What Do You Care What Other People Think?

Architecture Strategies for Catching the Long Tail

Fred Chong has completed his work on the overview of the architectural guidance for building Software-as-a-Service (SaaS) applications on Microsoft infrastructure.  If you haven't seen it yet, check it out.

Fred spent several weeks in the field with SaaS providers who have built their applications on Microsoft in order to understand the key issues core principles in building a scalable, multi-tenant on-demand environment.  Many of the companies they worked with are startups managed by the Microsoft Emerging Business Team (EBT), and I had the privilege to connect with some of them.

The EBT is actively reaching out to and working with SaaS providers building on the Microsoft platform in order to improve their market exposure and business relationships.  If you are interested in connecting with the EBT, check out their SaaS page and drop a line to SaaSMS@microsoft.com

Open Source Strategy at Microsoft

I've been quiet on this blog for the last few months because I've taken on a new role at Microsoft: Open Source Technical Strategy.  At this point, some of you are thinking:

a) I'm joking
b) I'm crazy
c) I've joined a dark conspiracy

But in fact the truth is:

d) none of the above

As Director of Platform Technology Strategy (official title), I run the Open Source Software Lab at Microsoft, where we have hundreds of physical and virtual servers running 40+ distributions of Linux, 12+ variant of Unix, and several versions of Windows.  The research projects we do run from testing interoperability of network protocols like IPSEC and IPv6 between Linux and and Windows technology, the user experience and technical capabilities of HPC projects like ROCKS and Ganglia, to the broader attributes like size of developer base and changes in the development model for different Open Source projects.

We're also working with JBoss and SugarCRM on optimizing their open source applications for Microsoft infrastructure like Windows Server and SQL Server.  This has been fun, rewarding work that has helped to demonstrate the truth of our statements about working with Open Source.

Finally, I'm active in the Microsoft Shared Source Initiative, where I am responsible for Technical Strategy.  We are seeing some great work from inside the company - teams from all product groups wanting to contribute to Open Source in some way.  This week, Microsoft launched CodePlex in beta.  CodePlex is a developer community infrastructure hosted by Microsoft on behalf of Open Source developers - a place for code from both Microsoft product teams and the community to reside and for the developers themselves to collaborate.  Currently a dozen projects are there, ranging from IronPython to the Commerce Starter Kit.

I have a new blog at http://port25.technet.com, a site we've built to have a constructive dialog on Open Source, Interoperability, and Microsoft. 

Change is coming and I'm thrilled to be a part of it.  I'm particularly grateful to people like Andrew Aitken, Mary Coleman, and Matt Asay for what they taught me about Open Source and the Open Source community.

SaaS Architecture Guidance

I've had the privilege to work with Fred Chong and Gianpaolo Carraro, a pair of extremely bright guys who work in the Architecture Strategy group.  They have a passion for SaaS and are applying themselves energetically to mapping out the space of SaaS application architectures.  They realized that there is very little guidance or documentation on best practices for SaaS architectures in the community at large - while there is some shared knowledge and a set of conversations, no hard documentation exists in any comprehensive way.

Fred is now on a mission to build definitive guidance on how to grapple with tough issues like multi-tenancy (including defining what that means), security, customization, metadata, and operations readiness.

Fred has posted the outline of the SaaS architecture guidance book that he is developing on his blog, and I'm pasting some of the chapter outlines here as well.  Fred is an expert in Identity Management and Web Services management (he literally wrote the book for WSM at Microsoft), so he knows what he is talking about.

1. Introduction
2. Business Model
3. Application Architecture Overview
4. Scaling 101
5. Data Management
6. Tenant Management
7. Tenant Customization
8. Application and Data Security
9. Programmable Software Services
10. Programmable Software Service Consumption
11. Instrumentation and Monitoring
12. Configuration Management
13. Metering
14. Infrastructure Security
15. Operation Structure

If you're interested in this, drop by Fred's site and take a look - better yet, send him an email and tell him what you think.

Future of Commercial Open Source

I got to take part in a workshop in Santa Clara yesterday put on by SDForum - "The Future of Commercial Open Source" - unlike a standard event in the valley, this started with "opening comments" from the panelists and then broke out the 70+ attendees into 6 working groups, each discussing a question about "What will Commercial Open Source be like in 2010?"

Andrew Aitken of The Olliance Group was the instigator, and brought together a really outstanding set of people - Tim O'Reilly, Rod Smith of IBM, Simon Phipps of Sun were panelists, and the constellation of VCs and open source companies was amazing.  As a bonus, Mark Radcliffe of DLA Piper Rudnick summarized the first draft of the GPL 3.0. I've worked with Andrew Aitken in the past for insights into Open Source and given his knowledge and connections, it was no surprise that the event was a success.

It was no surprise that Microsoft was mentioned many times - but the big surprise to me was hearing Tim O'Reilly say, "If you consider companies that contribute to Open Source projects to be Open Source Companies, then you would have to say Microsoft is one, because they contribute a lot of source code."  He went on to say that his definition of Open Source companies is companies that use OSS, like Google, SugarCRM, etc.

Tim's insights:

• Open Source is about sourcing commodities - we should look at the core this phenomenon as the software supply chain enabled by Sourceforge
• Can SourceLabs, SpikeSource, and OpenLogic become part of the Sourceforge ecosystem?  This would mean that they are truly integrated into the software supply chain.  What about Palamida, Black Duck, and CollabNet?
• There is a linkage between OSS and the Long Tail - find niche markets and use OSS to source niche technologies
• Ultimately, success for OSS will come from applying the Dell model - instrument the front end and back end of your business and find the inefficiencies - this is where the opportunities for OSS ecosystem infrastructure lies
• By 2010, the business frontier and the hacker frontier will move.  The hotspots will be very different and we should expect to be surprised.  OSS will be part of every software business, and every company's strategy - much like the Internet has done.

Simon Phipps (who is the chair of OpenSolaris) commented that "customer progress with open source is much slower than the industry's progress, so we must be careful and not rush in where customers fear to tread."

We were told not to blog about the content of the roundtable "thinking sessions" themselves, and I won't, but I will say that I had the pleasure of working with some real luminaries in the space - John Roberts (CEO of SugarCRM, the most interesting OSS business model today in my view) and Mary Coleman of Walden International.  I learned a lot from the discussion and met some very sharp people.  It was very lively given our table consisted of two commercial OSS companies (SugarCRM and Alfresco), two commercial giants (Microsoft and SAP) and four VCs...

Finally Doc Searls had an amusing and insightful summary of the state of OSS and software in general, drawing heavily on the construction industry as a metaphor for the mature state of the software industry.

Where are the OSS/BSS companies for SaaS?

Most of the companies I've spoken with have had to build their own OSS/BSS systems to run their Software-as-a-Service operation.  Provisioning, metering, and billing are core business functions for service delivery organizations, and while there are custom aspects to them, and hence good reason to build your own, there are probably better reasons to buy them off the shelf… if they were available.

Companies like Portal Software and Convergys have long supplied these systems to the telco industry, yet I've seen no indication that they are moving to engage the SaaS segment; nor have I heard of VC-backed startups targeting this critical infrastructure space.

A related need is that for a robust pricing engine that is capable of handling multiple pricing schemes (i.e. per transaction, per user-month, or per CPU-month).  Again, this is a core business function, and as we saw in the great Telco battle between Verizon and AT&T Wireless, the winner is the one that can combine their difference service assets into the widest variety of packages.  The story behind this (from my perspective) was partly due to integration (Verizon made the investments required to integrate their dozen-plus backend billing systems) and partly due to pricing & packaging - the ability to target a new demographic or customer segment with a custom package that is more attractive than the competition.

One quote I heard in the last few months - and I apologize, I have forgotten who said it - is that in the end, telco margin per customer is probably the same between "friends and family", "small business", and "enterprise" packages… but the success of the business is in crafting the package that feels right to the target customer and incents them to make the purchase.  So Verizon won, because they used their pricing agility to win new customers.

The corollary for SaaS that I'm taking away is that pricing flexibility is going to be key to competitive advantage… which brings me back to "where are the OSS/BSS apps for SaaS?"

Scoble Interview: Enterprise Mash-ups

I got the chance to sit down with Robert Scoble for 20 minutes last Friday.  The thing that has puzzled me recently is whether mash-ups are for real, or just another Web 2.0 buzzword.

So I asked Robert: "Are mash-ups going to make a real difference outside of the digerati - do you think they'll make it into the enterprise?"

His take was: what's to prevent mash-ups from being the main way that departmental apps are built in most enterprises 3-4 years from now?

We've seen composite applications pitched for years, with some very cool companies like Digital Harbor building development environments for constructing them, but in a way mash-ups are an even simpler way to build a composite application - pull together a set of ICCs (still looking for the definitive term for this, as are others, it seems - see Harry Pierson's discussion).

So what would an enterprise mash-up server look like?  How would it have to be packaged in order to be adopted by departmental users?  Would it be hosted like the other new technologies that are breaking into departmental use (salesforce.com, MarketTools, ExactTarget, etc.) or would it need to be a local server?

One of the other issues Robert raised was that of attention, and its necessary evolution to make the computing experience more useful.  Currently, attention is captured and processed only on the server, which makes for some thorny issues about trust (who am I trusting with my attention data? and why?).  To deal with these issues it seems to me that there will need to be a client-side standard for attention, implemented by browsers for inter-ICC communication, as opposed to relying on the server to have good behavior.

Then, in a twist of synchronicity, I got to talk with a very early-stage company building a mash-up server that can run on the client or the server.  It's in stealth so I can't disclose much more yet... but I am becoming convinced that this programming model could be just the thing to build SaaS composites on.

[Updated to add reference to Harry Pierson's entry.]

Contrary Evidence at the SLC

At last week's IDC Software Leadership Council, opinions on Open Source were not the only surprise.  The IT Execs from 4 companies (Manufacturing, Healthcare, Heavy Equipment, and Financial Services) were generally against subscription models for software.  As the conversation progressed, two key statements came out:

1. The CIOs did not want to go with subscriptions because if their business grew beyond expectations, they didn't want to pay the software provider more ("Why should we share the upside"?)
2. The CIOs did want providers to reduce pricing if their business failed to grow to expectations

I think this was a case of two things - first, the natural expression of greed (wanting vendors to share the downside but not the upside) - but more importantly, a need for the industry to provide clearer guidance on standard pricing models.  There was a clear conflation between value-based pricing and usage-based pricing in the mind of the customers.  Additionally, they were concerned that in the long run it would be cheaper to go with perpetual licenses and pay maintenance, dealing with amortization internally, rather than pay a subscription cost which would never go down.

So where do we go from here to advance the understanding of the SaaS industry's offer to CIOs of mainstream companies?  Are the doubters right, and will SaaS fail to penetrate large enterprises because of these issues?

Disruptive Innovation and Darwin

I have great respect for Clayton Christensen, who has done serious work putting real meaning into the term "disruptive innovation".  He's quoted in the latest Newsweek article on Skype, saying:

Still, the novel pay schemes "are hugely interesting," says Harvard Business School professor Clayton Christensen, who cites both Kazaa and Skype as great examples of the "disruptive innovations" he studies. "It's almost never the technology itself that paralyzes the incumbent—it's that the incumbent has a system for making money that's irrelevant to the new guys."

The combination of companies growing up after the bubble burst, dealing with recession and market pressure by using free software and then reducing customers' cost to use through "rightsized" pricing (moving amortization costs of hardware and software from the customer to the vendor, and reducing overall management costs through centralization) has produced some very fit organisms - not unlike biological organisms that have deveoped in impoverished environments, they may be tougher than the incumbents of enterprise software.

Axel Shultze of BlueRoads has said that no one originally set out to get to the current state of SaaS - it was a series of changes to fit the customer environment that led the industry here.  It will be very interesting to see where the intersection of pay-as-you go and ad-funded software business models leads us next.  I think Darwin would be having fun right now watching this industry evolve in real time.

SaaS is the "S" in SPLA

I've found that relatively few people know about the Service Provider License Agreement, which was built for hosters and companies which need monthly, usage-based licensing.  From the program description:

The Services Provider Licensing Program enables services providers to license Microsoft® products on a monthly basis. The program is designed to emulate how service providers do business - providing services on a monthly fee to their end-customers. A sample list of products available to service providers in this program is provided below.

So it's a pay-per-use model that works in arrears - hosters provide a report of the license units used that month and pay after they're done.  SPLA incorporates Software Assurance so there is only one license and one price to pay for usage.  There is a version specifically for ISVs which you should look at if you're currently a SaaS ISV using the Microsoft perpetual license model.

Two good examples of why this is useful:

1. Cashflow management: under the perpetual license you would need to buy the software up front and amortize the cost over a multi-year period.  SaaS is a cashflow-focused business model with little room for capital expenditures that need to be rationalized later (as seen by the standard practice of leasing hardware rather than buying)
2. Seasonal volumes: if usage goes up one month, and down the next, there's no need to buy additional perpetual licenses, guess what the necessary capacity will be, and suffer for guessing too high (if you're in Operations at a SaaS company, you know how challenging this can be - as they say, "it's hard enough to predict the past, let alone the future").  Instead, SPLA users report & pay month to month, so payments go down when usage goes down.

The team that came up with SPLA, led by Pascal Martin, has partnered with Rackspace and other hosters so that SaaS ISVs can transfer their existing operations to an MSP.  They are working hard on the next version of the ISV-focused hosting solution - more news on this in the near future.

A Billion Emails via SaaS on .NET

I've had the chance to some time with ExactTarget in the last week.  They're a SaaS email marketing company based on .NET with a very slick AJAX interface.  Since they're an email-centric company, they use Outlook as their design center - task pane selection and folder trees on the left, interaction page on the right, etc.  This parallels feedback I've heard from customers about email interfaces in the recent past.

The impressive statistic I got from our conversation was that they will send a BILLION emails this quarter - perhaps it's my ignorance of the email marketing space but I thought that was impressive.

While talking with their CTO and VP of Engineering, I learned a few things. 

First, they're doing all of this on end-to-end .NET (Windows Server, SQL Server, etc.) and have achieved massive scale.  Second, they're based on AJAX.NET, an elegant Open Source AJAX framework for ASP.NET (for example, to make a method asynchronous on the client, you just add an attribute: [AjaxMethod]).  Furthermore, they've hand-built a number of generally useful client-side features using AJAX - a WYSIWYG editor like Writely, and due to their server-side architecture, they've been able to integrate useful data cleansing tools via SOAP interfaces.  With the number of comments I get about REST >> SOAP these days, I had to ask about their use of SOAP.  They said they got it for free by using ASP.NET (.asmx pages), and that the automatic harnessing of SOAP rather than raw XML was useful.

The new stuff they're coming out with - and which they demoed at Salesforce's conference recently - is significant - partly because of their use of AJAX for some sophisticated drag & drop workflow features, and partly because of the breadth of scope they can handle with their workflow engine.  I can't give it all away here, but be sure to check them out when they launch the new stuff in December.

The ExactTarget team was happy overall with our technology, but were not happy with our licensing.  Running on Windows and SQL Server perpetual licenses, they are charged in a way that's out of sync with their business, and while standard "failover" servers are not charged for by Microsoft, "unutilized production" servers are.  Fortunately, we do have a better offering for them - I believe that the Service Provider License Agreement (SPLA) will be the solution to most of their issues.

If you're a SaaS ISV and you're using Windows, you should almost certainly be using the SPLA instead of perpetual licenses - it's pay-per-use and is a much closer fit to the SaaS operations & cashflow model.

People as a Service?!?

If you haven't already heard about Amazon's "Mechanical Turk" you absolutely have to check it out.  When I first encountered BPM companies who used "human-in-the-loop" learning I felt cheated.  Four years later the idea of using distributed humans to solve problems that machines still can't seems awfully clever.

Open Source as the Big Bad Wolf?

Having spent time with inventors, entrepreneurs, and the analysts who love them down here in Silicon Valley, I have come to expect generally positive comments from CIOs about Open Source.  Quite surprisingly, at the IDC Software Leadership Council today, the CIOs on the roundtable were consistently "strongly against using Open Source" software in their organization and "realized that they were placing their companies in jeopardy" with their current lack of governance around OSS adoption.

I was fairly shocked - and no, I'm not spreading FUD nor am I against OSS (as Director of Engineering at Ofoto from 2000-2001, I ran a department that used Linux, Apache, Tomcat, and Jakarta for 100% of development; the only software we paid for was Sybase).  The key issue they all raised was indemnification against IP and Open Source Licensing violations.  Jason Matusow was there and raised the point that the concern is really around commercial vs. non-commercial OSS.  Commercial OSS providers take responsibility for understanding the licenses and resulting restrictions embedded in the software they provide, which appears to effectively deal with the core issues the CIOs were raising.  Despite making these points, the CIOs were not mollified and continued their conservative stance on the topic.

Bob Zurek of IBM was at the meeting as was David Gee of HP - very interesting group of people with whom to discuss SaaS, Open Source, and industry consolidation.  Amy Konary of IDC was insightful as usual on the SaaS topic.  Wonder where the conversations will go from here?

Fortunately, I get to sit down with Palamida later this week and am looking forward to learning more about the expanding business implications of using Open Source.

Dave Winer has the Scoop: Ozzie, Gates, and SaaS

Robert Scoble has posted links to Dave Winer's site, where the Ray Ozzie memo I mentioned earlier has been posted, in full and complete form, along with Bill Gates' "turn the ship" email.  Worth reading.

[Updated: Now I think you can see that this is not just about Web 2.0, it's about Microsoft 4.0 which will be a service-based computing platform for the industry - not just an inward-looking "sell our software differently" approach.]

[Update 2: A well-written article in the WSJ discusses the meaning of all this.]

VCs on SaaS

I've been asked several times recently why I'm focusing so heavily on Software as a Service.  The answer is very simple: the future of the model is inescapable.  I work in the team at Microsoft that is responsible for managing our relationships with Venture Capital firms and helping their startups succeed with us as business partners.  In the last 6 months I have heard in person - whether around a table or attending an event - from partners at Accel, Hummer Winblad, NEA, Norwest Ventures, and many others: "We are only considering software deals that include a strong SaaS component." 

John Hummer actually said it more directly, at the SDForum event on SaaS back in March 2005: "If you are going to pitch me a software deal, it had better be Software as a Service."  Emergence Capital is a $125 million fund established solely to finance SaaS plays.  BAVP made their interest clear way back in 2003.

Add to this the fact that many partners I've spoken with have said that the software side of their portfolios currently include between 1/3 and 1/2 SaaS plays, and the reason to focus on this is obvious: the trend is only accelerating.  IDC forecasts the delivery segment (not "market") to reach $10.7B by 2009. 

It can be argued that this is a new bubble, but unlike Web 2.0 (which sure smells like a bubble right now but perhaps it's an echo boom) it is a software value shift that is fundamental and easy to grasp, whether or not you're a member of the digerati. 

Meet up at the VS/SQL/BT Launch?

I'm going to be at the VS/SQL/BizTalk launch event in San Francisco today at the Moscone center.  If you want to meet up and chat in person about partnering with Microsoft as a startup, getting help with VC, or what we should be doing to enable the SaaS ecosystem, drop me an email.

And thanks to those of you who have shared your ideas on the SaaS Startup Offering via comments and email - I will be replying over the next few days (once the launch event and IDC's Software Leadership Council are over).

Client Software as a Service

I spent a couple of hours with Dan Udoutch and Venky Venkataram from AppStream yesterday - smart guys with an awesome product.  Dan was at Netscape in the early days and has been all around the Valley since then (including CommerceOne from early on to the famed $350 share price and then Intersperse) and Venky ran engineering at ZoneLabs - enough said.

AppStream has some very cool technology that streams just enough of a Windows or Java application down to the desktop that it can start up and respond to standard user flows - then pulls down more of the application dynamically as the user activates other features in the app.  There's no interruption in the user experience, and the app runs locally on the client, with normal permissions, Start Menu entries, all the normal Windows app behavior you'd expect.  This is cool technology because the user wouldn't even notice it was there.

They combine this with robust management, provisioning, and metering for applications across large user communities.  Since applications are streamed on demand, apps can be versioned automatically across a user base, without any action required from the user.

What this enables is full client-side software as a service - where the definition of SaaS is "freeing the customer from daily operation, maintenance, and upgrades of the application".  When I step back from the SaaS phenomenon what I see is a value shift in which customers want their applications to "just work". 

There are a number of applications for this - one that springs to mind is security policy management of application versions; NAP and NAC both require a local SHA (System Health Monitor) that reports the versions of current apps on the client back to the Health Server, which then allows access to the network or sends the client a list of remediations required; the client then goes to a remediation server for detailed instructions which typically require patching or upgrading specific applications.  AppStream would allow this whole cycle to be bypassed (for managed applications) as the application would automatically stream down the latest version when the user starts it up.

I think this could be transformative as the pendulum of SaaS swings back to blended client & server implementations.

SaaS Startup Offering

I've been working hard to develop a strong Microsoft-based offering for startups building SaaS companies, because the economics are with LAMP right now.  In listening to startup engineering managers and business managers (i.e. VP Engineering and CEOs) I consistently hear the following:

1) Speed of development is important (hence PHP and Ruby on Rails, although I hear some say they're happy with the agility of ASP.NET).

2) Operations cost rules all (scale-out includes many instances of the OS, App Server, DB, etc., not to mention virtualization).

With partnership from Doug Pratt (who runs the Empower program which is designed to meet the needs of startups - and given the 15,000 enrollees who have gotten development licenses to every piece of software we make ("back the truck up") for $375, I think we can say it was a good offer for ISVs) I've been able to learn a lot about our licensing and pricing issues relative to SaaS companies.

Unfortunately it is far short of what SaaS startups need - first of all, they need permission to run the software as a service, which is prohibited under the Empower agreement, and second, they need to be able to scale out without paying more.  The Service Provider License Agreement (SPLA) is a usage-based pricing model for Microsoft infrastructure which is a closer fit to the SaaS model (has per-user and per-CPU modes of billing) developed by the Microsoft Comm Sector Hosting team.  They have also built out a hosting solution and we've seen ISVs like Vertafore use it to lower their costs & scale faster.

Shannon Clark writes about this in response to Robert Scoble's list of Web 2.0 entrepreurs' complaints he heard during his "two days in the Valley."

So what if we launched a SaaS Empower program that included architectural guidance on how to build multitenant applications on .NET, had a slew of free runtime/production licenses for our server software, and connected you to a SaaS Marketplace or Solution Finder on Microsoft.com?  Would that be enough to move you to use the Windows stack?  What if we included Provisioning, Metering, and Billing engines (to be run by you, not us)?

The complaints department is open.

Live Services != OS

I'm seeing some very smart people miss key pieces of the announcement and then go haring off in the wrong direction... my conclusion is that there's just too much new information in the Live announcement and related commentary for people to handle.

Ross Mayfield bags on MS Office vs. Google Office but apparently completely misses Mojo, the collaborative document creation infrastructure (Niall Kennedy nails this), and then concludes:

Jerry Michalski said something brilliantly simple the other week at a collaboration conference. That we are certainly not waiting for Vista, we have lost trust in these guys and it's time to get these things out of the OS.

So - remember, Live != OS, Services != OS - except perhaps metaphorically.  Vista is the OS but this set of announcements is about Live Services, rapid revs, and open APIs.

Similarly, we should probably have a new class of logical error like ad hominem - perhaps ad demonstrandum(?) - to cover the hundreds of blogs that point out that the launch was too early, and the demo broke, therefore Office Live and future Live properties are DOA.  Not even worth linking to - even when I was competing with Microsoft this would not have been worth focusing on... also known as aggressively missing the point.  Microsoft is coming into the services age - and that includes the much hyped "Web 2.0" areas evoked by the Live announcement and the whole software value shift represented by Service-based computing.

Ray (of light) Ozzie

It's going to take a while for all of this to really be digested inside Microsoft, let alone the industry.  But people really need to see the magnitude of this "turn the ship" effort - the internal memos and webcasts as well as the external communications, directed at making wholesale changes to how we do business.

It's a day to celebrate - there is an intelligent, informed, well-organized guiding force that is taking the company forward into the brave new world of Software as a Service.  I'm not talking about Windows + Office Live - see "Microsoft Previews New Windows Live and Office Live Services" - which looks like a good start for us. Don Dodge has some good coverage on this and also liked Richard McManus' writeup.

What the world didn't get to see today was Ray's internal memo on SaaS, which is brilliant.  It specifically calls out requirements for the entire ecosystem for SaaS and not just our direct offerings.  No doubt it will be leaked at some point but I'm not going to be the one to do it.

[Update: Here is Ray Ozzie's memo - thanks to Dave Winer]

For those who are interested, here is Tim O'Reilly's take on the announcements today.  Steve Hamm has put it in the right historical perspective but misses a key point - he says that Microsoft was able to beat Netscape because they were a software company and therefore appropriate competition, where Google is a different animal.  I suggest a different perspective - Microsoft is an indirect channel company (of $40B in revenue we generated last year, over 95% was indirect) and that we understand how to deliver value to ecosystems at scale.

The partner story for Microsoft in SaaS has not been officially told yet, but it is coming and it will have an impact.  To get an early look at what this could include, check out my previous post on providing a marketplace for SaaS companies to connect with small and mid-sized businesses globally. 

Offer your opinions and advice on this and I'll see that it gets into our SaaS discussions internally.  We have a cross-company team working specifically on how to make partners wealthy through our future SaaS offering, and we're looking for input.

Innovation as Language Action

My colleague Don Dodge notes that innovation is breaking out all over again - and many agree with him.  Innovation itself is a hot topic these days - what is it?  How do we produce it?  What I find exciting is that people are creating new interpretations of innovation that can help us understand how to make it happen.

I had the opportunity to spend time with Dr. Peter Denning over the last two days at a leadership conference in Mill Valley.  He is the past president of the ACM and currently serves as Professor and Chairman at the Naval Postgraduate School in Monterey, and is co-creator of CSNET - the network which bridged between ARPANET and the Internet.

He discussed his current work on Innovation as Language Action - a framework for identifying the linguistic distinctions and specific skills involved in taking new technology inventions into the broader market.  He defines "invention" as the actual creation of a new technology, and "innovation" as the process of technology adoption - for example, the Wright Brothers invented flight at Kitty Hawk, but the innovation in flight was the DC9, 30 years later.  PC/M was an invention in operating systems, but MS-DOS was the innovation - it spread broadly and became the standard for future developments in the industry.   

He and his co-author, Robert Dunham, detail seven specific elements of an innovation framework:

• Seeing opportunities
• Envisioning new worlds
• Offering new games
• Executing plans and tools
• Producing adoption
• Sustaining infrastructure
• Leading with care, value, power, and focus

What I found exciting about their work was that even at this early draft, a real framework for assessing our own actions in leading and developing the future of technologies like SaaS or SOA can be found - one which allows us to identify where we've been successful and where we need to bring our focus to complete the innovation process.

I invite you to read the full draft chapters of his book, which can be found here, along with his course material on "Technology and Transformation".

Thanks for sharing your work and your time with us, Peter!