One of the major knocks on SaaS (and Web based apps in general) is what happens when you have no connectivity. As an analyst I travel a fair deal and many of my most productive hours are spent sitting on a plane responding to email, writing reports, and catching up on all the research I should be reading but often don’t have time for. What I can’t do: file my expense reports, close my CRM records, or complete my end-of-quarter evaluations. All of these apps are delivered to me online.

All things considered this has never been that big of a deal for me. But it hasn’t stopped SaaS critics from knocking these apps as insufficient. Not surprisingly there have been two ways to handle such concerns. First — the route taken by Etelos, Zoho (via GoogleGears), and others — is building apps that have the ability to go offline and then sync back up on re-connectivity. This works quite well with Outlook and my mail file, but frankly gets pretty complicated when we start talking about collaborative applications like spreadsheets, powerpoint decks, or Word documents, all of which are leading candidates for SaaS delivery. The second tactic — the route that Google seems to be taking, despite GoogleGears — is to wait it out; connectivity will eventually catch up to the apps.

Right now I have to give a big vote for the latter tactic. As I write I’m somewhere over Pennsylvania on an American Airlines flight from JFK to SFO. I’m on my way home from Thanksgiving and using Gogo, the Aircell offering available now on select AA routes. Though I couldn’t use iPass — the single best application Forrester provides us — sign up for Gogo was fast and efficient. I even had a brief chat conversation with a customer service rep to get things squared away. The connectivity is fantastic and, if I were to be honest, better than I’ve had the last week in Connecticut (thank you Stamford Sheraton). With one easy transaction one of the last places I get stuck without connectivity is gone — at least when I fly from JFO to SFO. Best of all Hulu is working like a champ. Now I just have to get those damned expense reports filed . . . as soon as I’m done with this episode of It’s Always Sunny In Philadelphia.

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As you may have noticed already I am an unabashed Google skeptic — at least when it comes to Google in the enterprise. They have yet to show me they are truly committed to the enterprise space, and the customers they have shown thus far have frankly been a bit disappointing; they are mostly small, techie, and or higher education. The pace of product innovation has been slow — how long has it been now since I lost my bet with Rob Koplowitz about GoogleGears? — and the numbers Google provides for the size of the business are dramatically skewed by the Postini acquisition.

Today Google announced a webinar with Genentech. The $12bn pharmaceutical will discuss its 12,000 employee implementation of Google Calendar. As best I can tell that represents the entire employee base for the company. Impressive. We’ll have to keep a close eye on how deep the Google apps suite works its way into the company — I’d like to hear that Google is running Genentech’s email, a truly mission critical app, but calendar is big step in the right direction. A few more customer examples like this and a lot of CIOs will look at Google with fresh eyes.

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This weekend rumors began circling that Microsoft is about to rebrand Live Search as “Kumo.com.” Apparently Kumo translates to either “spider” or “cloud” in Japanese. All things considered it sounds like a pretty logical choice, if not a terribly awkward word, and yet another expensive branding exercise. I can’t quite imagine anyone saying “I don’t know, lets Kumo it.”

Just this past week I was meeting with Jeff Schick, the head of social software at IBM, and coincidentally we started talking branding — Bluehouse was the big hit of the analyst conference, by the way. Apparently when IBM was naming Lotus Connections they hired a branding consultancy to help with the decision. The big winner from the consultancy: SCOVE. Yes, you read that correctly, SCOVE. I don’t know if it was an acronym or an actual word, I didn’t have the chance to ask since Jeff and I were laughing too hard. Needless to say that particular branding firm did not make their commission, and Jeff’s team came up with the name Connections themselves. Now when one of Jeff’s team members is trying to pass off a crap idea they are accused of “Scoving.”

Frankly I’m not sure I could have recommended clients take a look at IBM SCOVE with a straight face, though I didn’t think Wii or Hulu would roll off the tongue quite so smooth either. Maybe “Kumo it” will catch on, but I would put my money on “dude, you totally got Kumo’d” entering the lexicon instead.

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Yesterday the New York Times published an article detailing a recent study from the MacArthur Foundation that examined the role of the Internet in the lives of teenagers. According to the Times:

“It may look as though kids are wasting a lot of time hanging out with new media, whether it’s on MySpace or sending instant messages,” said Mizuko Ito, lead researcher on the study, “Living and Learning With New Media.” “But their participation is giving them the technological skills and literacy they need to succeed in the contemporary world. They’re learning how to get along with others, how to manage a public identity, how to create a home page.”

On the surface this looks like good news; the behavior that has become so ingrained in our high schools and middle schools is building actual skills. The open question however is the ultimate impact of this behavior. How this sort of socializing and identity creation impacts long-term development is poorly understood. The researchers themselves acknowledge the deficiency: “Ethnographic studies like this are good at describing how young people fit social media into their lives. What they can’t do is document effects. This highlights the need for larger, nationally representative studies.”

For our part, Forrester’s own research on teen behavior shows tremendous usage of social networking sites. In fact, we found in 2007 that nearly two-thirds of US online teens – those ages 15-17 – visit social networking sites at least monthly. A full 20% of online youth – ages 12-17 – visit social networking sites daily, and most update their profiles while there. We recently updated much of this survey work for 2008 and while I have yet to dig into the specifics for the youth market I would be shocked if it did not mirror the overall trend of greater participation and levels of engagement.

But is this participation and engagement a positive development? The MacArthur Foundation researchers suggest it is. Personally, I have some doubts. Granted, learning how to create a home page may be of some value, and I will be the first to admit that I never really learned to touch type until I got going with AOL instant messenger in high school. But these skills seem pretty superfluous.

Where the researchers start to talk real value is in the notion of getting along with others, and creating a personal identity. But any sociologist or psychologist in the world will tell you that the teenage years are when everyone learns to be social and create an identity, internet or not. So now the questions becomes not “are the kids creating an identity” but “are the kids creating an identity that is healthier than they would have created otherwise?”

At the risk of coming off as a Luddite I’m going to suggest that the answer is no. Ever since it was released nearly three years ago a study in the American Sociological Review by researchers at Duke University has been stuck in the back of my head (those of you who have spent much time with me are likely sick of hearing about it). At the time the researchers reported that:

“The evidence shows that Americans have fewer confidants and those ties are also more family-based than they used to be,” said Lynn Smith-Lovin, professor of sociology at Duke University.

“This change indicates something that’s not good for our society,” Smith-Lovin said. “Ties with a close network of people create a safety net. These ties also lead to civic engagement and local political action.”

Let me repeat that, just so we don’t miss it: this change indicates something that’s not good for our society. Despite the hordes of new technology – email, IM, social networking –at our disposal we are actually distancing ourselves from other people. And this is among adults who learned these behaviors over time. The kids are defining themselves in terms of this technology from day one.

Of course there is the chance that growing up with these tools will better equip you to manage your relationships through them. However if we look again to Forrester’s Consumer Technographics data the story is a lot more complex. We find that the kids are lying (only 53% even claim to tell the truth on their profiles), creating multiple identities (49% report creating multiple online identities), and hiding parts of their lives from others (58% of multi-identity teens have social networking profiles they only give to certain people). If we couple this with the notion that the kids are becoming self-obsessed, voyeuristic, and abusive to each other online I think there is reason for real concern.

I don’t (yet) have children, certainly don’t have teenagers, and am only an armchair sociologist. I am not, however, naïve enough to believe these behaviors are new behaviors. All kids lie, hide parts of their lives from others, and experiment with multiple personalities. But in the past it was much harder to hide this from parents, friends, teachers, and others who provide the proper guardrails for kids. The internet makes it too easy, in my view, for kids to grow up by themselves.

The MacArthur Foundation researchers are trying to calm parents fears about their kids online and in one sense they are right to do so. Fears of online predators are overblown, and kids need to be allowed to socialize, regardless of medium. Banning social sites or internet access outright is counter-productive. That message makes sense and needs to be repeated. But parents need to approach the Web with a skeptic’s eye. The fears many parents have may not be well founded, but I wonder if parents are missing a bigger problem developing right beneath their noses.

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This post won’t do the topic justice, but Telligent just made another hire that caught my attention. As CEO Rob Howard writes, the company has just hired Marc Smith, another former Microsoftie, as Chief Social Scientist: “Marc will lead Telligent’s R&D efforts around analytics and business intelligence (tools to help you understand what people are doing in your communities), specifically Telligent Harvest.”

This, in my view, is a smart hire. Along with my colleague Jeremiah Owyang, I’ve been harping on the fact that it is increasingly difficult to tell the difference between white label social networking vendors such as Awareness, Jive, Lithium, Telligent, and hordes of others. So how should these vendors — as well as the incumbent web content management vendors like Interwoven and Vignette — differentiate themselves from each other? In a word: analytics.

Many firms from CPG to finance are now investing in social networking and social media and most are (rightly) focused on how to grow their community. The big question today is “are we building a viable community.” Traffic stats, comments, posts, and UGC are the metrics most community managers live and die by today. This is not, however, sustainable long term. Pretty soon the conversation is going to shift from “do we have a viable community” to “what are we learning from our community,” “is our community happy,” “what are the major concerns they are expressing,” and “how do we change our product road map as a result?” Most communities have begun as marketing initiatives but increasingly market research and customer support are getting involved and will only do more so over time.

How companies can make use of the insight from customer communities is going to be where budget, sales, and market share are won and lost, and analytics are going to be a major asset in that fight. Don’t get me wrong, analytics alone will not result in successful community implementations — incorporating community insights into the product development process will be the bigger trick — but those vendors that can provide the best analytics tooling will have a substantial advantage as the market shakes out. Telligent is making big moves to get there first.

By the way, Jeremiah is about to publish a Forrester Wave on white label social networking vendors. I worked with him early in the process developing the criteria and am very pleased to say that analytics are well covered in the report. I haven’t seen the final draft yet, but I can tell you already it will be a must read.

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Update: Traction President, Greg Lloyd weighed in via email. See below for his comments.

Traction Software, one of the blog and wiki vendors selling exclusively into the Enterprise 2.0 space, announced last week that “2008 marks the sixth year of consecutive revenue and customer growth at Traction Software.” This is the same drill as for MindTouch; with the wind at its back in (most of) 2008 Traction better be setting new revenue records. Congratulations to the Traction team; Jordan hasn’t been in my ear every other week as of late so it looks like things are busy over there.

The other news Traction announced is that “To thank existing customers for their support, and welcome new customers, we’re offering a 20% discount on commercial or non-profit price of all software licenses or upgrade purchases made between November 17th and the end of 2008. The promotion applies to perpetual licenses as well as the annual subscription options announced in June.”

My first thought after reading that announcement: “Uh-oh.” I applaud Traction for taking decisive action and slashing its already affordable pricing and grabbing customers now, but clearly there are larger forces at work here than a simple thank you to existing customers. My guess is they have 20% slack built into the pricing anyway, but to cut it right off the top is aggressive. Either the company is struggling to meet growth targets — despite the positive returns in 2008; the economy is taking a toll faster than I thought it might; or the competition in the market is really starting to hurt. I would guess it’s a bit of all three, though I’m not terribly bullish on Traction’s long term prospects; it feels like the market has started to leave the company behind.

I’ll be on the lookout for more discounts — advertised or otherwise. If we see more than a handful of vendors slashing prices I may need to revise my market projection downward with prices falling faster than I originally modeled.

Jordan, I’m looking forward to an earful, though I’m traveling the rest of the week, so you may not hear from me right away!

Update: Greg Lloyd, Traction software President sent me a quick note on the post and has agreed to let me share his comments.

“Hi Oliver — I enjoyed finding your Strategic Heading blog – via Google  alerts – and encouraged Jordan to speak for himself on  your ‘Traction Offers A “20% Year End Discount”‘ From me: it’s not a price cut, it’s a 45 day promotion. As Freud said,  sometimes a cigar is just a cigar.

“We have a limited downside closing deals one or two quarters earlier than we otherwise might, and a good opportunity make our case as the smart alternative for penny-pinching visionaries who have a business purpose firmly in mind.”

As I wrote originally, wrapping up customers today, before budgets flip to 2009, makes a ton of sense and Traction is smart in doing so. That said I’m not quite ready to believe that a cigar is just a cigar in this case; in all something just leaves me uncomfortable. But as usual I am more than happy to be proven wrong.

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I just got back from a week in Tokyo — sorry about the light posting — where I was consulting and running a workshop. I have to say: Tokyo is a BIG city! I spent a year in London back in 2002-2003, and while London seems to spread out over most of the island nothing quite prepared me for Tokyo. Every direction you look, all the way to the horizon its just skyscraper after skyscraper; clusters of them going on forever.

As for the picture above, that’s what much of the city felt like, a complete blur. Its nice to be home — until tomorrow anyway. If you are heading to the IBM Software Analyst conference let me know.

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This one should be filed in the “well its about time” category. According to The Australian, Google is going to start assessing customer needs and trying to fill them, instead of building products in search of a market, as Google famously has done with just about everything else. According to Google’s newly created Strategic Planning Director Stuart Smith, “‘What typically happens is it is just a load of engineers producing a load of things and then refining until it finds an audience,’ Smith says. ‘What they have never really done is to look at audiences and understand audiences and say “perhaps there is a need over here — let’s meet that need”.’”

While I applaud the effort — and as a market researcher who has tried to work with Google in the past there is no shortage of “I told you so” in this — I’m skeptical that the Google culture will truly change. Clearly the path to success is to come up with projects that turn into products, and I would be surprised if well researched, corporate-lead initiatives had the same cache within the company. On top of that it is pretty clear the memo has not been delivered to all parts of the organization, as Google Enterprise has just launched its own lab.

Google will need to tread carefully: on the one hand becoming more programmatic and customer-centric — for a notoriously engineering driven company — is a huge improvement, but if they swing the pendulum too far there is the potential to lose the ingenuity and innovation driving the company, not to mention make it a miserable place to work. I would guess the pendulum doesn’t swing hardly at all, but even a little movement should be a major positive for consumers and (presumably) enterprise customers.

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MindTouch has reportedly grown its revenue very aggressively in its past fiscal year. According to VentureBeat, “in the year ended October, the company says its revenue grew 612 percent while the number of customers grew 368 percent.” The company blogged about the news earlier this week.

This is a big number but not unexpected. MindTouch was growing from a small base — MindTouch is an open source company — and the wind was most certainly at the company’s back in 2007-2008. As someone who predicted a 47% CAGR for the enterprise Web 2.0 market its nice to see these kinds of numbers, though clearly they are not going to be typical for the industry as a whole.

No word yet if the company is profitable — my gut says no — but in either case congratulations to Aaron and the team.

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Position: Copy Editor

Pay: None (only volunteers will be considered)

Rationale: Apparently I can’t spell check my own blog posts.

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