I’ve had a number of conversations with other providers in the video space over the last several weeks that have provided further evidence that a lot of people still don’t get software as a service.

I’m always looking to figure out which other providers out there really have a SaaS solution and which of them are just calling their enterprise software or PC-based solutions with web interfaces SaaS.  The typical response I get when I probe on how a provider’s solution is implemented can be paraphrased as “we have a web brower interface, we do updates over the network and we charge monthly for our solution – so clearly we are a SaaS provider”.

I don’t need to go into a complete definition as there are great sources out there such as the wikipedia entry for SaaS.  Let’s just focus on what isn’t SaaS for a minute.  Putting a web server on a DVR (each and every DVR mind you) that users can access over the Internet is not SaaS.  Automatically pushing updates to DVRs or clients running individual copies of software is not SaaS (have you had the joy of being asked to “automatically” download iTunes v.9.0.x every two weeks b/c they pushed some fix or feature you won’t even notice?)  Charging monthly for hardware or software that you would otherwise sell to someone outright is not SaaS.

SaaS is a key element of MVaaS and with it comes a number of inherent capabilities that we believe provide advantages in the delivery of video services across large numbers of users and video endpoints.  Given its been a while since I’ve posted, I should probably follow up with another post to make my argument.

We are excited about both the content and participation we have lined up for the inaugural Managed & Hosted Video Summit planned for July 22nd and 23rd in Boulder, Colorado. I invite and encourage those of you still thinking about the event to pull the trigger. A sample of the participants joining in the Summit include: Axis, Salesforce.com, Cisco, Sony, Brivo, ACTi, Verint, Retel, Siemens, Archerfish, Connexed, Video IQ, Marketforce, Trextel, among many others.

The objective of the summit is to accelerate segment growth and speed adoption of MVaaS and Hosted video solutions. The agenda is geared toward business development and generating a productive dialogue that will inform how to best attack the opportunity. And of course Boulder is a great place to escape the summer heat and humidity hitting most of the country.

Find registration information here or give us a call if you have questions.

Zoosk is (apparently) an online dating service that just surpassed Match.com in total traffic recently.  Their advertising is funny but over the top (you’ll likely only find it late night on 2nd tier cable stations) and definitely not safe for watching with, oh,  just about anyone I can think of in my life.  On the surface, there isn’t a lot that we have in common with them.  They are a consumer play, they are a freemium service, and well… they make money by helping singles hook up, I mean find lasting lifelong relationships.

Despite the differences we may have, we do have one very important thing in common and it is on this front that I aspire to be like them.  Zoosk, like Envysion, is a Software as a Service provider.  I had the pleasure of listening to their co-CEO , Alex Mehr, last week talk about their business.  One of the coolest things he shared was how they run their software development shop and test the various capabilities and functions that they offer to their customers. 

They run two distinct instances of their application at all times (an A and B instance).  They push new functionality and make changes to both instances every day or every other day.  When they want to try something new, they come up with their two best ideas, implement one version on the A instance and one version on the B instance, measure the results, and then kill the loser – putting the winning idea on both platforms.

I thought we were advanced with our service where we push new capabilities and try new features every two weeks.  These guys are leveraging the benefits of SaaS to a degree that I hadn’t even contemplated before.  Poor Rob Hagens – I am now going to be badgering him on why we can’t do releases more frequently, try more things, and react even faster to customer requirements!

Now, before you get all spun up pointing out that Zoosk is a consumer play and their user requirements are not anything like the traditional security focused video surveillance users that have effectively used the same basic video functionality for the past 10 years and so why do you need to change functionality or react to customer requirements when they don’t ever change… remember, our largest customer has over 1,300 users but only 3 people in loss prevention/security.  1,297 of them had never used video before and are using it for things that even they didn’t know they would want to do before they tried our service.  That is just one customer.  Expand that to the entire emerging market MVaaS is creating and you have a whole bunch of new users and requirements happening very quickly.  The winners in this space will be those that can react quickly and get customers what they want.  Two week iterations on a single instance of the platform may be enough to maintain our lead today, but if the MVaaS market continues to grow as it has been, it may not be enough down the road.

Get ready Rob – I may ask you to spend some time checking out Zoosk as a business expense!

- continued -

Top line growth is paramount to business start-ups, and this is no different for us.  Our focus on attracting new customers has not changed.  What has changed is how this growth is measured.

In the past, we would tout the Contract Value of the customers we had signed in a given month.  But as illustrated in the previous post, this number can be misleading.

Therefore, the primary metric for our Company (other than cash) is Committed Monthly Recurring Revenue (CMRR).

CMRR is the total of all monthly recurring revenue, net of expected churn during the next six months.  The metric includes revenue that has been installed and is being recognized, as well as revenue that has yet to install but has been committed to by a customer.

In my prior post, I alluded the plane crash of 1999, where JFK jr. and his passengers (his wife and sister-in-law) perished.  The NTSB concluded that the probable cause of the crash was pilot error, which was contributed to by the fact that the pilot was not instrument-rated.

Why did I bring this up?  Prior to Envysion’s launch of Envysion Video in 2007, software-as-a-service had not been introduced to the video surveillance marketplace.  We were one of the first companies to the mark.  It has taken some time to help educate the market, but we believe that the more and more companies are recognizing the unique benefits of MVaaS. 

With success has come a clearer focus on achieving our growth aspirations.  It has also caused us to reflect on what the growth may mean to current and prospective investors.  The conclusion was that the metrics we were utilizing to gauge performance were not adequate.  They served us well for a time.  But as our growth has accelerated, the metrics were not adequately presenting our financial performance.  In a sense, we risked becoming pilots without an instrument-rating.

I’ve heard from those who were alive in 1963 that they will always remember where they were when they received news that JFK was assassinated.  Since I was not born yet I can’t count myself in this group.  However, I have a similar recollection of the morning that news broke of his son’s fateful plane crash in 1999.  It certainly did not elicit the same national period of mourning, but I’m sure that it brought many of those who experienced the first trauma back to 1963.

As speculation persisted over what happened (over the period of weeks, probably), one thing stuck with me.  A primary driver of the tragedy was the fact that JFK Jr. was not qualified to fly at night.  He was not an instrument-rated pilot.  Therefore, since the flight was at night and the weather was poor, he was unable to utilize visual cues (e.g., the coastline) in guiding his pilot reactions.  And since he was not qualified to fly utilizing only his instrumentation, he became disoriented and crashed.

I am not well versed in the field of aerospace.  My knowledge begins and ends with the requirements of lift and thrust.  So the fact that the concept instrument-rated has stuck with me is curious.  And it is more so as we’ve undergone a shift of the instruments that we use to measure our performance at Envysion.

Both on this blog as well as in many other forums we’ve seen debate over the fate of the security integrator of today. Part of that debate is if integrators are attuned to customer needs. Another part of the debate questions the value adding role they play (or lack there of) in the context of managed and hosted video. Evidence of thier challenge is the success of video services providers, including Envysion, who have been working directly with customers.
One angle I haven’t seen discussed as much is if we will see a new set of channel players enter the picture. The Reinvention of the Cloud Computing Reseller, a recent article on CRM-News, brought up this angle and I thought it was timely. A couple interesting excerpts:

Because many of today’s SaaS solutions blur the line between a software solution and a business service, a widening array of institutions are now exploring whether they can add SaaS solutions and cloud computing services to their corporate portfolios to better serve their customers and gain a greater competitive advantage.

The article provides Bank of America as its key example. And suggests it’s a ‘win-win’.

BofA recognizes that it needs to offer its customers a broader set of services to better fulfill their needs…Selling SaaS and cloud computing services through an established institution like BofA gives these solutions a new level of credibility in the marketplace.

BofA in this example is aggregating a collection of services that are fairly unrelated but meaningful to thier target customer and providing some degree of ‘trusted advisor’ in reselling cloud services.  So what about for reselling managed and hosted video services? Who’s got next?
While it would be fun to throw names out there, for now I’ll focus on describing a couple potential options. The first is likely pretty obvious, an aggregator of one flavor or another likely functional (everything IT: managed video, network, software etc) or segment oriented (everything retail: real estate, managed video, facilities). The second type of reseller that may emerge is a value added reseller that connects the clouds together in a meaningful way. This ‘cloud connector’ would do things like seamlessly integrate a customers CRM data to their ERP data.  I see this cloud connector as much like the successful system integrator of the past twenty years.  They will resell sets of cloud services that work on their own but also interdependently as a system for customers. 
I’ve got a strong bias that a successful reseller needs to add value so my money is on the cloud connector. I’d be interested in hearing from folks out there some already out there. Our Chief Architect (a.k.a. Jeff Gordon) and I couldn’t come up with a good one.

Sand Hill just released a new study on cloud computing, “Leaders in the Cloud,” and it found that the #1 driver of cloud computing adoption was business agility. They go on to explain that agility in their view incorporates a number of business concepts including flexibility, speed, and innovation.

I reflected on the study and the agility take-away a bit as I was flying to DC for a customer visit. At the end of the day the number one driver for managed video and our MVaaS solution is and will continue to be profit improvement. Together with incredible return on investment, customers see compelling value that in turn drives adoption. While I understand that agility for a customer has value in and of itself I would caution customers and providers alike that going quick without purpose can be just as dangerous as going slowly. As a provider I would never want to lose sight of the application use and bottom line value delivered for customers. Certainly agility for its own sake was not the take-away of the Sand-Hill study. Actually the punch line was as it should be, that adoption will be driven by business value and I could agree more. It may sound strange that someone in the cloud space would deliver a cautionary message – to clarify, my point here is that agility is part of the story. Just as the cloud is part of the story. The cloud offers fundamental advantages to customers and providers alike. It can be an accelerator and differentiator but I hope we learned lessons from the internet explosion and the ongoing mobility boom that at the end of the day it is about value add. Just setting up a web-page didn’t translate to long term success just like putting an application or platform in the cloud won’t either.

So that said, agility is an important part and enabler of the MVaaS value proposition. Customers who are using our application can rapidly scale additional locations, users, and usage. They can immediately receive application updates and requested improvements & refinements. They can easily integrate additional business systems to video and leverage social media influenced collaboration tools. A customer can focus their internal IT resources on other areas and IT investment on value adding solutions vs. help desks and administrators. Customers can immediately leverage Envysion’s growing set of best practices, see their usage statistics and drive continuous operations and profit improvement all in real time.

Yes, at Envysion we put the advantages of being in the cloud and a software as a service provider to good use and we are excited to position our customers with greater business agility. But for us our #1 source of pride will always be delivering bottom line profit improvement and value delivered for customers.

Infoworld had an article this past week titled Why businesses still hate enterprise software. The article lists out a bunch of pain points but #1 & #2 on the list were the high cost of ownership and difficult upgrades. The strain a solution places on customer is often overlooked part of selection/decision math (see our ROI blog) but even if it is overlooked on the front end examination it’s a very real cost that customers will incur and as you can read in the article, they are increasingly pissed off about it.

Certainly there is some great software out there that was and will be delivered via the traditional client-server model. And at the end of the day customers should care about the net value a solution delivers (we’d actually look forward to helping customers with this examination). That said it is refreshing to see broader acknowledgement of the support costs that can come along for the ride. Additional costs beyond what you pay upfront can be rich and may include installation, configuration, maintenance, upgrades, change management, help desk, trouble shooting etc. Opportunity cost, another often overlooked area, also can penalize customers as they tie up resources and scarce mind-share that could have been devoted elsewhere with better returns.

Software as a service and Envysion’s managed video as a service specifically seek to address this challenge head on. We aim to put no strain on a customers IT group or network. Customers only need a browser to access our software and services they never install anything on any client computer or server. Envysion upgrades (which occur every few weeks) are delivered seamlessly and never require customers to lift a finger. Our application is built for every day use and the every day user so help desks and heavy training requirements are a thing of the past. Should a problem arise we have a fully staffed NOC.  Actually we proactively go after problems as we monitor and manage the service and fix issues as we find them.

For those out there frustrated with complex video software and/or want a solution that delivers more while straining you less – give us a call, we’d love to talk to you.

A friend, who is out in the Bay Area, and I were talking this past week about product management and it got me thinkinking about product management in a SaaS environment. What stuck out to me as I thought about what’s different (vs. other spaces) was the ability to roll out a new version or completely new product every couple weeks. You can still have major ‘releases’, salesforce does them by the season, but you need to think about development prioritization, productization, pricing, communication really the whole bit on a much more accelerated pace. You also have the benefit (and challenge) of tons of real-time feedback you can get from customers on how they are using what you have out there. In a number of ways it turns the traditional product life-cycle dynamic on its head. It’s quite a balancing act.
My early take-away is that the ‘as a service’ model presents a flexible and fluid environment and that can present a tremendous opportunity for the nimble. Agility in development and responsiveness to customers pays huge dividends. However, it can present some dangerous candy for those not willing to commit and those without focus.  Even with the ability to go in so many directions you still have to pick your spots and follow through for your customers and on your strategy.
It’s a whole new world ripe with some great opportunity but at the core (call me old school) the same business rules apply.