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Posts Tagged ‘adoption

You’d think that after all the news of China blocking Google and other web sites Software-as-a-Service and cloud computing would be the worst software delivery model you would imagine?

Customer survey on SaaS Gartner conducted in November 2008 has shown that Asia/Pacific region is getting ahead of North America and Europe in SaaS adoption. Their respondents were evenly distributed across the globe with a third being in North America, third – in Europe, and third in Asia/Pacific (year, I know that there are other places on Earth too.) However, in terms of companies who have adopted SaaS about 50% of respondents turned out to be from Asia/Pacific.

Moreover, in this region more than 50% of respondents are in the process of replacing some on-premise systems with SaaS (in India this number is even higher – 70%).

Recent IDC report goes into some detail on the SaaS adoption in Asia/Pacific, and not only they also show significant growth in the market and the shift from on-premise systems, but specifically China turned out to the leader in SaaS adoption (more than 80% of respondents use or plan to use SaaS), and Australia to be a relative laggard (with slightly less that 50%).

My guess is that there are a few factors contributing to this higher SaaS growth in the region:

  • Some countries such as India are currently investing a lot in the internet infrastructure, with many other such as Korea already the broadband a lot of us envy.
  • In other countries, such as China, SaaS just makes more sense economically because it lets you collect money for your services more effectively than you can for packaged software. Packaged software sales are not that good in there due to high rates of piracy and so on. Subscription-based pay-as-you-go services might do better.

And yes, in some countries there will always be political risks, but these seem to be there in general and not really making SaaS business more risky than any other business there.

Would you agree with these conclusions? Thoughts/comments?

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Looks like my recent Google Apps customer base estimates need corrections and the current growth is far smaller than the one we were seeing earlier this year. What’s happening? Are they stuck getting all the technology enthusiasts and visionaries they could get, and having no way of attracting the bigger mainstream market?

Let’s look at the numbers again:

Last week Steve Ballmer quoted some private comScore research stating that Google Apps customer base stopped growing:

“Let’s look at the facts,” Ballmer said. “Nobody uses those things. And the usage data hasn’t grown in seven months. They’re just flat, comScore. Just like this,” he said moving his hands side to side. “It’s just like flat line. Exactly flat line.”

What a chance for Google to surprise the world with new usage data and all they could produce in response was:

…there are now more than 10 million active users (Granted, that’s the same stat Girouard provided in a May blog post).

But Girouard said that with the start of the new school year there had been “fairly huge growth” in the use of Google Docs.

Obviously if they were approaching 15 million or another significant number they would call it out.

To make things even worse they are back to providing confusing information about their enterprise wins. Bloomberg is reporting that this June they one $500,000/year Google Apps contract with Washington, D.C. Hmm… Weren’t they telling CNN recently that this contract was signed last year and for $1.9 million? Both stories quote the same number of user accounts (38,000) so this must be the same deal they are simply reporting as a new one again. Does not help their credibility really…

It really looks like they had been enjoying significant growth up until a few months ago (and were happy to report the numbers and customer names) and then the growth started to slow down leaving Google’s PR confused. Hmm… I sort of heard of such things before. Isn’t this a classical trend from Moore’s chasm diagram:

Marketing and Selling High-Tech Products to Mainstream Customers" by Geoffrey A. Moore

Basically, Moore argues that the needs and usage patterns of the early technology enthusiasts and visionaries groups are radically different from mainstream users, so once you get the first two groups to adopt your product you get stuck in the chasm not letting you penetrate more lucrative mainstream market.

Is that what we are seeing?

I have a few ideas of the possible reasons here:

Docs and Spreadsheets are too geeky and incomplete: I sort of think that the Gmail part is probably more acceptable to consumers – after all Hotmail, Yahoo mail and others made the concept of web mail widely popular with consumers. But editing documents and spreadsheet in the browser is still way beyond the regular user grasp. Maybe if the browser pretends it is just a local app (like Chrome presumably will be able to do for some sites) and is able to open the document you doubleclick on your desktop – but they are not close to that, and their poor ability to import doc files (I tried to import a simple doc with a clipart picture in it and the import failed altogether) is making the transition from Microsoft Office tough. They tout integration with Gmail, but just try editing the attachment you got in an email and sending it back with your reply – this is not any easier than in Microsoft Office.

Reliability concerns: I would think that Gmail is a far more adoptable concept, the recent outages have probably made a lot of the folks in the enterprise decide to put their evaluations on hold for now.

Poor transition path: Finally, most companies already have some IT infrastructure in place, and if you have more than a couple hundred of mailboxes, and would like to seamlessly go from your Notes or Exchange to Gmail without impacting the email flow and loosing any data – that can be a significant endeavor. For now I am not seeing crowds of system integrators (anyone besides Capgemini?) and ISVs rushing in to solve the problem.

[Update: added this fourth reason]
Sales/Distribution channel: Google’s consumer-oriented “built it and they will come” mentality is not working with enterprises – these guys expect vendors to be building relationships with them – something Microsoft’s direct sales force is doing and Google is not. A good distribution channel (Dell, HP, IBM, etc.) could help but Google does not have that either.

Without these problems addressed, Google might well get stuck with the “more than 10 million active users” for quite some time ahead…

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© 2008-2012 Dmitry Sotnikov

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