Office 365 – the beginning of Microsoft’s death spiral?

Thursday, 30 June 2011

Microsoft has finally launched a Cloud version of its Office (Word processing, spreadsheet) product, to less than rapturous reception:

Dennis Howlett calls Microsoft Office 365 “a dud”.

The Register points out that “Office 365 …  been designed to complement desktop Office rather than replace it“.

Mary-Jo Foley, normally a Microsoft fan, posts that “Sorry, folks. This is not Office in the cloud

Meanwhile their acquisition of Skype has been slagged off as too expensive with no synergy and the dying act of a company desperate to be seen to be still relevant, the Windows line get worse and worse press, and some investors are calling for CEO Steve Ballmer to be replaced.

Poor Microsoft! I’m not a fan of their products, although I used to be and I use many every day, but I do really sympathise with their problems.

Addressing the Office 365 issue first, it is almost impossible to move a traditional (try not to call them legacy!) application to the Cloud. Cloud applications behave differently, so trying to both be a Cloud application and retain some look and feel of the old product is impossible. Microsoft is torn between wanting a decent Cloud product, yet not killing off the revenue stream from the old product (and killing their traditional route to market, the channel). So many traditional software companies have this problem, trying to both produce modern Cloud applications yet tied by existing user base, channels and revenue streams: SAP, Sage and even Oracle to name but a few.

Meanwhile competitors like Google Apps, Zoho, Open/Libre Office eat Microsoft Office’s lunch and open source (ie, free) software products like Linux and MySQL make inroads into their server based product line. Really Simple System’s Cloud CRM product is gradually moving off Windows Server onto Linux boxes for a myriad of technical (performance) and commercial (price) reasons. Windows Mobile is being killed by Android and iPhone. The only bright spot is that as yet there is still no credible threat to desktop Windows, although Macs are doing well and a few technologists like me are moving to Linux based desktops such as Ubuntu.

And Steve Ballmer? I’m continually drawn to the parallel between the handover of the British Prime Ministership/Labour party from Tony Blair to Gordon Brown: charismatic but tarnished leader hands over to gruff company man just before the ship goes down. Something I’ve noticed over the years is that when the original software company founders leave, the product vision goes and the company becomes just another money making business, milking revenue off the locked-in user base, until the old user base gradually drifts away. The names of Sage, Infor, Oracle and good old Computer Associates come to mind. No wonder Apple investors are worried as to what happens after Steve Jobs goes. Microsoft’s user base and revenue streams are so large that it will take a decade for that to happen, but happen it will.

Meanwhile I predict we’ll see Microsoft taking the traditional software vendor death spiral: ·

  • Short term investors force Steve Ballmer out, replaced with bottom line focussed CEO.
  • New CEO cuts swathes of costs, profits recover, share price is talked up, short term investors sell at healthy profit, new CEO pockets huge bonus and leaves. Products struggle on directionless.
  • CFO takes over as CEO. User base gradually moves on, more costs are cut, products languish.
  • Rinse and repeat until nobody cares any more.

Amazon outage -the view from the mainstream press

Tuesday, 3 May 2011

When a story that gets the IT world excited actually makes it into the mainstream press – then for once the IT world was right to get excited.

So when The Economist covered Amazon’s and Sony’s problems last week, it was proof that cloud computing (and its teething problems) had broken out of the IT world and into general business consciousness.

Interesting to note that The Economist main recommendation was that SaaS vendors should not rely on just one hosting supplier, as I prescribed in my last blog.

Amazon Cloud Outage – The lessons

Friday, 22 April 2011

Over the past couple of years, well meaning people in the cloud industry have told me “You ought to host on a PaaS (Platform-as-a-Service) like Amazon or Google. Your customers would be reassured by having such a big name behind you, and it solves all the scalability issues”. And I’ve replied that, call us old fashioned, but we like to know where our customers’ data is and we like to have control of the technical environment we’re running on, and you only get both if you own and maintain your own servers. There is also the mostly-completey-ignored issue of complying with UK & European law and not holding data on EC citizens outside of the EC.

This blog post is not about schadenfreude, rejoicing in Amazon EC2’s two day outage that has taken a swathe of major cloud applications down, including some of our competitors. This is a plea (yet again!) for simplicity in IT design.

It is a truism that the more complex a system, the greater the chance that something will go wrong. The more firewalls, load balancers, routers and software layers between the customer’s browser and your application, the greater chance that something will fail, be it as simple as an engineer in the datacentre pulling out the wrong cable (as happened to us a few months ago).

The other reason we like hosting our own servers is that, if they go down, we have a team of our own people working flat out focussed 100% on getting our system back and not 1,000 other systems at the same time. Which is a lot easier job, especially as we’ve made sure that we have as few layers between our boxes and the outside world.

We also have a backup system on standby with real time data sync so that if our main datacentre does go down, we can fail over in about 20 minutes.

So, cloud developers! Rack your own boxes and keep the IT simple. Maintaining servers is not that hard, you’ll get much better scalability and efficiency by specifying your own software and hardware platform. And your customers won’t be left without an application that they have paid for.

Just make sure there are no Armenian old ladies near the building.

SaaS Escrows – useful or pointless?

Friday, 26 November 2010

I keep getting called by traditional software escrow companies who are looking to move into providing such a service for vendors and customers of SaaS products. However, despite the glossy brochures I just don’t see how it can work.

With a traditional software escrow a trusted third party, such as lawyer or specialist escrow like the NCC, would hold a copy of the source code in trust for subscribing customers. If the escrow was triggered, by the vendor going out of business or even simply ceasing to support the product, the  customers could apply to the escrow company to release them the source code. All this made sense when the software product cost 100k or more, the escrow subscription cost the customer a few hundred and the customer had a large in-house team of programmers who could, in theory, maintain the inherited code. In practice I can’t think of a single example where an escrow was triggered, and I pity the poor programmer who would have had two million lines of COBOL dumped on him or her and told to update the system for a new tax rate.

But for SaaS the story is more complex. SaaS customers purchase a service, not a product, and what they would ideally like to know is that should the SaaS vendor go out of business then their application will keep running. To deliver the service you need the whole hardware & software stack: servers, firewalls, load balancers, operating system(s), web server, backend databases, plus a whole pile of add-ins for charting, pdf generation etc. And of  an up-to-date copy of the data, ideally sync’ed in real time. To make sure that all this would work in the event of an escrow being triggered the whole stack would have to built and tested, otherwise the chances of it working on the day are minimal. And, just to make life more interesting, whereas traditional software worked on a six month or yearly release cycle, SaaS systems get updated much more frequently, almost every day in our case. So what you end up with is a replicated datacentre that has to be tested every week to make sure that it still works. Which is basically what we at Really Simple Systems do, keeping a complete system on hot standby for instant switchover.

Doing all this is a lot more work than keeping a CD in a safe, and that cost would have to borne by either the SaaS vendor or their customers. As most customers are paying very little for their SaaS solution (because that’s the point!), paying the same again for an escrow protection doesn’t seem great value. And as customers aren’t clamouring for such a protection, it is hard to see why SaaS vendors would stump up a lot of money for something that their customers’ don’t see the value in.

A better solution is for SaaS vendors to put in their contracts that should their businesses fail, then the data legally belongs to the customer. After all, it is the data that is the most important asset in most systems – once you have the CRM data, then moving into another CRM system is not such a large task and could be done within a few days, even for the largest systems.

Which (he said smugly) is exactly what we do here at Really Simple Systems.

Intellect Cloud Computing Seminar Thursday 15 July 2010

Thursday, 10 June 2010

If you are wondering what all the fuss about Cloud Computing is, and whether it is just yet more IT vendor hype or maybe something that might actually deliver tangible benefits to your business, then do come along to Intellect UK’s SaaS (software as a service) seminar in London on Thursday 15 July.

Although there will be some Cloud vendors talking (such as Really Simple Systems Hosted CRM), there will also be a panel of users, analysts and lawyers to put a more balanced view on things.

Really Simple Systems has a new blog

Wednesday, 11 November 2009

Really Simple Systems now has a blog of its own, at

It is primarily for users of Really Simple Systems Hosted to keep up with product updates and company direction. And for users to feed back to Really Simple Systems.

Crunching the Number Crunchers

Tuesday, 5 May 2009

Last February The Gartner Group (a US firm of technology analysts) published a report showing that SaaS was more costly in the long run for large organisations. Now McKinsey (another firm of analysts) has published another report coming to similar conclusions.

Gartner’s logic makes more sense that McKinsey’s, and claims that despite initial higher costs for purchase and installation, after three years the cost would be cheaper than paying the monthly SaaS subscriptions, especially if you can spread those initial costs over a large number of users.

Well, Yes and No.

If you plug all the numbers you know about into a spreadsheet you may come to the same conclusion, but these mathematical models don’t cater for the real world, for example:-

The assumption is that you install a CRM system and everybody lives happily ever after. Well of course, if that CRM system is Really Simple Systems then this is not a fairy tale! However, as somebody we’ve all forgotten about once said “Stuff happens”. Stuff like the department being closed down, or sold, or downsized. Or a new technology coming along and making it all obsolete. Or a new CEO saying that he wants to use the same system he had in his last company. Or suddenly realising that this new CRM system doesn’t really do what you wanted it to do. Or it being so over designed and complicated that the sales people stop using it after six months. Or the vendor’s support falling off a cliff. Chuck a pre-paid for CRM system out after two years, let alone one, and that was an expensive mistake. Plus right now most companies’ cost of capital is a lot higher than bank base rates, and they are happy to pay a small premium for keeping that cash in house.

Unforeseen Costs
Then there are all the costs that never quite seem to be budgeted for. Like hours unscrambling laptops after the data sync failed. The operating system upgrade that revealed some bugs in the application, which had to be upgraded but the upgrade necessitated a database upgrade, which then caused another application to crash, occassionaly. Plus a maintenance price hike because the vendor is going through a hard time at the minute (pace, SAP & Microsoft!). Plus all those extra payroll costs that governments will be springing on us in two years’ time to pay for the current economic mess.

And finally, although no SaaS vendor seems to want to admit this, we can all bet that those monthly subscriptions will come down in price as the application area continues to be commoditised, and in three years’ time a larger enterprise really should be able to negotiate a price saving.

So even for large companies, I think SaaS works out cheaper, and it certainly does for small ones. The really good thing about monthly payments is that if you change your mind, you can leave. Once you’ve paid for a traditional install, there’s no way to get that money back when things change – and they will!

So according to Gartner & McKinsey, traditionally purchased software works out cheaper in the long run, providing the world stands still. In the long run, said Keynes, we’re all dead.