When companies are developing SaaS applications, billing is a very important consideration but sometimes ends up as an afterthought, says Ed Sullivan, CEO of Aria Systems. Ed joined me for a talk about things to keep in mind on the billing front; listen to the podcast below or read the transcript.

Download file

KD: When a company wants to develop an deploy a software as a service application, one of the many considerations they must think of is billing and according to Ed Sullivan, CEO of Aria Systems, a lot of companies make critical mistakes in billing. Ed is here today to talk to us about software as a service billing and how best to handle it. Thanks for joining us today, Ed. Can you start by telling us how most providers are handling billing right now and what’s wrong with that approach?

ES: Based on what we’re seeing in both our existing customers that have come to us and prospects that we’re talking to, is that they tend to treat billing as an afterthought and cobble together maybe a PayPal account with Quicken or merchant account and don’t really, those solutions don’t really scale for one, secondly they’re not compliant with some of the, you know, the credit card industry stuff, taking personal information and thirdly, they don’t scale, they might scale, you know to a couple hundred or a couple thousand customers and you can do things manually but by treating it as kind of this cobbled-together thing, the thing they don’t automate all of the use cases throughout the customer life-cycle.

KD: All right, that makes sense. So what would you say is a better way to handle billing for SAS applications?

ES: Well, I think one of the other issues that some companies have when they’re billing a SAS application, either from an on-premise application that you’re trying to convert to SAS or a new service is that they’re still thinking in the old software paradigm where it’s kind of a one-time purchase, you either take the credit card or you prove the transaction through a CFO and a PO and then you move on. In software as a service, you’re software is not your business, but your customer experience is your business and all of the use cases throughout the customer life cycle need to be considered when building a SAS application. For instance, when somebody signs up, tracking channels and tracking resellers, integrating with something like Salesforce.com to bring the customers into the service, being able to do more than just take a one-time transaction but manage multiple transactions throughout a customer life-cycle that might extend beyond a one-time purchase, monthly, quarterly, annually for an extended period of time. So, taking the approach of understanding what all of those use cases are in a long subscription based or recurring relationship.

KD: OK, so for companies interested in putting together a SAS offering, such as ISB’s can you give a list of do’s and don’t’s that they should keep in mind when considering the billing issue?

ES: Yes, so we’re kind of seeing a convergence of really two forces, if you will. One of them is the way consumers are buying goods and services on the internet and products on the internet – songs, videos, etc. is leaking into the enterprise so what I mean, even CIOs of large companies are not willing to bear the expense of building out an entire infrastructure and go after compliance, etc. when the number of users they have is not determined yet. So, I would say, the other thing that is happening is the world – I read the book, The World is Flat but it really is, I didn’t appreciate how amazing that phenomenon is until it started happening to us here at Aria and our clients. We built our software to really for North American companies and we kind of were faced with this happy accident of having customers and end-users, in turn, in 236 countries, 16 different currencies, having to deal with not just the rigors of being able to take credit cards and manage personal information in the United States, but understanding things like the European Safe Harbor Act when a software company in the middle of America decides to sell their software over the web and somebody from Europe shows up with a Visa card and if you take that personal information and unbeknownst to that service provider they’re in violation of a treaty between the United States and the European Union when they take the citizen of the EU’s personal and financial information across a border.

There’s a whole bunch of compliance issues out there that small companies tend not to think about and even larger companies are starting a new service don’t think about that really need to be considered if you’re aiming to have a large successful business.

KD: Anything else you’d like to add on the subject of billing and SaaS software?

ES: I guess the three main things I like to talk about are that your software is not your business, making sure that you understand that unlike classical software providers your software is not your business and you’re entering into a relationship as a SaaS provider. There are different use cases throughout that life cycle. You need to consider billing before you enter into beta for your software so that you can have a really good understanding of how you can get all those interactions to scale in business. So we say billing before beta and billing is really treated as an afterthought and it should be well thought out and planned while you’re building out the application, especially for SaaS providers.

KD: Great! We’ve been talking with Ed Sullivan of Aria Systems about software as a service billing concerns. Remember if you want more blogs, white papers, news and more about software as a service and enterprise 2.0, visit www.ebizq.net. Thanks for listening and have a great day!

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

Once thought to be the realm of SMBs, SaaS is increasingly becoming more prevalent in the enterprise. CIO Australia has a good article about this today that profiles the rise of SaaS in larger companies.

The article quotes Capgemini's head of SaaS pointing out that SaaS means faster time to market and a more business centric cost model that allows for closer aligning of IT costs to business impact.

A representative from a SaaS CRM firm suggests also that some companies deploy a SaaS solution as an interim solution for a problem and then ultimately end up keeping the SaaS solution after being pleased with the value.

Other points include that what is outsourced in SaaS is merely "grunt work that should have been done by the vendor" and that the CIOs are more and more frequently becoming involved in decisions to deploy SaaS.

The article makes other interesting points as well. I have often wondered why SaaS is so frequently labeled as an SMB issue, and I do suspect that more and more we will hear of larger companies choosing SaaS and that enterprise class SaaS solutions will become more prevalent.

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

The news of the day is Microsoft's launch of its Live Mesh synchronization offering, a key part of its Software Plus Services initiative. The IT media is abuzz with stories about Live Mesh and what it brings to the field. Here's a roundup of a few good stories:

• Ina Fried of Beyond Binary attempts to simplify everything by offering an FAQ that answers basic questions about Live Mesh, such as what it is, how it works, and what it can do.

• Computerworld reports that analysts are saying Live Mesh is Microsoft's attempt to shift the playing field back to its strengths. The article quotes one analyst as saying the announcement is a step backward, rather than forward, pointing out that Microsoft seems to be trying to move Web 2.0 to its proprietary Windows offering.

• SeekingAlpha has Microsoft playing "catch up," according to a post by Jeff Kaplan, a noted SaaS analyst. Kaplan compares Microsoft's efforts to those of SaaS leader Salesforce.com, noting that Microsoft seems to be trying to redefine the trends to fit its own terms.

• In the Dave's Download blog on US News and World Report, blogger Dave notes the confusion in how Microsoft is presenting the offering and that it's apparently aimed at consumers.

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

Intelligent Enterprise has posted a review of Microsoft's SQL Server Data Services. Rajan Chandras calls the offering a late but promising entry into the field for the mid-market, predicting that the offering might help businesses attempting to enter cloud computing and Web 2.0 markets.

Database as a Service, or DBaaS to use the tired acronym system, is not identical to DaaS or "Data as a Service" or "Infrastructure as a Service." DBaaS is just one part of data services, says Chandras.

Chandras goes on to conclude that the notion of DBaaS is certainly a step forward for Web 2.0.

Posted by krissidanielsson in | Permalink | Comments (2) | TrackBacks (0)

An article by Glenn Derene at Popular Mechanics questions whether social networking sites might ultimately "kill" search. In the article, Derene refers to a venture capitalist who has predicted that Web 2.0 will ultimately be the main way that people use the Web and the things that people search for will be handled through social networking sites instead.

The article inspired a lot of commentary, both in agreement and ridiculing the concept that social networking sites could serve these functions. I found a lot of the comments interesting -- some referring loosely to ideas that have been tossed around in discussions of "semantic web," like searches that can figure out your intent based on your personal info rather than merely by the words you type into the search box.

Other commenters point out that people don't use search sites and social networking sites for the same purpose, and that people would not be likely to turn to a social network for the type of information that the usually use Google for.

Definitely an interesting discussion. What do you think? Post any comments here.

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

Matthew Broersma at TechWorld has written an interesting article about potential security vulnerabilities in Google Apps, particularly in Google Spreadsheets.

According to work done by researcher Billy Rios, a security flaw (now fixed) was present in Google Spreadsheets that left users vulnerable to session stealing. Broersma reports that Rios believes this is a reminder that developers need to be aware of cross platform issues and how browsers may handle script and other code in different ways.

Is this a concern for other SaaS applications? Time will tell.

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

The differentiation between true SaaS and hosted traditional software has been the subject of much debate, and recently I was joined by Paul Giurata of Catalyst Resources for an interesting discussion about the matter, plus tips that companies can keep in mind when developing a SaaS solution. Listen to the podcast or check out the transcript below.

Download file

KD: Hi, I’m ebizQ’s Krissi Danielson. With so many studies finding that companies plan to implement On Demand software, it’s no wonder that so many companies are trying to get into SaaS, but there’s a right and wrong way to do it. With us today is Paul Giurata, a managing partner with Catalyst Resource, a company that offers user interface and application design for critical software applications for some pointers to keep in mind when developing a SaaS application.

Now Paul, there is a lot of debate around distinguishing true SaaS applications from pretenders that seems to try to take traditional software and make it SaaS merely by hosting it remotely. What do you think is the key difference between these two categories?

PG: The difference is in the amount of functionality that has to be exposed to the user. So in a real true Software-as-a-Service application, you -- if you can imagine you have the application itself in the middle that the user interacts with and then there’s sort of this constellation of about ten or so different things that need to be addressed like that the user still needs to experience.

So for example, purchasing it, deploying it, customizing it, provisioning and add users. In a true Software-as-a-Service application, all of that needs to be sorted out. And it makes the application much, much more sophisticated. Where as if you’ve got just a hosted application where someone said, well, we’re just going to host this, similar to a lot of we saw in this early ASP model that the provisioning, the administration, the purchase, the support was still all done via normal model.

Well, we’ll have our professional services people do. We’ll run it as a separate code base, you’ll have your own version of it; it’s on your own server so that’s the biggest difference. The other thing that is relevant is that when you do Software-as-a-Service, in order for it to be scalable, you really need to be able to have one code base you’re working from. Where as in these sort of imitation versions where they’re just going to web enable some. They might web enable let’s say some scheduling piece of software, TRS, and there is a separate version of the application you need from each customer that is running and that’s not a scalable business.

KD: Okay. So what would you say are the biggest mistakes that companies tend to make when they try to jump on the SaaS bandwagon?

PG: It’s related to my previous comment, which is they don’t understand that when they’re looking at the application and they want to move to Software-as-a-Service that there is this constellation of other experiences that need to be addressed. They don’t take that into consideration both from a complexity – from a technical complexity point and effort point so that’s one of them. The other thing is that much of what’s driving people to want – much of the drive for Software-as-a-Service are for applications that are either desktop based now like, for example, Intuit’s QuickBooks.

KD: Right.

PG: I know people that have that be Web-enabled for a number of reasons, or very complex enterprise applications that could be ERP. I mean that’s a very sophisticated application, but it could let’s say a flight planning piece of software, or payroll piece of software. And what’s inherent, those pieces of software is they are very, very complex so and the experiences that people need to have when they interact with the software is very, very complex and sophisticated.

So the mistake that organizations make is that they’re not aware and they don’t quite understand that to turn those into Software-as-a-Service is really is going to require much of this rich internet application behavior that there is so much discussion about. And I think people don’t realize that that’s going to be a key design point, and they go into these initiatives not understanding how to address and design the software as a rich Internet application.

As an example, you know what I mean by rich Internet application. I mean where there’s a lot more manipulation of data on the screen, people can do real-time sorting and (inaudible), filtering and there’s a lot more interaction right there at the screen as opposed to a traditional web application where the entire screen refreshes so it’s a lot of this AJAX type behavior.

KD: So it sounds like maybe companies that want to deploy SaaS should be reading up on the Web 2.0 trends.

PG: 2.0 trends, life would be specific to that. The Web 2.0, which is such a loaded term –

KD: Right.

PG: – also has a number of different things in it. And I think companies need to really understand are what are the rich internet application behaviors.

KD: Right.

PG: So for example, if you look at something like FLEX, there’s a lot of that rich internet application type behavior in that particular technology.

KD: Right.

PG: That’s most of what I’m referring to.

KD: Okay. So for a company that wants to deploy SaaS, particularly, like in ISV, what are some key points they should keep in mind when they try to put their offering together?

PG: Well, I would say it would be the two that I mentioned. One is to realize that when you have an existing piece of software and you are going to web enable or move that to Software-as-a-Service, there’s this constellation of experiences that you need to consider right up front and they relate to. And I’ll even kind of mention, the purchase cycle, deployment, customization that people will be asking for, provisioning, how you add users, that sort of thing, training, support, billing, monitoring to make sure that you can deliver the service levels, delivering service levels.

And another key aspect of it is being able to update the software on probably a no more than 90 to 180 day cycle as opposed to one year or 18-month cycle. So that’s the constellation of things that are sort of surrounding the piece of software. And then the other thing that I would recommend is our sense is that there is significant demand to do these things Software-as-a-Service applications. And the enabling technology that has appeared is really this rich internet application behavior.

We won’t be able to do Software-as-a-Service and deliver these complex – what were historically enterprise-level applications there were own an internal network and running off computing power of a PC as well as a server. We won’t be able to deliver that just via the browser, it’s really going to take these other rich internet technologies that are being presented in a browser but are much more compelling to be able to do that.

KD: Great. This has been ebizQ’s Krissi Danielson speaking with Paul Giurata of Catalyst Resources. Be sure to tune-in at www.ebizQ.net for more podcasts, whitepapers, blogs and other latest updates on SaaS and Enterprise 2.0. Thanks for listening.

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

The big news of the day has been the expansion of a partnership between Salesforce.com and Google, in which Salesforce will offer Google Apps on its cloud computing infrastructure, integrating the functionality with Salesforce's CRM services.

Some industry analysts are saying that the partnership will give Google Apps a bigger presence in the enterprise scene and will put more pressure on Microsoft to offer a SaaS version of Office.

InformationWeek's Paul McDougall reported that the alliance of the companies could mean "a formidable challenge" to Microsoft's efforts in the SMB applications arena. Apparently the two companies are billing the offering as "the world's largest cloud computing platform for building and running applications." McDougall reports that other competition includes the Accelerate program through which Oracle offers its Oracle's Siebel CRM On-Demand.

At Network World, Mitchell Ashley agreed with that sentiment, calling it a strong validation of Google Apps and noting that it was part of a long "Chinese water torture strategy" by Google to erode Microsoft's revenue stream from Office.

Doug Henschen of Intelligent Enterprise makes the interesting point that the offering has an odd name...Salesforce for Google Apps rather than "Google Apps for Salesforce," noting that customers are more likely to be drawn to the offering initially for Salesforce.

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

With the recent big announcement of the preview of Google App Engine, a further addition to the cloud computing field that is sure to make an impact of some sort, a minor scandal has erupted today in the media: A company called 37Signals claims that the App Engine's HuddleChat application was a copycat of 37Signals' Campfire offering.

The similarities were first reported in ReadWriteWeb, where Josh Catone interviewed 37Signals about the issue.

Google has since pulled down HuddleChat, but Tom Lee of the Techdirt Insight Community says that the whole deal was much ado about nothing. HuddleChat was hardly a key component of the Google App Engine and was merely intended as a demo app, written by a Google employee, to demonstrate the abilities of the App Engine. Lee points out a potential irony in that 37Signals was accused of copying from others when it created Campfire as well and that the whole incident is unlikely to have any impact on Google's overall offering.

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

The big SaaS and Web 2.0 news of the day seems to be the Google App Engine. In a press release yesterday, Google announced a preview release of the app engine, a tool that allows developers to deploy code on Google's infrastructure and then integrate it with other Google services.

TechNewsWorld reported on the news, quoting a Google exec as saying the app engine is designed to make launching of web applications as easy as launching a blog. Right now the app engine supports only applications written in Python 2.5.2 but Google plans to support other languages over time. The offering makes Google a competitor with Amazon and Salesforce.com in offering cloud computing services, the article concludes.

An article in DailyTech specifically speculated that Google was targeting Amazon's popular Amazon Web Services offering, and that one factor that could sweeten the deal in Google's favor is that developers can use Google's APIs. Some analysts wondered whether Google's offering would force Amazon to cut prices for its cloud computing offerings.

Finally, in considering the new offering, ReadWriteWeb's Marshall Kirkpatrick wondered whether Google App Engine would be "history's next step or a monopolistic boondoggle." Kirkpatrick pointed out that the offering could be compared to Nick Carr's The Big Switch and raised some interesting points, such as whether or not there would be barriers for developers who chose to leave the App Engine after time.

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

Various SaaS vendors have been predicting that SaaS adoption would increase in harsher economic times. According to a new IDC report, that seems to be becoming reality in Europe.

The researchers found that 37% of IT leaders planned to invest money into some form of SaaS within the next two years for ERP systems. For CRM, 35% intended to use SaaS to replace existing software and 32% had similar plans for supply chain management.

In an article about the findings on Comms Express, Bo Lykkegaard from IDC is quoted as predicting, "We believe SaaS spending will be directed at new applications and at replacement of broken applications, rather than at ripping and replacing working solutions."

In a report about the same findings, ithotdesk pointed out that some companies may be using SaaS to reduce their carbon footprints.

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

An advertising firm called Modernista! is getting a lot of attention for its new so-called website. The firm apparently dismantled its own website in favor of a floating menu bar that superimposes its logo and a small clickable menu over the top of whatever referring page you clicked from.

For example, if you click on this link you should now see Modernista's new website superimposed right over the top of SaaS Week. (And if you find the floating buttons annoying, there should also be an exit option on the other side of your screen.) Typing in Modernista's URL brings the floating widget over the top of a Wikipedia page about Modernista that includes a disclaimer that Wikipedia is opposed to being used in this manner to promote a third party.

A lot of people have had very different reactions to the site, which is essentially not even really a site. Frankly, I do not care for the site myself and prefer for a website to at least attempt to sell me on a company, which the Modernista site does not. I fail to see the point it is trying to make and if I were attempting to choose an ad firm I would probably not choose one that marketed itself this way.

A balanced article by Rupal Parekh on Advertising Age presented some opposing viewpoints. Some who commented on the site pointed out that the site demonstrates that the company "gets" Web 2.0, whereas others noted that the success of the gamble remains to be seen.

Angela Natividad of the Adrants blog made an interesting point that when people are researching a company that people pay a lot of attention to what is written about companies on other websites, so being bold enough to rely on the Internet to speak for it could show that the company is confident that the strategy will not backfire.

A user called Drama 2.0 cried BS on the E-consultancy.com blog, however, instead countered that the site showed that hte company was trying too hard to be cool and failed to effectively communicate a message to prospective clients who would be seeking out Modernista's services in communicating a message.

Thoughts on the Modernista website? Post 'em below.

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

I read an interesting comment in CNET today that gave me a flashback to the early days of my life as a technology editor back in the throes of the late 1990s dotcom boom. I remember watching the headlines with a balance of incredulity and amusement as people went nuts funding anything that had .com at the end of the company name, regardless of how useful or well thought out the company actually was.

In the comment, a reader named free_people raised the point that the latest and greatest Web 2.0 technologies don't really provide any kind of valuable service and many of them don't even generate sales, and this is the grand focus of Silicon Valley, an area with a lot of indisputably great minds are hard at work to find new ideas on how to make money out of thin air. And meanwhile, engineers in other countries like Japan are hard at work on really important and heavy stuff like hybrid automobiles and alternative energy.

I've been starting to wonder lately about the idea that Web 2.0 could be heading for a bubble of its own. There certainly are a lot of companies popping up everywhere that I wonder if they suddenly went out of business, would anyone even notice or care? I suspect I know the answer to that question.

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

Brian Jackson of IT Business News Canada reports that experts are cautioning businesses to embrace rather than reject social networking.

Referencing a recent study by the Association for Information and Image Management that concluded that businesses were not on the ball about Enterprise 2.0 technologies, Jackson quotes the AIIM with a comment on the paradox that businesses claim to consider Enterprise 2.0 critical but they also admit to not knowing what it is.

The article also points out that company employees may be using social networking technologies already even without approval by the IT department (in companies that have yet to formally embrace the technology), concluding also that companies who fail to assign a project team to figure out the best uses of social media are at risk of being left behind by competitors.

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