In daily scanning of SaaS headlines, two interesting articles caught my attention today. One was an article in Australia's iTWire publication that covered an interview with Gianpaola Carraro, Director of Architecture Strategy at Microsoft.

In the interview, Carraro makes some ambitious statements about Microsoft's Software + Services initiative. He goes so far as to call SaaS a subset of S+S and insists that S+S "embraces SaaS but goes beyond it."

He then goes on to insist that a browser-only software model does not go far enough and does not address the needs of some enterprises to not move data outside premises and that only the combination of local software plus SaaS can prevail, pointing out that Microsoft's strategy is vindicated by how some pure SaaS companies are beginning to include offline capabilities.

Numerous other forces in the marketplace are likely to disagree, particularly small and medium businesses that are finding SaaS to be a terrific way to save money and avoid the hassle of offline software. Sure, some offline software still makes sense, but in time it might not. It's hard to say what the future holds.

That's sort of the way of thinking in an article called This isn't a device, it's a service by Sean McGrath at ITworld.com. In the article, McGrath points out that even five years ago an offer to rent someone a word processor would have been met with laughter. McGrath suggests that the emphasis of the IT industry is shifting from the idea of software as a thing to the idea of software/hardware as something to be consumed, pointing out that Amazon's CTO Werner Vogel seems to agree with his recent quote after which McGrath's article was titled.

Posted by krissidanielsson in | Permalink | Comments (0) | TrackBacks (0)

Talk of the SaaS web world today is a freshly announced merger between Webroot Software and Email Systems. The perhaps not so memorably named Email Systems offers SaaS services for protecting, storing and filtering email. Webroot specializes in Internet security products and services. The obvious result of the merger is that the new corporate entity could be a force to be reckoned with as far as offering SaaS-based email security products.

That was exactly what Email Systems' CEO hopes. In the press release, CEO Neil Hammerton said, "By joining forces, we are poised to provide one of the most unique and powerful security solutions in the industry. SaaS is a disruptive technology that we’ve seen grow to dominate business applications and expect to see the same with security."

Few bloggers have yet commented on the deal's ramifications, but The Register pointed out that analyst firm IDC predicts annual spending on hosted messaging security services will reach $1.4 billion by 2011.

Posted by krissidanielsson in | Permalink | Comments (0) | TrackBacks (0)

On November 15, IBM announced a plan it calls "Blue Cloud" for enabling corporate data centers to "operate more like the Internet by enabling computing across a distributed, globally accessible fabric of resources, rather than on local machines or remote server farms," it said in the press release.

The idea behind cloud computing, of course, has a lot to do with SaaS -- applications should be available through a Web browser from remote data centers rather than installed locally. Some call outsourced cloud computing by the moniker Hardware as a Service (HaaS).

By offering the Blue Cloud initiative, IBM hopes to enable customers to get started with cloud computing quickly.

The initiative has met great enthusiasm around the Web for the most part. IBM joins Amazon and Google in offering this sort of a service but IBM is well positioned to be a leader in the enterprise market for obvious reasons. ZDNet bloggers were mixed; analyst Dana Gardner points out that the announcement could herald a change in the relationship between companies' relationships with vendors. Joe McKendrick wondered whether cloud computing might be a major disruptive technology that essentially creates the $80 data center. Phil Wainewright was skeptical that Tivoli software might not be up to the task of managing cloud infrastructure.

Blogger Erick Schonfeld of TechCrunch proclaimed that Blue Cloud was Web computing by another name and wondered how exactly IBM would handle the implementation. That is, of course, an interesting question. Industry commentator Amy Wohl raised the very same question but predicted at least a few large IBM customers would find the idea to be "a tantalizing proposition."

Posted by krissidanielsson in news | Permalink | Comments (0) | TrackBacks (0)

Media outlet VNUnet discusses a new Gartner report that predicts that dynamics of the software licensing market will soon begin to hurt the profits of software vendors.

SaaS-based applications are getting more and more sophisticated, and with the lower cost of implementation and maintenance, some companies are starting to make greater demands of software vendors in terms of reducing licensing costs. In addition, new overseas markets that don't have to deal with legacy software environments tend to start from using low cost software and SaaS, the article suggests. Research VP William Snyder points out that today's software market is becoming something of a buyer's market, with increased alternatives available.

Covering the same report, CRM Buyer points out that software licensing costs are going to trend lower in coming years as CIOs look to reduce expenses.

On the issue of overseas SaaS growth, Business Line, an Indian publication, also reported predictions for SaaS growth in India (a growing market overall), particularly with small and medium-sized enterprises. The article predicts that Oracle and SAP will soon turn their eyes toward the market.

Posted by krissidanielsson in news | Permalink | Comments (0) | TrackBacks (0)

The Free Software Foundation has approved the Affero GPL for Software as a Service applications, reports E Commerce News. The new GPL is based on the GNU GPLv3 but includes terms to let users access source code for software accessed over a network.

In the article, analyst Laura DiDio points out how the new GPL reflects a growing trend toward SaaS.

CNET News also covered the announcement, pointing out that:

"The Affero GPL license is increasingly relevant as companies such as Google employ customized open-source software to run massive online businesses with no requirement for sharing. However, intellectual property attorney Eben Moglen, who helped craft GPLv3, said other pressure can be brought to bear if companies take advantage of GPL software without reciprocating."

The Free Software Foundation apparently hopes that the Affero GPL will help with that issue. CNET reports that the FSF said that code written under GPL and Affero GPL may be combined in some circumstances.

Posted by krissidanielsson in news | Permalink | Comments (1) | TrackBacks (0)

Minneapolis, Minn.-based SPS Commerce specializes in offering SaaS based EDI to global companies. Earlier this month, the company announced upgrades to its online EDI platform, and recently it announced that it now leverages Oracle's Software as a Service platform for its EDI services. SPS Commerce's Chief Strategy Office Jim Frome recently joined me to discuss the benefits of using SaaS for global EDI.

Why is SaaS a good idea for the customers that SPS Commerce targets?

We target the retail, grocery, CPG (consumer packaged good) market; the companies that we work with are retailers, grocers, and the companies whose products show up on the shelves of those firms. For years companies have been doing integration in that space as part of the ordering and fulfillment process. Information is exchanged and all parties can keep track of where the orders are. It used to be that all the organizations doing that went out bought piece of software and implemented those applications using the in-house staff. What we did, and what other firms in our category that do it as a SaaS delivery model do, is that we looked at the situation and found in this particular vertical that the retailers and grocers have developed a standard set of rule books or specifications and business processes that they request or require all of their suppliers to follow. For example, Target has a standard way to deliver forecasts, purchase orders, and point of sale data to their suppliers and request shipping status information.

In the software world, vendor A would build out integration to follow Target's guidelines and specifications, and Vendor B would do exact the same thing. All these companies were basically replicating the same work over and over again within their four walls. Once someone has built the target, why would anyone build that again? Why not just host that and make it available via a Web browser or API?

The payoff of using SaaS is that one, you're able to do the same thing you could do in software model. You have the same functionality avail; you don't take step backward. And over time, you get a more reliable service. If 100 or 1000 companies are using the same map over and over again, over time it's going to be more battle tested and more reliable. Three, you'll be able to implement faster because all the mapping is already done. You have prebuilt mapping for all of these rulebooks; if you're not first one that needs it, you can take advantage of something that already exists. This means we're able to solve problems that were very different to solve in the software model.

What leads companies to look into SaaS for this functionality?

This is where the globalization comes in; this is based on retail and not so much on the grocery side. Most products are sourced overseas, manufactured overseas, and some inventory is even managed overseas. As it is brought onto North American soil, there are a lot of touch points on that supply chain. Integration capability needs to be distributed to all of those locations. That's a lot easier to do in an on-demand model. There are also some economies of scale that allow us to deliver this functionality at a nice price point. If we have 1000 customers using the target mappings, we can distribute costs across 1000 companies. If you do in house, you're only able to share the costs across just yourself. In this vertical, suppliers are champions of outsourcing. They outsource sourcing of factors, outsource manufacturing of products to Asia and China, outsource management of inventory, picking and packing of orders, carrier selections to what's commonly referred to as third-party logistics provider, outsource import/export to a consolidator, freight forwarder... They look to outsource first already, and although most view integration as a critical business application, most don't view as core competency.

When we say SaaS, we're not just talking about hardware and software but the operations and staffing model associated with the application as well.

Can you describe a typical customer?

Typically the small supplier is a firm that has gotten to point that they're doing business with a few key retailers and grocers but have been asked for the first time to integrate into supply chain systems. That is a company who is basically shopping for the first time for this capability. They have two choices; they can buy a software license and can buy or find consultant or person on staff to implement or run this, or they can buy as a turnkey service from a company that does this for a living.

The other type of company would be sort of a mid-range supplier, like a firm that might have $100 million in revenue up to maybe a billion and who has been doing this type of integration but is taking a look at the SaaS models that have emerged. They then say hey, looks like I have a reasonable way now to outsource this functionality, and make the conscious decision to shut down those internal operations and outsource to a SaaS business. In this case, they are not just replacing what they already have, but also using us to solve some of the globalization challenges that they never got around to in the software model because of logistics challenges.

I would say it's typical that a supplier in the retail supply chain that does a couple, three maybe five hundred million dollars has outsourced almost every task associated with fulfilling those orders to North American retail customers. Target may send a purchase order, for example, to that supplier as being the supplier of record, but the sourcing company needs that P.O. data to instruct the factory what to make, produce, or ship. The firm managing internal inventory may need that information to replenish North American facilities; the consolidator or freight forwarder that's loading the container needs that info, or maybe even the Q.A. firm that insures the products are defect-free and don't have bad chemicals and things like that in them. For example, to determine the proper sample size, they need to know what total size is to get proper sample size. All parties need data in that original purchase order.

For those CPG firms, those are a lot of people they need to keep on the same page in terms of what's going on and allowing them to play their role on their behalf to their customer. Being able to say, look, as long as your people have an Internet browser, they can sign on and perform this functionality. If they want to integrate to systems, as long as they can follow a straightforward API, they can take data in and out of systems as well. Compared to the software model where each location may physically need a version or copy of that supplier's B2B integration or EDI environment, that's just hard to do. When it's managed on a server with role-based security, the ability to get on through a user interface or exchange data through an API, the implementation challenge is reduced.

Posted by krissidanielsson in | Permalink | Comments (0) | TrackBacks (0)

In the latest of a string of SaaS acquisitions, Dell has signed an agreement to buy Everdream, a SaaS remote service management provider. eWeek reports that Dell looked at the deal in order to complement the capabilities it acquired when it purchased the MSP company SilverBack Technologies earlier this year.

In other acquisition news, IBM also recently announced plans to buy Cognos, a business intelligence and performance management software vendor. Now, Cognos is not a strictly SaaS company but it does play in the space -- and Cognos itself recently announced a partnership with Daptiv (formerly eProject), which Intelligent Enterprise called the "tip of the Cognos SaaS iceberg." The Intelligent Enterprise article also speculates that IBM's intentions to "complement its Service Oriented Architecture strategy" with the buy may mean it intends to compete in the same space as SAP/Business Objects target with their union.

Commenting on the move, Judith Hurwitz wrote a piece for IT-Director.com in which she concluded that the deal makes a lot of sense for IBM and predicted that HP would begin targeting acquisitions in the same space.

Posted by krissidanielsson in news | Permalink | Comments (0) | TrackBacks (0)

Joining in with Gartner Group and IDC, Goldman Sachs is the latest vendor to endorse SaaS, reportedly calling it "one of the most important trends in software." At the same time, Goldman Sachs also reported that SaaS ranked 18th on a list of 37 IT investment priorities in a recent survey (but then again, one wonders whether buyers actively seek to invest in SaaS as a concept so much as they might have a problem that ends up being solved efficiently by SaaS).

The report also sparked an interesting debate between market analyst Ken Bender of Californian Software Equity Group and entrepreneur Rod Drury of Xero. Computerworld New Zealand reports that Bender asserted to the New Zealand Stock Exchange that SaaS profit potentials were overstated, and Drury countered that the international picture wasn't so cut and dried. More here.

Posted by krissidanielsson in | Permalink | Comments (0) | TrackBacks (0)

Tarzana, Calif.-based InfoStreet offers a product that it says can replace aspects of the corporate IT infrastructure, particularly for small to medium sized businesses. With its recent initiatives targeting credit unions, some of InfoStreet’s customers are realizing significant savings – often in upper five-figure to six-figure ranges.

CEO Siamak Farah believes SaaS has enormous potential in the corporate IT world, and is in fact a paradigm shift with five major pillars.

• Fully managed and hosted software: SaaS applications should take the weight off the customers’ shoulders. With true SaaS, “people don’t have to buy their own hardware, install their own software, worry about the hardware dying, deal with upgrade headaches every three to four years,” Farah says. Instead, SaaS applications should be a black box similar to cable boxes.

• A model based on recurring payments: According to Farah, the model of paying for everything upfront and then using or not using the system is fundamentally flawed. “This puts the onus on developers to be providing the best service and maintaining the customer base,” he says.

• Multitenancy: Farah says that this is the most important factor in making SaaS economical and scalable. “The reality is that you are providing a solution that is divided amongst many,” he says. A similar analogy would be telephone lines and how they deliver data through a shared infrastructure. If each customer got a separate set of telephone lines, the cost would be astronomical.

• Anytime, anywhere access: Companies should be able to have employees access the application from the road or from home as needed; they should not be tied to a specific location and terminal.

• No need for specialized client-side software: True SaaS products are not add-ons or functions of on-premise software.

InfoStreet’s specific offering called StreetSmart aims to deliver a good chunk of the IT infrastructure via SaaS. “For 90% of the market out there, their IT infrastructure is providing email, calendaring, workflow, file sharing, and some CRM for managing details and contact management,” he says. Companies typically buy a box, put something like Microsoft Exchange on it, hire someone to manage it, then replenish software every few years, and all of a sudden the data is all over the place.

Farah suggests that a solution like InfoStreet could save a lot of hassle by keeping the user interface integrated and organized. He points to an example of a customer that used a lot of telemarketers and would typically have to spend a lot of time on employee orientation and training, but with the simplified interface of StreetSmart, employees could be trained within a half an hour and put to work on a simple computer terminal with a Web browser.

Farah predicts that SaaS is a new wave and is not just another fad that will go away. “First we had the hardware wave, then the software wave, the Internet wave, and now the SaaS wave,” he says. “In five years, we will not have a single software company out there that is not offering SaaS.”

Posted by krissidanielsson in | Permalink | Comments (0) | TrackBacks (0)

An Ovum research analyst has written a piece about Microsoft's Software + Services vision that appeared in Google Alerts yesterday. In the analysis, research director Warren Wilson applauds Microsofts S+S strategy, calling it a way to "go one better than SaaS providers with hybrid solutions that give customers more choice and flexibility."

I have not been following the SaaS market for all that long, relatively speaking, but it strikes me as a strange claim to assert that S+S is a "one-up" to software-as-a-service. Basically, the "Live" family of products released by Microsoft do not seem to truly be SaaS at all. The offerings are web-based extensions of on-premise software rather than standalone applications, and they may enhance the standalone application but it seems to me that comparing this to SaaS is something of a misnomer, given that you still have to have the Microsoft application installed locally on your machine. A product add-on isn't the same as making a product into a SaaS offering.

Now, Microsoft's "Online" product family do seem to be standalones that can replace on-premise solutions and truly SaaS, but time will tell what happens with them in the marketplace. Blogs around the Net are a mixture of positives and negatives, with many suggesting that Microsoft's upcoming Titan initiative is its true SaaS play.

Posted by krissidanielsson in | Permalink | Comments (0) | TrackBacks (0)

It stands to reason that SaaS would be primarily an IT decision. After all, when all is said and done the question boils down to spending big bucks up-front for an in-house solution now, or pay a monthly or annual fee for a turnkey solution provided by someone else. Either way, the net effect for regular Joe User should be fairly marginal as he or she typically doesn't care as long there's a nice UI and the tools get the job done.

That's why may seem a bit surprising to hear analyst Ben Pring's comments at the Gartner ITxpo symposium in Cannes, France yesterday. Three out of four SaaS decisions are made by business managers rather than IT folks, Pring said.

Part of the reason was general dissatisfaction with the common high levels of unused licenses that plague the traditional client-server enterprise software. But there's a bigger factor in play here. Pring quoted from Tash Shifrin's article:

"...businesses could pay for the functionality they actually needed and pay from operational rather than capital budgets -- allowing greater flexibility. Users did not have to worry about infrastructure support or managing the software," he added.

Bingo. In a perfect world, budgets are mere tools for helping companies stay on track for long-term success. In reality, budgets are responsible for a fair share of bone-headed moves as well.

I'm not saying SaaS purchases are by default bone-headed -- far from it -- but it's a considerably smaller expense that a mid-level manager can make a snap decision about for say 20 user without breaking the budget, whereas getting a big Oracle solution for the same thing would take 12 months and involve numerous painful battles within the organization.

On one hand, this is great in that it enables department X to tap into service Y, which may help them achieve goals they would otherwise have missed. On the other hand, if departments A through W had the same bright idea, there's a chance the company as a whole would benefit from going the traditional route with a big-ticket implementation. Or it could be that the requirements differ. Or the maintenance costs could be so high it's a wash. Or any other scenario in between.

The bottom line seems fairly clear, however: SaaS makes for a very tempting offer for business manager, since it provides instant usability for a modest price. As an IT professional, it falls on you to reclaim the initiative and help make sure they sign up for the right services with the options open to evolve into the next stage -- whatever that may be.

Posted by krissidanielsson in | Permalink | Comments (0) | TrackBacks (0)

In an interview with eWeek, Google Product Management Director Matt Glotzbach talks about Google's plans to offer enterprise and consumer services. Glotzbach discusses how Google tries not to have a clear line between its enterprise and consumer applications, which primarily come through Software as a Service, and he mentions Google's acquisition of Postini, about which I recently interviewed Google's Rajan Sheth.

One interesting comment in the interview was when Glotzbach stated that people tend to misunderstand/misinterpret the offerings in Google Apps. People tend to see these offerings as "lightweight versions of the traditional office technologies," but Glotzbach suggested they were actually for power-users, enabling you to do neat things like pull real-time data from the Web and integrate it directly into the spreadsheet.

It does seem that a lot of media coverage of Google Apps treats the offering as if it is a bare bones, basic offering that no company would want to rely on exclusively. Increasingly, the opposite seems to be true. It will be interesting to see where Google Apps evolves over the next couple of years.

Posted by krissidanielsson in Vendors | Permalink | Comments (0) | TrackBacks (0)

Emre Sokullu of Read/WriteWeb posted an interested commentary on Amazon's Hardware as a Service strategy earlier this week. The idea of Hardware as a Service is an "evolved version of dedicated or virtual hosting services," writes Sokullu, removing the need for dealing with scalability in hardware issues.

In HaaS, businesses pay for what they use. Sokullu likens HaaS to Google AdSense, pointing out that using a pricing model that allowed Web publishers to generate revenue from content in a big way. HaaS is similar to virtualization, but HaaS eliminates the problem of forcing businesses to pay for a set amount of resources regardless of usage. Sokullu suggests that barriers might be that migration to Amazon's infrastructure is technically difficult and that it is far less viral than Google AdSense.

Frankly, I find the whole thing quite interesting. Amazon is not typically considered a provider for this
sort of a service, given that it is most widely known as a retailer of books and other products. Stay tuned; hopefully we'll have a future Q&A with an Amazon representative about this development.

Posted by krissidanielsson in | Permalink | Comments (0) | TrackBacks (0)