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Wednesday, December 28, 2011

Platform As A Service

9:28 PM Posted by Deepak Nayal No comments
Cloud computing is coming of age. Its increasing and widespread adoption, especially by the enterprises, is not a surprise to anyone who understands its benefits. The consumer side, as expected, had adopted the cloud much earlier, however, enterprises are catching up rather impressively as well. Nowadays almost every company uses at least one cloud-based application in one or the other way. While cloud computing is interesting in general, I found its PaaS (Platform As A Service) segment to be a major game-changer, especially for the enterprises (startups, SMEs or MNCs). 

PaaS is a type of cloud computing utility in which one can get the computing platform and the solution stack - such as the web server or application server - as a service for developing applications. Some of the leading players in this segment have gone even further and can provide pretty much everything you need as a service in a software development project, helping you manage the lifecycle end to end. So what makes PaaS so great? Well, since the early days of programming, developers have been dreaming about being able to only focus on development without having to deal with the fuss of underlying environments. Though middleware stack promised that, it never delivered. Now it looks like we are almost there. With a third party hosting and managing all your development needs, all you are left to do is, well, just development. And this is what makes PaaS a game-changer. 

With dedicated organizations hosting and managing your platform and servers, all you need to do is write some code or get some good developers. For enterprises, adopting PaaS and SaaS (end applications running on cloud) can help save a lot of investment in people, hardware, space and electricity. An efficient adoption of cloud computing can help organizations cut down costs drastically, increasing their bottom line - a rarity these days. These cost saving potentials of PaaS can have a huge impact on the whole IT outsourcing industry. Players in this space need to prepare themselves for increased PaaS adoption as it is an eventuality waiting to happen. Partnering with clients and helping them with the transition might be a better way to handle the situation than resisting or ignoring the change. For startups, PaaS has helped create a level playing field. A small group of smart developers can create a product that can compete with established organizations, because all they need to know is how to write software, the rest will be taken care by a PaaS provider. PaaS has effectively lowered the barriers to entry, and with technology used heavily in every industry and almost every company, old order is waiting to be disrupted. 

To be honest, PaaS is actually old news now. Technology players have already realized the potential of PaaS and with major players, including VMware, RedHat, HP and Salesforce, declaring full-scale war, Gartner had declared 2011 the year of PaaS. But even with major players jumping into this war and launching their PaaS products, the race is far from over. With a plethora of technology platform options and multiple providers for every technology stack, the market is very fragmented at the moment. Startups, for example, are doing fairly well in terms of PaaS products, perhaps even better than some industry veterans. Even the king of cloud computing, Amazon, does not rule in the PaaS segment. From here we can only end up in one of two ways (or probably both), either a dominant PaaS player will emerge, just like Amazon has for the IaaS (infrastructure) layer. Or this segment will remain fragmented with some big players and some sort of inter-cloud mechanism/standard/service emerging along the way to port solutions from one cloud to the other. 

With software becoming a key aspect of our daily life, I believe PaaS will reach greater heights when it will take the complexity out of the whole development process allowing common man to create and launch applications that suite his or her requirements. Though not exactly like that, Appcelerator's Titanium is a product in that direction. It allows web developers to use their knowledge of simple web development tools and technologies for making applications even for mobile and desktop platforms. I found it particularly interesting as instead of forcing web developers to learn new tools and technologies, it helps them leverage their existing knowledge. Future of such applications might have to be a cross between a PaaS and a SaaS, so that even common user can create complex applications using simple and intuitive user interfaces. Salesforce's Force.com is probably a better example of that. And things will only get better from here, the question, again, is not if it will happen but when. Irrespective of the time it takes to reach there, PaaS is a game changer that can disrupt not just companies or industries but also economies by giving entrepreneurship a big boost and allowing companies to improve their bottom-lines.

Monday, December 19, 2011

Simple And Clear

8:40 PM Posted by Deepak Nayal , , No comments
Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.
― Steve Jobs

Every now and then we keep hearing about the power of simplicity and clarity, but no one (at least in the business world) has leveraged that power and walked the talk better than Steve Jobs. His talks and presentations (such as the one below) on being absolutely simple and clear on what Apple stands for have inspired many people. 



We are constantly bombarded with information, messages and noises from the moment we wake up to the moment we go back to bed. There is so much information overload that our brains instinctively reject anything that we are not required to do and is hard to comprehend. It is this fact that requires us to be simple and clear in order to engage better with people. This is especially important to understand from a marketing perspective. With so many advertisements and PR campaigns targeted towards us every day, there are only a few that stick into our head. These are the ones that are either being repeatedly played (very expensive and not always effective, example - look around you) or are very simple and interesting (very hard to do but very effective, example - Apple's 1984 commercial). 

Being simple and clear is probably one of the most effective strategies in the current world. Look at Apple, Facebook, Twitter, Twilio, Dropbox, HearSaySocial - the list can go on and on. But then it probably is not just about being simple and clear, but about being simple and clear to an extent that you "dumb down the user". Let me explain it before you come up with your own interpretation of this. Dumbing the user down does not actually mean making a consumer stupid or going after stupid users, but about making the experience so fluid and intuitive that they do not have to put much effort into using your product/service or comprehending your message. The easier it is for a user to use your product and to get to what he wants out of it, the more chances you have that he will use that product again (obviously, given the hygiene factor that your product actually is useful). 

This simplicity, fluidity and intuitiveness is not a one-off, and needs to happen every time the user interacts with your company. Companies and consumers talk to each other regularly and are in constant dialogue. These conversations happen on various touch points. Companies talk to the consumers in many ways including product [design], websites, user guides, advertisements and price plans. And in the same way, consumers talk back to companies in many ways including product sales, customer support and feedback forums. If you analyze these touch points, you will realize that the ways in which companies talk to their users are more subtle [less obvious] than the ways in which the users talk back. That might be one of the key reasons for it to be harder for companies to being articulate and positioning themselves in front of the user in a simple and clear manner. 

In the age of Facebook and Twitter, getting mindshare has become more important than earning revenue (for sometime, and at least for startups). That is because getting the user base is really hard, but once you get it, making money out of it is much easier. This fact explains the high valuations of these new stars of the Internet. But then again, getting the mindshare is not easy as well. You have to make sure that every aspect of your product is simple, elegant and clear, 'cause in this world of big data, complexity is the last thing you and your users need.

Monday, December 12, 2011

Unstructure

11:10 PM Posted by Deepak Nayal , No comments
As human beings it is in our nature to be uncomfortable with ambiguity and uncertainty. The degree of discomfort and the actions we take to overcome that discomfort vary for each person. Almost all of the actions we take in this case pretty much have to do with structuring - this includes measuring stuff, research, creating models and detailed planning. Human beings, in general, would like to be in control, and putting structure around things helps us be in that state. Doing so obviously has its merits, but I think it becomes a problem when you try to put structure around everything, plan everything, try to put your hands around everything. 

Structure has its merits, but so has chaos. Unfortunately, in the professional world, chaos is considered to be a taboo. Consultants and managers swear by structure. Market reports, research, detailed analysis documents, project planning. Companies try to make sure that everything is analyzed and articulated. We succumb to our natural tendency of putting structure around everything. But the fact is that real world is a lot more unstructured, fluid and ambiguous. While our tendency for planning and structure only leads us into believing that things are under control, it does not actually change things the way they are. And this difference between perception and reality leads to failure of projects and initiatives - bigger the difference, more the chances of failure. I believe that we need to embrace reality and the things that come along with it, chaos, uncertainty, ambiguity, and be prepared to unstructure. 

This disconnect between reality and human desire to be able to put fingers on something concrete has led to failures in many areas. In finance, analysts love DCF (discounted cash flow) and ratio analyses. These are two of the primary mechanisms to value companies. However, in spite of these "powerful" tools, companies still fail in M&As, investments and IPOs. In software engineering, people have tried to estimate development effort, analyze requirements and plan projects to the nth degree for a long time. But software development projects still get delayed, get over-budget and end up with a different kind of end product than asked for. In marketing, companies spend huge amounts of money on market research and still end up with failed products. 

Don't get me wrong. I am not against a directed way of working or structure or models or plans. I agree that these are important. I am against the idea that not having a structure or a plan is bad, that just trying out things is not the right way to go about. Every initiative depends on multiple factors. You can control some of these factors but not others. I am absolutely up for planning to the nth degree as long as all the factors in that initiative are in your control. If that is not the case, acknowledge that you are not in control of everything, do plan but plan in the way that it allows for things to change or fail. This is why I like frameworks, milestones and checklists more than detailed project plans, because you will rarely work on an initiative in which all factors are in your control. 

The stuff I am talking about here is definitely not new. The professional and academic world has been realizing that the real world is much more chaotic than we recognize, and has added elements of flexibility and human elements to many fields. For example, even in a hard subject such as finance, people understand that it is not as much affected by numbers and formulae, as it is by human nature and feelings (such as trust and fear). This realization has led to the growth of behavioral finance. In software, practitioners have realized that traditional waterfall model and estimation methodologies are not very effective. This has led to agile software development methodologies, such as Scrum. In marketing, experts have realized that market research and focus groups do not necessarily provide the correct picture. This has led to use of techniques and subjects such as observational studies and anthropology in the field of marketing. 

Method, structure and direction - these are definitely required for executing projects and initiatives. When combined with a healthy dose of trial-and-error, chaos and experimentation these can do wonders in getting things done. I believe that we need to realize that it is not required that we always have a detailed plan, even in the professional world. That direction, complimented by trail-and-error, can actually prove to be much more beneficial than either of these individually. That sometimes you need to unstructure, in order to do things in the right way.

Tuesday, December 06, 2011

Revenue Models Of The Consumer Web

11:24 PM Posted by Deepak Nayal , , No comments
Thanks to the Internet, we are all use to free stuff now. It is not our fault. Sites such as Yahoo, Google, Facebook, Twitter, Tumblr and Wikipedia have got us into this habit. I am not sure how it started, but now it is hard to think of a successful web based application that does not offer its services for free - unless its business is about selling (e.g. Amazon). On the enterprise side, web based businesses charge their customers for usage, and these customers have got use to it - in fact, they might not trust something if it is offered for free. However, it is a totally different story on the consumer side. Asking consumers to pay for a service might cause the death of that business. 

While this free movement has helped the adoption of internet and is good for customers, many businesses are struggling in getting the consumers to pay. Publishing industry is one of the worst casualties of this free movement. Not many users are willing to pay online to read news and articles, while they can access the information for free on some other site. Collusion might be the only solution to publishing industry's problem but, sadly for the participating companies, that will be illegal.

Scarcity and restrictions lead people to innovate, and revenue models used by web based companies are a good example of that. They will have to struggle making consumers pay for using their service, so they have come up with different ways of doing so. Internet based businesses use various revenue models to make money. While some of these models are more common than the others and some are older, some of these models have evolved in only last few years, thanks to the phenomenal growth of new and emerging platforms. 
  1. Plain Old Selling - You cannot beat this. No matter how much technology advances, there cannot be any substitute for plain old selling. The old knights of e-commerce, Amazon and eBay, still rule the roost. Though, these are being joined by new players, such as Etsy. 
  2. Helping Businesses Sell Their Products - Some of the internet based players also make money by helping other businesses sell their stuff to consumers and getting a commission out of it. Deals and discounts services, such as Groupon and LivingSocial, leverage this model for generating revenue. 
  3. Advertisements - This is one of the most common ways that internet-based consumer applications use to make money, and has been in use pretty much since the initial web portals. This revenue stream is a carry over from the world of media - television and radio - where advertising is the primary source of income. Within online advertisement, search ad market is bigger than the display ad. Some of the best examples of this revenue model are Google and Yahoo. 
  4. Freemium - No matter how good your product is, it is hard to get consumers to pay for it. But if you trust your product and believe that consumers will like it once they use it, you can go the freemium way. In this model, you give the consumers a taste of your product for free and give them access to basic services. Then you charge them for any extra features or usage they want. Dropbox and Evernote are good examples of this revenue model. 
  5. Marketplace For Bells and Whistles - Another way the consumer applications are making money is by helping others make it. While you might not be in the business of selling stuff, you can allow others to leverage your product and do so. Tumblr, the famous blogging platform, allows designers to create and sell premium themes that can be used on its blogs. This model is like a cross between 'freemium' and 'helping others sell their products' models mentioned previously. 
  6. Leveraging Data - Companies have been trying to understand consumers for a long time. The whole marketing function is established in companies pretty much for that purpose only. Any insight on consumer behavior is worth gold nuggets, and anybody or any service that can help get that insight is a godsend. Social networking based tools and services have been most successful in leveraging this revenue model as they are well placed for tracking user behavior on the net (by tapping social and interest graph). Twitter and Klout are some of the services that leverage this revenue model. 
  7. In-app purchases and advertisements - Another revenue model that has become very famous and successful in the recent times is the in-app model. In this model, applications allow users to purchase gifts, tools, etc while using the app. Probably the most successful implementation of this model has been done by Zynga, the social gaming leader. In a different aspect of this model, small advertisements get displayed on the user screen, while the user is using the app. These can be seen in Youtube videos and many smartphone games. The key aspect of this in-app model is that the purchases and advertisements do not come in the way of the user experience, and in fact might add to it.
While new trends and platforms have led to some new revenue models, the old ones are still pretty common on the internet. The ones I have mentioned here are the most common ones, but this by no means should be considered a definite list. I am certain that new models can be added to this list in the future. As technologies and business evolve, so will the ways of making money out of them. In case you feel that I have missed any other prominent revenue models of the consumer web, please do share those through the comments.

[Image from e-marketinginprogress.blogspot.com]