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Loosely Coupled weblog

Friday, October 10, 2003

Secret weapons of ASPs
Business management ASP NetSuite came to London this week to launch in the UK, giving me a chance to catch up with how the product has come on since I last saw it. I was impressed.

People have started asking me what it is about ASPs today that's different compared to the days before they boomed and busted. The answer is, the ones that tried to do it the wrong way have disappeared, and the ones that got it right have just been getting better and better. Now they're ready for prime time, while conventional software businesses have no idea how far behind they are in the race to put their own products online. Siebel, for example, thinks it will stave off ASP competition now that it's teamed up with IBM to offer hosted CRM. But as I already explained earlier this summer, the company is so totally out of the picture it doesn't have a clue what's really going on.

Here's a run-down of some of the things that NetSuite (formerly known as NetLedger) has put into its service, and which highlight some of advances that ASPs have made over the last few years. You might call these the secret weapons of ASPs, because no one else yet appreciates just how fundamental these kinds of features are for success when delivering online services:

  • Open-source, shared-server infrastructure. Of all the secret weapons, this is the one that delivers the knock-out punch. Larry Ellison himself (NetSuite's lead investor) urged the company to run its Oracle database and application server infrastructure on low-cost Linux boxes, with the result that NetSuite can host a hundred customers on a single $10,000 server. This gives the company an operating cost base that's way below the $1,000 per user per year it charges its customers. This is already much less than it costs to buy and run conventional software. With economics like those, ASPs can undercut the competition and outspend it on sales, marketing and R&D.

  • Rich, intuitive functionality. Browser-based user interfaces have come a long way in the past three years. Sophisticated Javascript and DHTML that loads quickly and caches locally means that NetSuite offers client functionality that looks and feels pretty much as good as any Windows-based application. Pioneers like myWebOS (long-gone, but here's a screenshot) used to struggle to achieve even a fraction of the one-click, drop-down, drag-and-drop capabilities that you'll find in today's leading-edge web-based applications.

    But that's just the start. What really counts is how ASPs like NetSuite make use of those screen widgets to make the user's working life easier. Conventional software vendors are still trying to figure out what compromises they're going to have to make in the user experience to fit their products into the browser. ASPs have graduated on to innovating new ways of exploiting the browser environment to offer a better user experience. So in NetSuite, for example, you can directly edit records in a report without having to open up a separate editing window. There are pull-down menus that give you one-click access to new activities, such as entering a new order or a contact, or drafting an email. You rearrange report views or dashboard layouts just by grabbing the drag-and-drop icon for any element. Everything, in other words, is engineered to bypass long waits for screens to reload or new forms to open.

  • Self-service user configuration. Forget all the old conventional wisdom about ASPs delivering cookie-cutter solutions. It's been a long journey of discovery and development, but ASPs learnt very early on that even small businesses want custom solutions, and so what they've done is engineered their products so that users can readily customize every aspect of how they view and work with information. In NetSuite, each user can set up their own multiple views of the data they need to work with, including custom queries, tables and forms. All of this is performed using familiar tabbed screens, forms, pull-down menus and drag-and-drop layouts, so there's no technical knowhow required. If you know how to use eBay, Amazon or online banking, you'll get the hang of this in no time at all. You just need to know how your business works and what you want to know about how it's functioning.

  • Real-time results. Since all of this is happening on a state-of-the-art Oracle/Linux server cluster, there's no reason for compromising on timeliness of information. There are no out-of-date reports based on stale information: everything you see is what's happening now in your business. Conventional software vendors will make you pay extra for a portal server to get that kind of real-time access, but companies like NetSuite include a dashboard for no extr cost as a standard part of the product (and an ecommerce website engine as well, for that matter). Why do people put up with waiting for a developer (and a development budget) before they can find out what's happening in their business? ASPs recognize that the only business information that's worth having is information that's delivered to you as it happens, on demand, and they build it into their products right from the get-go.

  • Open data access and export. The only possible reason you might have for passing up on all of this flexibility and power is the sneaking suspicion that the ASP might go bust one day, and then where would that leave your business? But ASPs have been listening to that objection for long enough now to have all the answers lined up. NetSuite is typical in offering the ability to export data in standard CSV or IIF file formats. It has also created an smbXML interface that allows online integration with other systems, and which can also be used to export data to a separate system of your own choosing. ASPs are so sensitive to user concerns on this point that it's probably easier in most cases to get your data out of an ASP system than it is out of most conventional installed business systems. But in truth, there's probably a greater risk of someone breaking into your own premises and walking off with your server under their arm than there is of your unexpectedly losing access to business data running on an ASP's system.

Despite all of these advantages, it's still inevitable that most businesses will decide to stick with what they know, and put off gambling on the net-native ASP model for another year. But anyone who's shopping for new applications today should cast off their preconceived notions about ASPs and take a serious look at what's on offer today. The providers who are doing this right are offering slick, flexible, low-cost software that seems almost too good to be true. You can't help wondering what the catch is. The answer is that this stuff is still new and evolving, you will be going out on a limb if you decide to adopt it, and there will be teething problems. It is still ahead of its time — but not by much. If you've taken similar risks in the past and your gut feel tells you this software will solve problems you're experiencing in your business today, then you're the kind of customer that will benefit from making the leap. Odds are, you won't regret it.
posted by Phil Wainewright 8:14 AM (GMT) | comments | link

Tuesday, October 07, 2003

The truth about standards
It suits journalists to present the standards process as a bitter struggle fought by unscrupulous vendors. But sometimes their imagination gets the better of them. Sonic's Dave Chappell has this week published his side of a story reported by CIO Magazine last week under the headline The Battle for Web Services.

Although Dave says he was not misquoted, he describes how his comments were presented in a misleading context, and how pertinent facts were omitted [the journalist concerned has since issued a full rebuttal of these assertions — see update below]. The article gives the impression that the IBM and Microsoft-led WS-BPEL group at OASIS is not even talking to the W3C's WS-Choreography group. But Dave — whose company participates in both — points out that in fact there is active liaison between the two groups. While he concedes that there is "a rift" and that "there are 'politics and egos' involved in the battle for mindshare," it's not the case that the divide is unbridgeable — and every effort is being made to build bridges across the divide.

But if a respected title like CIO Magazine declares that "the Web services standards process began to fall apart this year," surely that's as good as an official declaration? Not according to Dave, who concludes that "this article took my comments out of context in order to get some sensationalism and create some overblown hype."

Why is it, then, that journalists are so keen on seeking out and sensationalizing differences of opinion in web services standards debates? The explanation is simple. It sells copy. These are the headlines and stories that readers turn to. They lap them up. To be frank, I'm not above hinting at standards dissent in headlines on Loosely Coupled if it will bring a few more of our target readers on board, although I balk at misleading them once I've caught their attention.

This leads on to another question. Why are readers so keen to be told that the web services standards process is in disarray? The truth of the matter, I fear, is that CIOs don't actually want the standards process to succeed. Although they pretend to like the idea in principle, they're secretly appalled at the practical reality of implementing a truly interoperable web services standards stack, and rejoice at each apparent setback it encounters.

Imagine the disruption and hassle CIOs would face if they were free to choose between countless interoperable vendors and products at each layer of their applications infrastructure. Today, they're busily engaged in pursuing convergence and consolidation so that they can deal with fewer vendors, not more of them. The best result for CIOs is a market where just one or two vendors dominate, with just enough competition to deny each of the leaders an outright monopoly. A completely open, standards-based market would destroy this cosy arrangement. That's the secret reason why every setback in the standards process is silently cheered.

UPDATE [added Nov 5, 2004]: The writer of the CIO magazine article mentioned above has this week posted a detailed rebuttal of Dave Chappell's complaints, citing direct quotes from the original article that demonstrate fairly convincingly that in fact it was Dave whose imagination had got the better of him in his reading of the article. The writer is understandably pretty sore about what he perceives as a slur on his integrity as a journalist.

Let's put the record straight here; no one is questioning the integrity and professionalism of the writer or of the magazine he writes for. The article is a thoroughly researched and well presented exposition of some participants' frustrations with elements of the web services standards process; it's one of the best that I've seen on this topic, and believe me, I've seen quite a few. But irrespective of the accuracy or inaccuracy of Dave's specific complaints, I still stand by my conclusion that the article sought out and sensationalized differences of opinion, and that this could mislead readers. In this respect, the article is no different from many others that have run in the tech media on this same topic, and that's a shame. I think there is much to celebrate in the web services standards process, and I look forward to the day when someone in the mainstream tech media decides to dig out that hidden story instead of the all-too-obvious and hackneyed one about standards dissent.
posted by Phil Wainewright 8:30 AM (GMT) | comments | link

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