A talk I did during SXSW is up, failing fast for the uptight.
Thanks to the W20 Group for hosting me!
A talk I did during SXSW is up, failing fast for the uptight.
Thanks to the W20 Group for hosting me!
I’ve spent a lot of time over the years working with cloud market-sizings, and occasioanlly on them. They’re always a bit whackadoodle and can be difficult to pull apart. But, so long as they’re consistent year of year, they do give a good intedication of momentum and a comparision to other markets. This is what you should be using emerging technology marketsizing for: just indications of which way the wind is blowing and how strong that wind is relative to other breezes.
All too often, strategy and M&A people (and other “MBA” types who’re doing valuations and finances, plus all the hangers on in the chattering classes) get obsssed with market-sizing as if they’re “real” and start to do things like include them as fundamental parts of their business plan, e.g., “we’re going to capture 1% of the cloud market this year!” The implication there is that if they don’t, they’ve failed…but when you realize how corny the market-sizing are, you realize that basing your yearly plan on an Excel macro is a poor use of time.
With that disclaiming context established, I love finding market sizing numbers. They’re fun once you get enough of them and can start figuring out the relative size of markets. Which is to say: how much money is being spent each year across the world on various types of technology.
Platform-as-a-Service is one of the more tricky markets to size and has spun all sorts of directions over the years. It’s always the smallest of the three aaS’s, but the highest growth. Even worse, most PaaS market-sizing you see is for only public PaaS. I’ve heard that Gartner has consternated much about this over the years: if you insert a simple “r” into it, they have an on-premises category called CrEAP that sizes what, I think, is “private PaaS,” and I believe they’re fixing it up further.
However, the problem with sizing the PaaS market is asking what you’re sizing. There’s “PaaS from SaaS” offerings like Force.com and then so called “first generation” PaaSes like Heroku (also at Salesforce) and EngineYeard. Then there’s hosted development tools (all the CI services otu there) that, for some reason, show up in PaaS market-sizing. But now there’s all the private PaaS offerings that happen to also run as public PaaS (it turns out the enterprise market really likes private cloud as well as public). And then there’s trouble-makers like us at Pivotal who bristle at the notion of being called (just) a PaaS. Layer Docker, Mesos, kubernetes and all those folks in there…and you’re head should be spinning.
The composition of this market has changed dramatically over the years. My theory is that it’s not well “shaken out” (defined) yet and it’ll change more. So, when I get asked for PaaS market-sizing, I sigh a bit inside.
I think the best process is to thinking through a what PaaS is used for and then try to figure out how much money is spent on solving that problem, not the exact technologies used to solve it. To me, that gets to some indication (whether it’s a ceiling, floor, or mid-point, I don’t know) of how much money there is up to grabs if you’re selling PaaS.
As you can infer from my over contextualizing above, I think most PaaS market-sizing is bunk, but this chart a good way of thinking through getting to answer. It compares traditional packaged software and on-premises hardware spend to IaaS and PaaS to show how it starts to erode into “non-cloud” IT. I’m not sure if IaaS and PaaS and public cloud only (it probaly is, which is problematic).
When using this chart, the voice over is something like “tracking this market is difficult at this moment, as any analyst will tell you. I like to use something like this chart as a guide for thinking about it. With PaaS, what you’re interested in is how much traditional IT teams writing cloud-native applications are taking over, and this is one swag at it. Notice that the growth rates are drastically different too: there’s little to no growth in traditional.
The other thing (since most analysts don’t track private PaaS) this suggests is that all the traditional middleware money switches over to all PaaS (public and private) at some point…at least all the “new” money, the growth. Or, at least, that it’s a rough heuristic. It could be less (prices go down with cloud, right? ;>) or it could be more (software eating the world X IT – SaaS = what? == more customer software development at companies leading to more spend on the application development category).
So, if you add up the traditional markets of Appdev and middleare, you get something like a $35-40bn market in 2018 or so, depending how exuberant or dower you want to be, for pubic and private PaaS. Again, that wet-finger-in-the-winding is “bunk,” but it tells you type of money you should think about. Assume that over the next 10 years most “appdev and middleware” spend converts to “PaaS” and then you’ve got something that looks less shitty than the PaaS market-sizing analysts do now-a-days…and more real, I think.
If you’re really interested in PaaS, come to the Cloud Foundry Summit next month, May 11th and 12th, and see how this market is evolving. You’ll hear how companies are using Cloud Foundry to create software defined businesses and get the latest technical details on Cloud Foundry. Register with the code COTE to get 25% off!
(I originally wrote this April 2015 for FierceDevOps, a site which has made it either impossible or impossibly tedious to find these articles. Hence, it’s now here.)
Quick tip: if you’re in a room full managers and executives from non-technology companies and one of them asks, “what kind of company do you think we are?”…no matter what type of company they are, the answer is always “a technology company.” That’s the trope us in the technology industry have successfully deployed into the market in recent years. And, indeed, rather than this tip being backhanded mocking, it’s praise. These companies are taking advantage of the opportunity to use software and connected devices in novel ways to establish competitive advantage in their businesses. They’re angling to win customer cash by having better software and technology than their competitors.
What does it look like “on the ground,” though when it comes to “being a technology company”? I’d argue that the traditional ways we think about structuring the IT department is different than how technology companies structure themselves. To massively simplify it, traditional IT departments are oriented around working on projects, where-as technology companies are oriented around working on products.
Project oriented thinking takes in requests from an outside entity and works on solving an immediate, well understood problem. There’s often a definitive end to the project: the delivery of the new “service.” Project oriented thinking is good for creating an initial version of an application, installing and upgrading existing packaged software, setting up new offices, on-boarding employees, and other things that have a definitive completion date and well known tasks.
When organizing around this type of work, you setup a functional organization that can be assembled to implement the specific problem. Here, by “functional organization,” I mean groups of people who are defined by their expertise in something: networking, server administrator, software development, project management, audit and compliance, security, and so on. These people are typically shared across various projects as needed and usually are responsible for just what they know about. (For a very different take on how to use functional organizations, see Horace Dediu’s discussion of how Apple organizes itself.)
On-top of this, you take a request-driven approach to change management, which defines when to launch a new project or make “small” changes to an existing one (like adding a user). In the 2000s, we fancied up this concept by calling it “service management.”
Once the project is up and running, there may be something called “maintenance mode” which sees IT making sure, for example, that the ERP application has enough disk space available, that new users are added to the application, and that extra capacity is added when needed.
This mind-set is very handy when you’re dealing with keeping a bunch of products from tech vendors up and running. It’s even good if you have custom written applications that are not changed frequently. What’s also great, is that because each project is well defined at the start and has a definitive end, you can measure success and financial metrics easily: how many requests did we handle (tickets closed) this month? did we deliver on time? did we deliver on-budget? is the project profitable (thus, did we pay too much for that software or get a good deal?)
However, two things have been changing this state of affairs, pushing IT to be more exploratory in nature. As a consequence, the structure of the IT department will need to change as well to maximize ITs value to the overall business.
I often joke that it’s been impossible to see a keynote in recent years without seeing the horsemen of the digital apocalypse. These are the cliche topics that seem to come up in every keynote. Two of these lay the groundwork for why the structure of the IT department needs to change:
These two alone create a pull for more custom written software in businesses. It’s fast and cheaper to create software, and competition is relying on that to create new business models that challenge incumbents or, rather, those businesses that are not evolving how they run their business with software. Again: think of all those taxi services versus Uber.
There’s a third “horseman” in the broader industry that’s driving the need to change how IT departments are structured: the rise of SaaS. Before the advent of SaaS across application categories, software had to be run and managed in-house (or handed off to outsources to run): each company needed its own team of people to manage each instance of the application.
As SaaS use grows more and more, that staffing need changes. How many IT staff members are needed to keep Google Apps or Microsoft’s Office 365 up and running? How many IT staff do you need to manage the storage for Salesforce or Successfactors? Indeed, I would argue that companies use more and more SaaS instead of on-premises packaged software, the staffing needs change dramatically: they lessen. You can look at this in a cost-cutting way, as in “let’s reduce the budget!” Hopefully you can look at it in a growth way instead: we’ve freed up the budget to focus on something more valuable to the business. In most cases, that thing will writing custom software. That is: developers.
This is where the shift to thinking like a product organization is vital. First of all, if you feel the need to develop more custom software — as you should! — you’ll need to hire and train more software developers, product managers, QA staff, and related folks. You’ll also want to cultivate an environment where new ideas can be explored, user-tested in production, and then quickly refined in a loop that spans mere weeks if not one week. You’ll need to become a continuous delivery and learning organization. Jonathan Murray has called this type of organization a “software factory” and has explained how he implemented the change while at Warner Music. More recently, books like Lean Enterprise have explained how this type of thinking can be applied outside of “startup culture,” whose concerns tend to be more around achieving a high valuation to get the company acquired or IPO rather than building and maintaining sustainable business models.
Setting up an organization like this requires not only developers, but creating the actual “factory” that they operate in. I think of this factory as a “platform” and the folks responsible for standing up and caring for that platform are a new type of operations staff. They’re in charge of, really, providing the “cloud” that developers effortlessly deploy and run their applications in.
This new type of IT staff has to think about how they add in as many self-service and highly elastic services in their “cloud” as possible. They too are creating a “product,” one that’s targeted at the internal developer teams and which must continually have new features added to it.
Meanwhile, your developers will be arranged into product-centric teams, hopefully working more closely with line of business managers and staff who are helping craft and grow new applications. No doubt they’ll need operations skill on the team: staff who know how to properly architect and operationalize cloud-native applications.
This is where the now classic DevOps mentality comes in: in order to properly focus on a product, the team must be responsible for all parts of that product’s life, from development through production and back. With a proper cloud platform in place and the operations team to support it, these goals are more achievable than if the product team has to start from bare metal, or work with IT through a ticket system.
To be pragmatic, you probably can’t dedicate all people fully to a product and will need to share them. This carries large risks, however, namely, making sure you properly prioritize an individual’s time and realizing that they’ll have a harder time keeping up with fewer products rather than more. Quality and ability to deliver on time will likely decrease. It may seem like an impossible goal, but often in order to stay competitive — to survive — large, seemingly impossible changes are needed
I had lunch with Israel Gat yesterday. Lobster bisque in a sourdough bread bowl, to answer your first question. We were talking about the concept of a “software defined business” (and I was complaining about how HEB needs more of that, if only to get digital Buddy Bucks).
Well, over the next 3 years, I think much of the marketing efforts in tech will converge on exactly that. This is what tech companies will try to sell and the “thought lordship” they’ll try to deploy into the market. I think it’ll actually be to the tremendous benefit of customers, not just a hustle. Soon the egg will become a chicken, and the chicken will start making demands on the egg. Which one is egg and chicken? Indeed! One can never tell the causation directionality in these things.)
Why will tech companies focus on software defined businesses as a growth driver? Well, it’s kind of the only area for growth, at least interesting growth. Keep in mind that if you’re a big, publicly traded company, you have to grow, you need to find new money sources. Last year’s revenue can’t just sit there, staying stable. Otherwise you’re toast because investors will want to allocate their money in companies that are growing, not shrinking (they’ll dump your stock, and but another). This is true for any business, but very true for technology companies.
Here’s my rough sense of revenue streams tech companies will have:
You know, you get a new mobile phone ever 2-3 years. Instead of subscribing to a cable package, you subscribe to HBO Go. (You sort of end up paying the same amount, but who’s paying that close of attention when there’s so new Game of Thrones episodes to watch?) You buy subscription services. Games.
Basically, the “not enterprise” market. This is what most tech press covers and talks about; it’s (sadly?) what we think of as “tech” now.
There’s growth in here, but it’s a totally different space than traditional, let alone “enterprise” tech. Microsoft finally seems to have figured this out, but meanwhile Apple, Google, and Facebook are gobbling up all the revenue and growth…not to mention all the new companies that have come along.
Businesses still need a lot of software, but I’d argue that “systems of record” are probably well saturated at this point and low growth. This used to be the fuel of the tech sector, but if everyone has a system of record in place…how much more more spend can there be there each year? (I’m sure we could look up some IDC or Gartner numbers about single digit growth in these markets.) Not much. One area of interest is shifting over to SaaS, or:
“Well, I guess I need to replace all this ‘legacy’ stuff with cloud.” You know in storage, compute, and maybe networking. There’s lots of hardware and infrastructure software churn here. In the software category, I’d put migrating your on-premises ERP/systems of record stuff to SaaS here as well: moving to Salesforce, Successfactors, etc. In a squishy analogy, things like Adobe transforming from licensed sales to subscription sales.
This is a long term play with lots of cash; for businesses though: do they end up with anything net-new? Have you actually tried to use Salesforce? It removes the hassle of having the manage your own CRM instance, but you still have to manage how your company uses the application…otherwise it’s baffling what’s going on in there. My point is: the company ends up kind of back where it was before the great rip-n-replace, just more optimized IT, with hopefully HTML5 and native mobile apps instead of Flex.
Here, companies are looking to create new custom written software that helps run their businesses in new ways or creates entirely new business models. It’s the thing we at Pivotal target, what you see coming out of the IBM/Apple partnership (mostly – some of it just the next step in the great rewrite the UI every decade journey of green-screen->HTML 1.0->Flex->HTML5->Swift), and it’s what will benefit us people most: companies get new businesses and, thus, growth themselves, us individuals get companies using software more to hopefully make working with them suck less. You know: Uber and all that.
There’s lots of “drag” (secondary spending) that gets to #3 above: you know, you’re gonna need a platform for all that stuff, and the hardware and services around it…but instead of just ending up with the same IT-driven capabilities, you’ll have new capabilities in your business.
So, if you’re a tech company, and you’re looking at the 4 sources of cash and growth above, the fourth option looks pretty good. #1 means competing with Apple, Google, and Facebook and then a dog’s breakfast of lower margin goods below the UI layer. #2 and #3 are good, known quantaties, but probably with single-digit growth, if not tricky waters to traverse in the lower cloud infrastructure layers.
Then you look at the other option: a wide open field of possibilities where you “go up the elevator” and avoid the Morlocks. Large tech companies have to do all of these, of course, but I suspect you’ll see most of the razzle-dazzle spread on the fourth.
Those cigar makers have nothing to do with this, but cool picture, huh?
I often joke that it’s been impossible to see a keynote in recent years without seeing the horsemen of the digital apocalypse. These are the cliche topics that seem to come up in every keynote. Two of these lay the groundwork for why the structure of the IT department needs to change:
Software is eating the world – Cloud technologies and practices have made huge improvements in productivity and costs when it comes to creating and running custom written applications. It’s easier to write and run software now, and the rise in “always on” devices (all those super-computers in our pockets that are on the Internet 24/7) creates a massive foot-print for computation: an endless buffet for software.
Change or die! – with this huge buffet of opportunity, there’s a rallying call for companies to invent new business models that rely heavily on software. This means that most every business has the opportunity to use custom written software to change the nature of their business. Think of the opportunity for Taxi companies to use software to change how they operate, or for the hotel industry to come up with a brand new business model to sell empty capacity…and you’re thinking of Uber and AirBnB. The “or die” part is a rhetorical trick to position this imperative as dire. And, indeed, in recent years studies have shown that remaining on-top has been harder. Change is needed to survive.
As the second points two, these two alone create a pull for more custom written software in businesses. It’s fast and cheaper to create software, and competition is relying on that to create new business models that challenge incumbents or, rather, those businesses that are not evolving how they run their business with software. Again: think of all those taxi services versus Uber.
I’ve talking with an old collegue about pitching a developer-based strategy recently. They’re tryin to convince their management chain to pay attention to developers to move their infrastructure sales. There’s a huge amount of “proof” an arguments you can make to do this, but my experience in these kinds of projects had taught me that, eventually, the executive in charge just has to take a leap of faith. There’s no perfect slide that proves developers matter. As with all great strategies, there’s a stack of work, but the final call has to be pure judgement, a leap of faith.
You know the story. Many of the folks in the IT vendor world have had a great, multi-decade run in selling infrastructure (hardware and software). All the sudden (well, starting about ten years ago), this cloud stuff comes along, and then things look weird. Why aren’t they just using our products? To cap it off, you have Apple in mobile just screwing the crap out of the analagous incumbants there.
But, in cloud, if you’re not the leaders, you’re obsssed with appealing to developers and operators. You know you can have a “go up the elevator” sale (sell to executives who mandate the use of technology), but you also see “down the elevator” people helping or hendering here. People complain about that SOAP interface, for some reason they like Docker before it’s even GA’ed, and they keep using these free tools instead of buying yours.
It’s not always the case that appealing to the “coal-facers” (developers and operators) is helpful, but chances are high that if you’re in the infrastructure part of the IT vendor world, you should think about it.
So, you have The Big Meeting. You lay out some charts, probably reference RedMonk here and there. And then the executive(s) still isn’t convinced. “Eh,” as one systems management vendor exec said to me most recently, “everyone knows developers don’t pay for anything.” And then, that’s the end.
If you can’t use Microsoft, IBM, Apple, and open source itself (developers like it not just because it’s free, but because they actually like the tools!) as historic proof, you’re sort of lost. Perhaps someone has worked our a good, management consultant strategy-toned “lessons learned” from those companies, but I’ve never seen it. And belive me, I’ve spent months looking when I was at Dell working on strategy. Stephen O’Grady’s The New Kingmakers is great and has all the material, but it’s not in that much needed management consulting tone/style – maybe his upcoming book on Oracle will add to it.
Of course, if Microsoft and Apple don’t work out, don’t even think of deploying all the whacky consumer-space folks out like Twitter and Facebook, or something as detailed as Hudson/Jenkins or Oracle DB/MySQL/MariaDB.
I think SolarWinds might be an interesting example, and if Dell can figure out applying that model to their Software Group, it’d make a good case study. Both of these are not “developer” stories, but “operator” ones; same structural strategy.
All of this has lead me to believe that, eventually, the executives have to just take a leap of faith and “get it.” There’s only so much work you can do – slides and meetings – before you’re wasting your time if that epiphany doesn’t happen.
I’m often asked for my perspective on the PaaS market, since I used to cover that as an analyst. For reference, here’s a brief overview. Of course I think Cloud Foundry and Pivotal play a big role in it, otherwise, why would I be here? ;>
Hey, I’ve not only seen this movie before, I’ve did some script treatments:
Chief Executive Officer John Chambers is aggressively pursuing software takeovers as he seeks to turn a company once known for Internet plumbing products such as routers into the world’s No. 1 information-technology company.
Cisco is primarily targeting developers of security, data-analysis and collaboration tools, as well as cloud-related technology, Chambers said in an interview last month.
Good for them. Cisco has consistinly done a good job to fill out its portfolio and is far from the one-trick pony people think it is (last I checked, they do well with converged infrastructure, or integrated systems, or whatever we’re supposed to call it now). They actually have a (clearly from lack of mention in this piece) little known about software portfolio already.
In case anyone’s interested, here’s some tips:
Don’t buy already successful companies, they’ll soon be old tired companeis – software follows a strange loop. Unlike hardware where (more or less) we keep making the same products better, in softare we like to re-write the same old things every five years or so, throwing out any “winners” from the previous regime. Examples here are APM, middleware, analytics, CRM, web browsers…well…every category except maybe Microsoft Office (even that is going bonkers in the email and calendaring space, and you can see Microsoft “re-writing” there as well [at last, thankfully]). You want to buy, likely, mid-stage startups that have proven that their product works and is needed in the market. They’ve found the new job to be done (or the old one and are re-writing the code for it!) and have a solid code-base, go-to-market, and essentially just need access to your massive resources (money, people, access to customers, and time) to grow revenue. Buy new things (which implies you can spot old vs. new things).
Get ready to pay huge multipules – when you identify a “new thing” you’re going to pay a huge multipile 5x, 10x, 20x, even more. You’re going to think that’s absurd and that you can find a better deal (TIBCO, Magic, Actuate, etc.). Trust me, in software there are no “good deals” (except once in a lifetime buys like the firesale fro Remedy). You don’t walk into Tiffany’s and think you’re going to get a good deal, you think you’re going to make your spouse happy.
“Drag” and “Synergies” – not gonna happen on any scale that helps make the business case, move on. The effort it takes to “integrate” products and, more importantly, strategy and go-to-market, together to enabled these dreams of a “portfolio” is massive and often doesn’t pan out. Are the products written in the exactly the same programming language, using exactly the same frameworks and runtimes? Unless you’re Microsoft buying a .Net-based company, the answer is usually “hell no!” Any business “synergies” are equally troublesome: unless they already exist (IBM is good at buying small and mid-companies who have proven out synergies by being long-time partners), it’s a long-shot that you’re going to create any synergies. Evaluate software assets on their own, stand-alone, not as fitting into a portfolio. You’ve been warned.
Educate your sales force. No, really. REALLY! – you’re thinking your sales force is going to help you sell these new products. They “go up the elevator” instead of down so will easily move these new SKUs. Yeah, good luck, buddy. Sales people aren’t that quick to learn (not because they’re dumb, at all, but because that’s not what you pay and train them for). You’ll need to spend a lot of time educating them and also your field engineers. Your sales force will be one of your biggest assets (something the aquired company didn’t have) so baby them and treat them well. Train them.
Start working, now, on creating a software culture, not aquiring one – the business and processes (“culture”) of software is very different and particular. Do you have free coffee? Better get it. (And if that seems absurd to you, my point is proven.) Do you get excited about ideas like “fail fast”? Study and understand how software businesses run and what they do to attract and retain talent. We still don’t really understand how it all works after all these years and that’s the point: it’s weird. There are great people (like my friend Israel Gat) who can help you, there’s good philosophy too: go read all of Joel’s early writing of Joel’s as a start, don’t let yourself get too distracted by Paul Graham (his is more about software culture for startups, who you are not – Graham-think is about creating large valuations, not extracting large profits), and just keep learning. I still don’t know how it works or I’d be pointing you to the right URL. Just like with the software itself, we completly forget and re-write the culture of software canon about every five years. Good on us. Andrew has a good check-point from a few years ago that’s worth watching a few times.
Read and understand Escape Velocity – this is the only book I’ve ever read that describes what it’s like to be an “old” technology company and actually has practical advice on how to survive. Understand how the cash-cow cycle works and, more importantly for software, how to get senior leadership to support a cycle/culture of business reneweal.
There’s more, of course, but that’s a good start.
Finally, I spotted a reference to Stall Points in one of Chambers’ talks the other day which is encouraging. Here’s one of the better charts you can print out and put on your wall to look at between meetings:
That charts all types of companies. It’s hard to renew yourself, it’s not going to be easy. Good luck!
Never mind journalism, it’s industry analysts who are being disrupted.
I keep coming across a new crop of IT industry analysts who end up getting compared incorrectly to journalists. It’s little wonder as most people have little idea what an industry analyst does; it’s not like analysts, hidden behind their austere paywalls, help much there.
People like Horace Dediu, Ben Thompson, and others are experimenting with ways to disrupt industry analysts. They’re using new business models and tools that often seem bonkers to the more traditional analysts wrapped up all warm and tight in their blue blazers.
Their models focus on narrow topics with broad appeal (Apple, vendor sports among high profile tech companies [you can call this “strategy”], and “social”) and they tend to make much, if not all, of their content free. What they lack is the breadth of the overall industry analyst world (they have no opinion on what type of identity and access management or CRM system you might want to use), but that can could be fixed as more “independent” analysts like themselves pop up. There’s also not a lot of “short-listing” (ranking of vendors and products intended to be used by IT decision makers and buyers) that these folks do; this an area where incumbents can easily defend themselves.
One way of looking at it is the “consumerization of industry analysis:” focusing on selling and serving individuals rather than enterprises. Indeed,current industry analyst shops sell mostly to companies and are near impossible for individuals to work with.
While Horace is patient zero here, the best example of this trend in action is Ben Thompson, or “stratechery.” For whatever reason – and his self-proclaimed Midwestern modestly would make him blush at this notion – he talks about his business more and, thus, provides a better view into the business side of this trend.
In the first episode of his podcast, Ben lays out the model he’s trying to execute (and how, you know, the Internet and blogging makes all this possible); he later elaborated on it with his rain forrest layer cake metaphor; and in an even more recent episode goes over how his business has evolved.
How well do these models work? Well, we have some data points from Ben since he’s discussed his momentum by subscriber numbers a few times. Let’s compare it to what I’ve made as analyst over the years to get a sense of what’s “normal”:
This excludes a lot of thing: health insurance is the biggest and other non-cash compensation.
The point is to show that at the individual level, Ben is doing well. His business is performing well compared to what’s “normal” for analysts. The recent growth rate looks even more promising. I actually ended up at the high end of the analyst wage chart (I think). The average is a lot closer to $100,000 the more junior you get.
If this model can be replicated by other individuals , we’ll see the biggest disruption to the industry analyst business since the Web. What the established firms have is marketing reach, brand awareness, and lots of money and time. The first two are hard for individuals to achieve, but not impossible. The last two are harder.
I think there’s a lot of room for Gartner (the mega firm) and the RedMonks (boutique firms) of the world, but in the middle things will get harder. Forrester is always rearing to be a #2, but revenue-wise, they have a long way to go; IDC will probably keep winching the cost-cranks and double down on being Master of the PivotTable. My former friends at 451 Research have a lot of potential, but like all the other folks in the middle, they need to keep honing their strategies and go-to-market. I keep hearing that HfS is awesome, which could provide an interesting case.
With that bucket of points made for the tl;dr crowd, the rest is an extended treatment.
I ran into Nick Muldoon a few years ago at a DevOpsDays (in 2012, right in the middle of my time at Dell) and he paid me a high compliment, loosely quoted from memory: “I always thought you could be the Gruber of enterprise IT.” Indeed, that’s what all my type dream about when we drive past those lottery billboards on the way to the airport at 4:30am: sitting at home, reading news, blogging, and being so awesome that it pays well.
To some extent, I did that at RedMonk; not at Dell, for sure: there’s no talking in public, really, when you work on strategy and M&A. And I did that on the pay side of the paywall at 451 Research. I loved it: writing up what I think about the IT industry targeted at helping my “audience” (we called them “clients”) make better decisions about IT, be it product management, competing, investing, or using IT. (There’s a minority that look towards analysts for entertainment, which is valid, but likely pays poorly.)
In part, that’s what I’ve been asked to do in my new job at Pivotal, except with a Pivotal bent, of course.
Just a few years into it, RedMonk decided to do away with their paywall and ended up showing one path to disrupting the industry analyst market: the idea of providing free analyst reports through blogs seemed crazy, but it worked. James captured the, uh, esprit de corps in the analyst world well in a 2005 post:
I was at a recent event when a well known industry analyst, who used to run a firm well known for writing white papers in support of vendor positions, sat down. I was discussing how blogs, RSS splicing and aggregation were going to change industry analyst and other information-based businesses. They sniffed and said that bloggers had no credibility. This from someone that sold their credibility down the river long ago.
Yup, analysts are a friendly lot…
As with VCs, one of the problems an analyst has is generating enough flow to get the raw materials you need for your day-to-day work: getting people to talk to you enough, frequently enough, and deeply enough to gather all the information you need to usefully pontificate. You need raw fodder for your content creation. Ben alludes to this is another way: you have to create a pipe (or an overflowing Evernote notebook) of content ideas, things to write and talk about…to analyze.
For RedMonk, having no paywall meant that their marketing was done for “free.” The consequence was (and still is) that RedMonk can’t charge for content, it’s all free. Most firms in the industry analyst business charge a lot for content. My last analyst shop, 451 Research, charges a bundle, and people seem to like it: 451 writes great stuff and their large customer base shows that people value it. But, it does mean that 451 needs to do marketing separately; they don’t get those “zero marketing budget” dynamics RedMonk does. Neither model is better or worse, just different depending on what and how you’re running the business. Both models still get paid for consulting, webinars, and a multitude of other things.
Let’s look at three firms to peek into the bushes of the business a little bit.
RedMonk thus differentiated itself from other analyst firms first by making all of its research free (at the time, very novel): it allowed RedMonk to build pull in the market, that is, it made marketing free. It wasn’t easy, and it took awhile, but it worked.
Their research topics matched this structural approach as well, namely:
They still do that and do it well, along with some of the usual analyst business models (like consulting, webinars, events, etc.)…but all of RedMonk’s activities revolve around knowing about the new shit sooner than the next analyst and being able to explain how to fit it into client thinking. Their events business (launched after I left) looks like an an adjacent business to the “knowing what the fuck we’re talking about” strategy: the tried and true come “hang out with the smart folks and drink your face of” business model.
RedMonk is cheap compared to other firms. The entry level is $5,000 for startups, and goes up from there. Companies like IBM, SAP, and Microsoft pay a lot more (and get a lot more!) but still get a really good deal compared to what other firms charge. You can check out their client logo page to estimate their revenue if you do a little estimating for the larger account sizes and Excel swagging: not too shabby, eh?
451, structurally, is similar to other analyst outfits: there’s a paywall for most everything. As with any analyst outfit, 451 does paid consulting, webinars, events, and other usual marketing driven stuff. 451 also does data center planning (they acquired The Uptime Institute some time ago) and has some interesting data-driven businesses that are being marshaled into proper quantitative analyst products. 451’s key differentiation is mixing its scale with the “the new shit” focus (perhaps a bit less bleeding edge than RedMonk, but not much), all stuck in the speed blender of publishing velocity.
451 seeks out new technologies, not old ones, and writes a lot: each analyst has to write somewhere between 40–60 reports a year, basically one ~1,500 word report a week…not including other deliverables. For the most part, if you brief a 451 analyst they’ll write a report on you, vendors love that and it helps with content flow (and gives analysts inbox heart-burn). I was terrible at that cadence coming from the RedMonk school (which emphasizes consulting, which I did a lot of at 451 instead of writing), but the best performers at 451 rarely take a briefing that resulting in no report being written.
451 is slightly cheaper than larger folks like Gartner and much more expensive than RedMonk. I was delightfully shocked at how much 451 charged coming from RedMonk; which is more a reflection of how cheap RedMonk is (I’m not sure they’ve raised prices, at least at the entry level, since 2006 when I started there – great for clients!). You get a lot more content, of all types, however, from 451 than from RedMonk due to 451’s sheer analyst bulk and core process of weekly report writing.
You’ll recall that my personal revenue was much higher at 451. I think that’s a reflection of the “leverage” a larger group of analysts can have: selling the same thing (reports and knowledge) over and over more.
Gartner is giant. It has breadth and has captured much marketshare. In analyst sales calls you often hear a variation on this:
Well, we’re signing up with Gartner because we have to, and IDC next because we need their PivotTables…the rest of you get to fight over what’s left (want to write a white paper for me?).
Gartner is really good at being the Microsoft of the analyst space…and I mean that as a compliment.
One of the key activities they do is ranking vendors. That may seem trivial, but it’s huge. Gartner tells you what the safe bet in IT acquisition is. It may not be the growth bet, or even the anti-disruption bet for your industry, but it’s the safe bet. And really, with the way most people use IT, that’s all they want. People don’t want to be Uber, they’re forced to compete with Uber, and they’d rather Uber didn’t exist at all.
If this beguiles you, think about your own buying habits outside the realm of computers. Do you prefer to buy your building materials at Home Depot, or some experimental shop on the side of the road? Like lumber and Shop-Vacs, most people look to computers for a function, not a complex belief system (I could have typed “paradigm”), let alone putting a business strategy in action.
(We at Pivotal like to think we help companies who are wise enough to take the first mover advantage when it comes to using IT to gain competitive advantage. This is shockingly not everyone in the world, which is fine: so far there’s been plenty of wise customers out there.)
Throw in their relative scale, and Gartner is in the hollowed “don’t fuck it up” position.
Gartner is expensive, from what I’ve heard and encountered when I’ve been on the vendor side. However, depending on what you need their content is good and the ability to influence (that is, educate, not make them parrot your messaging) analysts through working with them is nice. The IIAR seems to like Gartner, that group of analyst relations folks having ranked Gartner as #1 most every year since 2008 (it’s interesting to note that individual analyst winners are much different). Enterprises seem to like Gartner a lot as well from anecdotes I hear.
(See more analyst shop rankings from Kea Company’s 2014 survey if you like that kind of thing.)
The new (or “new new,” if you’re RedMonk and crew) crop of analysts follows the “make all the good stuff free” rule of having no paywalls (though Ben Thompson is following a sort of open core model). And in making all that stuff free, they’re doing much of the type of work that industry analysts do now, mostly of the qualitative sort. Horace gets into forecasts and market-sizing a bit, actually, which makes him even more of a threat; the other folks don’t seem to spend time on that. (Of late Horace has been mixing in market numbers from traditional analyst shops as well, but he also doesn’t do surveys.)
Again, the reason this new crop of “bloggers” are threatening to industry analysts is because they’re serving some of the same purposes, with much of the same tools and outputs of traditional analysts. And for those analyst activities they don’t currently do: it’s not too far fetched to think that someone soon will. The core differences are similar to previous disruptors (RedMonk and 451 – see, that’s why I outlined them above, all you tl;dr ding-a-lings!), but with some tweaks, namely:
Most of these analysts have a very narrow focus that appeals to a mainstream market. One individual can only cover so much, but if there’s a large audience for that topic, it will suffice.
Horace ostensibly is the world’s premier Apple analyst. That’s a bold claim as I don’t read any Apple analysts you have to pay to read, so maybe there’s some better than him locked behind paywalls; at the very least, he’s a big deal for his size. As a side effect of being an Apple analyst, he covers the mobile space in general. There’s two more tricks for him that build off this seemingly narrow focus:
The combination of Apple, “PC of the future,” and “innovation” all amounts to a very large “audience.”
(Recently, Horace went to go work for a think-tank; it’s hard to tell if that invalidates some of the “this independent blogger-cum-analyst thing is a thing” thinking here or not.)
While Ben Thompson started out seemingly as another Apple/mobile analyst, I’d argue he’s become more of a “third platform” analyst, discussing how the “consumerization of IT,” is effecting the tech industry.
This narrow focus means that both (and most of these new types of analysts) cover “vendor sports”: they don’t give buyers advice about what products and services to buy, they instead tell you how various tech vendors are doing and explore the strategic possibilities of new types of technology.
There are very few of these new analysts that are prescriptive when it comes to buying. I’m not sure why, but I’d theorize that it has a lot to do with the cost structures of doing such work (in the cycle time of analysts learning, collecting epiphanies, publishing, and then collecting money form clients for sharing the results). This is a large part of why I think Gartner’s scale and established position is and will continue to be hard to beat, head on at least.
There are some challengers here:
Once these new bloggers move beyond vendor sports – if they can – and start recommending what to buy, the dynamics will change a lot. Until then, they’re nibbling at the industry analyst business…but that’s how it all starts.
On that quest to find an enterprise Gruber, there’s been a rash of sites of late that go for that. There’s still a giant gap in the market for good enterprise tech coverage.
I watch these sites closely to see how they pan out and if they fall into the usual journalistic traps that start to preclude good analysis.
What you’d really like to see is some dramatic business model hacking in the mid and small section of the industry analyst market. What would it mean to have a Ben Thompson or a RedMonk approach at a place like 451, or Forrester even? Those shops would have huge cultural issues to deal with (analysts are, ironically, a lot who’re the least interested in doing new things in their own processes: they hate changing), but the established brand/reach and capital (in money and time) those larger firms could bring to the strategies of the micro firms would be interesting.
The problem with the big shops taking in the blogger-cum-analysts is that big shops don’t like to create rock star analysts. The rock stars leave to become independent because they can make more money, or, at least have more freedom. They, like me, also get snatched up by vendors who can pay much more including something rarely seen in the analyst world: those mythical stock options which could worth anything between the title for a large house, the cost of a college diploma, or pack of novelty cup-cake papers.
Larger firms are better positioned to cement their position by upping their game by deeply evaluating and short-listing technologies. There are two examples right in front of us: OpenStack and Docker. Both of those vacillate between IaaS utopia (sometimes people come down from their buzz and realize that Docker often aspires to be a PaaS too) and shit-shows cracking in tire-fires all the way down.
Someone like a Gartner has the time, money, and (potential) authority to run labs to test technologies like these out and give solid recommendations on what to use and not use…per business use case, even. To quote the meme, one does not simply build an enterprise cloud…so how could you expect anyone who just creates PDFs about cloud to actually be credible?
With all this glee, you may be wondering why I’m now at a vendor. Good question, as they say when they’re buying time to think. The core of it is that my fixed expenses are too high. I have a family, a large house, and even a new dog (I resisted as long as I could – promise!). And, I’m the single earner for all that.
While I would love to bushwhack my way through this emerging analyst jungle, I don’t want to Mosquito Coast my family; and let’s be honest, myself either. The warm, bi-weekly embrace of a vendor is very comforting. So, like the analysts themselves who observe from the sideline, I’ll be eagerly watching how the industry analyst sports-ball brackets play out.
Last year I finally qualified for American Airlines top frequent flyer status, Executive Platinum. It was really a “hack” due to special programs AA had out. Over the summer and fall, there were several ways to double up on qualifying points. If it weren’t for those programs, I wouldn’t have made it.
Having been at Gold and the Platinum for several years, I’d enjoyed many of the benefits, primarily:
Executive Platinum has all of that, except that the upgrades are free, and I get them nearly every time. Nowadays I fly in first class frequently. This means boarding first, free drinks, and a meal.
Of course, there are some customer service benefits that I don’t always know are happening, but suspect are. I’ve been able to hop flights pretty seamlessly, booking earlier flights to get home.
I primarily travel domestically, in the US. There’s an international travel benefit of getting access to the top level lounge which I haven’t checked out yet. Though, once your gold or platinum you can go into oneworld partner lounges, all of which are excellent compared to the American-cheap Admirals Lounge.
Oh, and I got a luggage tag.
Next year, I’m petty sure I won’t qualify as I only hacked my way in this time and am trying to travel less with our son around. If I got some international flights, maybe, but that doesn’t happen too often.
My next goal is to get lifetime Gold. You can do this once you earn 1 million miles through flying, credit cards, bonus miles, etc. I’m about 180,000 miles away, which is a lot less than you’d think.
What kind of shoes should you wear when you’re traveling? Most frequent travels like slip-on shoes, sandals, or something else that’s easy to put on and take off. I’ve begun to question that theory, though I still operate under it.
There’s one, small moment in every trip that defines what you can take with you: the security gate. As mentioned in reference to the 3 oz liquid limit here, there’s something absurd about the whole security gate deal at the airport. Of course, one never really knows how well something is working; it’s much easier to know how well it’s breaking. But, let’s set aside the usual TSA griping for people who do it better. As ever, our job here is to simply help make frequent travel easier, not boil the oceans.
Ever since that guy tried to blow up a plane with his shoe, in the States we’ve had to remove our shoes when going through the security gate. You have to X-ray them, you see.
Now, your goal at the security gate is to get through as fast as possible. Not only because you don’t want to spend time there, but because the longer you take the longer everyone else behind you has to wait. Being courteous is the rule for me when it comes to travel: most everyone else is either clueless or being a dick at airports, which aren’t two roles I relish playing.
To speed up your security gating then, you’ll probably want shoes without laces. “Slip-on shoes.” This way, you can quickly take them off and quickly put them on. Also, this minimizes the amount of time you have to walk around in socks, which is sort of the ultimate symbol of what we’ve let ourselves become at the airport, not to mention “dirty” for people who worry about that kind of thing.
I’ve had two pairs of these slip-on shoes: a casual-fancy pair of Doc Martin’s and a dark brown pair of Steve Madden shoes. It’s easy to find good looking slip on shoes that you can wear through the rest of your trip. They’re actually good for at-home use too: they’re so quick to put on and take off! (Who has time for laces?!)
Additionally, there are some who enjoy taking their shoes off on the plane. Indeed, if you sit in business class on American Airlines (and above, I guess), they give you a little bag to put your shoes in and a pair of socks to wear.
Personally, I’m a little wary of people taking off their shoes. I’m at the top of that list. I can see how it’d be great, but one often can’t smell their own stink, so how am I to do if my unsheathed feet are stinking up the aisle? Nonetheless, taking off your shoes on the plane is a sort of easy luxury for many, and I don’t hold it against them.
Of course, if you’re going to be going to the gym while you’re travel (a recent practice of mine that I highly recommend), you’ll need another pair of shoes, some sneakers. Packing sneakers in a carry-on bag is a bit tough, though certainly possible. And you might also be tempted to wear your lace-up sneakers while traveling and put the slimmer, slip-on shoes in your bag.
Of course, it’s easy enough to setup your lace-on shoe to be a slip-on one: you just keep the laces loose enough. This works well with Converse and skate-shoes, maybe not so much “real” tennis shoes.
All of these considerations aside, I’ve been thinking of late: I don’t want to drive my shoe choice by the dictates of the security line. In reality, most shoes I wear, even with laces, I tend to fix up so I can slip them on and off rather than lace them up each time. But there’s other options, like boots. Boots are not easy to just slip on and slip off, you sort of have to be sitting to remove and put them back on.
At the moment, I’m perfectly happy with my slip-on shoes – like I said above, I wear them all the time, traveling or no. But next time I look around for shoes, I don’t think I’ll let travel considerations enter my mind. It’s too weird – maybe too disempowering in a rich-and-privlegaged way – to think that any of my decisions is driven by such a small moment in time as the security gate.
Undoubtably, the best tip the frequent traveling is ever going to get is: never check your luggage, always use a carry-on. In the US, you can actually carry-on two bags: one of a purse, laptop bag, or other so-called “personal bag” and a carry-on bag/suit-case that fits the airlines allowed sizes. For most frequent travelers, this means a laptop bag and a piece of small luggage.
There are times, of course, when its not a good idea to use a carry-on like long trips that require more space than a carry-on bag or the fact that some people simply prefer to check luggage.
Those exceptions aside, here are the reasons it’s good to avoid checking luggage:
Of course, there are disadvantages, primarily having to lug around an extra bag and find overhead bin space for it.
The overhead bin space problem is taken care of if you have status on the airline and are one of the first ones to get on. Also, most airlines will waive the checked bag fee if you have status. American Airlines, the airline I fly on, applies in both cases.
Lugging around the extra bag is at the center of one of the classic frequent flyer arguments: do you use a shoulder bag or a suit-case with wheels, roller-bags. It seems like there’s some pragmatic machismo for shoulder bags: they both give you more space and have that “I’m not a lazy roller-bag person” feel to them. As someone who primarily uses a shoulder bag (a Patagonia MLC, thanks to Stephen O’Grady’s recommendation), though, I think roller-bags have their place.
Shoulder bags are more flexible and easy to fling around. And if you’re taking small, 1-2 night trips, you actually will pack less bulky with a shoulder-bag. For longer stays, shoulder bags also encourage you to pack light which most people, myself included, can use all the encouragement I can get: I tend to still always pack one out-fit too many.
On the other hand, if you have to carry a lot of equipment, or extra shoes even (sneakers are bulky), the shoulder bag can get too heavy if you’ll end up having to walk around a lot. I do a fair amount of video for work, so I’m always traveling with a tripod, video camera, microphone, and associated wires. Those ad extra weight that just barely fit in my shoulder bag. Nonetheless, I’m usually only walking to and fro the airport, in the airport, and then from car/cab to hotel room with the bag.
However, sometimes you have to walk a lot more than that, like, when you go to Las Vegas. Las Vegas, though a concentrated frequent flyer destination (it’s all on the strip) requires a lot of walking around to get from the airport to your hotel room. Once you get out of the cab, you’ll have to hike to the front desk. Then you’ll have to hike through some hallways, through the casino, up the elevator, then around some more hallways to get to your room.
In cases like that, a roller-bag starts to look nice.
Whichever one you use though – shoulder bag or roller-bag – try your best to avoid checking a bag. If you’re a frequent traveler, it’s the kind of thing that’ll pay off all the time without you noticing: your bag will always be there right with you, instead of in Milan, and you’ll save time in lines checking in your bag and getting it at baggage claim.
Part of traveling now is the liquid bag. While you can take as much liquid as want if you put it in a check bag, if you’re not checking a bag (which I recommend for all business travel, if not all travel of a short enough duration), and bringing all your stuff through security, you have to follow get yourself that little liquid bag. The TSA has all the details on the regulations up, even a little wallet card for the wallet-stuffers out there
Sure, we all know these rules are absurd and there’s a whole cottage industry in the press when it comes to making fun of the TSA. For the rest of us who just want to get home sooner and fight The Man from the comfort of our home-ground, here are some tips.
You want a sturdy bag that’s not going to rip up easy and that opens and closes quickly and easily. If you’re traveling as frequently as I do, you’re going to go through a lot of these bags, esp. if they’re flimsy. Also, when you’re unpacking or packing up your stuff early in the morning, the last thing you want to do is fuss with those annoying plastic zippers on the tops of cheap zip-lock bags.
Instead, I use bags like the one pictured above: a quart-sized “freezer” bag with the little plastic zip-helper do-dad.
There’s no one brand that I’ve found better than another. I’ve bought over-priced Whole Foods bags, Hefty ones, and all the rest. They’re all the same, the price is just different.
Now, you’re still going to go through about 2-3 of these a year, maybe 1 a quarter if you over-pack the bag and have container corners puncturing the plastic. Also, if your dogs get ahold of them, you’ll get some holes in them ;>
As bonus, these bags are also good for packing other things you bring, esp. stuff with cords that might unravel like travel headsets.
While you can buy all sorts of “travel” sized (3 ounces or less) toiletries, you should really get your hands on little travel containers. You’ll save money and be able to take whatever stuff you want. This doesn’t apply across the board: toothpaste and shaving cream are esp. hard to re-container.
I have 3 such custom containers in my little bag: my conditioner, my face soap, and my hair-gel (I don’t use shampoo, see here). For the conditioner, I use a squeeze bottle, and for the face soap I use a little squat container with a screw top.
The hair-gel is a recent addition. I used to just carry the whole pomade container, and while TSA people never harassed me about it, I noticed that is over 3 ounces. The pomade I use is expensive, about $13-16 a puck, and I damn sure didn’t want to toss it in the name of absurdity. Also, the container was way too big for the little bag. So, I got Kim to give me one of her little make-up discs, which I scoop about 3-5 days worth of pomade into. It’s worked well:
After slimming down the container, I have plenty of room in my little bag and I think it’ll rip less often.
As you can see, I also put toothpaste in there (a tube I picked up at a hotel, though you can get plenty of good travel sized tubes anywhere) and my shaving cream (a little travel size Barbersol: cheap and effective).
I also put my razor in the bag, just to have it all in one place and keep it from banging around in my bag. Toothbrushes are usually way too big to fit in the bag. I ended up getting an ultra-violet light bacteria killing toothbrush holder gee-gaw for Christmas (the Violight iZap UV Toothbrush Sanitizer to be exact), so I’ve been using that to carry the toothbrush.
Finally, for the frequent traveler, it’s worth considering where and how you pack your little bag. It’s one of the key items you have to fuss with when you go through the security gate (others being your shoes, laptop, coat, watches, phones, and other metal stuff). I always pack mine at the top of my shoulder bag, on one of the corners.
This way, I can unzip one of the shoulder bag’s corners, pull out my little bag and quickly put it in the bin for scanning. I leave the corner unzipped on it’s journey through the x-ray machine, and then when shoulder bag and little bag come through the other side, you can quickly stuff the little bag back into it’s special spot.
Hotels always have check-out times if either 11 AM or noon, mostly 11 AM for my slow moving self. Here’s a tip though: chances are you can just call up and ask for another hour, sometimes two.
I’ve stayed up to 3 hours later, but it’s usually just 1. The core problem is usually around having a work meeting scheduled early and needing time to pack up.
If you’ve been out late the night before and have to get up at, like 7am for a 7:30am meeting (wake-and-work is good skill to pull over from college for business travel) the last thing you want to do is pack your bag. Also, then you have to carry it around and give the bellhop another buck – good luck gettin’ a receipt for that, you cheap bastard.
The last time this happened – while at Lotusphere this year – I called up and asked for a check-out extension and was given it because I was a Starwood Preferred Guest member. That’s the frequent traveler program the hotel had. I don’t have status in it or anything, but it made me think that it can’t help to sign up for all those programs for these little things: stay a few hours later.