Buying Software in this Economy

In spite of the delayed affect this economy seems to be having on technology, investors have no doubt, hence the market reaction. What does this mean for customers? What should one do differently when buying software? Part of my focus here is on Enterprise 2.0 and Web 2.0 software, but the advice generally applies.

Here are 5 tips for those buying during a weak economy…

1. Be a Cheap Bastard

Regardless of the economy, I come to the table biased: Software is generally way too expensive. Now, any bias doesn’t matter. Customers, who have budgets, will have greater buying power.

This is a story that repeats itself: Eighteen months ago the CEO of a new search technology start-up demoed his product to me. When I asked how much he would charge, he responded, “As much as possible.” This is a behavior that is commonplace; it is rooted in hiring expensive sales people and meeting unrealistic investor expectations. Today, this fellow would not get funding. Today, his VC would tell him to lower his prices and try a new marketing strategy.

Ingrained behaviors in enterprise software companies don’t die easily, so look for software where the value is compelling. This software may be all your CFO supports in the next year.

2. Focus on Project Teams and Content

(This is where I piss off the social media and Web 2.0 crowd). In the Enterprise 2.0 software space, a lot is made of social networking. Andrew McAfee‘s definition of Enterprise 2.0 includes the word “social”. Yet when times get tough, the core work is all we’ll care about because we’ll have fewer people to do the work. The core work is not my social network, it is my project, and the content we build every day. By core, I mean: what I need 90% of the day that leads to a real outcome.

Ned Lerner of Sony Playstation said something interesting at Enterprise 2.0 in Boston last June, he said, “We don’t worry about getting the next person motivated to join the large corporate social network, we worry about great tools for our project teams.” He focuses on how to make his projects productive.

When the chips are down and budgets are low, this type of practical thinking will dominate, because all CIOs and CFOs will care about is whether or not a tool really increases productivity, and helps the next high priority project.

It’s not that the social aspects of this new software are useless. Quite the contrary. It’s that the Doubting Eyes of Skeptics in your company will glaze over if you trumpet the personal pages and social connections in this wonderful new software. Your ability to search on who uses certain tags won’t get people jumping up and down.

As an example, you instead should be demonstrating how project teams can produce documentation for customers on the web site without any expensive software, and (if you like) customers will be able comment on it, or (if you like) edit and improve it. The difference is the focus on content.

3. Focus on Killer Apps – Obviously Useful Tools.

Email and Word processing are considered killer apps because their benefit is obvious and they spread rapidly. Obviously Useful Tools don’t need a Return on Investment (ROI) analysis. They don’t need a seminar on adoption. A $100K piece of traditional enterprise software rarely is a killer app because adoption invariably requires considerable work: convincing users, training, roll-out projects, and the Famous Dreaded ROI Study.

Blogs have been so popular, they are a killer app. I would classify blogging as a Tier Two Killer App simply because they are nowhere near as pervasive as say, office apps. Nonetheless, blogging has proved an extremely useful communication vehicle.

Wikis also earn this distinction. Thousands of people in companies are now using wikis, without training courses, management edicts, and ROI studies. The value wikis play in communities, collaboration, and knowledge capture is clear.

A practical test: ask how concrete or vague is the description of the software. I still don’t know what a Collaboration Platform really is, let alone a Scalable Enterprise one. If a vendor concentrates on the concrete usefulness at a tool level, then you have a) a better chance of understanding it, and b) eliminated a blizzard of marketing bullshit.

If one takes as a given that securing a new budget for a large software purchase will be hard for many CFOs to swallow in this economy, then concentrating on inexpensive, highly useful tools is the way to go.

4. Ask the Vendor a lot of Hard Questions

Although Oracle’s financial strength won’t be doubted, half or more of Silicon Valley should be. VCs take enormous risks, but is your CFO interested in this type of risk right now?

I am not advocating shutting out small companies. Instead, if you focus on truly useful tools (Tip #3) and you are a Cheap Bastard (Tip #1), then you are most of the way home here. How much can you lose on a $1,000 or 3,000 system?

Still, ask hard questions about the company’s performance and about their approach to doing business. How transparent are they? Transparency removes doubt about with whom you’re dealing. The honest, open small vendor with a useful, inexpensive tool might serve you better than the (seemingly) safe, expensive, traditional, Cloaked-in-Confidential-Price-Lists traditional vendor.

5. Did I say: Be a Cheap Bastard?

Oh yeah, in case I forgot. Now’s a good time to be a World-Class Tightwad. I spend time regularly in Sydney and Amsterdam, homes of the Dutch and Australians, both world renowned for seeking value (I am being polite). Right now, make a practical Dutchman your role model when you belly up to the Software Bar. Cheers.

Is Agile Development Only for Nerds?

Eskander Matta

This man says, “No.” So what? He may look a little nerdy but he is a Senior Vice President at Wells Fargo Bank and using agile development techniques, he has dramatically reduced the time to develop new products for Wells Fargo’s online business.

 
What’s the big deal? Eskander Matta is not a software developer, and he is not in the IT department. Eskander is a banking executive, with a Harvard MBA, who thinks traditional development methodologies are impediments to building new online products faster and better. Eskander believes, “There is so much innovation in Financial Services that speed to market is critical. A lengthy linear process inhibits one’s ability to compete.”

Eighteen months ago, Eskander got a group of bank employees together to take a meat cleaver to a development cycle that had 26 artifacts (think: pieces of documentation). His goal was to remove all artifacts that had no downstream consumer. “If no one is going to read it, then get rid of it”, he asked the team. The team whacked the process down to 5 artifacts. Then equally important, all this was enabled with a wiki.

As is most often the case, Eskander, the business guy, asked the IT dept what wiki to use. The IT guys told him to use Confluence.

By underpinning everything with the wiki, communication and interaction between people was enabled. “If the wiki was a static word document, it wouldn’t have worked”, Eskander points out. The wiki enabled collaboration in a more formal sense.

What’s so interesting is…

• A business executive took the leadership to streamline development using Agile Development concepts.
• The outcome was fantastic: 26 development artifacts reduced to 5.
• The result ended up on one collaborative work space on a wiki.
• All this was in service of a major bank producing new online products faster.

Granted, Financial Services is largely an information business, this sector is the biggest spender on IT, and in this instance, the product was the Internet. Yet, this story is compelling evidence that there are other executives out there who understand what technology can do, who seek best practices like Agile Development, and who seek out the newest collaborative technologies.

Why Go to an Atlassian User Group?

This Thursday I’ll be at Atlassian’s Boston User Group, and speaking at Enterprise 2.0. Why User groups? Lessons and tips youu can learn. Here’s one, almost fantastic, example of what I learned from our German customers in Frankfurt a week ago. Vodafone’s CEO using our enterprise wiki, Confluence was cool, but well… you decide.

This is the knowledge management team at Deutsche Bahn (DB), the 240,000 employee German railway.

Pretty intense looking bunch. They focus on spreading collaboration across Deutsche Bahn. Although they look a little intimidating — “I’m gonna kick your collaboration ass” flashes through my brain — they do it with a lot of humor, internal marketing, and — is there such a thing? — wacky German good fun.

Marvin the robot from the Hitchhiker’s Guide to the Galaxy is their mascot. Why? Because he has a brain the size of a planet, and he rarely get to use it. They made him as real as possible. He has an email address, a phone number, a blog, and yes, a C.V.

To motivate employees to contribute, every year the team has the 42nd Marvin Awards for great contributions to knowledge. Why 42? You really shouldn’t ask; it’s the answer to everything in the Hitchhiker’s Guide.

And they give out Golden Marvins. Of course.

The team also has a clear metric and goal: of the 240,000 employees, 80,000 are online, and they figure getting 40,000 using the wiki, Confluence, is success. Currently the count is 15,000. Particularly interesting, the users include many non-IT people, including engineering and maintenance. Given the reputation of the German railway, this was my favorite bit.

Hope to see you at the next user group.

My New Venture

I have decided to go into magazine publishing, I am excited to announce the inaugural issue of Wiki People. I am also excited to announce this is a joint venture with the popular People magazine. Here’s a pre-release copy of the fantastic first issue cover, destined to become a collector’s edition.

The Benchmark for Corporate Wikis?

Sun Microsystems may set the benchmark for large corporations using blogging. Now Sun is trying to do the same with wikis.sun.com which makes it fast and simple for all employees to get up and running collaborating on a wiki. Excuse me, on Atlassian Confluence, I should say. Which is an honor given Sun’s wonderful ambition.

Linda Skrocki posted this Sun video today and aside from being long at six minutes [it would kill at three minutes!], it’s an awesome example of how one company is evolving communication.

I dig the 80’s music. The Aussies will think it’s contemporary. 🙂

Is Mediawiki an Enterprise Wiki?

If you want an excellent description of what is entailed in making Mediawiki into an enterprise wiki, David Strom reports useful, practical information for anyone evaluating enterprise wikis. Harvard Business School professor Andrew McAfee’s orignial blog on Avenue A/Razorfish’s wiki was an interesting case study, but it didn’t reveal these important points that Dave Strom surfaced:

1. Razorfish has one full-time intern and two part-time developers that maintain their code.
2. Razorfish put in place some code that pulls information from their Active Directory servers (that) enables single sign-on.
3. Security matters a lot.
4. Part of the custom code they wrote was to enable search across all wiki and blog content.
   

It strikes me that if Razorfish invested all this effort and money, then the question needs to be asked: Is Mediawiki an enterprise wiki? Certainly not out of the box.

One full-time intern and two part-time developers is at least $50-100K for one year! Probably the latter number. Mediawiki in this instance became an enterprise wiki but only after considerable work.

Although this case study exemplifies how companies can fulfill the promise of open source, this is not fulfilling the promise of Enterprise 2.0 software which should be: lightweight software suitable for enterprises for dramatically less money.

This case study points out about as well as I can imagine the difference between the open source option for wikis and the commercially sold enterprise wiki such as Socialtext, Brainkeeper, or our Atlassian Confluence.

Wiki Comparison

Troy Angrignon of Business Objects compared Confluence, Jotspot, Socialtext, and Wetpaint back in July and this week updated his blog mentioning that we’re releasing a hosted version. He drew commentary from Zoli Erdos and others, and I chimed in as well.

Troy revealed that Business Objects selected Confluence and standardized on it as their enterprise wiki. The wiki can be quite complementary to enterprise software such as business intelligence and content management, to name just two categories. Software vendors can fall into the trap of viewing wikis as this rogue sandbox, when in fact, it is a logicial extension of what they already sell.

I agree with much of Troy’s criticism of Confluence and the need for wikis to improve their usability. UI matters, and we need to give this some priority, now that our enterprise features — search, security, plugin library, refactoring, etc. — get good reviews from customers.

Is Microsoft’s Sharepoint Wiki Good Enough?

We did a briefing for Gartner today. A lot of the focus was on Confluence because next year Gartner is targeting collaboration, and technologies like wikis, to be one of the top two or three trends they will concentrate on. In addition to the primary purpose of these briefings — let Gartner learn about our products, these briefings give you an opportunity to ask the experts what they think. We asked Gartner what they thought about Sharepoint’s wiki.

Gartner said customers who decide to use Sharepoint’s wiki will not be asking “Is it the best?’, but instead will ask “Is it good enough?”. They added that the real wiki-minded people out there will not be happy with Sharepoint for a wiki. They also pointed out that big customers like Banks who want some degree of diversity in their technology will not want more from Microsoft. Customers who ask “is it good enough?” are the ones Microsoft will pick off.

I think Gartner is right on. Their point about some big customers wanting less dependence on Microsoft is interesting. You might think the pervailing principle is always to reduce vendors. Although this is a common objective with enterprise customers, there is a point at which too much is too much from one company. Now we’ll just wait and see if the Sharepoint wiki is even ‘good enough’.

Why I Like Microsoft and Google

Schizophrenics, step forward. This one’s for you.

How in the world can one like the Evil Empire and Do No Evil? How could I like anything from Microsoft? Afterall, XP is one of the worst nightmares known to software. I was terribly gratified when visiting a customer at Royal Dutch Shell in the Netherlands last week that Shell has skipped XP entirely: still run 2000 and are waiting for Vista. Of course, waiting for Vista is another soap opera. But here’s the point…

Yes, at this moment – fleeting as it may be — I do like both Microsoft and Google. Why? Because they are about to commoditize wikis for the masses and educate another 10 – 50 million people on wikis. In rather different ways. Wikis, which without doubt are one of the two killer apps to emerge from Web 2.0 Wonderland, along with blogs, will be spread and will benefit from the massive marketing budgets and reach of the Evil Empire and Do No Evil.

Microsoft will do wikis in a Gray-Metal-Desk-Bad-Movie kind of way. What a surprise. The current version of Sharepoint’s wiki is frighteningly bad. Shockingly. But let’s be clear: we do not underestimate the power nor the unventilated warehouses full of programmers attacking from Redmond, Washington. Sharepoint’s wiki will improve.

Google, on the other hand, will do it in a Clean-Intuitive-But-What’s-the-
Business-Model? kind of way. That’s because they bought our buddies from JotSpot who we have always respected here at Atlassian. JotSpot looks great and has some neat features. But it’s a reasonable prediction that Google will target a mass market audience and not enterprise customers. If history is any indicator, it’s also reasonable to predict that the wiki will be in service of the search and advertising Money Machine. We have always liked Google, so we not only wish them and Jot well, but we think they will do a good job in their own style of World-Domination-that-Does-Not-Harm-Animals.

So you gotta love ’em. Microsoft and Google in the same breath. It’s a personal struggle, but wikis deserve the publicity.

Fear of Flying

The Online Information 2006 conference in London attracted hundreds of people working in content management and knowledge management from traditional sectors, yet the most popular track was Social Software. Old meets new. The interesting part is: old wants new.

Despite this social stuff being popular, there was a distinct concern about it working in traditional organizations. “Most of what people put on a wiki isn’t inaccurate, you know.”, “How do we police these blogs?”, “You are glossing over the problems of these technologies.” … were a few of the reactions.

When Ben Edwards who runs IBM’s New Media Communications group in Armonk, New York headquarters said, during his panel discussion, that most employees use common sense, nothing was more credible. Afterall, IBM has over 300K employees. Ben continually referred to IBM’s legacy and bureaucracy, but also vividly painted a picture of a company that stands for giving employees freedom and assuming employees are intelligent until proven otherwise. Huzzah. If you don’t know the historical values of IBM, this should come as no surprise. There is a principled heart inside the Giant.

On an Atlassian note, Ben stated that IBM has over 50,000 users on their intranet using our Confluence enterprise wiki. Again, nothing was more credible.

This traditional school ‘fear of flying’ was rather pervasive with many conference attendees. On one hand some of these worries like “the inaccuracy of wikipedia” are scary and a bit ignorant. Let’s remember that wikis in companies are private things and about doing work. When an employee creates a page on a wiki that documents some solution she has devised, why are we worrying about accuracy? She is doing the same work she might do in an email, or in a presentation to her boss, or in a phone call to a customer. The wiki has nothing to do with accuracy. It’s a tool for letting others collaborate with her and better the solution.

On the other hand, these fears are real and unless we really grasp them, we will fail in spreading the power of social software. Linda Stoddart from the United Nations told me you cold not bring any of this stuff to the Secretary General and be credible. Yet the next day, Linda presented and said the wiki word. Huzzah. I must email Linda and let her know the United Nations is already using Confluence. ☺