Paul Wallbank – Brilliant Communications

Tag: cloud computing

  • Shifting the cloud business model

    Shifting the cloud business model

    “What’s the biggest risk to your business?” was one of the questions asked of Netsuite CEO Zack Nelson during a post keynote discussion at the Suiteworld event in San Jose yesterday.

    Nelson’s response was the shift to transaction based businesses and cited cloud based human resources company Zenefits as an example.

    The transactions model can work two ways with either a fee being charged for each transaction – something that data analytics Splunk does – or Zenefit’s model of taking third party commissions.

    A commission driven business

    Zenefits doesn’t charge for its software instead making money from commissions paid by companies they refer users to. When a client needs workplace insurance or a new benefits package, the service gets a fee from the provider.

    Investors love the idea with the company yesterday raising $500 million in a round that values the business at $4.5 billion dollars after just two years since being founded.

    Regulators however don’t like its less than transparent commissions with the service in trouble in a number of US states and it’s clear to see how such a revenue model would hit problems in countries with strong disclosure rules.

    Both of the transaction models present a threat to current cloud computing software businesses such as Netsuite and Salesforce that charge fixed license fees based on the number of users and the features they want. Both Splunk and Zenefits on the other hand give their software away.

    Disrupted disrupters

    Just as the cloud providers’ licensing model disrupted the traditional massive negotiated contracts for enterprise software and the fixed cost box model for small business, the online companies themselves might be facing their own disruption to the way they make money.

    For executives like Zach Nelson, shifting from one lucrative model to another more uncertain revenue source will be something keeping them awake for a while longer.

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  • Adventures in Startupland – the brutal truth of starting a business

    Adventures in Startupland – the brutal truth of starting a business

    Startupland is a magical, mythical place where the unicorns roam free and much of the advice dished out to nascent entrepreneurs has more in common with a romantic fantasy novel than the hard work of building a business.

    Mikkel Svane’s Startupland is not one of those books. Svane, the co-founder and CEO of cloud based customer business Zendesk, is instead a tough description of the challenges and personal costs of venturing into business for yourself and the harsh, demanding realities of the Silicon Valley statup model.

    “No-one tells you how little you get paid,” warns Svane as he charts his own journey from developing and selling through Stockholm’s computer shops of the mid 1990s a basic program that created 3D optical illusions through to floating Zendesk on the NASDAQ in 2014.

    During Zendesk’s journey Svane and his business partners experienced the entire range of challenges that a business founder could face ranging from managing high growth, laying off staff in the face of a downturn, the inevitable pivots and, sadly, the passing of a valued employee.

    “Startups are fragile” warns Svane and observes how he nearly fell for the trap all business owners have been tempted by in doing consulting work to provide cash for the business. Invariably the side job comes to dominate and the new venture withers due to lack of attention.

    Working from home

    For those starting out in business, whether it’s a tech startup or something a big more mundane, the observations and tips on working for home are worthwhile in themselves, if you find you’re one of the type that “sits at home and eats toasts and masturbates” then it’s probably best to find an office or coworking space.

    Having had the opportunity to interview Svane a number of times, his own passion and character comes clearly out of the book including his view that seemingly boring things like customer support is sexy, citing how Marilyn Monroe fell for Arthur Miller (although that didn’t end well).

    The ‘boring is sexy’ mantra is one Svane repeats throughout the book, and his contention is seemingly mudane areas like customer support are where the real business opportunities lie.

    Business is about relationships

    Ultimate Svane sees business as being about relationships; between customers, staff and investors. His view on accepting investor’s money is an important lesson from the book.

    “Great investors have unique relationships with their founders, and they are dedicated to growing the company,” writes Svane. “Mediocre and bad investors work around founders, and the company ends in disaster.”

    The brutal truth

    In telling the brutal truth about starting a business Svane gives anyone considering the idea of ditching the cubicle a realistic view of the challenges ahead. That advice alone will save many families from the stresses and costs of self employment and startup land.

    Those considering entering the world of startups, small business or self-employment should read Startupland. If you’ve already started that journey, then Svane’s story is worth reading to show you aren’t alone in your daily challenges.

     

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  • Twitter’s discordant note

    Twitter’s discordant note

    It’s been a bad week for the social media service Twitter with its stock pounded after the leak of poorer than expected results.

    Writer Matthew Ingham says Twitter lost its way five years ago when it started closing down access to third party developers, a move that hurt the service’s growth and user adoption.

    Twitter’s move was greeted with disappointment at the time and many developers gave up working on the company’s APIs.

    With the growth of third party applications stunted, there was little reason for new users to come on board and so Twitter is now disappointing the market with its results.

    Basically Twitter CEO Dick Costolo and his team reaped what they sowed in restricting access; they kept control of their data but it’s cost them users and hurt their share value.

    Twitter’s woes show that the economics of  cloud and social media services reward business that share data. While there may be some commercial and legal limits to what information can be shared, the default position should be to make data available.

    In an information rich society, those who contribute the most get the rewards. This is the point Twitter’s management missed.

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  • How the cloud killed the CIO

    How the cloud killed the CIO

    In Technology Spectator today I have a piece on cloud services and how the promise of high reliability threatens the IT manager and Chief Information Officer.

    This shift is the same change that’s affected the IT support industry, as technology becomes more standardised and a commodity the need for specialist support and management becomes unnecessary.

    In many respects this is similar to a hundred years ago where most factories had their own power plants providing electricity, steam or bel power to drive the machinery.

    As mains power became common and reliable, businesses no longer needed specialist staff to ensure the power flowed.

    While much of today’s commentary focuses on the CIO role evolving, it may well be the position is redundant.

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  • A small business makeover challenge

    A small business makeover challenge

    One of the key factors in bringing the Personal Computer era of business to a close was the end of the upgrade cycle where users tended to buy new systems every three to five years.

    For companies like Dell, Acer, IBM and Microsoft this cycle was an important and reliable income stream.

    In the early 2000s though it stopped as customers decided that with most new innovations coming onto their computers through web browsers they didn’t need to buy new systems.

    For the PC industry, particularly Microsoft, this presented a huge threat to their business models and all of them have been trying to find ways to refocus their businesses.

    The ModernBiz Technology Make-Over

    Late last year I was asked by Microsoft Australia to participate in their ModernBiz Technology Make-Over where a small business running Windows XP and Server 2003 was given a free tech upgrade to the latest equipment.

    This was interesting as it was an opportunity to see how Microsoft and the market are adapting to a very changed industry.

    As well I still carry the many scars – most psychological but some physical – from my years of running PC Rescue where upgrading companies’ old technology was a core part of the business.

    Doing a tough job

    The fallacy many managers and inexperienced companies fall for is that migration customers from old equipment to new systems is a simple matter of copying a few files. It is never that simple.

    Upgrading company computers a tough field as every business is unique and in workplace where the technology has been in use for over a decade the learning curve onto new software is insanely steep for staff and management alike.

    So watching the process from a relatively safe distance where I wasn’t worrying about losing customers’ data or trying to complete a complex task within a short deadline was quite attractive. Basically I wanted to see the other guys sweat.

    Another attraction in participating was to see how Microsoft are managing the transition from supplying business servers to provisioning cloud services and how customers are managing that change in product offerings.

    Dealing with a shifting market

    For both Microsoft and their customers the shift from one off hardware and license purchases to cloud based monthly subscriptions is a major change in mindset, so seeing how small business users adapt to online services will be interesting.

    Overall the technology makeover promises to be an interesting exercise on how the small business computer industry is changing.

    For his participation in the Modern Biz Technology Makeover program, Microsoft gave Paul a Lenovo laptop which he hasn’t yet used.

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