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#ls09 – The Long Run from Good Enough to Fantastic

LotusLive - My Dashboard

Here’s the deal: whenever a vendor does something that I think is, all around, a good idea, I start to get suspicious of myself. It’s that demo glow thing. Worse, when they start finally doing something they should have been doing so long ago, but haven’t, that you’ve given up believing that they would actually do it…you’re sort of all screwed up in your head in this analyst business.

That, dear readers, is my reaction at 20,000 feet (literally and figuratively) to this year’s Lotusphere. IBM actually released an application that ends in a .com. They’ve got SaaS, friends, and they’re not ashamed of it.

Side-note: Spring-loading Your Tea-leaves

Side-note: remember “SaaS”? It was the in-thing before “cloud.” Track how far back it was to when SaaS was that the cool kids were doing – 3 years, maybe? – and you’ve got a good idea of how long it takes IBM to “catch-up” to what those raskly startups are doing. The contemporary lesson is to apply that time-stick to cloud computing. IBM still has 2-3 years before they’re release a serious product it’d seem.

“And all I gotta do is act naturally…”

While at Lotusphere, IBM’ers kept telling me about the crabbing from the blogs about Indeed. It’s sort of like NetBeans to Eclipse. But that’s the kind of thing you expect from dancing elephants.

Here’s where things do get screwy with in the here-and-now: it’s still targeted at the same money-hogs that IBM has based it’s air-supply on these many years: The Companies Who Run The World, the Fortune-We-Don’t-Use-37Signals-Hundred. Yeah, those guys who’re laying off thousands of people now and hoarding their cash like The Road is about to lay us all out.

The talk of the Lotus-heads was of optimizing companies with 10,000+ employees. Big boys, dear readers. Would RedMonk, a virtual company of 5 people profit from using Could we even afford it?

Sears is a Mid-market Company

IBM is still not going after the S in “SMB” full-force like you’d think of from a SaaS offering. “M” gets in there under the moniker General Business, which is fine, but still gets the stripped down offerings at the drive-thru. Their interest is in processing RFPs and POs, not email addresses and credit cards.

For any talk you might hear about IBM selling to the Fortune One Million, they’re not really interested at this point. My take is that Lotus is going through what the other IBM brands would call “modernization”: take the existing customer base and bring them up-to-date to “modern” technology. Over in Rational and z, they’ve got EGL to move us from languages and platforms, of which, COBAL is the only one we can remember, only because of Y2K.

The perception for sometime has been that the Lotus world is stagnant, allowing Microsoft and even Trustafarians like Google to stumble into success, Lawrence of Arabian’ there way to Damascus. A perfect, but stagnant tecosystem always falls pray to the good enough up-start with a finger on the plunger. Sure, it only has 40% of the functionality and it doesn’t know how to spell ISO, SOX, PCI, or talk to MIL: but it works, it’s cheap, and damned if that email quota and 10 meg Reply-All email attachements becomes a non-issue.

Lotus has been in desperate need of catching up to the times – beyond the dazzling array of internal and research-driven applications – and it seems like they’ve finally gotten their footing a little ways up a very large mountain.

The $340,000 Question

Lotusphere Bloggers

Which brings the question back to one of cost. Any number you hear at a vendor show that has to do with cost is suspect, but let’s dance around with some.

At the 10,000 and above level, it was said at one keynote, Lotus believes they 30-40% cost savings on the average price of $10/user/month for email and calendaring. Let’s take the lowest there, the 30%. So, we’ve got Lotus messaging costing us $7/user/month, with a minimum of 10,000 users:

($10 - 30%) X 12 months X 10,000 users == $840,000/year

Then, let’s take Google Apps at a non-discounted price of $50/year/user. (Hold your comments about functionality: it’s coming.):

($50/user/year X 10,000) = $500,000

So, Lotus’ challenge is to justify that extra $340,000.

Sure the functionality that Lotus messaging and calendaring provides might be a immense compared to Google Apps. But how do you, and IT budget holder in, Staring Into The Economic Abyss, measure that immensitude?

You’ve got backup tapes with countless credit cards lost in the backs of cars. You’ve got regulations. You’ve got an endless amount of FUD out there, but if the risk management pounds of flesh on that FUD comes up to $340,000 or less: what’re you going to do?

Never Trust a Number

View from Dolphin 2nd floor room

Lookit: these are all funny numbers from some weird spreadsheet-cum-PDF with data points from 4AM benders. But, it gives you a start for understanding the trade-offs IT buyers have to make in the segment that Lotus once ruled. The real delta could be $5,000. It could be $500,000. All that matters is that Lotus is the Lexus, Microsoft is the Mazda, and Google is the Geo.

My high-school economics teacher gave me a nice piece of advice I’ve yet to apply in my life: a car is just a thing that gets you from Point A to Point B.

Email…calendaring…IM…”messaging”…social software has become that, in spades. To justify that $340,000, Lotus will need to bring innovation, easy to sell, profit-causing features full-force. Catching up with a SaaS offering is fantastic, no doubt, but there’s no room to drop the ball this time to someone with a better a outlook or a funny name.

Disclosure: IBM is a client and covered T&E to Lotusphere. Microsoft is a client as well, as are Microsoft and The Eclipse Foundation. Google once gave me some nice gloves (kisses!).

Categories: Collaborative, Conferences, Enterprise Software, Social Software.

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8 Responses

  1. Michael, I am not sure that the $340,000 question is accurate. One of the fallacies of the Google $50/user/year number is it assumes that you have zero additional costs. That couldn't be more wrong. Not only do you still have to worry about connectivity and bandwidth, you have to have some kind of 1st level help desk, someone to administer directory management, someone to handle compliance requests, and someone to think about rich client deployments for offline usage. I am a huge believer in driving down the operational costs for messaging, but I also think it's critical to look at the full force and cost of the operation.

  2. Ed: indeed. Batting around numbers is always a rat-hole of qualifications, esp. when the numbers get enterprise.

Continuing the Discussion

  1. […] taking enough risks when it came to creating new markets. Everything always had to be all about the The Companies Who Run The World, the Fortune-We-Don’t-Use-37Signals-Hundred. IBM wasn’t going to invest in things without a guaranteed payoff- R&D becomes a purely […]

  2. […] Lotusphere entering IBM into SaaS. Is “good enough” good enough? […]

  3. […] productize that and sell it pronto!” While at Lotusphere this year, I heard that some of the product came from that work. See more about the HiPODs in this 2007 […]

  4. […] at Lotusphere this year, John Simonds interviewed me as the first part in a new podcast of his, “An Analyst’s View […]

  5. […] Finally, we wrap-up discussing the Tivoli cloud computing story we’ve been seeing evolve here at Pulse. James is (still) not too happy with the IBM cloud story. That said, he suggests pulling in the OnDemand phrase and discussion from the past, the content of which he liked. I add in that the cloud computing discussion seems to be around what cloud means for operations people, not end-users, where you’d expect to hear more from the Lotus folks (as we did back at Lotusphere this year). […]