What is all this talk about enterprise app stores about?

Iced tea at Georgia's, version 2We are moving into app economy and that is happening very fast. There are many predictions on the marketplace on this trend with Gartner forecasting that 25% of enterprises will have their own enterprise apps stores for managing corporate-sanctioned apps on PCs and mobile devices – all this within 4 years. Others are saying that this is already happening and it won’t take four years. Whatever the case is, ISVs needs to pay attention to this as CIOs in large organizations need to take control of the situation with deployed apps both in tablets as well as smart phones.

I think there is a big misconception in the word “app” when thinking about business models. Many relate an “app” to small apps used by smartphones with either free or almost free business model. These are mostly consumer-focused apps, but the trend is that consumers will be using their smartphones to conduct business using apps, but these apps will be connected to backend cloud solutions that bring the scalability and logic to the game. Look at an app as just the UI to full-blown solutions where end users can run their business with small devices or tablets and use the cloud infrastructure as foundation.

The forecast for App Economy is huge and according to APPNATION, App Economy is going to reach $151B by 2017. What it really means for ISVs and any software developers organization is that they need to really get a better understanding how app economy is going to impact them going forward. CIOs will be asking questions how an ISV will support enterprise app stores and how the ISVs will support these app stores with their solutions. I am a bit amazed how little there is discussion off apps in our workshops but I think this is going to change going forward. Based on the study by APPNATION, the majority of mobile device owners under 45 years are using video apps and this supports my previous blog entry of eLearning.

There will be a need for both consumer-oriented and enterprise-oriented apps stores and it will be a space that will bring new opportunities for many players. The competition in this space will be based on innovation of solutions that people want to use and the use is measured on how much content the apps consume from the cloud. It is not rocket science, but it is a new world that people need to get used to.

In the end of the day, apps will have to be monetized in one way or the other and that is where the subscription economy comes to play and organizations need to understand how to price their solutions and all this based on value pricing.

The Channel does not work for you, you work for the Channel

pentagons and negative stars - CPBuilding a channel is not an easy task and there are many things what one has to think about when building one. I have had the pleasure to building channels for more than 20 years in enterprise software space, specifically in business intelligence,  collaboration, document management and integration software.

Today, when doing some preparation work for a channel related gig, I found an amazing link of a case that describes a successful channel development initiative and also some of the common mistakes that software vendors do.  The author of this article (David Skok from Matrix Partners) is definitely an authority in many areas (specifically SaaS related things). He lists a few very important points for software vendors to remember and I am now listing them here with some additional comments based on my own experience:

  • You (ISV) have to figure out the sales model first and then using this to teach your channel. I have heard many naïve comments from ISVs where the management explain that “we don’t have to do anything, the channel will take care of that…” Well.. I have not experienced this in my 20 years…..
  • Building a channel takes long time and ISVs forget that the channel has different priorities to what the ISVs have. The channel is focusing on products that are paying the bills and if you have not been able to demonstrate your capabilities to sell, why would they want to take the risk with you? I will never forget when a good friend of mine in California asked me once when I had become a CEO for a software company in the US and recently emigrated from Europe (from from a technology role). He asked me: “ How many have you Petri sold yet…. Call me when you have some stories to tell…”. I closed a few deals, called him and he was a man of his word. We closed large deals together during our collaboration. I had to show my friend that I could sell myself and show by example how enterprises would buy my BI solution.
  • Resellers need ongoing education on your solution, how to handle objections and how to differentiate your solution from the fifty-nine others on the market. You will have to provide marketing material, PowerPoint decks, PDF White Papers etc. And please do not say that there is no competition for your product. Give me 2 minutes and I will list 20 for you….
  • Do not expect your resellers to do lots of marketing, because they expect you to participate and expect you to pass some leads as well. You are expected to help in the channel demand generation efforts by working together with your channel partners.
  • Try to identify a pre-existing channel that supports your solution or your solution can be sold as an add-on. Business Intelligence is a good example where you can sell a collaboration solution as part of the value-added delivery. When you do this, you have to customize your messaging in a way where the channel partner realizes that that your solution together with the other solution is more than 1+1, it is in fact 1+1=3.
  • When ISVs build a channel and have an existing direct sales model as well, there will always be conflicts between the channel and the direct sales force. This can’t be avoided and if the ISV is committed to the channel, the channel will always come first. It is not easy and there are some rules that the software vendor has to apply. These rules will have to be emphasized from the top management of the company. Skok also states that one should expect the direct sales execs have an issue in moving to the channel sales model. Channel people know that with good channel management and right type of partners, the channel will give much higher leverage than trying to grow with direct sales.

These are some of the statements flavored by my own experience and I could not agree more with Skok on these. The good news according to Skok is that with the “right channel, the right people, good product/market fit and with lots of patience, the channel sales model can be one of the most profitable business models.” I echo with this!

Stay tuned for more in this topic and love to talk about it as I happen to have million different scenarios that I have been exposed to.

The App Economy – How should we view app monetization?

The blogosphere is all about apps and how different ecosystems compete for the eyeballs of these and the money of course. You might still remember the the news when a far app pulled as much as $10,000/day in revenue but since then there is tens of similar applications on the marketplace. This started a trend where people left their well-paid jobs to chase their dream of creating apps and living a life without pressures. The growth of app economy is one of the most promising trends, but people/organizations that want to make real money of it, need to include some risk management into it as well. The app industry has become similar to film industry where relatively few people make money and the ones that make, are hugely successful like Angry Birds phenomenon from Finland.

One might of course ask oneself is whether this is a shift in our society and how work is performed. according to Erik Brynjolfsson (director of the M.I.T. Center of digital business), “technology is always destroying jobs and always creating jobs, but in recent years the destruction has been happening faster than the creation”. There is no question that technology is creating new jobs and apps can be part of this opportunity as can be seen in many of the reports that have studied this trend towards “app economy”.

What I have not seen many discussions around is how the app economy is linked with the enterprise software business. I have researched around this and identified the “dimensions” that are typically linked to the app business, but not that much is said how established software vendors should view this space and how these vendors can make a entry to the app space in a way that makes sense and where there is also a sustainable economical model.

So, the question that we should ask ourselves is how much of the app business is truly geared towards the consumer business and how much of this will gradually move into enterprise business? Should software vendors keep the app business in their plans when building enterprise solutions specifically using the cloud? If they should keep this in mind, what kind of pricing should the ISV use? Maybe free as the real money comes from the enterprise solution and not the app that accesses it? As you can see, it is not that clear and my own experience when working with both small and large enterprises, the app business hardly ever comes up in discussions. I am convinced that this will change and it will change very quickly. One of the drivers will be Windows 8 and Windows Phone 8 developers that will create solutions that will be based on app technology and not on traditional desktop app architectural model even if these will be able to run in Windows 8 Pro environment.

Another valid question that we need to ask ourselves is whether app economy should be see purely from mobile app development perspective or should we view it from a perspective where the device is just the means to get to what you want and the backend (typically the cloud) is the one that provides the services and brokers the interaction between different services. Shouldn’t we in fact be talking about services economy instead where organizations build apps to consume and combine information from different sources using different SOA interfaces that organizations/developers have exposed to the world. Isn’t this what we have always dreamt about?

NokiaExpressI downloaded today a Windows Phone 8 app (Nokia Xpress) to my shiny Nokia Lumia 920 and this app really demonstrates where things are going. After having installed the app, it asked me whether it can use location information (which most apps want to use), but what really made me to think about the future of apps is that developers really have to think “outside the box” on when developing apps. The thing with this Nokia Xpress app is that it enables users to store and read articles on your phone (locally) so when you travel, you do not have to use expensive data roaming. I know.. there are many of these apps from before, but what this app has specifically thought of is to really monitory and minimize data usage and provide a combination of technology such as Microsoft SkyDrive technology to store videos and images without having to use the data plan. Why is this relevant to me? Just this week, my son’s data plan was going over the limit and I found out that it was all about video streaming and 2 gig data plan does not cope well with this.

The topic of “app economy” is very interesting to me as researcher, but also as practitioner. A recent paper written by Dr. Michael Mandel and Judith Scherer (commission by CTIA (The Wireless Association) and Application Developers Alliance provides an interesting view on the app economy. According to Mandel, the entire “App Economy” was coming to use in early 2009 and was popularized by a cover story run by BusinessWeek in November 2009.

The way that Dr. Michael Mandel describes App Economy in his February 2012 report resonates well with what I have educated my customers in respect to ecosystems:

“ App Economy is a collection of interlocking innovative ecosystems”. Each ecosystem consists of a core company, which creates and maintains a platform and an app marketplace, plus a small and large companies that produce apps and/or mobile devices  for that platform. Businesses can belong to multiple ecosystems and usually do”.

There is no question in my mind that this topic is relevant to anybody that works in the software industry and it is fascinating to see how this evolves with time and what kind of new companies will rise to take advantage of this.

If you work in the Microsoft ecosystem, I highly encourage you to read the article “Microsoft’s cloud vision: Why Azure is the linchpin of the firm’s new devices and services strategy”. Another great article from Information-Management.com that predicts Enterprise Apps to go mobile big time and that money apps will move to the cloud. The article lists quite a few things that are very interesting and I encourage you to read that article as well.

Stay tuned for more, there will be more to come on my research on different topics and this app economy being one of them!

Is Big Data going to replace Enterprise Data Warehousing?

In my blog entry yesterday I concluded that Big Data as an acronym is on the rise and ISVs need to pay attention to this. The next question that one needs to pose is how is Big Data different from the traditional enterprise data warehousing? I still remember vividly the arguments 15 years ago whether Bill Inmon (considered the father of data warehousing) Top Down approach should be replaced by Ralph Kimball’s approach (Bottom Up) where the Enterprise Data Warehouse is built as collection of data marts that then together conform the enterprise data warehouse. There are also concepts such as operational data store, master data etc. Following link shows a couple of pictures that explains the difference in these approaches and a blog entry that explains pretty well the differences in these two approaches.

During my career, I have personally been involved with all and above and the latest implementation was based on SQL Server 2008 R2 with not only ETL logic to the ERP applications, but also a staging area, relational data warehouse and then the multi-dimensional OLAP cubes with SharePoint 2010. Needless to say, you need to have an understanding of multi-layer architecture and how all of this work together.

The question is how Big Data relates to all of this? One view of this is that different market segments sees it in a different way. Start-ups will see this more of a web-based approach with cloud solutions supporting Big Data. The SMB market has invested in Business Intelligence solutions and to get scale, they are going to look at cloud solutions that can take their analytics to the next stage. An then the larger enterprises that have invested huge amounts in enterprise data warehousing, data marts, ETL processes etc. will probably keep these solutions but might amend to cloud-based solutions when it is appropriate.

The competition in the Big Data space will increase during 2013 and we have already seen this by new solutions being introduced to the market like Amazon Redshift and Windows Azure Big Data. The distinction in the Big Data solutions is that many of them are typically based on NoSQL technology and data is dumped into computer memory (In-memory) and these solutions are specifically good for non-structured data. It is important to understand that there isn’t one “turn-key” solution as these types of Big Data implementations are both complex and require very distinctive skills to maneuver like “programming, statistics and how to visualize and communicate data”.

What we also need to remember is that the need to integrate data from different sources still exist, the data will be typically very different to what we are used to (like digital sensor and cameras) and when you add social media to all of this, you will have a mixture of data that never existed.

And finally, if you have been involved in Business Intelligence or Data Warehousing projects, the data/information still has to be presented in a format that makes sense for your audience, whether it be your management or other information junkies. What I do know is that analyzing the data won’t be easier than before given the fact that there is so much statistical swing into it, but the results of that data could take you and your company to the next level if information is used in proper manner.

To answer to the question I posed in my heading. No, I do not think one thing replaces another, but I would say is that you can expect to see multiple different variations on implementations and you can call them what you like and cloud will definitely be part of that implementation.

Business Analytics is on the rise again with Big Data leading the way

It is fun to see how some things will just continue being relevant. Business Analytics, Data Warehousing and lately Big Analytics are topping the charts. Based on my own feelings, Big Data really took off the second half of 2012 and we also included that in our business modeling workshops as one optional extension that software vendors (ISVs) should look at. Harvard Business Review brought Big Data to the forefront in its October 1, 2012 magazine with Andrew McAfee and Erik Brynjolfsson (guru whom I followed when I worked on my PhD) with an article “Big Data: The Management Revolution”. According to the authors, Big Data is far more powerful than analytics of the past, specifically in making predictions.

One of the key reasons for the sudden explosion if Big Data has to do with the urge to achieve competitiveness by getting a better understanding of your customer, its behavior and the only way to do this is to enable massive analysis of data and in the past, this has not been possible with on-premise environments due to scalability issues. With new cloud technology such as Azure Big Data, ISVs and end user organizations can scale up the analytics/calculations based on the need (in bursts) and scale down when the calculation is done. There are quite a few new interesting startups in the Big-data-as-a-service domain (Zoomdata, Bidgely, Ginger.io, AgilOne, Continuuity). I expect this trend to continue specifically as cloud platforms enable startups to innovate without having to invest huge amount of capital in hardware and use the elasticity of the cloud instead.

What I expect to happen during 2013 is that you will hear more about real cases of Big Data use and conferences such as BigData TECHCON appear on your radar screen. Big Data is no longer about if there is technology to do it, it is more about finding the people that understand it and how to utilize it. According to McKinsey & Company, there will be a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts with the know-how to use the data to make effective decisions”. The McKinsey article breaks down the importance of Big Data very nicely, including things such as dealing with policies around privacy, security, intellectual property and even liability. There is a full report that can be downloaded from McKinsey web-site.

How does all this rely back to software vendors that I work with on a daily basis? If you are an ISV that deal with lots of data, you have to have a game plan for Big Data. Even if you do not care about it, your customers will be asking for it going forward. It is the same what has happened with the Cloud. Three years ago, the question about cloud was almost non-existent in many domains and today an ISV can’t really survive without the cloud. How about that as being a guiding factor for Big Data.

Personally I feel this is very exciting to me as Analytics, Data Warehousing, Business Intelligence has been my core domain for more than 20 years. Even my doctoral dissertation Evaluation of a Product Platform Strategy fro Analytical Application Software from 2004 is still relevant and explains the drivers that a software vendors should be looking at from a software product platform and software product line perspective. The link will download the dissertation (in English) and it is in PDF format.

Expect to hear more about Big Data from me during 2013 as it will be even more relevant than during 2012.

The end of brick-and-mortar shopping and the rise of online shopping

I admit that I am one of those that do not want to be pushed and have to sweat in traditional retail stores. I much rather do my shopping at my laptop, have a cup of coffee by my side and enjoy the selection not just by looking at the product, but also looking at comparisons and reviews that are posted on the Internet.

According to Economist.com, last years online sales in America reached $188 Billion which is roughly 8% of total retail. Of this, Amazon.com did last year $48 Billion, so we are talking about a pretty sizable giant. Some even have concluded that it is Amazon.com that is killing the traditional retail. According to Economist article, retail sales is going to grow to $270 Billion by 2015. See chart below:


I do not have to even read any statistics to know that there is a tremendous change in consumer behavior. I just have to watch how my family behaves. My wife told me this Christmas that she tries to do everything online to avoid the traffic and crowds at malls. This was not the case in the past. Consumers where doubtful whether online was going to cut it and in many cases people avoided to even buy as they wanted to try out first. Today, you can ship everything back if you do not like it.

We used to spend lots of time in local Barnes&Nobles and also malls, but I can’t remember when I have done that. The only reason for me to go to a local Barnes&Noble is to meet a friend or business acquaintance for a meeting as they typically are adjunct or have a Starbucks cafeteria. I can get everything online when it comes to magazines and books and in fact what I have noticed is that bookstores do not even carry anymore their entire inventory as that is costly. The same thing is happening to BestBuy who has really struggled this year. CompUSA and Circuit City already want belly-up and these used to be places where I went on regular basis.

According to Jose Alvarez of Harvard Business School, traditional retailers with pricy products will probably lower their inventories and focus instead on big investments in showrooms while commoditized items should have large inventory and less flashy displays. This of course makes sense, but many retailers can’t afford maintaining inventory in ways that Amazon.com has.

Amazon has been pressured to charge sales tax in states where they have distribution centers (34 now and 15 in the workings). This year, every Texan has to pay same sales tax as any traditional retailer would charge and that has evened out the play for some local retailers. Other well-know electronics online retailers such as Newegg.com still do not charge anything in Texas, so if it is one-to-one, Amazon will loose as the sales tax adds to the bill.

It is going to be interesting to see how 2013 is going to play out in the online shopping space. I would expect smartphone shopping to increase and based on some research from Aegis Media Americans, by 2014, mobile internet will overtake desktop internet usage in shopping. Those are pretty radical numbers and we that work in the software space, need to keep in mind the behavioral change that is taking place also in respect to devices and how things are done.

ISV wakeup call: Cloud and mobility will surge in 2012 according to IDC

I run a seminar in Finland at Microsoft Finland office 23rd of November for Microsoft ISVs about the transition to the cloud and what it means for software vendors overall. One of the key things in my messaging for ISVs is that they have to look at the cloud together with mobility going forward. This morning I run into an article in Information Management web-site where IDC predicts that mobility and cloud will surge in 2012.

It is easy to agree to this based on what we have seen in our work and research specifically in the US continent. IDC predictions are based on 1000 IDC analysts and according to this study, cloud spending will top $36 billion next year which is four-times the overall IT industry rate of growth.

Another interesting statement from IDC chief analyst Frank Gens is that there will be a “generational shift in the tech platform adoption and innovation” which could according to him lead to a worldwide IT spending of $5 trillion by 2020 and all of this based on mobile tech and the cloud.

Based on hundreds of discussions with independent software vendors (ISVs) around the world we have seen a clear shift in the urgency of many ISVs to ensure that they are on the right bandwagon concerning the cloud. My colleague, Juha Harkonen has been analyzing the trends for quite a while and the observations that he has made are very interesting. You might want to check some of his observations from his excellent blog.




A tale of “me too” kind of innovation: RIM to launch music service for BlackBerry

It is sad to read about Research in Motion (RIM) attempt to become hip again. I have been a client for RIM for the past few years for one reason: AT&T provides me with an unlimited data plan (worldwide) and that is hard to beat. I have not been able to switch to any other phones as I really need my phone when globetrotting and I am reluctant to spend hundreds of dollars each month for roaming.

As a Blackberry user, I would have appreciated RIM to focus on getting a real phone on the market that is competitive and I can still keep my unlimited data plan but I guess nothing lasts forever and I need to move on and change to a new operating system and vendor and deal with the roaming. I can’t be left behind in innovation and usability and when you look at the current smart phone market, it is growing and advancing with huge steps every month. My current phone (BlackBerry Torch) has a lackluster touch screen that does not react to my fingers the way one would expect. I have also had to rebuild the phone at least 10 times from scratch due to applications that have broken the phone. One would think that cannot be possible, but it is and I have seen it many times. I even had to buy a software tool to “self-manage” the rebuilding as AT&T refuses to rebuild the phone and forces you to buy the phone again if the warranty is over. Not something I enjoy doing. Once returning from Europe I put my phone on and it went dead and by discussing with AT&T service they said to buy it again.

The latest attempt from RIM was to publish BBM Music store that enables BlackBerry users to stream 50 songs using BlackBerry Messenger. Why on earth would I want to do that and wasn’t this something that Nokia already failed in and decided to kill? If I were RIM, I would focus purely on getting new phones on the market and focusing on the youth as they are the ones that either make the platform or break it. Another group are the developers that now are at crossroads as they have to decide what to do to a dying operating system as RIM is moving to the new QNX operating system that they acquired by RIM.

My personal opinion is that RIM needs to focus on having applications that support music services such as Spotify, Rhapsody etc. and forget about things that are outside their own core competence areas. This tale is also something that the software/IT industry keeps seeing all over again: once you are the top dog, you will eventually come down due to many reasons. We have seen this happen with IBM, Nokia and many other players. We need to remember to reinvent ourselves on regular basis and keep working in a humble way. Becoming arrogant and believing in something that is not true anymore can be lethal in the long run. When somebody becomes market leader, it always causes people/employees to think that this stays status quo even in the future. This never happens.

Where does this leave me as a smart phone user? In my mind there are only three players left in the smart phone field: Windows Phone 7 from Microsoft, Android from Google and iPhone from Apple. With these three choices the follow-up decision is to select the hardware manufacturer and that is where the race is going on with Nokia, HTC, Samsung, Dell etc. on the WP7 field and obviously the same thing with Google Android devices but with iPhone with only one manufacturer being Apple.

Life at Apple after Steve Jobs?

I can’t believe how many announcements we are getting from the large IT players: First Google buying Motorola, then HP deciding to kill its HP TouchPad.  I just read news from Wall Street Journal that he is resigning as CEO of Apple and taking the role of Chairman of the Board if the board accepts that. I am sure that will happen. According to CNN, Steve Jobs sent a letter of resignation to the Apple’s board with following statement:

“I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come,” wrote Jobs, who has been on medical leave since January. Cook has been filling in as the company’s leader.

The question that everyone will now have is what Apple will be when Steve Jobs no longer runs the day-to-day business. Some might say that nothing and Tim Cook that will take the CEO role will be doing what he was doing before. However, there is no question in my mind that Steve Jobs is and has been the visionary for the company and there will be a change at least in the long term.

When I look back at very successful software/hardware companies, there has always been a strong leader with almost ruthless and dedicated desire to win the game. Look at Apple and what happened to the company when Steve left long time ago: it was almost bankrupted. There are several books that tell this story such as “The Second Coming of Steve Jobs” by Alan Deutschman.

I am listening to CNBC when writing this blog entry and according to the analysts; Steve Jobs was never the one that has executed on operational level that has been Tim Cook.  The question that I have is whether Apple will be coming with new things as they have with Apple iPhone, iPad etc. According to the CNBC, the stock has lost 5% of its value afterhours.

Tim Cook isn’t Steve Jobs and the other way around. The question that the CNBC is asking whether Tim Cook is the right guy to lead: he came from an IBM operational role to help Apple to run operations smoothly. Only time will tell how Apple will continue on its path and the market is in shock as this could be the end where Steve Jobs and his presentations are over.

What is this going to do for the mobility and tablet market? The questions that the market will have is whether Apple will be able to continue on its iPhone and iPad success or will the market become suspicious whether the ecosystem and the devices will be able to compete. I do not like to speculate specifically as this has probably to do with Jobs illness, but this could be a major break for the competitors to gain some momentum at least on the long term. The market will be in disarray for a while even if CNBC says that Steve Jobs has mapped the devices/software and strategy for years to come. However, when you look at the current mobility and tablet market, it is in flux and any player can take over in matter of months. Just look at Android and how it is taking market share from Apple iPhone and others.

I expect there to be more announcements in the mobility/tablet market during the fall. No question about it.

Cloud ISV: make sure you understand your ecosystem play – example of Intuit and Microsoft collaboration on software platforms to create a foundation for solution developers

I have written several times in my blogs about ecosystems and the role that ecosystems play. I recently run into an interesting article in the Redmond ChannelPartner with the header “Intuit Extends Cloud Pact with Microsoft”. As I am working with Microsoft ecosystem every single working day, I became interested what the article was all about. Intuit has been building a Partner Platform (IPP) that was reported by Mary-Jo Foley already back in January 2010. I am a longtime QuickBooks Online user so I have a pretty good picture of Intuit’s SaaS delivery model at least from 2003. I believe Intuit was one of the first software companies to introduce a full-blown accounting solution for the SMB market and my company still uses it every single day.

In January 2010 Jeffrey Schwartz reported that Microsoft and Intuit stroke a cloud pact for small business where Windows Azure would be the preferred PaaS platform for Intuit and Intuit App Center.  This value proposition is obviously good for ISVs that can build solutions to the waste QuickBooks ecosystem with integration not only to QuickBooks data but also between QuickBook applications.

The idea behind this Intuit Partner Platform (IPP) is to help developers to build and deploy SaaS applications that are integrated with QuickBooks data and also to give huge exposure for the ISV on the marketplace that Intuit provides for its partners. This marketplace (Intuit App Center) has thousands of applications that can be used with QuickBooks and other QuickBooks third-party solutions.

Let’s look closer to why Intuit and Microsoft need each other. I read an interesting blog entry from Phil Wainewright that includes very interesting remarks about software platform that happens to be the topic of my Ph.D. dissertation (Evaluation of a Product Platform Strategy for Analytical Application Software). The blog entry from Wainewright includes following picture:


You can read more about this topic and download Wainewright’s report “Redefining Software Platforms – How PaaS changes the game for ISVs) for Intuit” and this can be found by following this link.

When you review the picture above in more detail, you will find interesting and relevant information how Windows Azure and Intuit IPP platform play together. According to Wainewright, the conventional software platform capabilities are all about functional scope of the development platform whereby cloud platforms add three additional distinct elements according to Wainewright: Multi-tenancy, Cloud Reach and Service delivery capabilities.  The service delivery capabilities have to do with provisioning, pay-as-you-go pricing and billing, service monitoring etc. The multi-tenancy is typically not something that the PaaS platform provides automatically without the application developer building the multi-tenancy logic to the application. I still hear people saying that a legacy application that is migrated to the PaaS platform will automatically become multi-tenant. This is not true as each application has to be re-architected to take advantage of things such as scalability (application increases compute instances based on load).

The idea behind Intuit IPP platform according to Wainewrite is that Intuit has built service delivery capabilities that can be abstracted from the functional platform that is on the left hand side of the picture. The idea that Intuit had initially was to be able to provide support for any PaaS platform to be integrated to the IPP platform which I think is a good idea by not practical considering how fast the PaaS platforms are evolving and the amount of investments that are put into them.

One thing to remember is that all cloud platforms such as Windows Azure has already moved on the horizontal axis whereby the situation and clear cut separation between functional platform and service delivery capabilities is no longer that obvious. This also means that any Microsoft ISV that builds additional infrastructure elements to Windows Azure has to be carefully aligned with Microsoft product teams as there might be a danger to be irrelevant as some third-party functionality will be covered with the functional platform itself (PaaS platform) like Windows Azure. I have seen the same situation with some ISVs working with BizTalk extensions that suddenly have become part of BizTalk itself. Microsoft is very clear with its ISV partners that they should focus on vertical functionality or features that are unlikely to be part of the Microsoft platform in the short-term.

A new post from Jeffrey Schwartz on August 11th, 2011 explains how Intuit IPP and Microsoft Azure will be even more integrated as Intuit will drop its native development stack and instead “focus on the top of the stack to make data and services for developers a top priority” according to Schwartz. In reality this means that Intuit will invest heavily in Windows Azure SDK for IPP and make developing an app on Azure and integrating it to QuickBooks data and IPP’s go-to-market services easy and effective. Microsoft released some more information about this partnership in the Windows Azure blog. The two companies have launched a program for this called “Front Runner for Intuit Partner Program” that explains what the developers get by participating in the program. The site portrays three steps: Develop, Test and Market and there is a video that explains what it means.

So what should we learn from this blog entry? First of all, every development platform (PaaS etc.) will evolve and my recommendation for the ISV is to focus and invest on one that you think is here in the long run. I think this example from Intuit is a great example of a company that was initially in the race of competing in the PaaS space to some extent to conclude that the investments to keep the competition going is just too huge and this led to the conclusion to select Microsoft Azure as the foundation for IPP. Intuit will be much better off by focusing on building logic on-top of Windows Azure by participating in SDK development an ensuring that any solution specific development can be easily integrated into Windows Azure platform. Intuit will therefore focus on providing data and services for developers to use with Windows Azure PaaS platform.

Microsoft has been in the development tools and platform development since its foundation so they are much better off to do those kinds of massive investments. I think this is very smart from Intuit and this enables Intuit to have a scalable solution that developers can rely on even if the decision was not easy according to Liz Ngo from Microsoft. Alex Chriss (Director, Intuit Partner Platform) from Intuit explains this in his blog why Windows Azure is a good foundation for Intuit development. Also, Intuit provides a tremendous opportunity for ISVs like CoreConnext and Propelware report based on the blog from Liz Ngo.

Software ecosystem will continue to evolve and EVERY ISV has to figure out how its solutions will meld to be part of different sub-ecosystems. This will also require efficient and well-defined Application Programming Interfaces (API) from all parties to be able to create an integrated solution based on service oriented architecture (SOA).

Let me known if you know other good examples where software ecosystems mesh nicely with each other.