Thursday, September 6, 2007

Office 2.0: Death of the Application?

From the Office 2.0 conference, this session (named the same as this post) addresses a direct question, which is: Are web-based applications going to replace installed software applications? I'm no pro-blogger, so real-time posting during the event, and providing complete coverage was not my goal here (whew... good thing, since i saved much of this post in draft and now posting almost a day later). The main reason I wanted to blog about this topic was that I have some opinions in this area and at the beginning of the conference had this strong sense that 10 years from now, we will actually think back to traditional shrink-wrapped and vendor-customized installed apps and think "wow, remember that? That sucked." (in fact, I've already thought that). I'm also not going to try to provide a transcript of the session here - just some high level concepts which were discussed - so if I attribute things to specific speakers, it's not meant to be a quote... apologies to the speakers if I missed your point...

The panel, moderated by Greg Ruff, includes Mark Bagley, Danny Kolke, Greg Olsen, Ramana Rao, Rajen Sheth and Frank Zamani

So - Is the traditionally 'installed' app dead to be replaced by the web app?
I don't see a binary answer, as there was for vinyl records or rotary dial phones... but there is clearly a shift to web-based services and software, particularly for business applications. This is not a quick transition by any means, but the pain of installing packaged software and "running it" on your own infrastructure (servers or desktops) is just too painful and time consuming when compared to web-based software. Even the traditional "evaluation period" and eventual procurement through the contract process is painful - which seems to disappear with web-based trial and procurement (although it really just takes another form).

The panel had a few interesting points:
- Users might not care at all about the app (whether it's online or installed on their desktop) they just want to get their work done.
- Users are frustrated by the inefficiencies of installed apps, particularly the persistent issues of upgrading, lack of connection to other users, etc. and are therefore willing to take risks perceived in online apps which have very low barrier to start using.
- IT should be focused (in the enterprise) on making the users within the company more efficient.
- CIOs are challenged to understand and then measure the risks with new web-based apps that their internal users want (or demand). The current mentality includes comfort in internally-stored data and fear of data 'in the cloud'.

Questions from attendees:
Question: History had many cycles of 'lots of products early, then consolidation into larger successful players' - will this current cycle buck that trend?
Olsen: within organizations, there will be some drive toward consolidation, but there will be smaller players with persistent success and real value.
Rao: If you think of it as "Sites" - is it reasonable to think there will only be a few 'Sites' one day?
Ruff: past cycles were driven by the economics - efficiencies in the process. This cycle might not have the same inefficiencies to drive consolidation.
Kolke: There are still many companies keeping books on paper ledgers, and desktop productivity app adoption rates are down for the first time ever which might be indicative.

Question: How does 'coolness' relate to success - in other words (i think) as apps are less cool, will there be less activity in development and will they become less successful?
Bagley: might depend on integration between apps
Kolke: faster cycles have a huge impact on success, since user needs are more quickly satisfied (rather than using 2-years ago requirements by the time software is done).
Sheth: Relevance to users is the key - good software will be successful.
Olsen: Products which are successful (that is, they still sell) will live on (me: I like to call this 'success breeds success')
Zamani: Delivery by software providers also requires strong performance to meet the scale of use.
Rao: There is nothing cool now - that's over already. So the new cool is "usefulness".

Question: (fr Dan Farber) Microsoft can't yet feel the impact of the smaller players, so what makes you confident that your bubble won't burst? What makes you think that the reality is user-created apps, web-apps, etc delivered so differently than the status quo?
Kolke: Integration with existing apps make the Etelos platform relevant. There's more pull from users who need solutions now.
Olsen: We can see what people are building with our product - and if they are building useful stuff faster - and there is traction in spaces that are not well served.
Bagley: companies like EchoSign have a value proposition. Time to market is super fast now and deployment costs are virtually free.
Zamani: Yes, it's tough to compete with the largest companies, but there is an opportunity here to build market share while the big boys wake up.
Rao: asked the audience whether they really feel that the smaller companies are just spinning their wheels.
- - - - end of panel - - - -

me: Any shift in product innovation, including technology products/services, opens a door where the smaller players can innovate and roll the dice (i.e. spend money) on winning customers and becoming a successful, viable business. The prize they shoot for is some exit strategy (being bought by the slower, bigger players who just need that advantage of speed) or an actual continuously profitable business.

[Update: Some similar ideas on the Google Enterprise blog post...]

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