Scheduling Chronicles

Bessemer Releases Updated Top 10 Laws of Cloud Computing and SaaS

Bessemer Venture Partners, a global investment group, has just released its updated edition of “Bessemer’s Top 10 Laws of Cloud Computing and Saas,” a resource for SaaS providers on how to succeed in the cloud computing business.

The updated material is available on the Bessemer website and co-authors Byron Deeter and Philippe Botteri will be presenting it at the upcoming SalesForce.com Dreamforce conference.

What's particularly interesting is that Deeter and Botteri expand the definition of Cloud computing in the report as incorporating the popular Software-as-a-Service as well as new areas such as Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). 

PaaS consists of the service and management element of the cloud platform and is rapidly changing to include elements such as intelligent provisioning as well as application and network management.

Further, IaaS is the “foundation” of cloud computing and includes storage, compute, backup, disaster recovery, databases, and security. 

These laws are the product of hundreds of conversations that the partners of Bessemer have had with cloud executives from our past and current portfolio companies, as well as other leading public and private cloud companies," said Deeter.

Gartner: SaaS Revenues to increase 18% in 2009

Global revenue from Sofware-as-a-Service (SaaS) will grow nearly 18% in 2009 to $7.5 billion, up from $6.8 billion in 2008.  That’s the latest according to technology research firm Gartner.

“The adoption of SaaS continues to grow and evolve within the enterprise application markets,” said Gartner research director Sharon Mertz.

Gartner says that the worldwide SaaS market will continue to grow through 2013 with expectations that revenues will exceed $14 billion, with content, communications and collaboration services capturing the greatest share of SaaS revenue at $2.6 billion.  This is followed closely by CRM systems at $2.3 billion and enterprise resource planning at $1.2 billion.

Mertz attributes much of this growth to on-demand vendors who are expanding their offerings though alliance and partnerships as well as moves to grow user application development via platform-as-a-service offerings.

Free Webcast: Saving Money with SaaS

TechRepublic, a popular resource for IT professionals will be hosting a live webcast on November 17th at 1:00 pm ET that might be of interest to any organization considering adopting Software as a Service as part of their business operations. 

Titled Saving Tim and Money with Software as a Service (SaaS), the webinar will provide an overview of the SaaS solutions and strategies for small and medium sides businesses.  

According to TechRepublic, the webcast will help attendees:

• Gain a better understanding of the market conditions that are driving the need for SaaS among SMBs as well as the leading trends and strategies to maximize its value to the business 
• Find out if SaaS is a good fit for your business and how you can properly assess your situation to determine the best SaaS solution for your particular type of business 
• Learn how an integrated SaaS solution provides a scalable platform that will grow with your business and provide even greater opportunities for lower costs and better service

To learn more or to register for this webinar, go here.

SaaS Stock On The Rise

The general state of the economy may be bleak but not in the world of software-as-a-service.  According to Nine Lives Media's SaaS Stock Index, SaaS stock rose nearly 30% in the first half of 2009. 

Among the big winners are Taleo Corp (up 133%), Amazon.com (63%), SuccessFactors, Inc. (59%), RightNow (52%), Constant Contact (49%), Kenexa Corp. (44%), and NetSuite (39%).  Others such as Dell, Google, Salary.com, and Ingram Micro also jumped, a potential sign of things to come.  While the performance of SaaS may have been less than stellar in 2008, perhaps SaaS is one market that can help lead us out of the current economic climate.

APIs the Key to Business Development and Customer Aquisition

The importance for SaaS vendors to have an API has never been greater than it is today.  That’s the latest from a panel of experts at the recently completed Interop Las Vegas event.

APIs are critical to any SaaS business with a channel partner strategy.  Why?  Because at the end of the day APIs accelerate the integration of SaaS applications with legacy solutions, therefore improving the adoption rate of those applications. 

As Network World notes in a recent article, SaaS applications can be an easier sell because customers traditionally don’t need (or require) the input of CIOs or the IT department – at least initialy – when reviewing potential solutions.  There’s no doubt that there’s involvement and, in fact, CIOs in particular are becoming more engaged earlier in the process as their awareness is heightened over SaaS applications.  But there’s certainly less resistance to new product adoption using the SaaS model than the traditional licensing model. 

When it comes to business development, however, an API is the backbone to a successful partnership.  In many cases, companies are looking for a variety of solutions to meet their needs but they also don’t want to have to manage a series of disparate systems as this creates a number of headaches across multiple departments.  An API can bridge this gap by integrating multiple applications that ultimately provide a more complete solution with greater "value add."  And the panelists at the Interop session claimed that using an API among partnering companies could cut the cost of acquiring customers for SaaS vendors which is a big plus since, as Tim Dilley of NetSuite notes "Customer acquisition is the biggest cost."

"'It's stunning to me the number of SaaS companies that don't even consider an API as part of the development cycle,' says Treb Ryan, session panelist and CEO of OpSource.  'Lord knows two Web developers in a garage know to put out an API. [For SaaS vendors not doing this it's] killing them.'" 

The Role of Customer Support for SaaS

I recently came across an intersting post by Mikael Blaisdell that focuses on SaaS, Support, and owning the customer relationship.  The question of who owns the SaaS relationship is an important one and the following excerpt highlights what many companies struggle with.

"Who is accountable now for maintaining that ongoing relationship [between customer and vendor], and whose performance review is based upon successful retention? In most SaaS companies, the accurate answer is: no one.

"There is an ownership vacuum, and it will be filled by someone. Perhaps that someone will be a new form of what was once a channel partner, capitalizing on both proximity to the customer and specific expertise in their vertical. Or it could be that Support finally comes of age within the company, reinventing itself as an authentic profession. The key to the success in this fast-paced game is in addressing what the SaaS sea-change has not touched, the burden of responsibility for making productive and profitable use of the technology. That value, not the code, is what the customer truly wants to buy, and will pay well for."

I submit that the best SaaS companies do not lose sight of the criticality of the relationship with the customer. Certainly at PeopleCube we have not. As we have grown our SaaS business, our VP of Customer Care, Carolyn Urban, has put forth an incredible effort to expanded our customer community offering to provide additional opportunities for interaction with us. Our Customer Care Center (http://connect.peoplecube.com) provides interactive forums where customers can exchange best practices with each other, a custom report archive where free exchange of reports is encouraged, proactive RSS feeds to notify customers of status changes of their incidents, searchable knowledgebase of technical articles, etc.

We understand that in the end it is not about the technology that we sell. Especially in the SaaS model, it is about not only productive and profitable use of our solution as Blaisdell suggests, but getting to those business objectives faster than ever.

Microsoft: SaaS Growth Expected in SMB Market

SaaS adoption among SMBs is on the rise.  That's the latest from Microsoft in a recent article in PC World. 

According to a recent survey conducted my Microsoft, 86% of the 600+ small to medium sized businesses that participated in the survey said they expected to deploy SaaS in their organization over the next year.  Further, 55% of the survey participants indicated that they were planning to spend the same or even more on IT over the next year. 

This is a great sign considering the current economic climate.  It not only shows that SMBs are still looking to spend, but that they're looking to spend on SaaS applications.  Why?  Eduardo Rosini, corporate vice president for Microsoft's worldwide small and midmarket solutions and partners group, says in the article that it's because SMBs are "interested in 'doing more with less' and optimizing the IT resources they already have. SaaS allows SMBs to do that while also letting them embrace new technologies they might not otherwise afford, since they don't have to deploy new IT infrastructure to deploy new software."

Truth and Rumors of SaaS

Jeffrey Kaplan, Managing Director of ThinkStrategies, recently wrote an article for ComputerWorld that discusses the top five SaaS myths and the reality of them.  What's interesting is that, in general, many people assume that with the current state of the economy fewer companies are adopting new software.  However, this is far from the truth.  In fact, the economy is likely one of the primary driving factors behind the recent growth of SaaS.

Among the myths Kaplan addresses are:

Myth No. 1: SaaS is a peripheral trend.  On the contrary, according to a recent ThinkStrategies survey, SaaS usage had jumped from 32% of respondents in 2007 to 63% in 2008.

Myth No. 2: SaaS offers just one type of application.  The fact is, there are several applications available using the SaaS delivery model.  In fact, ThinkStrategies directory of SaaS providers includes 950 companies across more than 80 different industries and application areas.

Myth No. 3: SaaS just offers skinnier versions of more sophisticated applications.  Actually most SaaS vendors offer the exact same feature set in their SaaS solutions as with traditional on-premise applications.  And that's one of the attractions of SaaS by smaller businesses.  They're able to leverage the same applications and larger enterprises without having to purchase, install, and maintain costly hardware.

Myth No. 4: SaaS is less reliable and less secure than on-premises applications.  The recent service disruption issues by Google and SalesForce.com have generated a lot of attention but this is more a case of people hearing more about the bad than reporting on the good.  In fact, these types of issues happen very infrequently and, further, there has been no known reports of a major security breaches of an SaaS application.

Myth No. 5: IT professionals are uniformly opposed to SaaS.  As SaaS adoption grows, more and more IT staff are realizing the numerous benefits of SaaS not only for the company but for themselves as well.  Rather than seeing SaaS as a threat to their job, they're understand that it actually presents a better way to manage application deployment and the ongoing management of enterprise solutions.

The Long Term Financial Viability of SaaS

There are conflicting reports over the short vs. long term financial viability of SaaS applications.  One train of thought is that the SaaS model provides short and long term ROI because of the predictability cost, the elimination of large upfront cost to deploy the application, and the ability to manage licenses more freely.  The other side of the argument is that after year two, the ROI of SaaS declines because you're still paying for the software while standard on-premise applications are paid for.  The argument is similar to leasing vs. owning a car.  But that's where the similarities end.

What many SaaS detractors neglect to mention is the cost of maintenance. Unless you purchase an application as-is and plan to only use that version then maybe the on-premise model works for you.  But if you need technical support or plan to upgrade the software over time, you need to have an active maintenance contract.  So there's an ongoing cost that needs to be considered.

On the other hand, the SaaS model is essentially a built-in maintenance plan - but so much more.  You're not installing the software on your own servers either for the initial release or subsequent upgrades - it all happens automatically by the SaaS vendor.  Further, support costs are typically built in to the annual SaaS fees, and let's not forget the added benefit of leveraging new functionality in new releases that happen seamlessly.  But the bottom line is, as Darren Wesemann points out in his blog, SaaS is considered an operational cost, a preferred option for most organizations.   

Identifying the Keys to a Green Corporate Strategy

I found an interested article the other day in Environmental Leader written by Rich Lechner, VP of Environment and Energy at IBM titled "The Seven Pillars of a Green Corporate Strategy."  The article rang true to me because his messages are very similar to the ones I espouse.  In essence, the bottom line (pun intended I suppose) is the green strategy your organization implements must include a strong cost saving component as well.  We all want to be environmentally sound but any corporation must ask "at what cost?"  As Lechner points out "$1 in energy savings can often drive an additional $6 to $8 in operational savings."  And the reasons are (relatively) simple: If you are able to reduce your energy consumption, aren't you, by default, reducing your energy costs?

Lechner identifies his seven "pillars" of the corporate green strategy as:

• Strategy: Creating an environmental strategy as part of a larger corporate social responsibility initiative can produce beneficial financial and environmental results.
• People: Implementing alternative workspace, providing more online collaboration tools and creating other environmentally-friendly work environments can help attract and retain top talent.
• Information:As we like to say here at PeopleCube, you can't manage what you can't measure.  Knowing how to maximize utilization of shared resources, workspace, and other mission-critical areas of your business can help you better manage costs today - and tomorrow.
• Products: By understanding the environmental impact of their products enable companies to adjust their manufacturing processes.  Further, companies can leverage new technology that provides greater energy consumption intelligence.
• Information Technology:Reviewing the energy consumption of IT related resources can surprise many people.  In fact, some companies are turning to software-as-a-service (SaaS) as a way to reduce costs and carbon emissions of their IT infrastructure.
• Property: By leveraging technology to understand carbon emissions and real estate utilization, you're able to make adjustments to reduce real estate and energy costs. 
• Business Operations: Similar to above.  Organizations need to change their operations processes to reduce costs and carbon footprint.  But in order to do so, you first need to track, measure and analyze existing use and compare it against targeted environmental benchmarks.

As Lechner indicated, going green isn't as difficult or as costly as you might think.  With the right approach, the right planning, and the right technology, you can quickly and easily be on your way to greener bottom line - in more ways than one.