Tuesday, August 22, 2006

[AoyW] The 'Web Office' Is a Tiny Niche

The web has solved a lot of problems in the past decade, but has had little impact on personal and team computing. We're still banging away in MS Office and shoving docs around via email, or piling them up on file servers. Any number of web-based online services and intranet software products have been offered to change this. They have seen relatively low adoption. As Exhibit A, I offer this Alexa graph of well-known web office (aka Office 2.0) sites, including—for contrast—the popular sendspace.com email-attachment manager:

click for full size


The Alexa numbers may well be inaccurate; what I find interesting are the trends of this graph. Why do they look so flat for all but email attachment distribution? I believe these services can't spread virally, unlike consumer web services, because business technology requires approval by management and IT staff. Management is leery of shipping confidential data out to web services run by a third party, and even if IT depts had ample time to evaluate new tools, they are uneasy about systems they can't control.

Certain "on-demand" apps like salesforce.com have made some headway among businesses which don't have the IT resources to deploy such solutions in-house. Management can approve outsourcing for capability which they couldn't otherwise access, e.g. CRM. But email is the only personal app which has made substantial headway as a service for businesses (perhaps because incoming email originates offsite anyway?).

Intranets.com, the biggest success of the Web 1.0 team sites, was acquired last year for $45M, a little more than they'd raised in venture cap. That was after six years of chasing users. Can an AJAX UI change the adoption curve of such sites? Check the trend lines on the graph for jot.com and projectpath.com (the most popular of five Basecamp domains), and draw your own conclusion.

The online web just isn't reaching a lot of users in this space, and server-based intranet solutions don't spread virally either, as end-users can't set up servers. The always-on-you web can change that.

The always-on-you web is any web app that runs on a user device (laptop, Wi-Fi smartphone, flash drive) and shares data with other users on a p2p basis. It's a web app that doesn't require an intranet or online server. It's a web app that the user carries, so it's always-on-you, as opposed to always-on(-if-you're-online). And it's a mechanism which can spread virally in a business environment, because users can deploy it themselves.

38 Comments:

At Tuesday, August 22, 2006 12:36:00 PM, Blogger kuchinskas said...

I'd love to see a graph charting more of the *sexier* web office companies. I'm not sure salesforce.com belongs on this chart, because I doubt that many customers start at the home page. They do have 501,000 subscribers -- that's not so bad! And they're making a ton of money.

Aside from salesforce.com, it would be interesting to look at the total number of users of all the various web office companies. Gee, there must be 20 or so, no?

Nevertheless, I do agree with you that this will remain niche for the foreseeable future.

Susan Kuchinskas, The 360
http://360techblog.com/2006/08/22/barriers-to-the-web-office-suite/

 
At Tuesday, August 22, 2006 5:48:00 PM, Anonymous Tom Foremski said...

Most web services applicatins for business are deliberately priced in such a way that they can spread virally because you don't need permission from IT depts, or senior management. They can be deployed by small departments or workgroups and paid out of their budgets, and then they can spread within organisations. Also, Alexa is a poor tool to understand these things, it only works with IE, it requires a toolbar to be installed at alll times, and it is heavily biased by its Korean users.

 
At Tuesday, August 22, 2006 8:52:00 PM, Blogger Liam said...

It's not budgetary approval that stops the viral spread of these apps; it's the issue of handing confidential data to outsiders. That entails perceived risk which any sensible employee won't take without management's involvement. "When in doubt, do without" is the maxim applied.

 
At Wednesday, August 23, 2006 1:54:00 PM, Blogger phil jones said...

Good post. Let's see if I can kick it a bit ;-)

Right now, I agree, that web-based simulcra of existing desktop apps are very unlikely to take off.

Why, really, would I want a web-version of Word? If I want something free, then Open Office is as good.

However, apps which are inherently social. and those which deal with online databases, are already native to the web-as-platform.

After GMail, I can't imagine a compelling reason to switch back to non-web-based email client. Nor an offline blog editor etc.

So I think we *will* see a sudden and dramatic shift to web-based applications, particularly in the enterprise, but it's going to be accompanied by a sudden shift to a whole new way of working with new tools. Not a web way to handle Word and Excel files, but a realization that in the age of blogs and WikiCalc we don't actually *need* Word files and Excel spread-sheets 99.99% of the time.

Unlike you, I think this will happen, and I think it's going to switch very fast. It's not something you'll really see coming in long-term rising trends of adoption.

Word benefits from a network effect. When whatever replaces it, replaces it, a sizable chunk of the whole network will have to go almost at the same time. Before this, very little will show up on the radar.

I buy the web 2.5 concept, of course, but my betting is that it's going to be coming via the web-as-a-platform, rather than from desktop / machine-centric software.

So, at some point in the near future, someone will come up with a derivative of Firefox which

a) has its own local database to store as much user data as needed without creating a security holes on your computer,

and

b) can *cache* large javascript applications.

At which point what's the difference between your web 2.5 concept and the mainstream web-as-a-platform service model?

Users will go to a site, implicitly grabbing the application, which will be cached locally, along with the user's data, for offline work. The data will be synced back with the central or cloud servers whenever reconnected. Similarly, the application software will be written as if served centrally, and kept continuously updated, but will be cached locally to minimise network traffic and for offline use.

My feeling is that software-as-a-service is inevitable *as a business model* given two truths about software development :

a) large-scale software development sucks

b) free-software

Trying to specify and build and deploy a large-scale piece of software in one lump (two to three year project) is an incredibly difficult and inefficient way to do it.

It makes far more sense to develop according to iterative Agile / eXtreme methodologies, releasing small new incements of functionality on a regular basis.

The problem with eXtreme or agile development is that it's very difficult to *sell*. Customers want fixed time, cost and functionality negotiated in advance; they don't want an open-ended commitment to funnel money to developers.

How do you reconcile the contradiction : monolithic development sells, monolithic development sucks?

Microsoft used to have an answer, before free-software destroyed it.

SaaS offers another : rent the software, which can be either hosted by the provider or, for convenience and confidentiality, brought inside the organizational firewall.

In practice, installing it in-house is another form of local caching, and is a mere implementational detail for something which at the business level is treated as a service.

In short, this is gonna happen because companies producing SaaS will be more agile and get better quality software written, faster, than those sticking to large scale product development.

In practice, you may have local copies of both the software and your data, but that will be "mere" optimization (and certainly not to be planned "prematurely" :-)

 
At Monday, August 28, 2006 8:01:00 AM, Anonymous Anonymous said...

hey should add IM from other app providers such as koolim.com and meebo.com, most people look for web based IM at work and at school.

 
At Monday, August 28, 2006 8:12:00 PM, Anonymous Ed Lyons said...

The only group of people I think are going to have a reasonable uptake of the web office are startups.

The problem in my mind is that usage of Word is not about user preference or innovation or anything like that. It is about IT organizations and budgets and fear. If everyone in an organization already "owns" Word (even if they have pirated copies) then the incentive to change is almost zero and the potential to become afraid is huge. (Imagine if a client can't open our proposal!!!!)

The only time you get organizations that move away from Microsoft Office are when the following things happen: the managers, IT guys, and users are all the same people; the cost savings between Office and non-Office is a non-trivial savings for the company; interoperability with external users of the documents is not seen as overriding everything else (interop fears being a red herring that causes many people not to leave office formats).

So what kinds of organizations have this kind of attitude? Very small ones.

 
At Wednesday, August 30, 2006 7:02:00 AM, Anonymous David Koretz said...

You raise an interesting question, but I think the issue with the approach is that you are using Alexa as the ranking method. Alexa gathers the vast majority of their stats by users that have the Alexa toolbar installed. Most business users simply don't install Alexa.

We have increased bandwidth and users by more than 500% in the last 12 months, yet our Alexa ranking has gone *down.* As a test, we had two of our employees use Alexa and our ranking tripled. The toolbar does a very poor job of measuring SME users.

Also, I think when you look at penetration of services, you are comparing apples and oranges. The primary successes on the Web have been small business-centric services like BlueTie, Intranets.com, Salesforce (which despite claiming an enterprise focus, has 80%+ of their users in installations of less than 1,000 users) etc. All of us have seen enormous growth in users over the last 12 months. Large corporates may not use SaaS right now, but SME's do. In fact, more than 3.1 million small businesses still rely on AOL as their primary email provider.

IT organizations unfortunately still like to have another server to sleep next to at night. Smaller businesses with 1-100 employees are the primary driver of Software as a Service right now, because they simmply can't afford in-house servers.

David Koretz
President & CEO
BlueTie

 
At Wednesday, August 30, 2006 7:15:00 AM, Anonymous Liam said...

Bluetie offers a "business-class messaging solution", i.e. hosted email, which is the one online service making real headway in the market, as pointed out in the article.

 
At Wednesday, February 14, 2007 1:36:00 PM, Anonymous bart stevens said...

What the key driver of succes of the web office will be, is how current enterprise vendors will able to reduce the numbers of features in their online versions.
SAP is betting 400 MLN euro in the next 8 quarters that they can do it. If they move, lots of people will pay very close attention ... Like us, we are doing such an exercise as we speak. To be kept in the loop, follow the smell ... ;)

 
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