2007 - The Year of Online Social Networks

As we approach the end of 2007, the start of 2008, and of course, the holidays in between them, I was yet again assured on how much of a difference a year makes in the technology industry. Every year, we see new technology advancements that become part of mainstream. 2006 was the year of user-generated content and I would call 2007 as the year of online social networks. In 2007, FaceBook launched its developer platform to propel the social networking into the mainstream. I had user ids on FaceBook, Friendster, and LinkedIn for the last few years but I only started using the social networks more regularly in 2007. May be I was late to the party, but I am sure, I was not alone.

The current proliferation of online social networks is a reminiscent of the Internet email in 1997. At the time, I was a sophomore student. The Internet email was a new phenomenon and to be honest I don’t even remember how many email services I had signed-up for. The few I remember were Hotmail, Yahoo, USA.NET, mailbox.com, mail.com, and a service from some company (don’t remember the name) that had let me create a @technologist.com-based email address, which was a very cool thing for a young undergraduate technologist at that time! Fast forward to today, I only use Hotmail, Yahoo and Google. I don’t even remember my user ids from other providers and don’t know if they are in business or not.

To make my point, if you look at the online social networking websites today, we are witnessing the same scenario. We have FaceBook, LinkedIn, Bebo, Hi5, Plaxo, Dopplr, Twitter, Google Reader Sharing, VodPod, and Yelp among many others that enable virtual networking of my life with my friends. I don’t logon to all these websites in the same way I didn’t logon to all of my Internet mail boxes in the late 1990s. Slowly but surely, through a natural selection process, I adopted Hotmail, Yahoo and later to Google email. I still use these three services as I like to continuously compare them to see which one brings me (a user) better features. I believe, in the similar fashion, over time the social network websites will consolidate and some will close down due to unsuccessful monetization models.

As I was writing this post, I had CNN Your $$$$$ program running in the background. I don’t remember who it was from but a Holidays gift advice from a program’s guest caught my attention. The advice was for the parents looking for a gift for their children’s teachers. The woman advised the listening parents to contact the parents of other children in the same class and pool the money together to give one good gift to the teacher. It was yet another aha moment in my life. Social networks could save money, help us select better gifts, and help companies to do more targeted advertisements? How? Just setup a community/group in a social network website that would enable parents to collaborate to select a gift for the teacher. And the targeted advertisement model of the social network website would show teacher gifts ideas. Am I taking it too far? Not really. Technically, it is all possible with the contemporary social network websites. The difficult part would be to have boomers or early generation X parents to use the online social network websites. Therefore, it may not become part of mainstream in the next few years. However, as the late generation X (including me) and generation Y people - who are very comfortable with the concept of online social networks - enter the parenthood, it will become part of mainstream because the use of the social websites to network with other parents to discuss the school lives of our kids will be a part of our routine life. Well, we shall see.

More Enterprise SaaS

As I sat down to write this Blog entry, the SaaS market welcomed the entrance of Amazon’s SimpleDB that will let developers and companies store simple tables in the Amazon’s cloud. The SimpleDB is yet another example of the shift from in-premise software deployments to the SaaS model – slowly but surely.

SaaS is a new model and it will take years before it will be used in lieu of in-premise software deployments more pervasively. Though, the actual impact of SaaS on enterprises is debated among the Internet leaders, nobody would argue against the SaaS shift and it is a market that no one wants to ignore. The jury is still out there as which companies will be the eventual leaders in the SaaS space, but the participation of all big Internet players has guaranteed that it will only get more interesting with time.

For my discussion, I will divide the Enterprise SaaS into two broad categories: Infrastructure SaaS and Application SaaS.

Infrastructure SaaS

Over the years, infrastructure installation configuration tasks have improved considerably through better user interfaces and more thorough introspections of the target environments. In contrast, the day-to-day administration of the infrastructure software has gotten more complex due to the advancements in the applications that use the infrastructure software. Today as before, every Enterprise still has to hire skilled system administrators, security administrators, backup administrators, database administrators, and web server administrators to keep these infrastructure software deployment running smooth and securely. The Infrastructure SaaS is mainly employed by the companies that want to do away with the internal infrastructure software installations, for some part, at least.

The contemporary infrastructure SaaS is mainly centered on the online backup storage services. However, Amazon is changing this slowly by coming up with more sophisticated Infrastructure software services. Amazon’s S3, EC2, and SimpleDB services can move real time storage, computing and databases into the cloud. Google, which by far runs the world’s biggest cloud computing cluster to deliver search, advertisements and apps, has surprisingly stayed away from the Infrastructure software SaaS. However, Google and IBM did join forces to generate an academic interest in the cloud computing science. It remains to be seen as which companies will be the eventually leaders in the Infrastructure SaaS space.

Application SaaS

Salesforce.com’s CEO, Mark Benioff, saw the Application SaaS dream in 1999. As I said in my last Blog entry, the entrance of big players such as Microsoft, Intuit, and the creation of new big players – Amazon, Salesforce.com, and Google – in the last few years have finally forced IT departments to take a serious look at the Application SaaS.

To make my Application SaaS discussion more specific, I will divide Application SaaS into three sub-categories.

Collaborative Application SaaS

Zoho, Microsoft Office Live, Cisco’s Webex and Google Apps are the few prominent players in Collaborative Application SaaS space. The new players are popping up, however, eventually they will either die or will be acquired by the big players. Santa Clara Cricket Club, a non-profit social organization, where I serve as a CTO, uses Google Apps SaaS. Recently, I was interviewed by the Google communication department regarding my implementation of Google Apps. I was asked why I had used Google Apps to run my organization. I answered that I saw the market shift towards SaaS products and realized it could transform my own organization. I implemented Google Apps SaaS for my own organization to confirm my understanding. At the end, I was very glad to move all of the features development work to the Google’s engineers for free!

Platform Application SaaS

Salesforce.com’s AppExchange is considered as the pioneer in the Platform Application SaaS. As of today, it has more than 725 application components that can be integrated into the Salesforce.com SaaS application(s). However, earlier this year, the opening of FaceBook as a platform to run third party applications has added a social twist to the Platform Application SaaS. The Social Platform Application SaaS has created a new market in itself. After Facebook’s announcement, other Social network players such as MySpace, LinkedIn, Bebo and Hi5 have also either opened their platforms or are in the process of developing a platform to enter into the Social Platform Application SaaS market. The Google’s OpenSocial has a potential to make developers’ life easy, however, I will wait for the market to confirm that in the next few years.

Business Application SaaS

This is the category that is getting most attention from Enterprise IT departments. Salesforce.com, Quicken Online Services, NetSuite, Microsoft CRM, and Workday are few prominent examples in the Business Application SaaS. Recently, SAP entered into this by creating a SaaS offering for the mid-market customers. Oracle already has CRM SaaS through its acquisition of Siebel.

Though, we have a big push towards the Business Application SaaS, I still believe that the enterprise software development is very hard and will remain hard. It is more art and less science. The big players took twenty years to create platforms that can be customized to meet large enterprises’ complex business processes. The Business Application SaaS is forcing the same issue again but moving it into the cloud. Jeff Huber of Google recently said that the platform wars are over and the Web is the winner. I could not agree more. The creation of a cloud-based SaaS platform that can support complex enterprise business processes is not an easy job. It will be the hardest job done when completed, if ever. The companies that embrace the SaaS shift early will be the winners at the end.

Every shift in the technology industry kills some existing players and creates new players. The SaaS shift will do the same. However, as with any shift, no body knows which companies will die, which companies will thrive and which new companies will be the next Oracles, IBMs, Salesforce.coms, Facebooks, Googles, Yahoos, Microsofts, Intuits, eBays and Amazons in 2020. Unfortunately, I can only connect the dots backward and not forward, otherwise, I could have predicted the next leaders. Nevertheless, the question is not “Why SaaS” any more; instead it is “When and how SaaS”. Do you know “When and how”?

Enterprise SaaS

I started my professional career at the start of a major shift from client/server applications to the web-based applications. Subsequently, almost all software products migrated to the HTML front-end and the web-based presentation layer became the choice for all user interactions. Fast forward to today, the advancements of web-based computing and communication technologies have created a great turbulence and major shift in the enterprise application architectures, yet again. This time, it is not about client-server vs. web-based applications. It is the delivery of software as a service (SaaS) in lieu of an in-premise software deployment. In both cases, the user interface is still a web application. However, the concept of SaaS moves the actual storage of data and execution of application logic outside of enterprises’ firewalls, and into the cloud.

It is not the first time that the concept of SaaS has hit the enterprise technology departments. During the dot-com bubble days, the same concept was captured as application service provider (ASP) or managed service providers (MSP). The dot-com bust bankrupted most of those ASP and MSP providers but some did manage to survive. Now, those survivors have been joined by Microsoft Live , Salesforce.com, Google Apps, and Amazon S3 among others. It is a fair question to ask as what is different today vs. five years ago that makes SaaS is a viable option. I believe there are three major differences.

First is the ubiquity of computers connected to the Internet, the dramatic improvements in the communication bandwidth, and the cheaper availability of the storage and computing infrastructures. For example, in 2000, I paid $65 for my home Internet line. In contrast, today, I only pay $20 for my home Internet line that is actually faster and more reliable. It is almost a 200% decrease in cost with increases in speed, reliability and availability.

Second is the change in the way people use Internet. Though, younger generation has led the way here, the adults have also caught-up on the use of Wikis, Facebook, Mobile Web, Instant Messaging, Blogging and many other communications mechanisms. All of this has made Internet as ubiquitous as TVs, thus, the average users have become comfortable using the Internet and related applications.

Third difference that I believe is pushing enterprise technology leaders over the edge is the entrance of big players in the SaaS space. Large enterprises only do business with big software vendors because they want reliability and future assurance. Though, Google, Amazon and Salesforce.com were small companies five years, today, they are considered big companies with billions of dollars in revenues. Microsoft’ CTO, Ray Ozzie, recognized the shift two years ago. And even SAP, the biggest enterprise application software vendor, has admitted that SaaS has become a viable for small and medium enterprises. Of course, time will move those deployments to large enterprises.

However, make not mistake. SaaS model is a major change in how enterprise software is developed, deployed, customized and supported. It is not a mere change from fat client user interfaces to web interfaces as we had in the early days of Internet. It requires SaaS providers to not only develop but also deploy applications and platforms that are very highly available, highly secure, highly customizable, and web intergrate-able. It is not an easy task by any measure and certainly it is not a task that can be accomplished in few months or sitting in a closed lab for few years. The only way to do this is to deploy these SaaS applications on a trial basis, learn from those deployments, adapt the platform and software based on lessons, and then upgrade existing deployments seamlessly – all while keeping the customized logic intact.

The enterprise software developers and customization engineers might dismiss SaaS due to its limited customization capabilities but they would be wrong about it. Every major shift requires us to re-think our process, cultures, organizations, strategy and talents. This shift to SaaS warrants a re-thinking process. It is a change that will take five-ten years to materialize. But it is a change that will hit your processes, people, organizations, business systems in every way you can think of. Realizing the shift is only a start.