While in Japan recently, I learned a few important Japanese phrases:
Yoroshiku onegaishimasu - Something to the order of I'm your humble servant, please take my business card
Ita daki masu - Saying thanks for anything - especially food
kouji shinko kijun - New accounting rule going live as of April 1, 2009 in Japan. This rule states that SI's in Japan need to recognize project revenue as well as expense ratably during the project.
Much discussion has happened concerning the best way to achieve compliance with kouji shinko kijun. Organizations who used to use Excel to figure out status on project plans now need a more reliable method for recognizing project revenues during the execution of the project. Key components of compliance include Enterprise Project Management, WBS, and EVM.
WBS, or Work Breakdown Structure, is a tree structure which sums a project's components upward. Progress recorded at the lowest levels of a project's WBS is reflected in the overall project data.
EVM, or Earned Value Management, is a way to normalize schedule and cost progress in an objective way (See http://en.wikipedia.org/wiki/Earned_value_management). Earned Value allows an SI to know at any time during an engagement how much work has been completed toward the full contract as a ratio. Using EVM, I can easily compare many different projects of differing scopes across a standard measurement. With EVM, I can depict in a single number the degree of variance at any point in time a project is experiencing in terms of cost and schedule. These numbers play into anticipated revenue from labor on those projects.
Enterprise Project Management gives SI's the ability to look across all projects and pro-rate the expected revenue from those projects according to the EVM data and the WBS projections. Compliance with kouji shinko kijun requires this level of understanding across the organization.
A series of articles on this topic are emerging from thought-leaders in Japan. One of the first of these can be found on page 54 of November issue of Nikkei Systems publication (http://ec.nikkeibp.co.jp/item/backno/OS0187.html). This article covers solutions that address Kouji Shinko Kijun requirements. The article mentions Artemis, HP PPM, Primavera P76 and @task. The article devotes an entire page to @task and conducts a case-study with Toyo Business Engineering, and @task customer.
One of the quotes I liked from the case study was, "All team members now can see the overall schedules of the project in realtime and can see the results of their contributions and this has
been a great motivator” (Miyazaki-san, Division Manager, Toyo Business Engineering).
Wednesday, October 29, 2008
Monday, October 27, 2008
Project and Portfolio Management (PPM) is an Inferior Good
Market-watching these days has become a macabre pass-time; like, why do you torment yourself by looking? Its like watching a train wreck in slow motion.
We have to know how these changes are going to affect us personally, affect our businesses, and affect our ability to invest; and so we watch anyway.
CIO's, executive teams, and department heads all across the world right now are looking at how they can cut costs and still maintain similar levels of productivity. 'Do more with less' is the new global slogan. The market just got a 30% reduction in value, so did your budget - or at least if you haven't gotten that news yet, trust that somebody is talking about that somewhere in your organization.
For a leader to 'Do more with less', he or she needs to know a few things about their organization. Namely, what everybody is doing and what impact that work has on the organization as a whole. Organizations looking to make cuts or tighten up on growth need to do three things better:
* Obtain true visibility over all initiatives and resources
* Prioritize initiatives according to positive impact on the organization
* Make better use of resources
What I love about this is that these needs are addressed through of the discipline of Project and Portfolio Management (PPM). So, why the comment about PPM being an inferior good?
Drawing from knowledge picked up in my BYU economics classes years ago, an 'Inferior Good' is one that people buy more of when they have less money. Right now, people are scrambling to understand their organizations. Good CIO's will realize that PPM is the key to overall productivity gains. This puts PPM in a growth situation; even when the markets are down. We have been seeing this in trends observed over the last six weeks. We have seem a dramatic uptake in product interest as the economy shows further signs of weakening. Our belief is that PPM remains a strong performer in this time of potential global recession.
A couple weeks ago I was in Japan. While there, I spent some time with Jim Hunter of PM Global. PM Global has some great technology dealing with controls management of which, @task is one integrated component. Jim has been in the Project Management industry for many years and commented that he loves down markets due to the increase in PM attention they create and the consequent increase in business.
Furthermore, in the PPM space, there are heavyweight solutions such as MS Project Server, Computer Associates' Clarity, and Oracle's Primavera. These solutions are heavyweight in both up-front cost and resources required for implementation. These solutions tend to focus on the management layer and are complicated to the point that adoption into additional levels of the organization is limited. This limitation directly affects the solution's ability to provide real-time visibility for executives down into the workforce (e.g. If the workforce isn't in the tool, the tool can't provide good data back up the chain without mid-level after-the-fact redaction). These complicated solutions are actually pushing organizations toward alternatives that are less costly up front, less risky to the organization, and more likely to be utilized by the entire workforce.
@task is the SaaS alternative which has its roots in usability and Web 2.0 technology. There is a practical aspect to the needs organizations have around visibility, prioritization, and productivity. Modern tools like @task address this practical need extremely well in a way that promotes usability - so that the organization truly can do more with less... including less complication in their PPM tools.
The combination of down economy pushing organizations toward PPM. That same pressure is pushing PPM buyers toward SaaS applications. This bodes well for products like @task.
We have to know how these changes are going to affect us personally, affect our businesses, and affect our ability to invest; and so we watch anyway.
CIO's, executive teams, and department heads all across the world right now are looking at how they can cut costs and still maintain similar levels of productivity. 'Do more with less' is the new global slogan. The market just got a 30% reduction in value, so did your budget - or at least if you haven't gotten that news yet, trust that somebody is talking about that somewhere in your organization.
For a leader to 'Do more with less', he or she needs to know a few things about their organization. Namely, what everybody is doing and what impact that work has on the organization as a whole. Organizations looking to make cuts or tighten up on growth need to do three things better:
* Obtain true visibility over all initiatives and resources
* Prioritize initiatives according to positive impact on the organization
* Make better use of resources
What I love about this is that these needs are addressed through of the discipline of Project and Portfolio Management (PPM). So, why the comment about PPM being an inferior good?
Drawing from knowledge picked up in my BYU economics classes years ago, an 'Inferior Good' is one that people buy more of when they have less money. Right now, people are scrambling to understand their organizations. Good CIO's will realize that PPM is the key to overall productivity gains. This puts PPM in a growth situation; even when the markets are down. We have been seeing this in trends observed over the last six weeks. We have seem a dramatic uptake in product interest as the economy shows further signs of weakening. Our belief is that PPM remains a strong performer in this time of potential global recession.
A couple weeks ago I was in Japan. While there, I spent some time with Jim Hunter of PM Global. PM Global has some great technology dealing with controls management of which, @task is one integrated component. Jim has been in the Project Management industry for many years and commented that he loves down markets due to the increase in PM attention they create and the consequent increase in business.
Furthermore, in the PPM space, there are heavyweight solutions such as MS Project Server, Computer Associates' Clarity, and Oracle's Primavera. These solutions are heavyweight in both up-front cost and resources required for implementation. These solutions tend to focus on the management layer and are complicated to the point that adoption into additional levels of the organization is limited. This limitation directly affects the solution's ability to provide real-time visibility for executives down into the workforce (e.g. If the workforce isn't in the tool, the tool can't provide good data back up the chain without mid-level after-the-fact redaction). These complicated solutions are actually pushing organizations toward alternatives that are less costly up front, less risky to the organization, and more likely to be utilized by the entire workforce.
@task is the SaaS alternative which has its roots in usability and Web 2.0 technology. There is a practical aspect to the needs organizations have around visibility, prioritization, and productivity. Modern tools like @task address this practical need extremely well in a way that promotes usability - so that the organization truly can do more with less... including less complication in their PPM tools.
The combination of down economy pushing organizations toward PPM. That same pressure is pushing PPM buyers toward SaaS applications. This bodes well for products like @task.
Wednesday, October 22, 2008
On-Demand is not SaaS. The old and new economy shaping software licensing
SaaS and on-demand are not synonymous.
Let me first start by explaining the business model behind SaaS in software development.
Old Economy - In the past, software vendors have typically modeled their business around traditional product development practices. The company sells a license for a specific version of its product and charges maintenance fees for continued support of that version. The support includes technical support as well as bug fixes and patches. In the meantime, the company plans for a version upgrade containing 12 to 18 months of software development effort. That upgrade is sometimes sold at full-price to existing customers and sometimes for a reduced price in the neighborhood of 50-75% of retail.
New Economy - Recently, software vendors have adopted the agile way of thinking about software development. This way of thinking requires that software development become very customer-focused and that innovation is delivered to customers frequently and in smaller pieces. This allows the customer to provide feedback on phased-in functionality and leads development along a path that ultimately delivers more useful software. This process requires that there be no 12 to 18 month release cycle, but rather a monthly or a quarterly release cycle. This process also requires a new business model as the traditional approach to discreet versions becomes obsolete.
SaaS is a natural outlet for the new economy. SaaS, keep in mind, means 'Software as a Service', not 'On-Demand Software' or 'Hosted Software'. The SaaS model merely allows vendors to deliver frequent upgrades to customers and still protect the revenue that would have come from selling discreet upgrades every 12 to 18 months.
The defining characteristics of a SaaS company are:
* Customer-focused software is delivered frequently (e.g. monthly or quarterly)
* An economic model that promotes use of continuously improved software instead of ownership of a discreet version of a software package
Benefits of SaaS on buyers - Buyers should understand why SaaS is a win for them, even though it may feel uncomfortable to be making an annual payment for their mission-critical software. There are several reasons why the SaaS model benefits buyers:
* SaaS is cheaper and less risky. The economic model for a SaaS vendor amortizes the cost of software over a typical packaged software's life expectancy. It is, therefore, less expensive to obtain and the lower up-front costs are less risk to the buyer. A recent study by Goldman Sachs (Investing for the next stage in software-as-a-service, Sept '08) discovered that SaaS vendors' gross margins are 15% lower than their packaged software counterparts.
* SaaS vendors tend to be extremely customer-focused. In the SaaS model, the days of shelfware are absolutely gone. If the buyer does not derive continued value from their software, they will simply not renew.
* SaaS software innovation is delivered monthly or quarterly. This allows the vendor to more quickly respond to market trends and customer needs
* SaaS software is not a capital expense, its a lease.
Why is on-demand not equivalent to SaaS and visa-versa?
Virtually all SaaS companies deliver their software on-demand, or hosted. The on-demand delivery model allows the vendor to control the upgrade process and to keep the application on the latest version. Additionally, SaaS companies have been leaders in the usage of the multi-tenant architecture, scalability techniques, and user-configurable software to dramatically improve economies of scale. Thus, architectural characteristics such as multi-tenancy have been attributed directly to SaaS companies rather than to on-demand software.
Can an on-demand application fail to be SaaS? Yes. Not all on-demand applications will exhibit the attributes of a SaaS offering. Recently, several of our competitors including Computer Associates and Serena have marketed 'SaaS' versions of their products. These products are essentially on-demand incarnations of traditional heavyweight packaged software. While the pricing model may reflect the cost amortization, I would suggest that the 'service' component is missing; namely: focus on customer usability and frequent upgrades.
Let me first start by explaining the business model behind SaaS in software development.
Old Economy - In the past, software vendors have typically modeled their business around traditional product development practices. The company sells a license for a specific version of its product and charges maintenance fees for continued support of that version. The support includes technical support as well as bug fixes and patches. In the meantime, the company plans for a version upgrade containing 12 to 18 months of software development effort. That upgrade is sometimes sold at full-price to existing customers and sometimes for a reduced price in the neighborhood of 50-75% of retail.
New Economy - Recently, software vendors have adopted the agile way of thinking about software development. This way of thinking requires that software development become very customer-focused and that innovation is delivered to customers frequently and in smaller pieces. This allows the customer to provide feedback on phased-in functionality and leads development along a path that ultimately delivers more useful software. This process requires that there be no 12 to 18 month release cycle, but rather a monthly or a quarterly release cycle. This process also requires a new business model as the traditional approach to discreet versions becomes obsolete.
SaaS is a natural outlet for the new economy. SaaS, keep in mind, means 'Software as a Service', not 'On-Demand Software' or 'Hosted Software'. The SaaS model merely allows vendors to deliver frequent upgrades to customers and still protect the revenue that would have come from selling discreet upgrades every 12 to 18 months.
The defining characteristics of a SaaS company are:
* Customer-focused software is delivered frequently (e.g. monthly or quarterly)
* An economic model that promotes use of continuously improved software instead of ownership of a discreet version of a software package
Benefits of SaaS on buyers - Buyers should understand why SaaS is a win for them, even though it may feel uncomfortable to be making an annual payment for their mission-critical software. There are several reasons why the SaaS model benefits buyers:
* SaaS is cheaper and less risky. The economic model for a SaaS vendor amortizes the cost of software over a typical packaged software's life expectancy. It is, therefore, less expensive to obtain and the lower up-front costs are less risk to the buyer. A recent study by Goldman Sachs (Investing for the next stage in software-as-a-service, Sept '08) discovered that SaaS vendors' gross margins are 15% lower than their packaged software counterparts.
* SaaS vendors tend to be extremely customer-focused. In the SaaS model, the days of shelfware are absolutely gone. If the buyer does not derive continued value from their software, they will simply not renew.
* SaaS software innovation is delivered monthly or quarterly. This allows the vendor to more quickly respond to market trends and customer needs
* SaaS software is not a capital expense, its a lease.
Why is on-demand not equivalent to SaaS and visa-versa?
Virtually all SaaS companies deliver their software on-demand, or hosted. The on-demand delivery model allows the vendor to control the upgrade process and to keep the application on the latest version. Additionally, SaaS companies have been leaders in the usage of the multi-tenant architecture, scalability techniques, and user-configurable software to dramatically improve economies of scale. Thus, architectural characteristics such as multi-tenancy have been attributed directly to SaaS companies rather than to on-demand software.
Can an on-demand application fail to be SaaS? Yes. Not all on-demand applications will exhibit the attributes of a SaaS offering. Recently, several of our competitors including Computer Associates and Serena have marketed 'SaaS' versions of their products. These products are essentially on-demand incarnations of traditional heavyweight packaged software. While the pricing model may reflect the cost amortization, I would suggest that the 'service' component is missing; namely: focus on customer usability and frequent upgrades.
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