We’ve written previously about the fact that the Austin economy and startup community seems to be humming along, as well as about the economy in general, which appears to be particularly startup friendly at the moment.  Or at least, it looks like startups are back to hiring in a big way.

More evidence of a change in the Austin fund-raising environment.  A couple of weeks ago Spiceworks raised $25 million- a tidy sum for an Austin startup.   Congratulations to our friends and colleagues at Spiceworks, which represents another example of Austin’s odd nexus of social, and enterprise software – a theme first made apparent to me by a speech Mike Maples, Jr. gave at Capital Factory a couple years ago.  He characterized the situation in Austin and laid out the data points – all of which I was aware of but hadn’t picked up on the emerging theme.

Spiceworks is “the largest and fastest-growing social business network for IT”.

Meanwhile, TabbedOut just raised another $3.7 million.  At first glance a consumer play, but it is as much about helping the enterprise (bars and other venues in this case) get paid.  Think more “OpenTable” than “Yelp”.  Actually, GigaOm has a better summary of TabbedOut than I could hope to provide, updated May 9th (Thanks to Stacey Higginbotham for the link).

The money raised is a good indicator that Austin venture capital funding is getting back up off the mat.

There were several blogs about Gartner BPM 2011, capturing overall impressions.  From ebizQ, Ann Stuart reviews the keynotes (including this quote from Daryl Plummer):

–Visibility is critical: “If you can’t see it, you can’t fix it. You probably don’t even know you have it.”

I think the highlight of the keynotes was Daryl Plummer’s closing remarks.  I found myself wishing he had opened the ceremonies, so to speak – it would have been a great way to energize the attendees about BPM and their role within their businesses.  He was the best individual speaker that I saw at the conference (great mix of humor and data and content).

Len Dorfman from Fujitsu also summarized the Gartner BPM 2011 experience in the Fujitsu Interstage blog:

What stood out for me the most at the Summit, however, was the positive vibe of the attendees.   I had the opportunity to speak to a number of them in the booth as well as between the sessions, and all of my conversations were positive and optimistic about the BPM outlook for next year and beyond.

I’d second this sentiment – the positive vibe was palpable.  And you might think that this was just among the vendors, eying a bigger attendance population – but no.  It was positive among companies attending.  I’d attribute this partly to an improving background (economy, fewer layoffs in your own company), and partly to a different posture – acting upon the world rather than waiting to find out what the world will do to you and your firm next. I think humans are hardwired to prefer to be taking the initiative over waiting and reacting.

Deb Miller wrote about the conference on her blog as well:

Cloning would have been helpful at Gartner’s BPM Conference #BPM11 last week in Baltimore.  It was hard to decide which of the multiple concurrent sessions to attend.

She should try attending SXSW in Austin.  Some of the time slots had more than 100 concurrent sessions.  At Gartner the maximum was 5 or 6 – but still, there were usually good choices of content.  She also liked the “Great Case Management Debate” format.  We’ll just agree to disagree on that one!

Clearly overall reactions from vendors attending Gartner BPM 2011 were positive.  But in the way of feedback, a few things I noticed:

1. Some of the speakers have spoken at many, if not all, previous Gartner BPM conferences in the US.  I think Gartner could be more proactive about pushing even their sponsors to bring fresh perspectives and content to the conference.
2. Some of the vendors are just now figuring out that you need to start with the business objectives and work from there toward the methods behind BPM, and the functions within a BPMS.  I found that… surprising.
3. The high variance of maturity of what different vendors are calling BPM is astonishing.  The variance of maturity of what customers call BPM is also high, but less surprising.  (If Visio and Sharepoint plugins are your idea of BPM…)
4. BPM within most companies is an island.  If you envision all the BPM efforts at these different corporations, you might think of it as an interconnected web, but it is more like a sea of islands.

It turns out, standing on one of these islands, a person doesn’t have perspective about how their BPM maturity compares to another island’s maturity.  It is only the vendors and independent consultants and analysts who really carry this news around.  Someday perhaps Twitter and other resources will also, but for now, those social domains just help keep the outside experts better informed and connected, and haven’t advantaged customers directly as much.

I’m mindful that we should all stay humble as we share our advice with the world – lest we find out our own island is small and inconsequential – perhaps more so than we thought.

If Moore’s Law had been easy to adhere to it wouldn’t have garnered the respect it has as an axiom of human progress.  For some reason everyone has always assumed it was about to run its course… and every time we appear near the end, a new innovation (or ten) comes along to sustain Moore’s Law a bit longer.

Kurzweil was quoted on Wikipedia as saying:

In terms of size [of transistors] you can see that we’re approaching the size of atoms which is a fundamental barrier, but it’ll be two or three generations before we get that far—but that’s as far out as we’ve ever been able to see. We have another 10 to 20 years before we reach a fundamental limit. By then they’ll be able to make bigger chips and have transistor budgets in the billions.[55]

Furthermore, “In 2008 it was noted that for the last 30 years it has been predicted that Moore’s law would last at least another decade.[49]” – in fact, that is exactly how I feel.  Every time we think we’re running out of room for improvement, we still see another 10 years out…

And then Intel shows up with a 3D transistor:

The breakthrough comes from building up the channel that conducts electricity inside chips from a flat structure to a taller, 3-D structure. The stop-start flow of electrons through that channel is the underlying pulse of the zeros and ones that our computers read and translate into our web pages, documents and everything else.

The real magic, however, is that they’ve figured out how to manufacture this innovation efficiently and at scale. You’d have lost a lot of money betting against Moore’s Law for the last 30+ years.  I think it will be a losing bet for quite a few years more.

I was interested to see the “Great Case Management Debate” at Gartner’s BPM 2011 conference.  After all, it has been quite the topic, ever since Keith Swenson put his weight behind the ACM moniker more than a year ago.

But right off the bat, Toby Bell reset expectations- that this wouldn’t be a debate, it would be a “live research session” (whatever that means).  Toby Bell represented ECM (content management), Janelle Hill represented BPM, and Kimberly Harris-Ferrante represented insurance…?   It would have been more interesting to have someone really representing and advocating for case management, versus someone really advocating for “BPM” – instead we had a bit of an odd triangle.   For most of the session there was no debate at all, there wasn’t even nuanced disagreement. A definition of Case Management was given:

Case management is the optimization of long-lived collaborative processes that require secure coordination of knowledge, content, correspondence, and human resources and require adherence to corporate and regulatory policies and rules to achieve decisions about rights, entitlements, or settlements.

The path of execution cannot be completely pre-defined; human judgment and external events and interactions will alter the flow.

Even Toby poked fun at the very Gartner-ness of this definition.  They talked a bit about why Case Management hasn’t caught on better in the marketplace – and there was some consensus that part of the problem is the word “case” – what is it?  To many businesses, this is sort of a meaningless term.  Kimberly proposed that Case Management would get better traction by adopting industry-specific terminology for the “objects” that are cases.

Janelle gave an example of a collaborative, content-rich process:  university applications selection.  As she put it, they want to pick from a big applicant pool (lots of people applying), pick better students, and get a higher acceptance rate. ( Well, actually these last two goals are contradictory.  The better your students are, the more options they have, and the lower the implied acceptance rate.  However, what increases acceptance rate are things outside the selection process – reputation, communications, campus and facilities, faculty, cost, financial aid, etc.  Universities have been competing for top talent for a long time, since well before terms like case management and BPM were coined. )

The closest we got to a real debate was with respect to the marketplace.  Toby took a light-hearted shot at BPM vendors by pointing out that ECM vendors were adding case management and process management capabilities as obvious add-ons to their software packages.  Janelle’s retort was well-said:  that ECM vendors were pursuing BPM functionality out of necessity, looking for a way to grow when there are only 4 or 5 vendors left.  Whereas in BPM, there are 60-70 vendors, growing in the BPM space, adding ECM functionality as a rounding function, not out of a necessity to find new growth opportunities.  I think she has a point – for some of the ECM vendors it looks a bit desperate rather than aggressive.  It doesn’t mean they shouldn’t continue with the strategy but it does look like a strategy of necessity.

As Sandy Kemsley reviews it:

Looking at the issue of products, they showed a slide that looked at overlaps in product spaces, and puts BPM in the structured process/data quadrant, with case management far off in the opposite quadrant. As Hill points out, many of the BPM vendors are extending their capabilities to include case management functionality; Bell stated that this might fit better into the ECM space, but Hill countered (the first real bit of debate) that ECM vendors only think about how changes in content impact the case, which misses all of the rules and events that might impact the case and its outcome. She sees case management being added to ECM as just a way that the relatively small market (really just four or five key vendors) is trying to rejuvenate itself, whereas the case management advances from BPM vendors are much more about bringing the broad range of functionality within a BPMS – including rules and analytics – to unstructured processes.

Not everyone shared my disappointment at the lack of debate – I thought it was a missed opportunity to really dig into one of the few controversies in BPM.  The session was still good and well worth attending – it just wasn’t what I was expecting.

This is a question that has probably been asked a few times.  Joshua Baer does a great job breaking it down in his blog:

I actually think most of the right things are happening. I’ve been here for more than 10 years and Austin has only become more attractive to startups and entrepreneurs. We are one of the top cities in the world attracting young smart entrepreneurs, college grads, and young professionals.

We are attracting startups like Gowalla and others that are moving to Austin from elsewhere in Texas and around the country. Austin is a great place to launch a startup because it is a market full of early adopters. I am contacted at least once a month by a startup who is looking for advice about moving here.

What do we need to do? We need to keep Austin attractive to young, smart people and innovative startups. We need to continue growing the early stage venture community and our connections to outside capital. We need to identify our Startup District (East side?) and achieve critical mass. We need to embrace failure. We need to keep being Austin.

I agree with Josh – the important thing isn’t being the next Silicon Valley.  The important thing is building on what Austin is, and not losing what’s best about Austin as we build toward a more diverse and interesting economy.  In my 17 years in Austin, I’ve been really impressed how well it has handled the growth, and how diverse the growth in the economy has been.  When I moved to Austin, the state and local governments were our largest employment sector.  Not any longer. I used to have trouble naming the next crop of startups that were likely to be successful here.  Not any longer.

(Another good article summarizing the state of things on Austin Startup – a sign that this topic still has momentum.  )

This is a fun post from John Reynolds about the BPM Implementation Dream Team.

Rapid Iteration BPM implementation projects, like the ones that I work on, depend on “Business” to take on building responsibilities and “IT” to take on requirement writing responsibilities.  We don’t structure responsibilities like this just to make everyone feel good, we structure things this way because of the way things are:

• All Business requirements have Technical implications
• All Technical implementations have Business implications

When the business folks hit the technical hurdles, and the technical folks hit the business challenges, there’s great incentive to find “another way” that gets the team to the solution sooner.  Shared misery builds strong bonds.

The core of our ideal BPM implementation team are two individuals; the Business Lead and the Technical Lead.

I recommend reading his blog for the rest of his entertaining post.  John has a great attitude about BPM and it shows in his writing.

Elise Olding reports on twitter stats in her latest blog post:

April 27th stats:
# tweets for the day – 637                    # unique tweeters – 91

April 28th stats:
# tweets for the day – 789                    # unique tweeters – 114

I think the delta in tweets reflects partially the stronger content on day 2, causing more people to participate. But it also probably reflects that people got on the proper hashtag bandwagon.  Since individual sessions and topics didn’t have their own hashtags, we can’t compare interest level as we might in SXSWi, for example.

Sadly, even on twitter you can’t get an accurate count of peanut-gallery comments.  Though you might get a sense of it with Ian Gotts (@iangotts) in most active, and myself in 5th.  You could probably double the # of officially tagged tweets with the side-bar @-replies and DMs.

Gartner’s BPM Summit this year in Baltimore was a little different than previous years for a few reasons. First off, almost 850 attendees were present according to Gartner’s stats which is a  non-trivial improvement over last year! Secondly, for the first time I can remember we actually ran into a larger business audience than before. Normally these conferences are highly IT represented but this year marked a shift- quite a few business professionals were also in attendance.  This is obviously a very good thing. Lastly, there was great content all around but I caught a session focused on Change Management that really hit the nail on the head and certainly left an impression with me. We have discussed how critical change management is when it comes to BPM and yet it’s something most companies have little competency in doing on their own.

Now when I say Change Management this is not your IT notion of change management and it also isn’t this idea either!

Change Management is not just:

• Communication
• Training
• Group therapy sessions
• Cheerleading
• Etc.

The talk was presented by Phil Eastman II of ProSci and you could clearly see that this subject is a passion for him. One of the key moments came when Phil cited research performed over several years that stated in essence, “Keeping the human side of process change in the forefront buys on average a six times realization in quality of solution”.  That is a big number and as we want to de-risk these initiatives to the greatest extent possible, why would we not look at the change management with a lot more diligence? He also added, “Change management is not about training”. Sure, it is a component but it is not what is most highly correlated with success – change management is about getting results! Before I get to that, here are some points Phil cited on why change management is not done more:

1. It’s hard – it requires planning, discipline and persistence to be effective
2. Poor measurement – it’s difficult to quantify benefit other than the stat above therefore, funding for it becomes a bit more of a challenge
3. It’s expensive – change management requires real resources, time, and money to do correctly

However, without appropriate focus in Phil’s words you allow ‘Chance’ to be in the driver’s seat over ‘Change’. This definitely hit home for me as a practitioner because over many years I have seen this in action as well as other key success factors being under-capitalized on programs deemed “mission critical” by organizations.  So what is Change Management about? It’s really about taking the human aspect and getting extremely serious about ensuring the crew of your ship you just built is actually recruited. In Phil’s words, “There is no such thing as organizational change; only individual change summated is organizational change. The unit of change is without a doubt the individual”. Absolutely true!

Phil then broke the idea of Change Management into two perspectives which were ‘Individual Perspective’ and ‘Organization Perspective’. Most of the focus went into the ‘Individual Perspective’ which is appropriate considering he just stated that the individual is the ultimate unit of change. The idea is to understand what it is going to take to make any given individual adopt the change successfully based on the dynamics of the new solution presented. ProSci has a model called “ADKAR” (acronym, of course) which in turn has five major building blocks of successful change:

• Awareness – Are individuals aware of the change and do they understand why it’s occurring
• Desire – (This is the hardest according to Phil), Do the individuals actually want change
• Knowledge – Are the individuals understanding of what is being ultimately asked of them and do they know what is in it for them
• Ability – (There is a major gap between knowledge and ability), can the individual successfully participate in the new world
• Reinforcement- What is being done to reinforce the behavior of individuals post change, because people are readily capable of regressing)

The ultimate idea is to understand the mechanisms that perhaps got one individual over the change hump and be able to replicate that over and over again. Phil stated, “Processing a billion transactions a month is not hard. Processing one transaction a billion times is”. One other very insightful concept to keep in mind is that “organizations are not mechanical systems, they are living systems. You cannot change a living system, you can only disturb it”.

Great session all around and it certainly kept the attendees attention. Kudos to Gartner for locking this one up!

As a business, it is important to establish good habits.  And of course habit #1 is making enough money to keep the business alive.  An article titled “The Audacity of Getting Paid” really hits the mark.  The author uses Facebook, Twitter, and Tumblr as cautionary tales:

I’ve been a member of the above three services for a combined total of 13.5 years, and have watched all three grow from small services in a corner of the internet to the front-page, well-known brands that they are today. All three have made the same tragic mistake: at no point did they say, “hey, we’ll give you (more features, fewer ads, faster service) if you give us some cash.” I would have (and still would) willingly paid a substantial sum to each.

And although the author uses those three companies, and others are likely to point mainly to Web 2.0 or Web 1.0 style companies, this logic applies equally well to companies in services businesses.  The main difference is that the services businesses aren’t likely to have a trove of VC cash – so they’re likely to close shop quickly if they aren’t priced right, unless the service business is a secondary source of family income.

He concludes:

First, making money is easy: you must have the sheer audacity to charge for a product. Pinboard.in turned profitable in week one. Minecraft’s early sales helped bootstrap its development, and the developer has staffed up and found office space in the past six months to work on new features and new games.
…

The third lesson is for you, the user: if you use a product and don’t pay for it, you’re living on borrowed time.

I think this falls under the general heading: if it seems to good to be true, it probably is.  If you’re getting something for nothing, you’re not the customer, you’re the product being sold.  If you’re getting a price that is too good to believe (especially for allegedly experienced or specialty-skilled resources) – then it probably is too good to be true.  But collectively we suspend our disbelief all the time (and then act shocked when we get a surprise down the road).

Joel Spolsky:

There’s a lot of stuff that’s accidental about Fog Creek and Stack Exchange, but lunch is not one of them. Ten years ago Michael and I set out with the rather ambitious goal of making a great place to work. Eating together is a critical part of what it means to be human and what it means to have a humane workplace, and that’s been a part of our values from day one.

Lunch is often wasted eating alone at your desk.  Get out there and eat with your colleagues and friends, and build the working (and personal) relationships that will enrich your life and work.  If I can’t have lunch with coworkers I meet up with old co-workers or friends to catch up on their lives.  It is a great opportunity for personal connection.

(Note: I recommend BBQ or TexMex)

If there weren’t already lots of reasons to like Mark Suster’s Blog, I have to admit, this article (“What Should You Do With Your Crappy Little Services Business?”) gives me another great one:

There’s a line of thinking in Silicon Valley that you should build product businesses rather than services businesses. This thinking is largely driven by the venture capital industry (and subsequently Wall Street) who are in search of high margin, highly scalable businesses.

It’s nearly impossible to get a services company financed by VCs. You’re a small fish.

So pervasive has this thinking become that on several occasions startup companies with profitable & fast growing tech services businesses have come to me wanting to change their companies to product businesses or to create “spin outs.”

I’ve seen that happen a few times as well.  In fact, Giff Constable had a great article about it.  We’ve even written a few ourselves.  Mark hits on pretty much all the points I would have made about a services business.  It isn’t just that services businesses are small fish – it is also that they generally can be self-financed.  The result is that the services business owners aren’t willing to part with equity cheaply, and at the same time, the VCs would likely want *more* equity in exchange for their cash because they’re not expecting the expansion to be as rapid if the service is a hit. And as Mark points out – at that point you have to swing for the fences, no more singles and doubles.

The biggest challenge in building a services business (truly growing it, versus just being an independent contractor) is financing.  His #4 financing option is bank financing – specifically he mentions Silicon Valley Bank (SVB) and Square1 Bank.  These are both fine institutions and if you can get financing from them, so much the better.  But if you need a line of credit or loan of less than $500k to $1M, you’re unlikely to get their attention.  That means you need to have a certain scale before you even try to work with those banks.  Surprisingly, we found large multinational banks to be more willing to finance our activities than these alleged startup-friendly banks.

Mark also has good advice for what to do with the product business within your services company:

• Use the products as a service sales machine – essentially a loss- or break-even instrument to get more services sold in or support contracts.
• Use the products as a key differentiator to win new business over other service providers.  The products could make you more efficient (allowing for lower bids for the same work), or allow you to more clearly tackle intractable problems.
• Use the products as a margin bump – allowing you to stay above “commodity” in the long run.

I’d add another:

• Use product as a badge of credibility in your market niche.  Much like writing a book or whitepaper or blog enhances your credibility (assuming they’re well-received).

Kudos to Mark for writing on this subject.