Ian’s Blog on Open Source Marketing

The enterprise software market for gorillas is becoming soup - MISO soup - Microsoft, IBM, SAP and Oracle.

Large enterprise software vendors have a lot going for them. They have a big base, a large sophisticated salesforce, and big budgets to create a lot of noise in the market. Microsoft has a low-cost global channel with partners in every locality to explain and deliver their products.

It’s simply not possible to “out-base”, “out-salesforce” or “out-noise” MISO or even the lesser enterprise gorillas.

The big advantage of the open source model is the community and the low cost global internet distribution model. For this to work effectively your differentiation must be simple, intuitive and indisputable. You can’t rely on a sales-person having a long conversation to argue your differentiation or a long evaluation to prove your differentiation. It is critical to attack “the weakness in their strength” - classic “Ries and Trout” marketing warfare (First published 20 years ago but still as valid today.

Their strength is the salesforce and big marketing budgets. If you can get you message across simply without the need for a large expensive salesforce and large marketing budget then this becomes their weakness. The channel becomes too expensive to deliver the product. What you have is a classic open source best-of-both world’s strategy.

The best market for this is an already educated market that has been using the technology for a number of years.. The market doesn’t need to be taught what the problem and pain chain is. They know it. What they want is simple competitive based, differentiation based messaging.

The customer knows:

• The High-End systems are too expensive and complex
• 
• The Low-End systems are low priced but don’t meet requirements
• 
• But why should I choose you?

The customer has to come to the conclusion the best solution is in the middle - The Best of Both Worlds. (This is best described by John Zagula and Richard Tong in the Marketing Playbook. I’ll talk more about this in later blogs)

An example is the following Differentiation/Comparison of Alfresco, SharePoint and ECM Stack:

• ECM may be Scalable and Robust but it is too Expensive and Proprietary
• SharePoint may be Lower Cost but it is Proprietary and not Scalable

• The world needs an open source alternative to legacy ECM
• The world needs and open source alternative to SharePoint

Open Source, Scalable and 1/10th of the cost - The Best of Both Worlds

This week I saw one of the best customer webinars I have ever seen by Neil Armstrong and Tim Bergeron of Activision Inc.

When you say Activision people think of blockbuster games such as “Call of Duty” , “Guitar Hero” and “Marvel Ultimate Alliance”. For a change when I came home my kids were interested in what I had to say.

One of the things I found fascinating was how Activision had chosen to make the web site a strategic part of their marketing, creating product-oriented micro-sites supported by the company brand, but even more-so by the community of followers of the game. Five of the top twenty five software companies are now games companies and their sites represent the future of the corporate website with great, fresh, engaging, community oriented content.

When you look at these types of sites it interesting to think about “a day in the life” of the content that powers these sites:

1. Create Game Information Behind the Firewall - Create videos, stories, images, ratings etc
2. Review and Approve Behind the Firewall
3. Stage the New Website Behind the Firewall - Content is now ready for the public site
4. Deploy the New Website - Intelligently deploy content to a web server, media streaming server and content management system
5. Publish across Multiple Channels - Use simple templates to provide variety, flexibility and an intuitive user experience
6. Manage Digital Assets and Publish across Multiple Channels - Low-resolution Flash for website, High-resolution Quick Time for downloads, Automatic transformations for mobile devices - iPod, CellPhone, PSP
7. Manage Ratings and Publish to Appropriate Channels - Use rating information to match channels to the appropriate population or age range
8. Make it Scale for Millions of Users - Use load balancing, replication and clustering
9. Use Open Source - Like the leading Web 2.0 sites use Linux, MySQL, Alfresco, Tomcat and JBoss AS

Given all of this what are the benefits

• Dramatically Reduced Ad Spend
• Great successes like Call of Duty, Guitar Hero and Marvel Ultimate Alliance

Interestingly today I read an overview of “New report Cautions on Using SharePoint for Public Websites”

Given the strategic importance of this next generation site the world should remember it needs an open source alternative to SharePoint.

Web 2.0 sites have proven that next generation websites are built on open source.

In my previous post I wrote on “A Marketing Model for Open Source”. I finished by saying

“Open source has to have a different approach to the massive gorilla software companies of today. It can’t use its dominant position to force its platform. There is a better way. I’ll explore alternative models for different types of companies later.”

I recently read an article by Mary Jo Foley called “SharePoint: the next big “Operating system from Microsoft“. In this article it says:

• “is it correct to think of SharePoint as almost like an OS (operating system)”? “Bingo.”
• “So how does Microsoft keep the growing family of business services it is introducing tethered to on-premise software”
• “SharePoint Server is the answer. Not Windows. Not Windows Server. Not Office. SharePoint.”
• “Ballmer told the Convergence questioner he was dead-on in his thinking.”
• “Ballmer also provided one of the most succinct definitions of SharePoint Server I’ve heard from any Microsoft exec. SharePoint is just like Office; it’s a bunch of point products gathered together into a suite.”

This got me to thinking about Gorillas (Microsoft) and “The Platform Play”. There is an excellent book called “The Marketing Playbook” by John Zagula and Richard Tong. It details the plays they used “during their years of spearheading the marketing efforts that drove Microsoft Windows and Office to global dominance.”

A summary of how the book outlines the Platform Play is as follows:

Market

• “Inherently the Platform Play is about defending and expanding your turf”.
• “Your Platform is like currency. It’s good to be able to print money”

Read Office
Strategy

• “Use the strongest, most broadly applicable aspect of your technology or business to seed the center of a new ecosystem.”

Read Office

• “…the field needs to be defined in a way that excludes most of them”

Read SharePoint – Collaboration, Portal, Search, Content Management, Business Processes and Business Intelligence

Positioning to Partners

• Invite partners “to joint in your little slice of heaven”
• Make sure “the risks of opposing it stay high”

Read ECM vendors pulling back from the ECM market to develop applications on top of SharePoint from fear of Microsoft.
Messaging

• “In a Platform Play you make comparisons to yourself.”

Read SharePoint version 2 a notoriously weak product
Finally

• “Platforms die when innovation dies”

This strategy can be summarized as using office dominance to expand into a new larger “uber” platform.
Wikipedia comments on previous platform expansion behaviour as follows:
“United States v. Microsoft 87 F. Supp. 2d 30 (D.D.C. 2000) was a court case filed against Microsoft Corporation on May 18, 1998 by the United States Department of Justice (DOJ) and twenty U.S. states. Joel I. Klein was the lead prosecutor. The plaintiffs alleged that Microsoft abused monopoly power in its handling of operating system sales and web browser sales. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system. Bundling them together is alleged to have been responsible for Microsoft’s victory in the browser wars as every Windows user had a copy of Internet Explorer. It was further alleged that this unfairly restricted the market for competing web browsers (such as Netscape Navigator or Opera) that were slow to download over a modem or had to be purchased at a store. Underlying these disputes were questions over whether Microsoft altered or manipulated its application programming interfaces (APIs) to favor Internet Explorer over third party web browsers, Microsoft’s conduct in forming restrictive licensing agreements with OEM computer manufacturers, and Microsoft’s intent in its course of conduct.”

http://en.wikipedia.org/wiki/United_States_v._Microsoft

Interestingly though as the book states “Platforms die when innovation dies”. In the words of Microsoft “SharePoint is just like Office; it’s a bunch of point products gathered together into a suite.”?
Innovation or new “uber” packaging?
The real situation is one of choice. Do you want to be tied into Microsoft for the whole stack of:

• Operating System
• Database
• .NET
• Portal
• Browser
• Office
• Wiki
• Blog

What about your corporate infrastructure standards and user preferences?

• Operating System – Linux or Windows
• Database – My SQL or Oracle or DB2 or SQLServer
• .NET – Java or .NET
• Portal – LifeRay, JBoss Portal,
• Browser – Firefox or IE
• Office – OpenOffice or Office 2000, Office 2003 or Office 2007
• Wiki – MediaWiki other massively used wiki software
• Blog – WordPress or other massively used blog software

We are now moving to what Geoffrey Moore called “The Stack Wars” - Get a whole stack from Microsoft, Oracle, IBM or SAP.
In summary is SharePoint the killer platform or the “Choice Killer” and “Corporate Standard Infrastructure Killer”.

Open Source is the alternative to being tied to a stack.

A year ago I wrote “Howells Ten Rules for Open Source Marketing“. This generated a lot of positive feedback and was featured in “Enterprise Open Source Journal”
Alfresco is looking like it will be the fastest growing company I have been at. This made me review the rules and also think about a simple marketing model for open source. Marketing models are often dominated by position - Position in the technology adoption life cycle or Position relative to competitors. I have previously worked for companies focused on crossing the chasm in the early days and later being leaders. I have also worked for companies that were number 2 to a dominant player. The marketing models we used and the understanding of them was critical as it drove a coherent approach to:

• Segmentation
• Competition
• Differentiation
• Positioning
• Messaging

I have previously worked for:

• Ingres – Number 2 competitor to Oracle before they started dominating the market
• Documentum- Leader in Document Management
• SeeBeyond - Number 2 competitor to Tibco in Europe and number 3 in US

There are many approaches to marketing models – Moore with “Crossing the Chasm and Darwin and the Demo“, Ries and Trout with “Marketing Warfare” and ex Microsoft marketing people Zagula and Tong with the “Marketing Playbook”. Often you focus on your position in the market – a follower or a leader – the Avis vs. Hertz model or a gorilla, a chimp or a monkey model.

To make dramatic growth you need two things:

• A shift/discontinuity that shakes up a market – this may be legal, regulatory, technical …
• Customers who have a pain or are making a trade-off

A classic example of a trade-off is many people would like a fast, luxurious BMW but most would rather pay for a Toyota. In software terms it is common for users to have to choose between an expensive, hard-to-use ECM system with robustness, and performance or a low-cost collaboration portal that doesn’t meet their ECM requirements. This is a market that is ripe for commoditization and open source is the market shift to accelerate that commoditization. Martin Mickos of MySQL is famous for reputedly saying ” I want to make the the $10bn relational database market a $3bn market - and get a 30% share“. He also said “Business class is fine but economy gets me there at the same time and you don’t send all of your employees business class.” What is needed is a simple marketing model to capitalize on this situation.
Commoditization is taken for granted in many industries. We all drive commoditized cars. Commoditization is about:

• Efficiency of Development and Manufacturing
• Efficiency of Distribution
• Increased Quality – With high volumes things just have to work
• Reduced Cost

Open Source is made for these market conditions:

• Lower Cost of Software Development – Community, Best-of-Breed Open Source Components and world class engineers
• Low Cost Distribution Model – Internet and SourceForge
• Low Cost Of Sales – Model of Discover, Try and Buy with out a large costly sales-force
• High Quality – Large scale Community testing

This results in dramatically lower cost for the purchaser. The advantages that open source companies have are:

• The Internet, Blogs, RSS have levelled the playing field
• No Legacy
• Being able to start with a clean slate

So when these components are put into a marketing model you get the following. [We have used and field tested these ideas and I have used Enterprise Content Management as an example]:

Situation

Users are looking to rollout ECM to all desktops but have to choose between an expensive, hard-to-use ECM system with the robustness and performance you need or a low-cost collaboration portal that doesn’t meet ECM requirements and the alternatives don’t integrate. There is a resultant very low adoption of ECM – estimated to be 5% to 10% of users

Segmentation – Why Choose

What users want is a low cost, simple to install system that is easy to use and scale-out. It should be simple to develop content centric applications and fit in with a corporate architecture The target is all users who manage content and want a scalable, robust system – “Why Choose”. This is the massive under-served segment between the high-end ECM systems and at the low-end SharePoint. Often these users store content in a shared drive today and use email for collaboration. These are the tools of mass usage.

The segment becomes even more attractive when the focus has been in acquisition and integration as opposed to innovation. This is common as a post bubble strategy was to buy companies to fill out the portfolio at bargain prices.

The segment becomes even more attractive if standards are emerging.

Model Rule One Segmentation: Choose a segment with a large under-served mass between the high-end and the low-end. A lack of innovation in the segment makes it even more attractive. Emerging standards as well make the segment irresistable

Competition

Your competition are the high-priced legacy vendors that are effectively on their way to becoming boutiques. You need to become the brand for the masses with a high-end cachet.
High-End: Content Stack Players

Low-End: SharePoint

Model Rule Two Competition: Your competitors are primarily the high-priced enterprise vendors (and to a lesser extent the low price alternatives) not other open source vendors
Differentiation

This is critical as it has to be simple to explain and indisputable. It is critical to attack “the weakness in their strength” - classic Ries and Trout marketing warfare. An example is:

Differentiation/Comparison Content Stack SharePoint Alfresco

Low-Cost/Easy-to-Use_______N_______________Y________Y

Scalable Robust_____________Y_______________N________Y

Open Choice:______________N_______________N_______Y
OS, App Server,

Java vs. .NET, Portal
Model Rule Three Differentiation: Differentiate on high-end features at a price that people can afford. This is packaged as a simple to install, simple to use and simple to scale-out system. This also fits in with the existing corporate standards lowering TCO.

Positioning

You are entitling people to what they were previously denied. They no longer have to make a trade-off.

The Open Source alternative for Enterprise Content Management Model

Model Rule Four Positioning: Keep the positioning simply. We are the open source alternative for (generic term for expensive proprietary vendor)

Messaging

This should complement your positioning as offering the high-end functionality that users require at a price that they can afford and drive people to try your offering. This is much more campaign oriented.

• By the makers of Documentum® and Interwoven®
• When you are looking to rollout ECM to everyone you don’t have to break the bank
• If you know Content you know Alfresco - Content Wanted

Test Drive Alfresco today

Model Rule Five Messaging: This should say high-end functionality (without stating it explicitly) at a price users can afford and drive people to try your offering

Proof Points

All of this should be backed up by indisputable facts.

• Architecture – Choice of Operating system, RDBMS, Java vs. .NET, Portal, Office suite, Browser
• Scalable, Robust – JSR-170 Benchmark
• Low-Cost, Easy-to-Use – Customer Testimonials

Model Rule Six Indisputable Facts: Have a proof point for each of your key differentiators to make buyers feel comfortable to make a decision to try and buy your offering.

Alfresco is composed of senior executive from very successful traditional enterprise software companies such as Documentum, Business Objects and Interwoven who joined in the belief that open source is the future of software. Geoffrey Moore pioneered marketing for high-tech disruption in the 1990’s and then ten years later talked about marketing and business model discontinuity in Darwin and the Demon. In the 1990’s many enterprise software companies adopted basically the same fundamental marketing models. Open source is a significant change where different successful companies have become successful in differentiate ways. The understanding of open source is accelerating by the month as are marketing models, marketing execution rules and licensing. Hopefully this will stimulate some thought. Open source has to have a different approach to the massive gorilla software companies of today. It can’t use its dominant position to force its platform. There is a better way.

I’ll explore alternative models for different types of companies later.

This week BBC Radio had a feature where the Conservative Party promised to create a level playing field for open source software in the UK in an attempt to save taxpayers more than £600m ($1.15bn) a year. George Osborne, told the Royal Society of Arts “There isn’t a level playing field for open source software. As it stands, too many companies are frozen out of government IT contracts, stifling competition and driving up costs. He also announced that Mark Thompson has been advised on how to make Britain the open source leader in Europe.

The current labour government has come in for criticism for failing to promote open software, most recently in the education sectors where the British Education Communications and Technology Agency extended and agreement with Microsoft despite concerns over the software giant’s licensing and research indicating schools could save money by using open source alternatives.

As Steve Ballmer said in an interview with the Chicago Sun-Times “Linux is a cancer that attaches itself in an intellectual property sense to everything it touches”

John Newton in his blog commented, “Being a British software company, you would think that the UK government would be all over Alfresco as an open source alternative to American software. After all, governments all over Europe are adopting Alfresco for document management, records management and starting to develop web sites. Local and Central governments in France and Spain have been using Alfresco for nearly two years now.”

In this radio feature Microsoft were invited to respond. What was amazing was their comment that Microsoft gave customers “choice”
So when you choose SharePoint where is the choice around:

• Operating System
• Database
• Application Server
• Java or .NET
• Content Management System
• Portal
• Blog Software
• Wiki

In a book entitled ” the Marketing Playbook” ex Microsoft marketing executives talk of Microsoft strategies and tactics and this is a classic platform expansion play (from Office) as opposed to a “choice” strategy. So this is how they kill the “cancer” with “Choice”!

More on the marketing plays next week

There is a famous film called “It’s a Mad, Mad, Mad, Mad World” where the film begins as the occupants of four vehicles on a narrow road in a southern California desert stop to help Smiler Grogan, a man who has just careered off the highway. With his dying breaths, he tells bystanders about $350,000 hidden in the fictional town of Santa Rosita, A wild race follows to find the treasure. There was a recent study by Accenture that reminded me of this film where in this case the chase was for content not money.

The study highlights:

• Managers spend up to 2 hours a day searching for information
• More than 50% of the information they obtain has no value to them
• 59% said that as a consequence of poor information distribution they miss information that might be valuable to their jobs almost every day because it exists somewhere else in the company and they just cannot find it
• 42% of respondents said they use the wrong information at least once a week
• 53% said that less than half the information they receive is valuable
• 45% said gathering information about what other parts of the company is doing is a big challenge
• 31% said that competitor information is hard to get
• 57% said that having to go to numerous sources to compile information is a difficult aspect of managing their jobs
• 40% of respondents said that other parts of the company are not willing to share information
• 36% said that there is so much information available that it takes a long time to actually find the right piece of data
• Only 16% using a collaborative workplace such as the company’s intranet portal

When you look at these statistics it may seem like a “Mad, Mad, Mad, Mad World” but in reality it is a “Consumer-Driven, Distributed, Federated, Heterogeneous Content World”!

Content Management and Search is critical for people’s productivity

• Managers spend up to 2 hours a day searching for information
• 59% said that as a consequence of poor information distribution they miss information that might be valuable to their jobs almost every day because it exists somewhere else in the company and they just cannot find it
• 36% said that there is so much information available that it takes a long time to actually find the right piece of data

Content Control and Records Management is critical to people’s productivity. Content that is not approved should not be available to everyone. Security should be applied to search so that users only get access to content that are are supposed to view. Out-of-date, incorrect and invalid content needs to be marked and retired.

• More than 50% of the information they obtain has no value to them
• 42% of respondents said they use the wrong information at least once a week
• 53% said that less than half the information they receive is valuable

The web is not one website and corporate content is not one repository - It’s a Distributed Content World

• 45% said gathering information about what other parts of the company is doing is a big challenge
• 57% said that having to go to numerous sources to compile information is a difficult aspect of managing their jobs
• 40% of respondents said that other parts of the company are not willing to share information

It’s a Federated World. To analyze a competitor you need to search across internal repositories and external repositories. These may be content management systems, blogs, wikis - It’s a Heterogeneous World

• 31% said that competitor information is hard to get

The consumer interface is coming into the corporation. Interestingly 31% said it was hard to get competitor information vs. 45% for other parts of the company. It is easier to search the web and get useful information on a competitor that search an internal repository and also users don’t want to use their internal portal. Users want the simplicity of the web interfaces across internal and external content

• 31% said that competitor information is hard to get
• Only 16% using a collaborative workplace such as the company’s intranet portal

It’s a Standards, Standards, Standards, Standards World

Given this scenario the only option is to use standards to search across these repositories. In the old proprietary, legacy content world distributed meant going across a couple of that vendors repositories and maybe another competitors repository. In this scenario creating adaptors in feasible. In the consumer driven, distributed, federated, heterogeneous world of today the options are endless and not under a companies control. Writing hundred of adaptors is not an option.

That is why is this world OpenSearch against content repositories is the solution today. OpenSearch is the standard used by:

• Google
• Yahoo
• Amazon
• eBay
• Wikipedia
• Technorati
• Creative Commons
• and many more

Alfresco version 2.0 has adopted OpenSearch as a search standard.

David Caruana has written an excellent blog on Alfresco OpenSearch.

John Newton has also written an excellent blog on Open Search.
Alfresco 2.0 can be downloaded at

http://dev.alfresco.com/downloads/

and read about in the Wiki at

http://wiki.alfresco.com/wiki/OpenSearch