In a couple of my past posts, I pointed out that SaaS is not a one-size-fits-all deployment option. However, I do believe that there are some types of solutions that can only be effectively delivered as a SaaS solution - call it the "SaaS only" option.
Typically, "SaaS only" is applicable when the software/service meets one of four functional criteria:
(1) "SaaS only" solutions require significant deployment and operational resources to be effective. The Celarix logistics visibility service is a good example of this. To achieve supply-chain visibility, you need at least 20 interfaces to logistics providers. Setting-up those interfaces is extremely costly and time-consuming. Managing them going forward is also complicated with hundreds and thousands of inbound transactions every day. With over 300 predefine interface as part of their service, Celarix can provide customers with the visibility they need significantly faster and more cost effectively than any other alternative.
(2) "SaaS only" solutions include data that requires constant updates. There is a brilliant new service being launched that can only be successful in a SaaS model - let's call it LeadDB. It's not the services' real name, but it is still in Beta and under-wraps. IQ is participating in the Beta. LeadDM provides a list purchasing service unlike any others that I have encountered. Once you have logged-in to their service, you can enter your segmentation criteria and they will return target names that meet those criteria. You can then buy specific names one-by-one or in bulk. Fast forward to their new offering - by adding a couple of lines of code to your website, you can receive contact names (that meet your segmentation criteria) for the companies that are visiting your site. Set a monthly budget and distribution rules and each day you will get a list of potential prospects for your lead gen activities. It's a great way to bridge the gap between people that complete our online forms and those that just visit. Given the timeliness of LeadDBs data and the complexity of updating their contact database, there is no way this type of solution would be possible in any model other than SaaS.
(3) "SaaS only" solutions provide information that is only available by aggregating data across their customer base. Google has just rolled-out a new capability in their Analytics tool called Benchmarking. Basically you can use it to benchmark yourself against your peers and see how your site performs in 6 different categories (IQ currently outperforms in 5 of 6 and our next website release should address #6). It would be impossible to do this type of analysis in non-SaaS analytics packages.
(4) "SaaS only" solutions include a value-added component in their service. Constant Contact (CC) is a great example of this. The CC service has a few main components: (1) email creation, (2) list management, and (3) email distribution (with SPAM management, SPAM compliance validation and white listing). Of these components, #3 is most useful to me. I can easily replicate components #1 & #2 using an installed product, but having a level of assurance that my domain won't be black-listed as a spammer is a major benefit. A benefit that CC provides as part of their SaaS model and one that I could not easily replicate.
So, anybody thinking of deploying a new software solution (or re-deploying an existing one) in a SaaS model should really evaluate if their solution meets one of the four "SaaS only" criteria, or if the change is simply a "buzz" driven decision.
Next up is a model for identifying SaaS go-to-market strategies (i.e. marketing, sales, services) based on target customer profiles. Stay tuned.
Sunday, April 27, 2008
Tuesday, April 15, 2008
SaaS, Governance & The IT Bypass
My last SaaS posts were mostly about SaaS from a SW company's strategic perspective. This one is as a SaaS consumer - from the viewpoint of business and IT users.
As a business user, SaaS represents a wonderful opportunity to find and start using new applications that make my job easier. All I need is a credit card, a computer and an internet connect. Great - after 10 minutes I can hit the ground running with my free trial. One monthly price and I have no IT budget hassels (hence the bypass), no servers to install, no backups to worry about and no datacenter costs. Personally, at IQ, I use a variety of SaaS solutions and wouldn't want it any other way. Neither would our technical team - they are too busy building innovative technology. So, for a small to mid-sized business or department of a large organization, the model is cost effective and works well.
The picture is not so rosy for larger IT organizations. Imagine this very real scenario: Mary in accounting needs a better way to organize and store invoices, so she get a SaaS subscription to InvoicesAreUs (a SaaS startup) for herself and 5 other team members. Bob in marketing wants to store his collateral online and make it available to the sales team, so he gets a Google Sites account and creates a quick intranet. Meanwhile, the CIO has just paid $10 million dollars for an enterprise Documentum license. Fast forward 3 months, InvoicesAreUs goes out of business and Bob gets fired? There is suddenly a crisis. Nobody has a record of the invoices, since Mary scanned the hardcopies into InvoicesAreUs and then destroyed them (naturally the InvoicesAreUs database is no longer available); Bob still has access to the online Google Sites since nobody has revoked his authorization (there is no tie-in to a central LDAP or similar security directory); and the CIO suddenly has to figured out why employees are paying monthly fees for something that he has already bought.
Could this fiasco have been avoided? Well, yes with 3 main governance components:
(1) All SaaS purchases must be approved to ensure that there is no overlap with existing or planned systems that the purchaser is unaware of;
(2) All SaaS user accounts must be authenticated against a central LDAP (or similar) directory so that users can have their access to the systems withdrawn;
(3) All SaaS data must be provided on a backup schedule with a mechanism to view and manipulate the data outside of the SaaS application.
So, what's the bottom-line? SaaS can be incredibly useful, valuable and cost effective, but to be successful, SaaS vendors need to support coporate IT's governance and security requirements.
As a business user, SaaS represents a wonderful opportunity to find and start using new applications that make my job easier. All I need is a credit card, a computer and an internet connect. Great - after 10 minutes I can hit the ground running with my free trial. One monthly price and I have no IT budget hassels (hence the bypass), no servers to install, no backups to worry about and no datacenter costs. Personally, at IQ, I use a variety of SaaS solutions and wouldn't want it any other way. Neither would our technical team - they are too busy building innovative technology. So, for a small to mid-sized business or department of a large organization, the model is cost effective and works well.
The picture is not so rosy for larger IT organizations. Imagine this very real scenario: Mary in accounting needs a better way to organize and store invoices, so she get a SaaS subscription to InvoicesAreUs (a SaaS startup) for herself and 5 other team members. Bob in marketing wants to store his collateral online and make it available to the sales team, so he gets a Google Sites account and creates a quick intranet. Meanwhile, the CIO has just paid $10 million dollars for an enterprise Documentum license. Fast forward 3 months, InvoicesAreUs goes out of business and Bob gets fired? There is suddenly a crisis. Nobody has a record of the invoices, since Mary scanned the hardcopies into InvoicesAreUs and then destroyed them (naturally the InvoicesAreUs database is no longer available); Bob still has access to the online Google Sites since nobody has revoked his authorization (there is no tie-in to a central LDAP or similar security directory); and the CIO suddenly has to figured out why employees are paying monthly fees for something that he has already bought.
Could this fiasco have been avoided? Well, yes with 3 main governance components:
(1) All SaaS purchases must be approved to ensure that there is no overlap with existing or planned systems that the purchaser is unaware of;
(2) All SaaS user accounts must be authenticated against a central LDAP (or similar) directory so that users can have their access to the systems withdrawn;
(3) All SaaS data must be provided on a backup schedule with a mechanism to view and manipulate the data outside of the SaaS application.
So, what's the bottom-line? SaaS can be incredibly useful, valuable and cost effective, but to be successful, SaaS vendors need to support coporate IT's governance and security requirements.
Friday, April 4, 2008
Nucleus Research misses the mark on Saas vs ASP
I have been an interested reader of the Nucleus Research's studies since they launched. For the most part their analysis is insightful and balanced but they really missed the mark in their "Hosted versus on-demand" study.
http://nucleusresearch.com/research/notes-and-reports/hosted-versus-on-demand/
If you have ready any of my other posts on Software as a Service (SaaS), you will realize that I consider SaaS to be a strong business model and a great deployment option, but I do not consider it to be the best model or the death of SW as we know it. It will be a delivery model, but not the only delivery model available. Yes, this runs contrary to a lot of pundits (like Nucleus Research), but let's face it - there are a variety of attributes that make a product successful in a SaaS model, while there are other attributes that would make it less successful. For example, highly integrate applications are not well suited to SaaS given volumes, latency, etc. On the other hand, services with additional value-add components like GSX / Celarix or Constant Contact are perfectly suited. Also, hell will freeze over before government entities and a lot of large organizations use SaaS as the only delivery model for their applications. There are just too many compliance, legal and security issues that they would have to overlook or ignore to make it feasible. For many organizations, economics is also not a good reason - the US Government and Fortune 100 companies each have significant enough data center expertise and economies of scale that very few, if any, SaaS providers can compare to.
Most importantly, just providing a solution in a "multi-tenant architecture" is not enough justification for a SaaS model. Multi-tenant architectures work well, that is how we deployed Celarix, but they also have downsides (which Nucleus forgot to mention). Everybody has to get upgraded at the same time, regardless of organizational change management impacts or interfacing issues. If the application is down or performing slowly, everybody is impacted. I have experienced these issues at Celarix (fortunately very seldom). At IQ, our applications are provided either on-site or on-demand (ASP / SaaS). Each customer gets their own virtual instance of their application run from a cluster of blade servers. The cost economics work well AND the customers can define their own backup, interfacing and security requirements. The choice of deployment option is up to our customers (which is where it should be).
At IQ we use a variety of SaaS solutions such as ADP, ConstantContact and GoToMeeting amongst others. Each of these solutions deliver financial value - I don't need to get servers, communication lines setup or IT resources involved. Each of these solutions also deliver unique business value (e.g. ConstantContact takes care of message delivery and SPAM compliance), but that doesn't mean all applications deliver additional benefit from a SaaS model. That I believe is the fundamental issue I have with Nucleus' report - software that delivers unique value as a SaaS solution should be delivered as one. Otherwise give the customer a choice.
http://nucleusresearch.com/research/notes-and-reports/hosted-versus-on-demand/
If you have ready any of my other posts on Software as a Service (SaaS), you will realize that I consider SaaS to be a strong business model and a great deployment option, but I do not consider it to be the best model or the death of SW as we know it. It will be a delivery model, but not the only delivery model available. Yes, this runs contrary to a lot of pundits (like Nucleus Research), but let's face it - there are a variety of attributes that make a product successful in a SaaS model, while there are other attributes that would make it less successful. For example, highly integrate applications are not well suited to SaaS given volumes, latency, etc. On the other hand, services with additional value-add components like GSX / Celarix or Constant Contact are perfectly suited. Also, hell will freeze over before government entities and a lot of large organizations use SaaS as the only delivery model for their applications. There are just too many compliance, legal and security issues that they would have to overlook or ignore to make it feasible. For many organizations, economics is also not a good reason - the US Government and Fortune 100 companies each have significant enough data center expertise and economies of scale that very few, if any, SaaS providers can compare to.
Most importantly, just providing a solution in a "multi-tenant architecture" is not enough justification for a SaaS model. Multi-tenant architectures work well, that is how we deployed Celarix, but they also have downsides (which Nucleus forgot to mention). Everybody has to get upgraded at the same time, regardless of organizational change management impacts or interfacing issues. If the application is down or performing slowly, everybody is impacted. I have experienced these issues at Celarix (fortunately very seldom). At IQ, our applications are provided either on-site or on-demand (ASP / SaaS). Each customer gets their own virtual instance of their application run from a cluster of blade servers. The cost economics work well AND the customers can define their own backup, interfacing and security requirements. The choice of deployment option is up to our customers (which is where it should be).
At IQ we use a variety of SaaS solutions such as ADP, ConstantContact and GoToMeeting amongst others. Each of these solutions deliver financial value - I don't need to get servers, communication lines setup or IT resources involved. Each of these solutions also deliver unique business value (e.g. ConstantContact takes care of message delivery and SPAM compliance), but that doesn't mean all applications deliver additional benefit from a SaaS model. That I believe is the fundamental issue I have with Nucleus' report - software that delivers unique value as a SaaS solution should be delivered as one. Otherwise give the customer a choice.
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