can use the service, and you can cancel at any time.

True Cloud: For purposes of experimenting with business intelligence applications, you purchase database space from a vendor, at a cost that varies depending on how much space you use.  You can scale up or down in terms of the storage you need.  You can connect to this space with a variety of tools for transporting  data and you can install and remove applications easily.  For running your business day to day, you can host your most critical applications in this cloud, and have in reserve an identical cloud with servers ready to take over in cases of disaster or over-capacity of your main servers.

Before you accept at face value the terms ‘cloud’ or ‘SaaS,’ make sure you understand what the vendor is telling you. Ask for details and explanations.  What the vendor thinks is cloud or SaaS can certainly be different from what you expect.

Image by lofrev.net

It’s getting harder to determine which software vendors have what capabilities. This is because:

• The number of technology startups has increased;
• Big software companies have been acquiring other firms to increase the breadth of their capabilities;
• Established firms are rapidly making changes to their suite of applications – adding capabilities so quickly that it’s difficult to land on a static evaluation and comparison vs. other vendors.

The branding of specific functionality continues to proliferate. Firms don’t define their software’s features all the same way – they give them a brand name, which only adds terminology that is unnecessary and gets in the way of a clear comparison of features.

Firms are offering products and services that overlap what other firms offer, making it more difficult to weed out who truly offers what you want.

It used to be that, if your company needed software in some form – packaged or custom – it was “installed” on a server. Then a “client” for the software – a relatively small piece of software – was installed on desktops so that the software on the server could communicate with the user on the desktop.

In between the two was a local-area network (LAN), which is jargon for a wired connection. In this configuration, a user could launch the client software on a PC, and the client would, via communication over the LAN to the server, enable the user to fully use all the features of the software.

Players in this market looked like this:

• The firm that wrote the software;
• The firms or independent consultants that support the software;
• The firm(s) that helped you to install, configure, test and launch the software you bought;
• The company from which you bought your servers;
• The company that supplied your LAN and wide-area network (WA)

All of this has changed. Now there are vendors that can do all of the above, without stepping inside your building, through a web portal.

How do you get what you need in this environment?

1. Find the software vendors that know your industry and understand what they offer. Software companies are usually organized according to what they call industry verticals, such as health care, pharmaceuticals, consumer goods, banking. A company with lots of clients in your industry is a good start
2. Find the software vendors that are the best for your targeted functional area such as sales, manufacturing, finance, etc.
3. Focus on the firms that are well represented in #1 and #2 above

Please choose the door through which your next software vendor will take you.  Image: Doors of Dublin, by Tim Sackton, edited to fit 569 X 368px, CC license.

Selecting a software vendor is difficult at best in the 21st century; here are some must-have criteria, in addition to, but perhaps more important than, cost and time:

Does it solve my problem? Does the software company’s system solve your business problem? Does its existing functionality match the business requirements you drafted?
Does it pay back? Do the financial benefits from the solution pay back the total cost of implementing it in three years or less?
Do I understand all of the solution’s costs? Have you accounted for initial license, recurring support fees, custom development costs for changes you want to make to the software, hardware costs, upgrades to your network bandwidth or operating systems on your current servers or PCs, the cost of the next version upgrade, the cost of consultants, of hiring backup staff for project team members, and travel?
Is the solution in line with my strategy? Does the system match your criteria for what types of information solutions you will invest in, now and in the near future?
Do I understand all of my alternatives, besides this particular vendor? Have you done your homework regarding software options available? Have you constructed an evaluation matrix and compared all the alternatives to one another?
Does my team have the time and skills to implement this solution? Can you secure near full-time people to manage this project? Is the system easy to learn? Is it intuitive? Has your team evaluated it and are they comfortable they can master it?
Do my users have the aptitude to learn it and become proficient? Can you envision your end users quickly learning to use all aspects of the software? Are there enough users who could become proficient enough to serve as key users and help other users with training and troubleshooting?
Does my team fully understand how this solution will integrate with the company’s other systems? Has the vendor demonstrated to your satisfaction the ease with which the system will integrate with your other systems? Are other enterprises already running the software with systems like yours? Try to get at least a conference call with those references to gauge the level of integration complexity.
How risky is this particular software alternative compared to others? Can the software be phased in without interrupting the business? If the solution fails or the team encounters startup problems, how easy will it be to keep mission-critical activities running?
Vendor reputation. How many enterprises are using the vendor’s software, and for how long? Get references and check them.
Can I find programming help in the open market? If you need customizations, can you readily find people to do the work? Or are you locked in to using the vendor to make all your changes?

All of this is of course after you have submitted and reviewed detailed RFPs from the most appropriate vendors.  You can build a grid or a table, with vendors/solutions across the top and your most important criteria down the left hand side, and weight the relative importance of each. The result is an overall score that points you to a solution that best fits your needs.

Image: “Computer Software Development” by Fabio Bruna, CC license

Being on the “buy side” of corporate software for many years I’ve seen numerous pitches by software vendors. A few were excellent, most were forgettable, and quite a few were incoherent. Like actress Clara Peller in the Wendy’s ads — for those of you alive in the 1980s — I was often left wondering: “where’s the beef?”

One thing missing from nearly all of these presentations: a clear understanding of what my company did and what our business needs were, not to mention how the software solution met those needs.  Nearly all the meetings with vendors centered around the software and its ability to do this or that.

Another common theme: the vendor would present a business problem — one that you may or may not have — how solving this problem is the key to business success, and how that is accomplished with the vendor’s packaged lines of code.

Some advice to software vendors:

Ask the potential customer what they hope to accomplish with your solution.  Listen.  Ask questions and clarify.  The first response you get is probably not enough information.  Once you understand the problem and how you can help then you are ready to present something.

Know the specific issues facing the customer’s industry. Is there a language used in that industry that someone in your firm is familiar with?  Many software vendors have expertise in selling to specific industries, but have few people in their organization who’ve actually worked in that industry.

Limit the accolades for your firm.  You don’t need five slides explaining how great your firm is and how many of your firm’s customers are household names.  The customer probably wouldn’t be meeting with you unless they already knew you were legit.

Most importantly — connect the dots.  Most people cannot, in their minds, translate software functionality into business benefits.  You must do it for them and you must use the language of their business to do so.  You also need to leave behind a draft business case for investing in your solution. Most people don’t know how to write a business case, for anything.

Photo by Jimmy Brown, CC license

FUD stands for fear, uncertainty, and doubt, and was a phrase used in the early 1980s to describe the unsettling and confusing atmosphere companies faced as they began investing heavily in software applications.

In 1979 Gideon Gartner, formerly a top technology analyst at Oppenheimer & Co., capitalized on that confusion and formed an advisory firm to help companies with technology decisions. Gartner Inc. now has a market value exceeding $4 billion and customers in 85 countries.

Although we have software tools far superior to what was available in the the 1980s, FUD still exists.

It exists wherever software marketers and commercial enterprises interact.  The dialogue is predictable: “Can your system do this, that, and the other thing.”  “Our system can do that, and much more; it can do X, Y, and Z.”

But the two parties (software, business) are talking past each other.  They aren’t even using the same language.

Software marketing is filled with evocative corporate-speak; it is opaque, conceptual, and general.  Meanwhile, the business person looking for a solution is mired in her own problematic world and knows in general what she needs but doesn’t realize that the software company she is speaking to has no idea of the details of her situation and even more cannot imagine it.

They speak to one another and try to find some common things they both agree on and understand.  The business person is left bewildered.  FUD.

Money pits thrive where FUD exists.  In this situation, bad and costly decisions are highly probable.

• Take a step back and evaluate your business and technology strategy.  Do you really need this technology or could you outsource the whole business process?  Will the investment in this technology make my customers happier?
• Before considering any solutions offered by software vendors, take the time to evaluate processes the software will support, document how those processes should flow in the future, and prepare a detailed list of requirements for the future application.  You will use this to evaluate the “fit” of each software solution to your situation.
• Like anything else, educate yourself before you buy.  Understand the type of technology you need, and the options available in the current market.  An advisory firm is recommended here; it will cost you a fraction of what you intend to spend and save you multiples of that.
• Change the conversation with the vendor.  Stop talking about the software.  Instead talk about your business context and the goals you have.  Most vendors really do want to understand your needs but they don’t have the advantage of being in your shoes.
• Take the vendor’s software solution for an imaginary “test drive.”  Spend time with the vendor walking through your future process and the associated technology requirements.  The result will be much more clarity and understanding of the vendor’s potential to meet your needs.

Yes, your new fridge can be an internet-enabled Thing, and you can text it to check the beer supply, possibly avoiding a stop on the way home (although, is it possible to have too much beer?)

Alas, which of life’s many difficult hardships will technology eliminate next?  The smart fridge is cool, but it’s about as necessary as a lawn ornament (no offense to law ornament fans).

What about the breakthrough, make-the-world-a-better-place uses for IoT?

In business, I see three promising areas:

Inventory: Good, cheap, durable sensors attached to inventory could cut losses and improve  accuracy.  RFID isn’t good enough in many cases, although that is changing: Airbus uses RFID tags to track thousands of airplane seats and life vests, and a major Japanese clothing retailer has applied RFID tags to everything in its stores, including inventory, hangers, and merchandising displays.

Retail: Already some stores are starting to use sensors to detect when inventory on the shelf is low.  If the trend continues and accuracy is good, this could be a revolution in retail inventory tracking, which is currently done by scanning UPC codes.  As the costs of sensors drops, more and more (lower value) products can be included in this type of solution.  Some hotel mini-bars now sense when items are consumed, eliminating the need to count, write down, and key in how many drinks and snacks a hotel guest had. 

Machinery diagnostics: For complex production lines that are difficult to keep running at top performance for long periods, IoT sensors could continually measure and transmit machine parameters, output, speed, consistency of cycles, and other variables to create a visual record of performance that could then be correlated with unplanned downtime; cause and effect could more easily be determined and machine performance improved.

PINC Solutions, Inc. markets connected sensors and software for managing truck fleets at plants and distribution centers.  It is a straightforward, practical application of IoT: trucks have RFID sensors that uniquely identify them; trucks are attached via software to delivery numbers, dock doors, destinations, and other information via a giant virtual whiteboard.

The benefits here are easy to understand: measure & reduce wait times at pickup and delivery points, reduce idling and searching in a yard full of trucks for the one you need, and provide real-time on-the-road status and ETA.

For more on this topic, check out this IoT primer published by Goldman Sachs.

For more articles like this, visit my site at softwaremoneypit.com.

Photo by Official GDC

A packaged application is not ready-to-use, in any sense of the word. The word “packaged” is kind of a misnomer. You won’t find a warehouse management system in a shrink-wrapped box on the shelf at Best Buy. A packaged application is simply one whose features and functions match in general terms what you want the software to do, but which still needs to be configured for your business. Configuration (also called setup) involves a lot of work.

Some important guidelines:

Stick with a software vendor’s competencies. If you have defined your scope as one or two specific functional areas, look for applications that best fit those purposes. It’s always interesting to look at a program’s other features and functions, but unless you see hard returns in expanding beyond the package’s main mission, stay within your scope.

The biggest risk in overspending with packaged applications is during the implementation phase. A single implementation of, say, a system to manage order processing, can cost $2 million to $3 million or more. Why? Two main reasons: a) you don’t know exactly what modifications are needed to make the program work the way you want; and b) you don’t know what delays you might encounter; each delay prolongs the project and adds billable hours to your cost from either the application vendor or other people you have hired to help with the project.

Plan the life-cycle costs of a packaged application. The life of a packaged application can span many years. The main costs will be annual support fees and any enhancement (custom development) work you might need as your business requirements change. Your vendor will also be releasing upgrades to the software, sometimes as frequently as every six or nine months, and you will need to stay current with those upgrades in order to get the best performing software and to continue your support contract.

Understand that software is an annuity business. In simple terms a software company survives in the long run because it is able to collect annual maintenance and support fees from its customers while providing custom development services and a stream of version upgrades. The support fees are 20% to 25% of the original cost of the software license, so to the software firm, it’s like selling a new system to the same customer every four or five years.

Packaged applications generally can’t be implemented by without people who know the app. So the software vendor is not just selling you the application but a team of people to implement it for you. One expert on a project for one year can cost you $300,000 – $500,000.

In the time is takes to purchase and implement a company’s software systems, an infant can become a first grader. Degrees can be earned. And a lot of money can be spent. This is one more reason why people find software so maddening.

The classic ERP implementation, which many companies dove into in the 1990s, is a huge endeavor that can last years for even the most tech-savvy companies. As Cynthia Rettig wrote in an October 2007 MIT Sloan Management Review article, ERP systems are “massive programs, with millions of lines of code, thousands of installation options and countless interrelated pieces….they introduce so many complex, difficult technical and business issues that just making it to the finish line with one’s shirt on is considered a win.”

More often than not, studies have found that the original scope is not achieved, and it may take years to optimize the solution so that it delivers real value.

Lengthy implementations have become a sore point for software buyers. Companies and governments often see large software projects as a nuisance. There has been a backlash against the big, interconnected, and costly-to- implement applications. Executives no longer readily accept big dedicated teams working on a project.

A few years ago, you may have seen the cartoonish billboards that say “Down with big ERP.” The ads are part of a campaign begun in 2009 by, ironically, one of the largest ERP software companies, Infor. Sensing the negative turn against large software implementations, the company sought to differentiate itself from its large competitors SAP and Oracle.

In launching the campaign in November 2009, Infor’s then-CEO Jim Schaper said: “Obviously our industry hasn’t done the greatest job serving their customers. Software implementations have become disruptive. They’ve become known for over-budget and seemingly never-ending implementations, increasing maintenance costs every year, and forcing customers to upgrade or exchange software when it wasn’t advantageous or economical to do so. In many cases, the ‘software experience’ has been anything but a good experience.”

Why does it take so long? Software is the result of converting information – human thought — into computer instructions. The “information” could be as simple as a mathematical formula, or as complex as the mind’s sequential thoughts and logic. Much of the time is spent understanding what the user wants and how to convert it into business rules that a computer can apply. Large blocks of time are also spent testing the software code to make sure it does what it was intended to do.

Another reason that projects take so long is that the software must fit hand-in-glove to your business process. Remember, the software knows nothing about your business. It is told by its lines of code to perform certain calculations and transactions using data you provide.

So in a sense, you are building a bridge.  On one side is what your enterprise knows about its processes, data, and transactions.  On the other side is software code — some of it is ready to take what you have and run with it, some of it is at odds with or irrelevant to your needs.  Success will depend on maximizing the former and minimizing the latter.

You need to understand the way software firms, consultants and advisory services interact with one another.

In the process of thoroughly confusing yourself trying to scan the software market for something resembling a solution to your problem, you will at some point realize that there aren’t many places to go for an objective appraisal of applications or vendors.

That’s because, in my view, all the players in the software market — the firms themselves, consulting companies, advisory services, user groups, associations and conference organizations, and hardware and network providers — act in a way that is (shocking!) mostly designed to perpetuate and increase spending on software and related products and services.

Yes, firms strive to be competitive and earn your business, and will tell you why their solutions are better than others. But few players in the software market — even subscription advisory services — will solidly endorse or, alternately, steer you clear of, a particular software or consulting organization or its products and services.

[pullquote]There’s just very little clear-cut information to be had. Advisory firms don’t want to dismiss anyone because they rely on all players to provide them information, buy their services, and attend their conferences.[/pullquote] IBM Consulting Services is not going to advise you that SAP or Oracle would be a terrible choice — their consulting revenues depend on a stream of projects implementing those same applications.

There are several well-respected organizations providing in-depth research and advisory services related to the entire IT industry. Their services and publications are indeed excellent, thorough and detailed, but only directionally conclusive and even then in a rather general and not exactly plain-spoken way, and accompanied by caveats.

Consider this summary statement from one such respected research firm, in a publication reviewing software for analyzing product assortment: “Use DemandTec if optimizing your assortment in a collaborative retailer and manufacturer environment, the ability to leverage localized incrementality and demand transfer analytics or leveraging your shopper insights is a key priority for your company.” Got it?

Adding to the noise are industry associations and a slew of online newsletters that seem to multiply over time…there’s CIO Magazine, CIO Research, IT Whitepapers, IT Whitepapers Business Intelligence, Enterprise Business Alert, Business Management Alert, Mobile Alert, Networking Alert, InfoWorld, Supply Chain Technology Bulletin, BI Technology Bulletin, and on and on…a flood of information, discussion, interviews, blogs, announcements, conference invitations and webinars.

All of it contributes to a general feeling of being in the woods, having no idea what the forest looks like. But one thing is sure: every topic is urgently important and deserving of weighty consideration equal to that given the most pressing and critical questions of our time.

Now hitting your inbox: “New survey – High performance analytics: Are you ready?” and “7 Best Practices for Developing in the Hybrid Cloud.” These digital marketing efforts are fueled by advertising for IT products and services — again, the self-perpetuating nature of the market.

It’s marketing, OK?  Just view it as that.  As I’ve said before, change the conversation.  Ask questions that come from deep within your understanding of your own situation and business, and insist that your vendor speak to those needs.

Software vendors have lots of value to offer.  Most are selling valuable solutions.  There is an intersection between your needs and the software; that is what you need to find, and understand completely.