The company was founded in 2003, and is currently profitable with some thirty employees, no debt and no external financing.

According to Malviya, the team set out to create a multi-tenant Platform optimised for the easy creation of web-based applications, but their first public offering was a SaaS CRM application devoted to the media industry. That application is still running today, and is used by more than 150 enterprise customers.

The Platform followed in September 2007, exclusively as a hosted offering from LongJump’s partner data centres, and Malviya perceives it as in direct competition to Salesforce.com’s Force.com. With extensive support for common protocols and communications specifications such as REST, SOAP, Java and XML, and a common security framework throughout, Malviya argues that an application Platform such as the one his company offers is important in overcoming what he describes as the

“Enterprise tendency to develop one-off apps… and then expect IT to support them.”

He argues that business users are able to take a degree of control over their own application needs, whilst reassuring the CIO and IT Team that everything is running on top of a single set of secure infrastructure over which they have control.

Today, that same Platform is being made available on an annual subscription basis for local installation behind the firewall, as well as being offered to a range of third party hosting companies whom Malviya hopes will brand and resell the software to their own customers. According to Malviya, two (unnamed) service providers have already agreed to resell the Platform, and details will no doubt be forthcoming as they get up to speed.

As the LongJump corporate site notes,

“LongJump BAP for Enterprises addresses a major gap in next generation application platforms designed solely for the public web. Information that is sensitive or subject to regulatory issues is relegated to sitting on a custom application built internally, adding to a level of complexity and management that neither scales nor adapts well with changing requirements. Because LongJump BAP for Enterprises sits inside your own datacenter, its applications and platform are ideal for organizations tasked with managing [sensitive] information”

And, crucially,

“In addition, applications can be packaged for migration from one LongJump deployed instance to another. For example, development can take place in a cloud deployment and be deployed in production in a corporation’s data center.”

This will, of course, be crucial in allowing flexible movement between different environments as requirements, capacity and resources change.

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Salesforce.com

More recently the company has begun to diversify from its heritage as the provider of an on-demand CRM application, seeking to nurture an ecosystem of add-ons and enhancements through the AppExchange and offering third party developers access to the underlying Force.com Platform.

In an effort to understand the company’s views on the evolving SaaS and PaaS markets I recently spoke with VP for Developer Marketing, Adam Gross, and the result has just been released as a podcast.

Show notes available on Talis‘ Nodalities blog

Delivery of both application and platform could create significant tensions, as business decisions made to advance the application potentially cannibalise revenue from the platform ecosystem, and vice versa. We discuss some of these issues during the conversation, with Adam going so far as to suggest that ‘nothing would stop’ a third party using Force.com to build an application that competed directly with Salesforce itself.

Have a listen, and see what you think.

Image of Adam Gross © Salesforce.com

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Driving home last night, listening to podcasts from the BBC, The Guardian and John Willis, I began to wonder about the ‘inevitability’ of Open Source in the Enterprise. I shared the initial idea on Twitter and had some useful responses overnight;

“Thought; Open & Closed Source coexist well in enterprise. BUT once you deploy Open Source tool can you ever get budget back for Closed ver?”

Conversation was clearly constrained by Twitter’s 140 character limit, and several respondents (incorrectly, but understandably) assumed that I was simply suggesting Open Source Software to be cheaper. It may be, but it doesn’t have to be. And that wasn’t the point.

For the avoidance of doubt, let me first expand upon that brief tweet in order to clarify what I meant. Then we can explore the issues in a little more depth and see whether the premise holds water.

Thankfully, we appear to have moved beyond the ridiculous polarisation of recent years that saw Open Source evangelists square off against Microsoft junkies and other proponents of closed source proprietary solutions. Naive notions that ‘free’ software would not cost anything to deploy and maintain have faded from the conversation, enabling growth in for-profit ventures to support deployment of all that ‘free’ software. In essence, we have reached (or are rapidly approaching?) a healthy balance; a point at which Open and Closed Source solutions co-exist within many Enterprises, with each solution selected on its merits rather than for the flavour if its religious dogma.

So far, so good; and it is against this background that my question should be considered.

The essence of my question, actually, isn’t one of Open versus Closed at all. The essence is about budgets and politics, and the ways in which organisations manage them. A traditional on-premise installation of proprietary software is generally held to be a Capital item in the budget. It’s a single – and sizeable – allocation of funds once every 3-7 years that results in ‘ownership’ of an asset. Even if an Open Source deployment actually ends up costing almost the same over the lifetime of the installation, the vast majority of those costs are in terms of people who are either employed or brought in as contractors from outside. Those people are recurring items of expenditure in the budget; smaller amounts, more often.

In choosing to procure a new piece of software, it probably doesn’t ‘matter’ whether it’s Open or Closed. Instead, the decision should (correctly) be made in terms of the ability of the chosen solution to meet a set of business requirements. Sometimes the best solution will be closed source, sometimes it will be open.

But once an enterprise has opted for an Open Source solution, various internal considerations take over;

• the budget holder (probably) gains a number of staff dedicated to supporting and customising the new solution, either on the payroll or as external consultants. The size of the budget holder’s empire grows visibly larger;
• the CFO sees the unpleasant pain of large Capital investments removed from their books, replaced by a more manageable steady trickle of recurring costs each and every year.

At that point, I’d argue, it must effectively be impossible to turn back from an Open Source solution to a future Closed Source replacement. The switching costs, perceived loss of ‘power’ and perceived hit to a bottom line accustomed to the steadiness of recurring costs all combine to dissuade numerous stakeholders from making the switch away from Open Source. Any proprietary competitor would have to be far better than both the incumbent and all the other Open Source alternatives to stand any chance at all, and in a mature software world where most applications are actually pretty comparable that seems unlikely in the extreme.

So, I’d propose, the decision to move to Open Source is actually made on a reasonably level playing field but the decision to move away from Open Source takes place in an environment so stacked against Closed Source that it’s unlikely to happen. If that is true, we will see a gradual movement of various Enterprise applications towards Open Source as purchasers select each application on its merits (inevitably, some proportion of those will be Open Source). However, we’ll see almost no movement the other way, leading to the eventual dominance of Open Source across the Enterprise. QED. Or maybe not?

And, for some reason, my background in Archaeology comes bubbling to the fore, offering the Roman Army’s fossa punica as an analogy; you can get in [to Open Source], but you can’t easily get out.

An email conversation this morning suggests that vendors of Closed Source solutions are aware of the threat, at least subconsciously. Rhys Wilkins, for example, pointed to the relatively low incentive for piecemeal replacement of software from companies such as Microsoft that tend to bundle ‘desirable’ and less desirable products together in packages. Their customers are prepared to continue paying for the desirable products (Exchange, say) and as they have to keep paying for the bundle whether they use all of its pieces or not there is a disincentive to gradually bring in alternative offerings.

Hosted subscription applications (SaaS) such as Salesforce only serve to confuse this picture still further. They’re not Open Source by any means, but in budgetary terms this new generation of subscription software is a recurring rather than Capital item of expenditure. Will we therefore (as Justin Leavesley suggested in an email) effectively see a race between those trying to push Open Source Software into the Enterprise and those trying to evangelise the benefits of entrusting previously internalised processes and applications to proprietary Clouds? And what happens when Open Source meets Open Data and the Cloud, and some of today’s proprietary silos begin to leak out onto the open Web?

But that, I think, is probably the subject of a subsequent post.

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Event organisers are feeling the squeeze as advertising, travel and ‘training’ budgets present easy targets to Finance Directors seeking to balance their books in the current economic climate.

Amidst announcement after announcement of cancelled and radically down-sized trade shows and conferences, one bright spot in the event management space appears to be anything related to ‘The Cloud.’ There is an understandable perception that Cloud Computing will save money, so that ticks boxes back at HQ. There is also a perception that a sound understanding of the Cloud (and yes, it’s more than simply outsourcing your Data Centre to save some money) will position companies to come out of this economic downturn extremely well placed to exploit new opportunities and grow.

One of those events to cross my radar just before Christmas was Powered By Cloud, which is being held in London – just around the corner from the UK Parliament – on 2 and 3 February. According to the site, attendees will learn;

“What does [the Cloud] mean for your business model?

How fast will this happen?

How can I make money from Cloud Computing?

What technologies will be used?

What are the implications for consumers, privacy and security?

What is the future of Cloud Computing?”

Speakers on the programme look like a nice mix of solutions providers, customers and analysts, and include Amazon‘s Simone Brunozzi, Dave Armstrong from Google, Woodson Martin from Salesforce, Rightscale CEO Michael Crandell, Elastichosts CEO Richard Davies, Simon Wardley and Sam Sethi.

If you’ve got a couple of days to spare, can convince the Finance Director to agree (tell ‘em Cloud Computing saves money…), and can get to London then this looks like a pretty good investment for that diminished travel budget. It might even be worth enduring Heathrow to reach.

And, thanks to Philip Low at event organisers BroadGroup, here’s something that might even make the Finance Director smile… If you use discount code ‘SPKR‘ when you register, you can get in cheaper and save even more money. Enjoy!

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The notions of core and context are, of course, most often associated with Geoffrey Moore, and one of his sites defines them, thus;

Core

“Any activity which creates sustainable differentiation in the target market resulting in premium prices or increased volume. Core management seeks to dramatically outperform all competitors within the domain of core. (Note this use of the term is unrelated to either core competence, which describes differentiated capability, or core business, which describes categories accounting for a high percentage of overall revenues.)”

Context

“Any activity which does not differentiate the company from the customers’ viewpoint in the target market. Context management seeks to meet (but not exceed) appropriate accepted standards in as productive a manner as possible.”

Writing in last weekend’s Financial Times, Gerrit Wiesmann tells us that;

“We’ve been waiting for trains since 1840, the year a British parliamentary committee invented mass transportation by ruling that rail traffic should be exclusively in the hands of the companies that owned the track. It’s an odd notion now, but in the years before that decision, a debate raged about how to use rails. In the 1820s, the British railway visionary Thomas Gray called for a national network for use by private vehicles. He reckoned traffic in and out of London could be handled by 12 parallel ‘rail-ways’.”

Here, as elsewhere, ideas given serious consideration at the birth of an industry are superseded as that industry matures and sustainable business models begin to emerge.

There will always be areas in which technology companies invest their own human capital rather than buying in services and products from third parties. The traditional view, largely captured in Moore’s terminology, holds that companies gain most by focussing their own efforts upon the differentiating aspects of their business whilst making use of supporting services from third parties to enable concentration upon those differentiators. It will tend to be cheaper and ‘easier’, so the argument goes, to pay for commodity services from a third party rather than develop everything in-house from scratch.

In the early stages of any technological wave, there is an understandable tendency to develop and control far more of the stack within a single organisation. Various players enter a nascent market, and attempt to shape it to their needs at the same time as laying the foundations for what they hope will be a successful product or service. Without agreement on standards and specifications, there is very little interoperability. With an emphasis upon attracting and growing a customer base, there is little incentive to make it easy for users to compare offerings with – or move to – the competition. With a fluid understanding of the final product and its differentiating features, there is little clear understanding of that which will be ‘core’ as opposed to that which will merely be ‘context.’ Internal and external pressures encourage, and almost require, an approach that is closed and all-encompassing.

The problem, it seems, is in making that move from a nascent market toward the point at which certain aspects of the technology stack are fit for commodification; the point at which a healthy and competitive ecosystem can begin to emerge that increases customer choice whilst lowering development and running costs. Looking at aspects of the Cloud Computing and SaaS arenas, we must surely be reaching the point at which numerous homegrown technology stacks become increasingly counterproductive? In the Semantic Web space, too, that early burst of innovation is becoming unnecessarily expensive to maintain as one company after another continues to concern themselves with segments of the problem space that might easily be made a commodity.

Look, for example, at the number of Semantic Technology companies continuing to pour effort into building, scaling and maintaining a basic ontology. The ontology is rarely the point of the company. It is simply something they need to have in order to get on with the business at hand. How many of them are ‘wasting’ time recording the fact that Gordon Brown is the UK Prime Minister, or that Beverley is in East Yorkshire, which is in England, which is in the United Kingdom, which is in Europe?

A recent conversation with Hapax CEO Mark Redgrave confirmed the extent to which they are having to focus upon ontology construction with Amplify. Refreshingly, though, he was extremely open to the notion of gaining value from a more open and generic ontology upon which Hapax and others could build, add value, and compete. In the SaaS space, too, Apprenda CEO Sinclair Schuller has some interesting ideas with regard to enabling others to build their own Software as a Service offerings on top of a common platform that begins to look increasingly like a commodity. It will be interesting to see the extent to which the reality of his company’s SaaSGrid is able to match that vision.

I have spent (too much!) time in the formal standards making process, and would be the last to even consider suggesting that freeform innovation and commercial creativity be snuffed out in favour of protracted and painful rounds of negotiation, specification and never-ending compromise.

However, it seems apparent that early innovators in a given market (Amazon with EC2, Salesforce, etc) often see little incentive to open up and behave less proprietarily. It is in their interests for every competitor to have to reinvent all the wheels that those early entrants first conceptualised. The shift needs to be driven by their competitors, some of whom will be sufficiently successful that they disrupt the market conditions in which incumbents dominate to such an extent that customers are incentivised to consider switching.

A little reinvention is a good thing. It encourages creative thinking, and probably leads to refinement, iteration, and further innovation. Perpetuated at the expense of opening up a nascent market, it becomes a tool of monopoly and ultimately counter-productive for all concerned.

Perhaps it is only at this point that those at the top of a market segment are able to realise the benefits of letting go a little, and of relegating much of what they do to the status of mere context.

Image of a bicycle with square wheels © Michael Vroegop 2007, and licensed with a Creative Commons Attribution License.

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