Outliers -- worth reading

I just finished reading the new book by Malcolm Gladwell (The Tipping Point) named Outliers -- The Story of Success. A quick read and good food for thought. Anyone out there that thinks success comes only to those that work hard are smart and have innate talent should read this book.

One very interesting story is about NHL stars from Canada...eveyone in Canada thinks that only the most talented and hard working young hockey players make it to the NHL - pure competition produces the best, right? Well it just happens that 90% of the Canadian players in the NHL are born in the months of Jan, Feb, March, April...an odd fact if you believe hockey success in Canada is really based upon pure competition, talent and hard work. To find out why this odd statistic exists you will have to read the book -- but it shows clearly that there are other factors that come into play when you examine how people become successful. Maybe there is a little bit of luck involved too...luck of circumstance, timing, arbitrary rules -- like which month youth hockey picks as the age cut off for selecting and grouping teams.

With that said...no one is successful without working hard!!! And there are some GREAT examples of this lesson in the book as well.

It's a quick read and certainly gives you something to think about.

OSS Product Sales models

Been doing a lot of reading since, I "retired" from my GM role at Progress, and it's interesting how many blog posts there have been regarding the sales and marketing models lately. I find it interesting because I've assumed that most companies have moved to some form of low-cost selling model where the community website, and telesales are the primary vehicle for capturing customers and subscriptions -- take a look a the latest quarterly results from RHAT to see how important that model is to cost of sales. Yet many companies are still trying to lead with a direct sales model or a modified version "pods" where there is reliance on lots of SEs and direct sales calls for maturing a prospect (vs using the community resources and website content found with most successful OSS products). Is this happening because some OSS products require the hand-holding? Or is it because some organizations don't worry about the cost of sales because they have other products to sell along with the OSS product -- as value added add ons? Or is it a case of sales management not believing a product can be sold in any other way than the direct model?

What ever the answer is, it's clear that the market is still maturing...the low-cost model can't be used exclusively for sure, large accounts require hand holding by enterprise sales reps...but these customers are the top 10 - 15% not the majority. If you want to capture full potential of the market using OSS products you must be able to acquire customers in a low cost and low touch manner. Using the direct model (where the inside/outside/SE ratios are close 1-1) will not allow this to happen.

FUSE Team @ Progress Software

It's been a long time since I blogged about anything related to the FUSE team because my role at IONA prohibited me from publicly weighing in on all the speculation regarding IONA's future. Well I am happy to say the silence can now end because the acquisition of IONA by Progress Software is complete. What does this mean for the FUSE team? In a nutshell, it's great news. Progress has kept the team in tact and is moving forward with the FUSE product line by investing more in R&D and community resources which will benefit not only FUSE customers but the broader Apache Software Foundation. FUSE customers can rest assured that the same quality of FUSE products they have come to expect will continue to be delivered to the market, and these releases will be backed by an even larger and far reaching professional services and enterprise-class support organization. So if you are a FUSE customer today, or a user of one of the Apache Projects underlying FUSE products (ServiceMix, ActiveMQ, CXF, Camel) you should be excited about FUSE being part of Progress Software. ASF community involvement and commitment will make the ASF projects better and stronger, and users wanting to get the "best of both worlds" -- community developed software, backed by enterprise-class support, services, and training -- will all benefit going forward.

BTW the answer to the most popular question these days is: Yes. we ARE hiring -- engineers with ASF experience in our favorite projects, and sales people!

Customers are Great

A few weeks back I spent time on the road visiting customers. It always amazes me how much you can learn spending one or two hours with a customer, asking questions and doing a lot of listening. What I learned during this trip was:

• Vendor independence is very important. End users have really had it with vendors and if there is an opportunity to establish a little independence they will take it. Customer’s adoption of FUSE and/or the underlying Apache projects(ActiveMQ, ServiceMix, CXF, Camel) see open source software as one way to do that.
• Cost reduction does not mean free. All customers are trying to reduce their costs but they do not expect software to be free. Be it SaaS or open source customers are willing to pay if the value is clear…they are DONE paying for large stacks where only a fraction of the capabilities are used.
• Open source can be used to achieve both cost reduction and vendor independence…across almost an entire IT operation. One of the customers I met was a large retailer in the UK that has done an amazing thing…they have completely switched their IT systems over to open standards and open source products in the past 3 years. Really amazing stuff…
• desktops moving from windows office to open office
• Netscape to Firefox
• Netscape Mail to Gmail
• Progress DB to MySQL
• Progress 4GL to Java
• Various operating systems to Linux
• ERP system to and open source ERP system (sorry can’t name this one)
• CRM system to SugarCRM
• MQSeries and SonicMQ to FUSE Message Broker

Now they have a large pool of developers to draw from when hiring because they are using popular well known products across all their infrastructure, they have great retention of employees because they are working with current tools, they have reduced their costs of software across all their operations, and they achieved independence from one of a couple of vendors that gives them confidence in their future costs of IT.

So…this is why I think customers are great -- they make vendors better by keeping us honest.

Open Source Think Tank 2008

Last week I attended the Open Source Think Tank event hosted by The Olliance Group and DLA Piper. There were 100+ invited guests including approx. 40 CEOs from companies with open source offerings and strategies. The companies represented, ranged from startups such as SpringSource and Hyperic to names we all know and love -- Microsoft, IBM, HP, Oracle and Adobe.

Some observations and take aways from the 2 days of conversations:

• Community is king! Open Source Software is about the community, and this doesn't only mean contributors...it means consumers of OSS projects as well -- in fact, the community of "consumers" is arguably the most valuable asset to an OSS project
• Enterprise customers are increasing their adoption of Open Source Software across a wide range of software product categories -- however this adoption is still in it's infancy from where it will ultimately be once key barriers to OSS adoption are addressed

• License education

• Viable vendor support and productization

• Clear value proposition

• Project and Product maturity

• There really is no such thing as an open source business model

This last "take away" may be a bit controversial so let me explain. It occurred to me half way through the event that most of the issues and concerns I was hearing were no different than what I heard when the internet hit our industry up the side of the head. Today it would be silly to call yourself and "internet" company if you were a vendor -- and you certainly wouldn't tell anyone that you have and "internet" business model. The internet changed our industry but not by creating a new category and new business model -- but rather by changing the way we go-to-market, acquire, retain, and service customers...across all industries. A retailer is still a retailer before and after the internet, same for manufacturers, and service companies. The companies slow to react to the internet lost an opportunity to use this great new tool called the internet for their businesses. The other thing the internet did is create a new tool for new entrants in existing industries -- Amazon, eBay, Google...

I think Open Source Software is exactly the same as the Internet when talking about the impact on our businesses, as software companies. Open Source Software is a great new tool to go-to-market, acquire new customers, and create a loyal and vibrant user community for our products...but a new business model? The companies at Think Tank were not really Open Source companies with new business models they were CRM, Database, Reporting Tools, and Integration Infrastructure software companies. Each of these companies needs to understand their domain, know the difference between users, champions, and buyers of their products, and have a good plan to meet the expectations of these different constituents before, during and after the sale. Some of these companies receive revenue from consulting and training, and some from subscription support, and others are really media companies (SourceForge) that get their revenue via advertising -- are these really new business models in our industry?

What IS different is how this new tool called Open Source Software is used to achieve our ultimate goals of being a successful software companies. How a community is built and kept vibrant, how we acquire customers, our vehicles for revenue (consulting, training, support and no license), and how we approach product development are all different and can be a very powerful differentiator in the markets we all compete in. The most exciting thing about Open Source Software for me is the very real possibility of new entrants and dominant players emerging in existing industries because of their strategic use of OSS -- which one of these Think Tank companies will be the next Amazon of their industry?