May 192016
 
Zac_Nelson_Netsuite_CEO

Both the public cloud and a publicly listed company are good things for a business says Netsuite’s Zac Nelson.

“Managing a public company is a great discipline and in some ways gives us an advantage over non-public company who don’t have to have discipline and make good investments,” says Zac Nelson, the CEO of Netsuite.

Nelson was talking to Decoding the New Economy yesterday at the annual Suiteworld conference, Netsuite’s annual gathering in San Jose.

The CEO’s comments are in contrast to a common view that being publicly listed company distracts a company’s management from focusing on long term objectives, a sentiment Nelson rejects.

“In terms of managing a public company I think it’s an important discipline, I think a lot of people are opposed to these SOX (Sarbanes-Oxley) rules but when I look at these rules I think they are just common sense. Are you managing your business right? You want to have control of your business so you aren’t blindsided.”

Probably the biggest advocate of taking companies private is Michael Dell who took his eponymous business off the markets three years ago and is now looking at doing the same thing with EMC in what will be the biggest IT merger in history.

Dell going private

Nelson doesn’t think Dell going private was a mistake though, “I saw Larry Ellison say it was one of the greatest business moves in the history of man, I’ll agree with Larry – he’s usually right on that stuff,” he laughed.

“The thing I see Dell doing that I understand is they are giving their smaller division more autonomy. Dell Boomi is going back to being just Boomi and Secureworks just went public. Certainly from a structural standpoint and business model innovation that makes sense and it’s what I understand.”

As a public company, Netsuite does come under scrutiny and one of the criticisms is that it continues to post losses, something that Nelson puts down to the treatment of stock options. In the last earnings report, the company claimed capitalising stock options added $30 million in costs and not including them would see the company reporting an eight million dollar profit last quarter.

“We’re cash flow positive, we generate over $140 million in cash,” Nelson says. “People are happy with it, we’re still investing. What we’re investing in this year is different to the past, we’re investing in services to enable our customers to invest in product.”

Integrating the stack

One of the advantages Nelson sees that cloud based companies like his have are integrated systems, “the client server world created this perspective that dis-integrated systems actually work – you have Windows, you have third-party apps – but what really works well are integrated systems.” he says. “Look at the most common system you guys use, called Apple, it’s an integrated end-to-end system. Same with Amazon, that’s what we’ve built.”

“The detour we took in the client-server world is still being taken in the software world, a lot of software people believe you can compile this stuff and it will magically work. No, it doesn’t. Integrated systems work better.”

Securing the cloud

One area he specifically sees where cloud services have an advantage in being integrated is with security, “a problem that large enterprises have that we to some degree don’t have is we have one system, we have five data centers. You look at some of these large enterprises and some of them don’t even know where some of their data centres are. How on earth do you secure that environment? It’s not a product problem, it’s a process and IT management problem.”

Nelson’s comments on security are a swipe at competitors like SAP and Oracle who are often criticised for having disparate systems.

With Suiteworld moving to Las Vegas next year, it will be interesting to see who’s taking bets against cloud services like Netsuite. Certainly with salesmen like Zac Nelson, they’re able to tell a good story. The key though is to show some profits in the longer run.

Paul travelled to Suiteworld in San Jose as a guest of Netsuite.

 

May 042016
 
not listening to your market or industry is a big management risk

One of the big technology industry stories currently is the merger of Dell and data storage giant EMC, which at seventy billion dollars will be the biggest merger in the tech industry’s history.

With fifty thousand employees managing such a change presents a challenge for EMC’s managers and something noticeable attending the company’s EMC World conference in Las Vegas this week is how upbeat almost all the staffers about the impending merger.

In an interview with David Goulden, the CEO of EMC’s Infrastructure division, which is the company’s core business, I asked him how they were keeping staff morale up in the face of changes that will almost certainly cost jobs.

“Change creates uncertainty,” says Goulden. “One thing I’ve learned from this is you cannot over-communicate and that’s true internally and it’s true with our customers. We’ve put an incredible amount of effort in communications so our teams are engaged to go and speak to their customers.”

As change is now a constant in all industries Goulden’s lesson should be noted by all managers and business leaders – clear, honest and open communications with employees and customers is essential in keeping the trust of the markets and workforce.

The old model of restricting information and hoping no-one finds out is increasingly harder to sustain and from a business point of view unprofitable in the medium term as well.

Paul travelled to Las Vegas as a guest of EMC and Netsuite.

May 012016
 
google-larry-page-sergei-brin-driverless-car

Breaking with the company’s tradition of the Sergi, Google’s CEO Sundar Pichai writes this year’s founders letter laying out how the search engine giant is focusing of artificial intelligence and the machine learning.

Pichai’s view of the world seems to tie in very closely with founders Larry Page and Sergei Brin with him laying out a vision of making the internet and computers accessible to all.

The challenge for Google is the shift away from personal computers, something that the company is struggling with and a factor that Pichai acknowledges.

Today’s proliferation of “screens” goes well beyond phones, desktops, and tablets. Already, there are exciting developments as screens extend to your car, like Android Auto, or your wrist, like Android Wear. Virtual reality is also showing incredible promise—Google Cardboard has introduced more than 5 million people to the incredible, immersive and educational possibilities of VR.

Whether Google can execute on that vision and manages to diversify its revenues away from depending almost exclusively upon web advertising will be what defines Pichai’s time as the company’s CEO. He has a challenging task ahead.

Apr 292016
 
record_player

A good example of the technology transition effect is the Personal Video Recorder (PVR) where a decade ago relatively cheap hard disk drives started to displace videotape, CD and DVD players.

During that period Tivo was the giant of the PVR industry but it wasn’t to last as the plummeting price of hardware made the devices a commodity while the rise of streaming media changes the industry’s dynamics.

Now Tivo is no more as it is bought out by entertainment company Rovi, a victim of the transition effect.

Apr 262016
 
group collaboration on a project

Offering free products to students and academics has long been a tactic used by software companies to build their market presence. The current fight for dominance in the cloud is seeing the same tactics being used.

Last week I had the opportunity to talk to Amazon Web Services’ Glenn Gore about his company’s academic support program.

Part of that conversation ended up in a story for The Australian about how researchers are now using cloud computing services and it’s worthwhile looking at how AWS are using this program to cement their products’ market positions.

“We work with the majority of universities across Australia,” Gore said. “It’s part of an international focus around how we support the education sector in general.”

In some respects AWS’s behaviour isn’t new, for years Microsoft, Autodesk and Adobe have had programs offering free or deeply discounted products for academic or student use. The success of those schemes in becoming defacto industry standards is no small reason why these companies have dominated many sectors.

Microsoft themselves have the similar Bizspark program for tech startups and it’s easy to see how that initiative is helping push Azure’s adoption into a field that has been dominated by AWS.

One of the drawbacks though with cloud computing services is the risk of ‘sticker shock’ where customers end up with big bills. One of the universities I spoke to in researching the story recounted how 0ne of their faculties was presented with a huge AWS invoice because their engineers didn’t provision the services correctly.

This is where AWS’s team steps in with advice for researchers, “in the case of Koala Genome Project use the on-demand model, the standing pricing model for the cloud,” recounts Gore in pointing out the nature of their work could use spot-pricing to take advantage of cheaper prices in off-peak times. “As a result of making that one change they were able to do eighty percent more research.”

Getting more research time is always attractive for researchers and Dr Rebecca Johnson who leads the Australian Museum’s part of the koala consortium was particularly effusive about the support from AWS staff,

“What we have been able to access via this partnership with AWS is compute time and compute capacity that we just would not have had access too,” Dr Johnson said in a media release. “It would have cost us thousands and thousands of dollars to create and we just would not build such a computer system these days. You would not create your own computer infrastructure as we would only use a fraction of it anyway. So, it is great for us to piggy back off these already built systems.”

Being a relatively small institution, the Australian Museum is a good example of how cloud computing can work for those without the resources of big universities or corporations in the same way small businesses and startups can access resources formerly only available to enterprises.

Amazon’s programs though show the Microsoft model of getting students and startups onto their systems early pays dividends. It’s good for academic institutions but one wonders whether it’s also another form of vendor lock in.

Apr 232016
 
How do mobile phone users reduce costs

It isn’t just software companies and telcos that are facing a changing, less profitable, world. As margins decline for their enterprise customers, equipment vendors are facing the squeeze.

A good example of this is Sweden’s Ericsson which last week announced declining sales as China’s Huawei displaces them in market and their enterprise and telco customers tighten budgets in the face of declining margins.

For Ericcson this means finding new opportunities but for them, like Cisco and Microsoft, most of the promising markets offer nowhere near the profits they have been used to in their traditional businesses.

Managers in these industries face a difficult dilemma in explaining to shareholders their company needs to be smaller and less profitable than previously which is something few want to hear.

Not to admit that painful reality risks killing the company as margins continue to shrinks, sales shrivel and desperate managers engage in increasingly desperate stunts in the hope on stumbling on another river of gold.

It’s an ugly place to be for staff at these companies but it shows that fat profits can never be considered to be given in any industry.

Apr 172016
 
engineer plans

“Making rich people richer is not disruption, it’s the same old bullshit” says design guru Mike Monteiro in a speech given last June at the USI Conference in Paris.

Monteiro’s point is telling at a time when much of the tech industry’s business model is based upon solving the problems of rich white men, attracting investments from funds run by rich white men and then selling the venture to a corporation run by rich white men — what this blog calls the Silicon Valley Greater Fool model.

“How Designers Destroyed the World”, is Monteiro’s call to arms for the design industry. In it, he lays out four fundamental responsibilties that should guide how designers work; a responsibility for the world we live in, a responsiblity to the craft of design, a responsiblity to clients and, the most important of all, a responsibility to yourself.

“The work you do defines you,” says Monteiro about that responsibility to yourself. “I found when I started saying ‘no’, the clients listened. When I lost a bad job, a good job appeared.”

Monteiro’s view is designers are in a position of power. In truth though, we may all have a small degree of power in what we choose to do and choose not what to do.

“Responsibility is not a burden for you to carry, it’s a privilege.” Monteiro states. The presentation is well worth watching not just for designers, but for everyone.