We've nearly completed the fourth year of CS309A: Software as a Service. We've had a great list of speakers. I'm going to use this blog entry to be able to have the students gain access to some of the powerpoint and to summarize the quarter.
We began the year with Jonathan Schwartz. Jonathan spent most of his time talking about the value of free. Which in this context is talking about how free products reduce the cost of customer acquisition. Depending on who you talk to for companies like Amazon or Priceline the cost can be $30-40. While companies like Vonage and salesforce could be closer to $400. And we all know that traditional software companies spend 25-40% of their dollars on sales and marketing.
Tony Hsieh, founder and CEO of Zappos delivered the 30 September lecture. Many of us were unaware that Zappos is poised to be a $1B company and is already the leader in online shoe sales. Tony talked a lot about the culture of the company - but one quote stood out: "Customer service is not a department'. Zappos takes a completely different attitude about customer service and it has changed how it's people and infrastucture are organized in a fundamental way. If you're interested contact them and get a copy of the yearly company culture book and you'll understand what I mean. We all look forward to the day of Zappos Air.
Marc Chardon, CEO of Blackbaud (full disclosure: I am on the Board) was our next lecturer. He talked a lot about similarities and differences between Blackbaud's software and conventional CRM software. Perhaps it was best described as software directed more at knowing more about the donor, the customer and less about the state of the transaction. With Blackbaud's move to deliver software in Model Four and the recent acquisition of Model Six companies (eTapestry and Kintera) this quarter the subscription revenues will be twice the conventional license revenue.
Dave Girourd, President Google Enterprise spoke on the 14th of October. For those that are students and interested in a copy of his presentation let me know and I'll email it to you. I was surprised at how little Dave talked about enterprise search. But he did highlight the scale of the operations and investments Google is making in enterprise productivity apps - in particular the size and cost structure of Google Mail As they gather more early adopters it will certainly be interesting to see how deeply Google penetrates the enterprise with more business oriented apps - not that we don't all use Google search everyday in the office.
CEO of Netsuite Zach Nelson was up next. Netsuite went public last December and has been growing ever since. While traditional back office software is not simple to implement, Netsuite has been making great progress in the SaaS model. They clearly see the trend to specialization or verticalization and are taking steps to allow CEMLIs (customizations unique to an industry) be transferable from one customer to another. For more details see his presentation.
John Lervik, founder and CEO of FAST (recently acquired by Microsoft) seemed to be happy to have the resources of Microsoft to bear on what has been a life's work. I asked him - today - the SQL business is probably close to $15B (Oracle, IBM, Microsoft...), but search is probably only $1.5B - Why? I think his answer was: Google did us a great service in making search important (but that only happened over the past 6 years) - but they also made everyone see search as a search bar. John sees search much more as a new platform to build search-based applications - apps driven by search not SQL. For more detail see his presentation.
Charles Phillips spoke last week. He's the co-President of Oracle and has been one of the driving forces of Oracle's M&A activities. They've completed nearly 50 acquisitions in 50 months - so Charles spent a lot of time talking about the methodology of doing this. It might have been lost on the students how difficult this is. He spent some time on - on demand - and how the @Customer model (Model 4) was doing well - but he made the point that large companies aren't going to move everything tomorrow - particularly when they have a large scale operation.
Yesterday my old friend Javier Barerras came from Mexico City to deliver a lecture on how technology is reshaping the hotel business. It's not widely known but Grupo Posadas the largest hotel chain in Latin America generates 50% of their profits from non-hotel (and more specifically software) -based businesses. This includes AltiusPar, which is the moral equivalent of Sabre for the hotel industry. Javier also pointed us to CitizenM, a new hotel chain powered by technology and a "real CRM" system that knows what you like to eat, drink, watch and listen to - and customizes your hotel experience based on information. For more detail see his presentation.