Matthew Deacon Chief Architectural Advisor Developer & Platform Group, Microsoft Ltd

“The Only sustainable Edge”, John Hagel & John Seely Brown Opportunities Migrate to the edge Require a new source of competitive advantage – “Accelerated Capability Building” Disruption will be a significant force – Innovation blowback

Opportunities Migrate to the edge CORE “The Only sustainable Edge”, John Hagel & John Seely Brown

Technology Innovation and the changing software landscape

Why is it so often the case that companies that lead their markets fail to stay at the top of their industries when technologies or markets change? Posed by Joseph Bower & Clayton Christensen…

It is because the new technology was or is Disruptive… Joseph Bower & Clayton Christensen claim to have the answer, in their HBR article and in their book(s):

Technology Innovation and the changing software landscape

SEAGATE 1980 pioneered 5.25” DD Revenues $700m by 1986 SEAGATE 1980 pioneered 5.25” DD Revenues $700m by 1986 MARKET & ATTRIBUTES IBM & PCs Capacity 40-60MB Price (Cost/MB) Performance MARKET & ATTRIBUTES IBM & PCs Capacity 40-60MB Price (Cost/MB) Performance 3.5” 10MB DDs Conner 3.5” 10MB DDs Market <$50M Conner 3.5” 10MB DDs Market <$50M Catching the Wave, Bower & Christensen SUSTAINING INNOVATION This can either be RADICAL or INCREMENTAL sustaining innovation

SEAGATE 1980 pioneered 5.25” DD Revenues $700m by 1986 SEAGATE 1980 pioneered 5.25” DD Revenues $700m by 1986 MARKET & ATTRIBUTES IBM & PCs Capacity 40-60MB Price (Cost/MB) Performance MARKET & ATTRIBUTES IBM & PCs Capacity 40-60MB Price (Cost/MB) Performance 3.5” 10MB DDs Conner 3.5” 10MB DDs Market <$50M Conner 3.5” 10MB DDs Market <$50M NEW MARKET & ATTRIBUTES Compaq & portables Size Weight Power consumption NEW MARKET & ATTRIBUTES Compaq & portables Size Weight Power consumption Catching the Wave, Bower & Christensen DISRUPTIVE Capacity up 50% / year In 1987 met mainstream demand of PC Market Capacity up 50% / year In 1987 met mainstream demand of PC Market

Performance Time Offered by mainstream Offered by new technology Required by market Disruption Initial performance

Definition (Part 1) Disruptive technologies introduce a very different package of attributes from the mainstream technology that is currently valued. Furthermore, and most importantly, the new technology performs particularly badly on one or two dimensions that are currently particularly important to current customers.

Definition (Part 2) In addition, to be disruptive, the new technology makes rapid strides on the key dimensions, those on which it massively under-performed initially, to the extent that it becomes competitive even on these dimensions. It thus has the potential to be disruptive to the existing technology…

Technology Innovation and the changing software landscape

PC Gartner Applied SOA: Transforming Fundamental Principles Into Best Practices. 4 April G GUI Web Web 2.0 SaaS

“Far from having crashed, the web is now more important than ever.” Dale Dougherty, O’Reilly

Six Characteristics of SaaS Location License Management Community Reach Application

Technology Innovation and the changing software landscape

How prevalent are Disruptive Technology Innovations for SaaS? What are the indicators of Disruptive Technology? – Pre-disruption? – Post-disruption? How can one estimate/measure the impact of Disruptive Technologies?

20 What are the key attributes of a traditional product Existing Market Existing Product Existing Product New Product New Product New Market B.A. D. C What are the key needs from an existing customer perspective? What are the key attributes of the new product What are the key needs from a new market customer perspective

SIEBEL Complex, commitment High upfront costs, CAPEX Maintenance, Support SIEBEL Complex, commitment High upfront costs, CAPEX Maintenance, Support MARKET & ATTRIBUTES Large corporations Reliability, Scale Unique requirements Flexibility MARKET & ATTRIBUTES Large corporations Reliability, Scale Unique requirements Flexibility SF.COM Low upfront cost Simple, low commitment Subscription SF.COM Low upfront cost Simple, low commitment Subscription NEW MARKET & ATTRIBUTES SMEs Pays as you grow/mobility No IT, good enough Try before buy NEW MARKET & ATTRIBUTES SMEs Pays as you grow/mobility No IT, good enough Try before buy Siebel and Salesforce.com

SIEBEL Complex, commitment High upfront costs, CAPEX Maintenance, Support SIEBEL Complex, commitment High upfront costs, CAPEX Maintenance, Support MARKET & ATTRIBUTES Large corporations Reliability, Scale Unique requirements Flexibility MARKET & ATTRIBUTES Large corporations Reliability, Scale Unique requirements Flexibility SF.COM Low upfront cost Simple, low commitment Subscription SF.COM Low upfront cost Simple, low commitment Subscription NEW MARKET & ATTRIBUTES SMEs Pays as you grow/mobility No IT, good enough Try before buy NEW MARKET & ATTRIBUTES SMEs Pays as you grow/mobility No IT, good enough Try before buy DISRUPTIVE ?? Online version Desktop version

EXISTING PRODUCT Scale Customisation Training Maintenance, support EXISTING PRODUCT Scale Customisation Training Maintenance, support EXISTING MARKET Complex integration Control, consistency Flexibility Privacy EXISTING MARKET Complex integration Control, consistency Flexibility Privacy SAAS PRODUCT Pay as u grow Quick start No training, IT, Capex Market driven features SAAS PRODUCT Pay as u grow Quick start No training, IT, Capex Market driven features NEW MARKET Broad reach No HR Department No in-house IT Flexible NEW MARKET Broad reach No HR Department No in-house IT Flexible DISRUPTIVE ?? SUSTAINING ??

Technology continues to evolve at an significant rate – Some sustaining & some disruptive Software will be about choice – On premise, in the cloud – Or a mix - Software + Services – With an emphasise being on “Service” By understanding innovation we have an opportunity to manage it.

Matt Deacon Blogs.technet.com/matt_deacon