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SaaS Week

Krissi Danielson

Podcast - SaaS Heads Toward Vertical Business Networks

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Colleen Smith, vice president of SaaS for Progress Software recently joined me for a discussion on the trend of SaaS for vertical business networks. Read the transcript or listen to the podcast below.

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Listen to the entire 13:30 podcast Download file

Hi, this is ebizQ's Krissi Danielsson. At this point, pretty much everyone would agree that the Software as a Service delivery mode is here to stay, and at this point, most general applications are available in SaaS format from one vendor or another. According to Colleen Smith, vice president of SaaS for Progress Software, the next major trend we will see in SaaS may be a move toward vertical business networks.

So, Colleen, my first question then is can you talk about what exactly it is we mean when we say vertical business network?

colleensmith.jpegCS: Sure. Basically, what we're seeing is that there's this new wave or this new era that's beginning with Software-as-a-Service and as we move from kind of just one application being a hosted application to the ability to have an integrated suite of business services, this era -- this next wave we're seeing is that large business service providers are beginning to look at the opportunity to bundle smaller ISV offerings.

And what they do is they integrate them and provide an integrated suite that's very focused on a particular vertical opportunity. And so what they've done is create these vertical business networks where they're now hosting, integrating, and providing access to a community of like users the ability to have access to multiple business applications.

And so the term vertical business network is really just saying that's an opportunity to have multiple applications potentially from multiple ISVs integrated in a preset way based upon a particular vertical or very specific industry focus.

KD: All right. So would you say that there's a trend for more and more SaaS applications becoming available targeting vertical business networks?

CS: Yeah. I think that what's happening is that some of the smaller ISV are definitely looking at this opportunity. I'm not sure if I would say that most are there today, but what I do know is that there are a lot of these large business service providers that I would classify as early adopters that are building out these vertical business networks.

And what they're doing is they're looking for a smaller ISVs or these very niche applications in order to be able to provide these applications to their community of users. So what I see happening with the smaller ISVs is that they're out there looking for new channel opportunities, or if they're trying to figure out how they can better compete or collaborate in this Software-as-a-Service market.

They're realizing that maybe instead of just looking at the traditional VARs and resellers that there's actually an opportunity to look at other types of service providers. And these business service providers that are offering these niche vertical applications to a community of users, especially, the SMB; it really is a great opportunity for ISVs.

So -- and everyone does seem to agree that Software-as-a-Service is going to be more successful, and can be more successful if you can collaborate. And it's not just about partnerships that we saw, you know, in the old days where I said I was partnering with you, you said you were partnering with me, this is really truly partnerships where there's collaboration.

And so I think a lots these smalls SaaS providers are figuring out who can I collaborate with and how can I best bring my product to market. So they are looking at it as a channel opportunity as well as just, you know, an opportunity to bring their product to market in a broader market as well as faster time to market.

KD: Alright. So could you talk a little bit more about the opportunities available for this SaaS ISVs and targeting vertical business networks and maybe give some specific examples?

CS: Sure. What I think, you know, what I worked with a lot of ISVs and we've got a few hundred at Progress Software that we're working with right now that have made the transition and it becomes Software-as-a-Service providers. The first thing that I tell them is that they need to kind of step back and figure out where their product and/or service best plays.

And what I mean by, you know, that is that, you know, one other specific business processes that their product addresses and who is the best target market for them. You know sometimes we forget that, you know, especially, if you're in a traditional software vendor and now you make the transition to SaaS. One of the things that I'm always fearful of is that they're just going to target the exact same market and just say well, now I have SaaS offering.

And the more successful SaaS providers have been the ones that have that have stepped back and said, okay, maybe I've been selling to this market over here, but now there's an opportunity for me to look at a new market. So if they can -- as SaaS provider, if you can step back, figure out who that best target market is and then determine what are the right business service providers that play in that market.

Say, for example, in healthcare is there a large service provider that is right now looking at an opportunity to integrate multiple applications in healthcare and bring that to market? In the legal sector, is there a large service provider that is looking to aggregate and bring these different services to market to may be smaller law firms?

You know in the oil and gas industry, is there a large player that's looking to consolidate and bring together a lot of the business applications that are used in the oil and gas industry? Now those three industries I happen to mention are three that Progress is working with right now to build-out these vertical business networks.

We've also seen it happen and the travel industry. Where if you think about it more and more, you know, if you're going to, you know, get a ticket on an airline, you also look at a hotel reservations, car reservations, and maybe even theater or dinner reservations. And if you can get that from a single business service provider, that's going to be a lot more of interest to you as the user of the system as opposed to having to go to five different portals, or applications, or websites in order to get that information.

And so really that's the -- the first thing is the opportunity for them to figure out, you know, what is your niche. And that's really the biggest difference and one of the keys to success in Software-as-a-Service is being able to pick your niche and be the best at it because remember the Software-as-a-Service it's as much about the service you can offer them as it is about the software.

So those SaaS providers that know their business and have a very specific application that can solve a problem are really going to be the best fit for these vertical business networks to be able to come in and offer their business applications. Now, with the vertical business network needs to then do is have the right SaaS infrastructure that can really focus on the integration of those business applications, the management of those business applications, and the deployment of those business applications to that community of users.

So they're going to be looking to focus more on an infrastructure to be able to provide the community with the applications, but the smaller ISVs or the small SaaS providers, their real value to the vertical business network are the business applications themselves.

KD: All right. So those sound like some good opportunities then. So given that there's a trend for ISVs to more and more want to deploy different types of SaaS applications, what do you think are some good points that they should keep in mind, like does and don'ts for targeting this opportunity?

CS: Sure. Well, the first thing I'd say if, you know, for the smaller SaaS ISVs, is the first thing is you know think outside the box. I think especially if you are a traditional software vendor making the transition, you know. There are a lot of opportunities for partnering and collaborations and it's not just the traditional VARs, SI's and resellers.

So you know the first thing, I think, you know, my recommendation would be don't just go to your existing channel. It might end up being that your channel there would be an opportunity, but if you kind of step back and think about, you know, if your application is in the automotive or in the construction, or in the travel, or in the newspaper publishing industry, think about who the large service providers are in that industry, and who some of those smaller organizations might go to for a full suite of services.

So that's the first thing. Think about, you know, step outside the box and think about these partnership opportunities. The second thing I often tell ISVs is make sure that your offering is able to handle the workflows and integration because if your application is today just to a standalone application, you know, the challenge with being able to move into a vertical business network is its now just not going to be the only application that the end-user's going to be using.

And so a lot of SaaS users today, you know, one of the things they're disappointed with is the level at integration that's offered by a SaaS provider. So one of the things they can do from a product perspective is make sure that their product can be easily integrated. It'll still be their responsibility of the vertical business network to make sure that their application can work with the other applications, but as an ISV, you really need to think in terms of how easy your application can be integrated and work from a workflow perspective with other applications.

The other thing about these vertical business networks are they kind of the biggest challenge is going to be the, you know, the SaaS infrastructure requirements. And, you know, the only way that vertical business networks will be successful in the long term are if, you know, the service levels that they're able to provide to these community of users stand up to was the service-level agreement or that they're providing to their customers.

So things like, you know, process management and an orchestration, overall service-level management, and governance, and of course, security is still going to be one of the key components that, you know, the community of users are going to look at because these are all going to be multi-tenant environments so multi-customer are going to be accessing potentially the business code and business logic.

And so what needs to happen is the vertical business networks provider needs to make sure that they've thought through the security, the access, and the controls. And so it's not going to be, you know, it's not necessarily an easy thing to build a vertical business network but the keys to success are going to be that have the right infrastructure built along with picking the right partnerships with these smaller ISVs.

And if they can build on an environment that would be something that a small to medium-sized business never would've been able to build out themselves because of the costs associated with it and because of the IT requirements associated with it, then they end -- the end result will be success on both sides.

The ISVs will be able to sell into a new market and sell an integrated solution into that new market. And the vertical business network providers or these large business service providers will be able to target that SMB market that always has been something they wanted to but the price points and the in the IT requirements always kind of kept them from being able to go after that community of users.

And the community of SMB users will start to get business applications that they can really afford but also have the capability their larger enterprises and have been using, you know, for a number of years. And so it really could be a win, win, win, you know, as long as all of these other things are thought of upfront in terms of the infrastructure, and the applications, and the end user requirements as well.

KD: Great! We've been talking with Colleen Smith, VP of SaaS with Progress Software. Remember for more podcasts, blogs, white papers, news, and more, you can visit www.ebizQ.net. Thanks for joining us and have a great day

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