Given that users who are not tech savvy often type search queries into the URL bar, I always wondered what the value was of the URL bar. Clearly, their intention was not to go to the specific URL (unique resource locator) but rather to find out what other information there is on what they typed in. Similarly, as a tech savvy user, I rarely type in URL’s other than for a few often-used sites that I expect my browser to auto-complete. In almost every case, I search instead since I’m never sure what domain a company is using (often, due to domain name squatters). Usually, I find my desired link in the first page of search results.

My follow-up question has been – why not get rid of the URL bar and only provide a search bar? Seems that Google Chrome finally does that.

Example of a word typed into the Google Chrome Address Bar (source: http://www.google.com/support/chrome/bin/answer.py?answer=95440&hl=en)

Search queries and results are listed in line with the potential domain names that could match your query. Hopefully, Firefox 3′s AwesomeBar will provide similar functionality sometime soon (maybe another FF plugin already does?). And if there is broad adoption of Google Chrome, can we hope that the value of typo domain names and squatted domain names will decline?

I acknowledge the obvious value to Google (and Yahoo! and MSN) of additional traffic and searches; I infinitely prefer that option to the current state of affairs.

I find several of his assertions wrong and in fact contradictory to other statements that he makes in the same interview. My takeaway: this reads like a classic case of a company not wanting to cannibalize its current revenue streams.

He makes a fair point that much of SaaS hype has been catalyzed by the success of a single company, Salesforce.com. He also points out that SAP’s SaaS offering, Business ByDesign, was a failure in the market with fewer than a 100 users after a couple of years. However, I see two major problems with his assertions:

• Salesforce.com’s success has little to do with the fact that it’s been licensed under a SaaS model.
• The way to retain customers is via vendor lock-in and retaining customers in SaaS is much harder because switching costs are lower.

First, to his point that he and others would use Salesforce.com because the software is very good, not because it’s SaaS, says nothing about whether or not the SaaS licensing model has helped to increase the market penetration of Salesforce.com. Fundamentally, if I’m a customer inside an enterprise and Salesforce.com gives me a packaged server I can install locally and have my users hit my local server via their browser, the primary benefit I derive is that I have more control over the infrastructure, but correspondingly, the downside is that I have to pay to maintain it. From the customer’s standpoint, the major difference is not the user experience, but the maintenance cost and the license cost structure.

From the vendor’s standpoint, the major difference is not the software, how it’s deployed, or how capital must be deployed in order to build the software (“the more you sell, the more you lose” with SaaS is his assertion). The major difference between traditional enterprise software licenses and SaaS licenses is that with SaaS, the revenues are spread out over a longer time period. Two similar situations, related to the difference between SaaS and traditional enterprise licenses are:

1. Term licensing vs. perpetual licensing – one option when doing an enterprise sale is to give your customer a license to your software for a certain length of time e.g. a 3-year term and then require them to renew their license at the end of that period. Say you do a software deal for $300,000 for a 3-year term. Then, the customer would pay you $25,000 quarterly. According to Mr. Debes, this is a “more you sell, more you lose” kind of model as well. In practice, it works quite well – you have very predictable revenue recognition and cash flow – as long as you are not a start-up. With a start-up, you are investing significantly ahead of revenue and the term license defers revenue, stretching out your breakeven point further.
2. Seat-based licenses vs. all-you-can-eat licenses – When I was selling BI software, I noticed that almost all the other major BI vendors sold seat-based licenses. That is, if you want 2000 people to read a report, you need to buy 2000 “report reading” licenses. If you want 500 people to able to write or modify a report, then you pay 500 “report writing” licenses. We decided that if we were to truly offer our customers “BI for the masses” – that is, large scale adoption of BI – we had to change our license as well. We tried out a model of per-application or per-enterprise. The other vendors could not offer the same easily; their sales incentives and organization were not structured to handle a different license structure.

I would suggest that Lawson may not be able to switch its revenue and cost structure over to a radically different licensing model. Without knowing much more, I would hypothesize that SAP’s experience may have been related to something similar. I also don’t have faith that SAP actually built a compelling SaaS product in the first place.

To Mr. Debes’ second point – that you can only accomplish customer lock-in via enterprise software, I would agree that you can accomplish stronger customer lock-in via a traditional enterprise software deployment. Usually, enterprise software deployments involve IT approval processes, small fiefdoms being built in IT around the software package, and “expertise” in maintaining the software and hardware to keep the application going. SaaS deployments, at least for initial adoption, require none of those things. So yes, it’s far easier for a customer to try out a different SaaS deployment because the barrier to use is lower; however, is the traditional enterprise model truly a better user experience for the customer?

I would argue that Salesforce.com has just as much lock-in as any other “in-the-enterprise” CRM product. There’s no lock-in because of IT approval processes and fiefdoms; the lock-in comes from Salesforce.com being a great product and the fact that companies customize their business processes around their usage of the tool. Once you have companies molding their business process around your tool, you have the ultimate form of lock-in.

On a slightly-related note, check out YC’s list of ideas that they’d like to fund. Having spoken with many enterprise customers that deal with large IT organizations, I particularly like the idea described under the heading “Outsourced IT.”

Hopefully, we’ll see more of these readers across all types of businesses, unless of course we all change to RFID-based cash transaction systems first.

The online version has a UI innovation that I loved: the ability to leave comments inline with the text. I often find it quite distracting to scroll between comments and the main text when reading some online publication formats. And in this case, a wiki was not an appropriate format in which to publish a book.

Instead, the site allows users to click on the left side bar, which changes to a slightly darker shade of green when you hover over it. Click on the sidebar and a comment box pops up. If comments had already been left, then you see a little callout indicating the number of comments that have been left around a particular paragraph. I believe the authors used this facility extensively while their book was in “beta” to get feedback and errata from users.

The AJAX pop-up lets you read others comments as well as post new comments:

I noticed the little ‘+’ link in the upper right-hand corner of the pop-up (something that I haven’t noticed before). That click resulted in a much larger pop-up:

The pop-up provides much more detail such as open / close times, major credit cards accepted, reviews, etc. and most importantly, presents that information in the context of the task that I am doing. Instead of taking me to a different screen or requiring me to do a separate search, everything is in one place with a clean tabbed interface. A good example of some data cleansing and structuring, combined with an understanding of the user task, delivered using new web technology.

Information delivery in the context of a task, with a more structured user interface, is a significant step forward from traditional keyword search for many common information tasks. Hopefully, Google will choose to apply these ideas to additional types of searches.