Platforms: What FinancialForce, Xactly, and Hubspot Understand

Platforms – can’t live with them… pass the potatoes.

I know, we all hate platforms.

The crux of the problem is explaining what a platform is and how it works, I can write for ages about the details and go into nitpicking details – and never publish.  The closest I got to it was the post I did when SFDC announced Salesforce1 (the platform, not the message of a mobile client attempt at confusing users).

But the issue remains: how to explain platforms easy and simple?

Then, it hit me as I was sitting at conference after conference these past weeks: use examples.  I collected some of the most obvious ones these past months and I want to share them with you to try to elucidate on what platforms are and how they work.

Defining a Platform

If there was ever a fool’s errand it is to try to get y’all to agree on what a platform is.  I know better than that.

However, before we start I want to give you a short version of  what I call platforms (and what you should also, if you want to be right… ok, ok, just messing with you…).

First a proper definition, but not from Webster’s (who misses the point by simply stating it is an OS – which is a very basic form or platform, but not related to cloud computing), but form Wikipedia (after disambiguation, ended up in computing platform) that says:

A computing platform is, in the most general sense, whatever pre-existing environment a piece of software is designed to run within, obeying its constraints, and making use of its facilities. Typical platforms include a hardware architecture, an operating system (OS), and runtime libraries

Some of the critical pars of this definition are: environment, self-contained, and with specific resources to leverage the environment at least as I read it, but I may be biased. Also, by “hardware architecture” I interpret Cloud Computing in the context of this post and my future writings.

In cloud computing, a hardware / software architecture combination, the platform is the middle layer that provides essential, secure, scalable, and repeatable services that are then leveraged by the SaaS and IaaS layers to run operations.  Think of it as a “traffic cop” that ensures that the right element (data, function, integration point, more) goes where it is supposed and ends up in the right place, after providing it with the right resources to get there.

The easiest way to think about a platform (PaaS) in cloud computing is to look at the requirements:

  • A component of a three tier open cloud architecture (entails being able to communicate with any IaaS or PaaS or SaaS component directly without point-to-point integration) – see figure below

Slide3

  • A collection of functions delivered like a service (see some of the examples in the picture above); if you want to call them APIs, do so – but make sure they are open, discoverable, and secure as services at the very least (there is lot more about this coming in future posts).

I am in awe of the many versions and approaches I am finding (as well as failed attempts).  I will highlight a few, but know that I’m merely pointing you to some of the most mature I found; there are many, many others not included here (I cannot cover everything in one post, sorry).

The Platform-to-Platform Play

FinancialForce.is a very interesting play on platforms, as they are both an application leveraging Force.com (Salesforce1) as a platform and a platform on their own.  Depending on what solutions you implement you are either using a service that is delivered on top of Force.com (Salesforce1) or their own platform that also connects to Salesforce1 (Force.com) to provide additional services.

As you see in the chart above, there is an inherent element to cloud-based platforms that is to connect to other platforms and FinancialForce has done this quite well.  By establishing these connections between platforms they both deliver a value add via  new platform that can easily integrate into exiting ones as well as leverage previous investments the customer may have made.

This is the way organizations will leverage the solutions and power provided them by vendors in the cloud: through an aggregation of multiple services delivered by a myriad of platforms providers.

The traditional role of the vendor as a seller of software that does everything end-to-end is coming to an end and being replaced by vendors that connect platforms and offer services on top of them.

The Leveraged Outcome Play

The second example is something that Xactly showcased earlier this year: a new service based on the outcomes generated by the established service they provide.

If you don’t follow Xactly they have a service that helps organizations manage their compensation strategies and tactics.  They do this by delivering data points showing  what others are doing (anonymously) and use that information, together with real-time performance data, to manage compensation for sales people.

In a world that is dramatically changing the value and purpose of the salesperson, Xactly offers organizations an easy way to manage their performance and to reward the right behaviors with proper compensation dynamically and flexibly.

One of the things that Xactly noticed was that they had access to reams of data about more than compensation: who the people were, how they acted, what they did and didn’t do, what worked and didn’t, etc.  All that data started to show insights that were too useful to be abandoned.  Xactly at first used them to share with their clients, in a non-methodic manner, as casual insights.

Along the way they figured two things: one, the insights could be a  product once they figured a method to share them consistently with customers who wanted to know not only how they compared to others, but also what worked and didn’t for others.

Second, it was not only that specific data that made sense-  but the model.  The model of collecting data, any data, from transactions and operations as part of cloud-provided services.  This model, together with the data and the insights, became the basis for a new service they provided via their existing platform by simply leveraging the outcomes and the results of the other services.

This is what platforms do divinely well and easy: extend what has been done into many different new directions with minimal effort.

The Extending Functionality Play

Another platform example that I noticed recently was Hubspot.  At their recent user conference they announced that in addition to the Marketing Automation functionality they were already offering they would begin to offer more basic CRM functionality (related to Sales and Pipeline management as well as contact management).

This was partly led by requests from their clients and partly by them noticing that the data was the same and if they could add a few more reporting and operations functions to the cadre of services their platform offered they could extend the functionality of their platform – but more importantly do so in a way that delivered what customers wanted to see.

Hubspot focus was not only on the data they could add to their existing database, but more on the functions that their customers could not complete with other offerings as well as extending the functionality of their functional and reporting services.

By extending the functionality of their platform (adding new services) they were able to deliver more value to their customers and also showed them how easy it was to do so, enabling future requests for added functionality to come in to them and they can fulfill them – continuing the cycle.

Other Examples

One more place where I am seeing the rise of platforms play is in the CRM Idol competition.  Now on its fourth year, we are used to seeing the contest showcase the main technical challenges, and solutions, offered by new and starting CRM vendors.

During the previous years we saw plenty of focus on social, analytics, big data, marketing automation, and small medium businesses – but this year we are seeing a lot more focus on delivering all these solutions as platforms or even as services for other platforms.

While I cannot name names yet (as the contest is still underway and I cannot show favoritism) you can see the list of participants and draw your own conclusions.  However, know that I am more impressed by the technology deployment approach via platforms this year than at any other time.

Please keep in mind that these are just a few examples of what I am seeing as there are many other plays I didn’t highlight (but will going forward).

OK, your turn – flame on (I feel so old saying that)… Troll on… whichever you prefer.  Tell me what I missed and what you noticed.  Caveat: if you are vendor touting your own solution, likely that your comment will be “spamatized”.

What do you say?

disclaimer: as with any post mentioning vendors, I want you to know that FinancialForce and Hubspot were never (or are not now) clients.  They either paid expenses for conferences and events, or invited me to dinners and such.  Xactly is a current client.  Some of the CRM Idol vendors are or were clients also.  As always client status is not indication of inclusion, nor is inclusion in this post something I do for them to hire.  I’d be very surprised if they were to hire me because of this short mention in a blog post – but stranger things have happened and if this does I will update this post.

Oracle’s Approach Makes Sense (But It Sucks)

If you follow the conference circuit you’d know that Oracle held its user group conference this past week – Oracle Openworld 2014 was held at the Moscone Center between Sunday afternoon and — well, today officially.

First off, I did not attend in person.  I watched the keynotes from the comfort of my home office and followed the tweets (as well as chatted with some other influencers and analysts who were there, and had plenty of talks with Oracle people before and during the show).  I also have been following Oracle for close to 15 years.

What follows is not an analysis of the show (Dennis Howlett and Doug Henschen did a good job of analyzing that, go read their stuff), but a summary of many of the conversations I had with executives and vendors these past few days about Oracle.  As we used to say in Gartner, you write the note when you get the same question three times from clients – and it has been more than three times.

Two parts to this post to answer two questions.

Does Oracle Approach Make Sense?

It is very easy in this world of $1.2 billion acquisitions and $5 billion ARR to get confused as to what a vendor should do.  We all want to see massive returns and extraordinary (read, all new and incredibly cool) innovation from all vendors.  We all want to have all vendors re-architect their product to address both market needs and innovation requirements.

Unfortunately, no market can support two (or more) large vendors out-innovating each other forever.  The traditional technology adoption curve for any market says that we have between 15 and 20 percent of buyers that are early adopters, lead adopters, or early mainstream.  These are the ones that look at innovative technologies and product and implement them right away – usually looking for competitive advantage.  The other 80 percent or so of the market is mainstream and late adopters – meaning they wait until the wrinkles are ironed out and implement tools and technologies because they work and do something that needs to be done.

Oracle realized long time ago what target market they wanted to serve, and it was not the early 20 percent.  Oracle knows their customers favor easy integration, fully functional, and tested-and-proven technology.  They gladly trade late and safe adoption, comparatively speaking, for bells and whistles and competitive advantage.  They want something that works the same as everybody else – not something that works before anyone else.

And this is what has guided Oracle all these years in their approach to new technologies – they acquire established vendors that are no longer market leaders and innovators, but that have a solid, functioning product that works (for the most part).  In the CRM world itself, Oracle did not acquire Siebel, Peoplesoft, Inquira, Vitru, and their “friends” until they saw their evolution and innovation stall and the market become more commoditized.  That is the perfect entry point for Oracle, since they are looking to provide the functionality (and add revenue in the process) not to deliver innovation.

Oracle’s approach is very smart in that sense: take an established customer base of nearly half-a-million companies, bring tested-and-proven technology solutions to them, increase revenue from the established base five-to-ten percent by selling these solutions, and reduce the costs of delivering those solutions to maximize profits.  Continue to collect maintenance (on-premise solutions) or recurring revenues from hosted solutions (there is no cloud, but that is another discussion for another time – think three-tiers and open, you’ll quickly see why Oracle does not support cloud solutions).

There is a far longer discussion to be had on the size of the customers, risk management, and tailored offers that encompasses Exa-x machines and solution, databases and “platforms”, and applications but this is not the place.  For the most part, this is Oracle’s approach to the market – and one of the reasons they are doing what makes sense: they can generate sufficient revenue from this basic strategy to continue operations and growth ad-infinitum.

So, yes – Oracle’s approach makes sense.  Which brings us to the next question…

Why Does Oracle Approach Suck?

There are three main reasons this approach sucks.

  1. Misdirection and Fear Mongering – This is what Oracle does in relation to the cloud:  The three tier public cloud? Yeah, we could do that – but instead, let me show you this beautiful “new” security-in-a-chip solution that will do everything you need (although cloud-based security has been proven to be more secure than any other method time and again).  If you insist in taking a different approach, one that may make sense for an organization investing in a three-tier public cloud infrastructure, I will have to tell you how scary that world is: you cannot do things without multitenancy else your data is commingled and remote (not true).  Still not convinced? Any solution you will implement is ultimately running my products (database, platforms, analytics, hardware, etc.) underneath, just  but not as secure as they would be in a private cloud we can implement in your location.  Still thinking about going elsewhere? Did you know that without my hardware underneath it all, the solutions are not “engineered to work together”.  Of course, none of these issues matter if you are moving to the cloud – but they do spread sufficient FUD to keep you close by.
  2. Lock In – Now that I convinced you that you must run my hardware, servers, databases and solutions (even mentioning how you can migrate anything you want into my data centers with “the push of a button” as mentioned throughout this past show) you are in.  There is no easy way to get out and go anywhere else.  Now you are one more of the almost half-million customers that will take what I give you (functional products, albeit not innovative or advanced) and will continue to buy from me.  If I convinced you to go the “private cloud” route, even better – moving from a system “engineered to run together” to a three-tier cloud model with open integration is as much of a nightmare as moving from client-server to the internet was in its day.  You are locked-in and living in a “Red Stack”.  Uber-blogger Jon Reed wrote a great piece on lock-in and adoption at Diginomica that you should read also.
  3. Anti Innovation – As mentioned in the section above, Oracle customers are not the most audacious innovators there are out there.  And this is perfectly fine, as they don’t have to be.  However, there is a line that separates offering them the solutions and technologies they want and need and telling them to not innovate.  That  line is crossed when Oracle tells them how bad things are out there, how many horrible things will happen to them if they deviate from staying with Oracle, and how their careers and organizations will fail.  Using misdirection, fear mongering, and adoption lock-in the vendor can then convince their customers to not try new and different, but instead stay with the old and trusted.  In some fields this may be acceptable, but in technology this translates into working into the insecurities of IT departments and CIOs to convert them into anti-innovation hubs that will continue to buy from the established vendor.  Not a good place to be, even worse off as the pace of innovation and technology evolution continues to accelerate.

Now, before I get tar-and-feathered out of town for being mean to Oracle, a caveat.

I am picking on Oracle because they are the latest to do this – all vendors do something similar to some extent.  It is incredibly hard, not to mention almost impossible, to re-architect a behemoth with as many products and solutions as Oracle has.  I recognize that.

However, Oracle is the worst offender in using these tactics to ensure an end-to-end lock-in (hardware to applications) since they are the only one offering the “entire stack”.  Picking on Oracle does not absolve other vendors that are doing the same or using similar tactics.

Caveat Emptor – be aware of what the vendors tell you, and make your decisions based on thought-out, rational conclusions.

As Franklin Delano Roosevelt once famously said – there is nothing to fear, but fear itself.

note: thanks to Alan Berkson for putting up with my un-flushed thoughts earlier and let me use his brain and intelligence to make this more coherent.  If there is something wrong or omitted in this post, it is entirely my fault.  If something good, it was his help.
disclaimer: dang, i posted initially without this – hope you get this.  Oracle is a past client.  SAP, Salesforce, Microsoft are active clients. Inquira was a client, as was Siebel and Peoplesoft in the day.  if i miss someone else, they might’ve been a client or not.  as you can see from the tone of this post – it does not matter :-).  things don’t change because you are or not a client.  and, for the record, i was invited by Oracle to attend Openworld and they would’ve covered expenses by declined – so there is also that to get out of the way.