Why software makers need to be able to sell to a CIO and a low-level developer

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1002.Day 2 Batch 2

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Session Name: The Rise Of The App Economy

Barb Darrow
Lew Cirne
Steven O’Grady

Announcer 00:00
New app economy. Please join me in welcoming them out on the stage.

Barb Darrow 00:09
Hi, guys. The title of this session should actually be “The application developer, is king, and if he or she isn’t, they should be.” We’ve got great people to talk about it, we’ve got Lew Cirne, CEO of New Relic. Fun fact, New Relic is an anagram of Lew Cirne, I never knew that. We have a Boston fan, Steven O’Grady from RedMonk, I don’t know if you are guys are hockey fans, but it was a pretty rough night last night, so feel sorry for us and be nice. The premise of this session is that the app developer is now viewed as a part of the business team, which is great in theory. I still know a couple of developers who still feel like they’re kept in the closet like mushrooms and fed you-know-what. Can you talk about how true that is in the bulk of your customer base, I think I can guess what you’re going to say?
Lew Cirne 01:05
Well, New Relic is my second company, in the space that we’re in, which is monitoring software and production. My first company, by design we decided to avoid getting stuck in too many conversation with developers, because we felt that they didn’t have enough influence on decision making for purchasing technology. We think that’s been turned upside down in the last ten years, because cloud technology, software distribution, through SAS and dramatic lowering of cost to try out and use technology enables the end user of the technology to actually adopt that technology and spur its utilization internally, and in our business that means going to the people who actually are on the front lines keeping the software running, and that’s increasingly the developer. Not worrying about what their boss’s boss’s boss thinks, because the decision making is happening on the front lines, and that’s exciting.
Steven O’Grady 02:07
I would say the same thing, one of the same things that we at RedMonk have been tracking for a long time is the rise of the developer and the rise of more importantly their pre-eminence in the decision making process now. As Lew says, we’re in a world today where developers can obtain software infrastructure, storage, really anything they want, for free or for pennies in the dollar. That’s a dramatic change from the way things used to be.
Barb Darrow 02:33
If a CIO or the corporate masters aren’t giving them the tools they need, they’re apt to go out and get them themselves.
Steven O’Grady 02:40
We see this all the time, some of you in the audience may be familiar with the term “shadow IT”. That refers essentially to “rogue” or independent elements within companies, primarily populated by developers, who are basically there to get things done. A lot of times they’re bypassing traditional IT to do that.
Barb Darrow 02:59
The landscape has changed so much. I’ve been doing this a really long time, and I covered IBM and Oracle and things have changed a lot. When those– you had to deploy a big stack. I’m curious, in those companies, IBM anyway, a lot of these companies had their own toolsets for application mod. I’m curious about how they are progressing. Are any of those a factor in mobile application development? I know IBM talks a lot about mobile apps. I’m just kind of curious, are they catching up, or–?
Lew Cirne 03:31
They’re certainly always going to be a presence in the market, companies like IBM and Oracle have an influence. I think they’re really struggling with what’s going on today, in terms of reaching the customer directly, focusing on just dropping it in and it ought to work, not focusing so much on massive deployments at the outset, at the expense of just getting the functionality that serves the business. They’ve built a business around renewals of maintenance on software that they sold ten years ago. That’s great for the shareholder in the short term, but I think in the long term more businesses are going to be asking what they’ve done for them lately on a regular basis. I think that’s why SAS is interesting, because we get paid monthly from our customers if we delivered value for them in the last month. I like being held accountable on that based on the value we deliver them. If you’ve built a company for decades where it’s more building into the lock-in mentality, it’s going to be hard to react to that.
Steven O’Grady 04:38
Yeah, I think that’s exactly right, and I think the evidence is there, so in other words one of the things that we do is go and look at company financials. One of the things that people come back with to us is – we make the claim that the developer is the new king-maker and so on – that Oracle and other companies like that are still growing their revenue. They are, but if you go look at and take apart their quarterlies and end of year statements one of the things you find is that the growth is primarily coming from maintenance agreements. The new licensing sales are mostly flat, they’re not growing. A lot of that comes from the fact that even if you have a technically superior product, an Oracle database for example is functionally more capable than a lot of the open-source alternatives, but developers more often than not are going to choose what’s convenient, what’s easy to get, and what they don’t have to jump through a lot of hoops to procure. That changes the way that these companies function, and the winners are going to be able complement the existing top-down sales. We know how to sell to CIOs, with developer strategies. Thus far the results of that have been very uneven.
Barb Darrow 05:44
When I started out it was a client/server world, you had the LAN, you had the PC, you had the server, and you could troubleshoot those things. Now we’re talking about millions of endpoints, be outside the firewall, Amazon, SAS providers, how can you monitor the application performance in that environment, which is so distributed?
Lew Cirne 06:08
Our company thinks the most important stuff to monitor is the software. We’re a software analytics company, really. It’s obvious now that 95% of all new software projects will be running in one of three places. On the server, in the browser in Javascript, or in the mobile device. We are present in all three of those strategically, because we want to be where the logic is. We think that infrastructure exists to support software projects. We just introduced a platform initiative yesterday with 40 plugins, but it’s interesting. We’re not charging for any of the plugins that monitor the infrastructure, that’s all free, because we know people need to monitor that. We think that’s all in service of the business logic that the developers wrote. We just want to provide a complete solution, but we don’t want to be in the business of charging to monitor the network, the database, even though our customers could get it for free. It’s all part of this whole– we have to be present in the logic on the mobile device, to see how that’s performing, but correlating it with what you see on the server and what you see in the browser.
Barb Darrow 07:25
That would include plugins for the big SAS providers as well?
Lew Cirne 07:28
Yes, absolutely. Some of the plugins we announced yesterday are things like Sendgrid and Amazon web services et cetera. So we’re looking at infrastructure as well as services right now, all in one place.
Barb Darrow 07:39
I’m just curious about other toolsets you see out there, let’s leave New Relic out [chuckles]. Maybe Steven could talk about this, other toolsets that you see on the horizon that developers should know about if they don’t already.
Steven O’Grady 07:56
From a monitoring standpoint there are any number of tools, a lot of open source options available to you. You have a number of software and service based alternatives, too. The really interesting things to me, the next frontier from a monitoring standpoint isn’t just can you collect what I’m doing. The interesting opportunity for me longer term is going to be can you collect what I’m doing and compare me to how a much larger population of entities is doing. In other words– you know the FitBit Flex, it records the things that I’m doing and so on, one of the useful functions it performs is that I can now compare myself to a peer group, I can now compare myself to a baseline, and so on. Over time, as we look towards next generation tools, the really interesting opportunities are going to lie in the services that let you compare against a much larger baseline.
Barb Darrow 08:55
I’m also interested in how impacted you are with the plethora– I hear a lot about testing different Android app implementations. Does that impact you? iOS is one thing–
Lew Cirne 09:08
It certainly impacts developers, it’s a big headache. Just when we started to see a bit of settling down on the browsers, and IE has come a long way recently, there’s this plethora of devices on the Android side that make it so that you have no idea if your software is going to work on all those devices. You can try and you can throw a lot of money at very complex testing suites, but that can’t give you all the assurances that after you’ve shipped it it’s going to work in an HTC device running a certain version of the OS in a remote location. A lot of our customers use our mobile product precisely to manage that risk. It’s only going to increase. Obviously Android has got the momentum in the marketplace, we don’t see that changing, and you’re going to see a proliferation on that QA matrix that requires a depth of monitoring that can cover it all.
Barb Darrow 10:01
If anyone has any questions, you can go up to the mike. I’ve got more questions here, but don’t be shy, we’ve got the kingpins here. I’ll go on until someone comes up, but one of the stories I’ve been following is the whole platform as a service story, and obviously there was a whole explosion of mobile backends as a service. I’m curious if you think that’s going to consolidate or congeal going forward. Is there a need for a mobile backend as a service, if there’s a PAS or– any thoughts on that?
Steven O’Grady 10:35
Honestly, I think the promise to me of platform as a service over the longer term is sort of to serve as a container for an application of some kind. The application’s going to have to present to you, it’s going to have to persist data somewhere. So to the extent that companies are rolling out hundreds of thousands of mobile applications a day, enabling that as a service is a useful function. What I think will be a problem for potential adopters is where do the lines between the plain vanilla platform as a service, where does that end, and where does the mobile backend as a service begin. Where is that delineation? Because at the end of the day, an application being delivered in a browser isn’t all that different from an application being delivered in a mobile handset, apart from the UI considerations. You have logic, you have data that’s persisted, and you have a frontend. How you present those things is– I don’t want to say academic, but the differences are less clear than we might otherwise prefer.
Lew Cirne 11:46
The translation from academic to the real world is exactly why we have a business opportunity. [chuckles]
Barb Darrow 11:51
There’s money in confusion, right?
Lew Cirne 11:53
There is, there is. I think the like of StackMob or the Microsoft offering, or the traditional platform service like Heroku or Engine Yard et cetera, it depends on where the center of gravity of your architecture is. Some apps are mobile clients, like online banking. There’s going to be so much more logic on the server, so a server-centric path makes more sense in that case. Then the other end is a game where you want to store high scores and compete with your friends, is something that’s very likely no server, it makes sense. I think there will be many paths depending on the app you’re building, and that’s okay.
Barb Darrow 12:35
Some people think that the whole IAS PAS thing is going to glom together. My final question is, is anyone to your knowledge building desktop applications any more?
Steven O’Grady 12:50
Anyone is a big question, certainly there are still people who build applications for the Mac, and some of them make some reasonable money doing that, but in general, no. The primary deliver mechanism is either browser or handset.
Lew Cirne 13:08
I was thinking about that, when you first asked me that question, and I was an absolute no, but then I fired up Hipchat and it is so much better as a native app or a desktop app than it is in the browser, so it’s a mobile web, and there’s a case for when you want it on your desktop. There are going to be apps of that nature, and they tend to be in the communications and collaborations space, anywhere you need instant responsiveness. Chat apps, things of that nature. There’s an opportunity there, but there are no pure desktop app business opportunities, in my opinion.
Barb Darrow 13:43
I think that Microsoft is even leading with Office 365, versus Microsoft Office. I think, I actually don’t know that. Anyway, we’re out of time, thank you very much.