8 Trends in Software as a
Service Platforms
- SaaS is just part of the web mega-trend
- Mainstream opinion says “Yes” to SaaS
- Software vendors stampede into SaaS
- All is being virtualized
- Explosion of Web APIs
- Economic factors favor SaaS
- Enterprise and SMB IT embraces SaaS
- SaaS platforms proliferate (PaaS)
1. SaaS is just part of the web mega-trend
Most of us have witnessed and many of us
have been a part of the transformation in
the way goods and services have been
digitized, virtualized, delivered and
consumed. Software, the data behind that
software and the functionality that software
provides is no different - software is
subject to the very same transformational
forces.
Just think about how even a class of product
that is natively digital - such as software
- has been transformed in the way it is
delivered and consumed. For prosperity's
sake, I've still got a few of those ZX81
software cassettes stashed away somewhere,
gathering dust, looking ever more antiquated
with each passing year. How will today's
mode of software delivery and use look to us
in a few years from now?
The web wants to connect things, and that's
interesting. But connecting and interacting
with "live" data, information and remote
functionality make things more interesting.
At the fundamental level, the web connects
things. It connects people to people,
businesses to businesses, and people to
businesses. Since the early 90's, the web
has enabled the connection of so many things
to so many other things at an ever
accelerating rate, and yet we crave even
more connectivity. But we increasingly also
want the ability to interact with those
things.
And it is the nature of these connected
things that have changed since the early
internet. The early web was good at
connecting to static views of information
and accessing limited and rigid functional
services, very much a read-only mode. Then,
as we learned a) the ability to read more
dynamic-type information - at least
regularly updated, and b) access richer
remote functionality, we created whole new
opportunities for ourselves. Next, we grew
our ability read and write against dynamic,
near real-time data and information and to
program against remote functionality to
create a new class of web applications
leveraging those capabilities - and hence a
new order of business and experiential
opportunities have emerged. Some label this
as "Web 2.0".
At its essence, it is the "liveness" of
these real-time read-write data, information
and functional sources available as "always
on" services and the increasing ease to
connect to, interact with - specifically
change those resources available as live,
programmable services that allows us to
create new value out of those resources,
opening up brand new market opportunities
for businesses and the compelling, rich
"live" end-user experiences of tomorrow.
2. Mainstream opinion says “Yes” to SaaS
Not surprisingly, Wall Street loves the the
predictability of subscription services.
It's good for cash flow, forecasting and
business planning.
The venture firms also relish the
opportunities that are opening up in a
software as services-oriented economy. The
ability to circumnavigate the incumbent
software players with new disruptive
technologies and propositions that are
significantly easier to try and access for
prospective customers compared to
traditional software evaluation, along with
usage and subscription-based business models
verses the old licensing model makes
investing in services-based software
companies very compelling propositions from
the venture firms' point of view. We should
also see healthy M&A activity based on these
similar opportunities in the coming year.
And then there's the trend for offshore / IT
business process outsourcing. These
providers will surely get in the game and
make their plays through investments in and
acquisitions of SaaS vendors that align well
with their current core businesses.
Add to that the excitement we're reading
about the SaaS space from the IT Analysts,
journalists and bloggers, plus the new book
by Nick Carr (author of “IT Doesn’t Matter”)
- delivered by Amazon to me last week: “The
Big Switch: Rewiring the World, from Edison
to Google”. I think there's little doubt
Carr's excellent analysis of the computing
industry as an analogy to the electricity
industry's shift to a utility model will be
on business bestseller list for much of
2008. His messages resonates with corporate
executives and end-users agree with him:
- IT is a needless hassle,
- it should be as easy as electricity and
- be as reliable as a utility
3. Software vendors stampede into SaaS
The Big Software Players are following the
early SaaS successes
CRM as a case in point. If you've been
following the CRM software market, you'll
know about the noises Oracle-Siebel, SAP and
Microsoft started to make in the 2007 about
what they are are lining up for the 2008 in
terms of CRM as a service. Their efforts to
emulate Salesforce.com's success delivering
CRM as SaaS will be key strategic bets from
the incumbents' point of view - and loud,
price and functionally competitive
propositions from the point of view of their
existing and prospective customers.
CRM is just one of the multiple horizontal
solution categories to transform from
on-premise with traditional licensing model
to a service-based delivery and
subscription-based revenue model. ERP,
supply chain, e-commerce, HR and many
more...the horizontal solution list goes on.
And then there are the vertical solution
players...
Here's another data point to consider
regarding the move by traditional software
vendors to a SaaS model:
“15-20% of application ISVs have already
either begun new skunk works initiatives or
gained access to SaaS assets and development
experience through M&A activity”
(Source: Key Trends in SaaS: 2008 and
Beyond, Saugatuck Technology)
4. All is being virtualized
Virtualization is a technology trend.
Virtualization enables hardware as a
service. The demand for virtual machines met
by hypervisor software (VMWare, Xen,
Hyper-V) and the success of Amazon's Elastic
Compute Cloud (EC2) in the last couple of
years point to a continuation of further
virtualization of applications and hardware.
Virtualization is accelerating the move from
traditional on-premise software to services.
Virtualization is a business trend.
We continue to become a mobile workforce.
The younger entrants into the workforce in
service-oriented economies expect and want
to be always connected. It's very hard work,
if not impossible to get your traditional
on-premise applications and centralized
servers sitting behind a firewall to serve
today's mobile workers. SaaS and managed
services meet the needs square on.
5. The explosion of Web APIs is upon us
According to ProgrammableWeb.com, there are
559 commercial and public APIs available
today, most of these are new and there are
plenty more to come. How many will we see go
live this year? And how many private web
APIs are there and will be developed and
consumed in the coming year?
Data from ProgrammableWeb.com
6. Economic factors favor SaaS
On-premise software requires upfront capital
investments
To lower costs, many companies hold back on
their capital investments to mitigate their
risks, especially in recessions
Adopting on-demand services on a
pay-as-you-go basis will be a perfect
sourcing strategy for businesses seeking
greater cost-controls and flexibility – the
utility model
All well and good, but the real economic
value of SaaS is that fact that it unleashes
new value of previously isolated data silos
and functionality.
7. Enterprise and SMB embraces SaaS
When it comes to IT, who doesn't like
- Low-maintenance?
- Low cost?
- Low-resource profile?
IT and business folk like these things,
and externally delivered SaaS applications
deliver these benefits.
8. SaaS platforms proliferate (PaaS)
The more mainstream SaaS becomes the more
the large vendors will be forced to offer
effective platforms for ISVs, enterprises
and SMBs.
If the move by the software vendors from
traditional on-premise software to a
services model is to be successful, they
will need to provide programmable interfaces
- not just end-user interfaces - to their
services for their customers. Customers need
and want the ability to access, intergrate
and create new value out of live,
programmable data, information and
functionality living in the cloud. And in
turn these same customers will want their
custom-developed composite applications and
integrated data available as programmable
services - yet more APIs.
Customers want to unleash new value of
previously isolated data silos and
functionality through the development of
their own applications programmed against
those resources. And in turn these same
customers will want their own
custom-developed composite applications and
newly integrated data available as end-user
interfaces and as programmable services -
yet more APIs. These customer needs will
drive the software market to provide
platforms to provide businesses and
developers with with end-to-end:
programmable services and data integration
application development, testing and
collaboration tools
deployment and scalable delivery
...all as a service with a utility model.
Source:
Alex Barnett blog |
