Later today I am talking at Point Nine Capital’s annual SaaS conference. The topic will be how to create network effects for SaaS businesses. Just as a quick reminder, a business has network effects if the value of the service increases for all customers as the business grows. Here are some of the ways that this can be accomplished: First, there is the obvious one which is actually connecting businesses to each other. For instance, if your are in purchasing management and you connect companie...

Yesterday evening we were driving back to the city from an afternoon in the suburbs. The drive was completely uneventful until we got to the EZ Pass toll booth on the Triboro bridge. We have had our current EZ Pass for at least a decade and never had a problem with it. So I was rudely surprised when the gate did not open and the sign said “Contact EZ Pass, Low Balance.” We rapidly had a large number of honking cars behind us. We sat there for several minutes with the honking getting ever more...

The definition of a commodity is a good that is “supplied without qualitative differentiation." You can’t charge more than others for crude oil, you have to turn it at least into gasoline. And if you really want to charge a lot more you have to turn it into a plastic product. CPU cycles and memory are the crude oil of our times. If you want to charge more for them you have to add value. If you are SaaS company that provides a complete solutions you are adding a lot of value (plastic product)....

This morning at 8am I will participate in a discussion around the costs and benefits for small to mid-size enterprises (SMEs) from using Software-as-a-Service (SaaS). Here are some of my key thoughts:Total cost of ownership (TCO) studies are highly suspect. The real cost of installed software has historically been an ossification of organizational structure around fairly inflexible offerings. With SaaS we are seeing more flexibility around what can be adopted by whom and how it can change ove...