Just in time for the third part of my Silo Busting Trilogy (don’t be confused by the 4, the first post was just an overview) Sarah Lacy published her fantastic article On Demand Computing: A Brutal Slog.  (Sara, thanks for the set-up.  Let me know how I can return the favor.)

For those without the patience to read her prose, Sarah basically says, the world is going to On Demand but selling this stuff is really, really hard.  CEO’s are flying all over the place trying to get deals done.

The natural reaction might be, isn’t this the case with traditional software as well?  It is for big deals, but smaller deals (still the majority of SaaS sales) are done through the channel.   The network of channels for traditional ISV’s is huge, from local Mom and Pop VARs, to huge resellers such as CDW, to the big integrators like Accenture.  Unfortunately none of these organizations does much for SaaS (seems like they are as addicted to up-front revenue as the traditional ISV’s.)

Fortunately we are seeing a next generation of integrators focused on integrating SaaS products.  Companies such as Astadia, BlueWolf, and Appirio have built burgeoning business’s around SaaS application cusotmization and integration.  Problem is that most of the focuse has still been around integration SalesForce.com.

That’s where web services come in.  By insuring you have a good web services interface you allow your app to be integrated in to these solutions by these next generation integrators.  This opens whole new channels (admittedly small right now, but growing like the rest of SaaS.)   Integrators can either use your software as a platform in which to develop custom apps, or more likely, integrate your app as part of a custom solution for a specific company or vertical.

Beyond the SI play, there is the ability to integrate your app in other SaaS applications allowing them do the hard work of sales while you grow every time they get a new customer.  Intacct software has done just that with RealPage.  Intacct is a critical component of RealPage, providing the underlying financial package that is part of RealPage apartment management solution.  Now every time RealPage signs up a new apartment building, Intacct get’s a new customer.

Now that’s a great way to stay off the plane.

Posted: August 29th, 2008 under Uncategorized.
Comments: 2

A couple of posts ago, I spoke to the busting of the SaaS Silo with Web Services and the impact that was having on the SaaS industry.  The last post spoke specifically about using Web Services to add functionality to your app.  While adding cool new functionality to the app is big for the product guys and the marketing guys, the interest from the sales side seems to be driven by a whole separate set of concerns, chief among them… Integration.

According to recent research by both Saugatuck and Forrester, integration has surpassed security as the main concern for enterprise implementations of SaaS.  This is actually a great sign for SaaS vendors.  It means that SaaS is extending beyond the departmental sale and making true progress into the enterprise.  It also means that in order to get past this increasingly common sales objection, companies need to figure out how to use Web Services to integrate their SaaS application.

While enterprise adoption of SaaS has been quite good, it’s usually done at the departmental level initially.  That means good SaaS apps appeal to business users with specific problems.  As the adoption of those applications spreads from the department to the whole enterprise, IT gets involved.  And it’s logical to think IT wouldn’t want a separate employee record in its Taleo system than it has in its payroll system.  Solutions such as Boomi’s Atoms help IT shops avoid that problem.

Besides integrating with legacy applications, Web Services are beginning to help companies integrate multiple SaaS applications.  Up to now the most ubiquitous integration problem, user management, has either been ignored by companies using SaaS or has had to be cobbled together by in house teams.  I can tell you, we use everything from SalesForce to NetSuite to RightNow and we’ve had to put some pretty tricky things in to (imperfectly) manage users.  Now we are seeing ready built solutions from TriCipher and Symplified that are making this easier and easier for both the SaaS vendor and the enterprise.

Finally, the integration piece is allowing companies like Astadia to go beyond SalesForce customizations in to the world of really creating custom applications out of many different SaaS apps.   Astadia’s acquisition of Theikos indicates that pre-built custom applications are going to be a big part of their future.

So while integration may be listed as a concern on SaaS adoption in the enterprise, it’s really an opportunity.  An opportunity to expand your app by tying it in to other SaaS apps, to legacy apps, and to even see it as the basis for custom apps.  Next post, we’ll talk about using Web Services to not only to break down customer objections but to actually create new opportunities.

Posted: June 30th, 2008 under Cloud, SaaS - Software As A Service, Uncategorized, Web Services, Web applications.
Comments: 1

It’s time to grow up….and learn to play nice with others.

SaaS adoption in the enterprise has definitely increased. But with that organizations are increasingly asking SaaS applications to start working with both other SaaS applications and the company’s legacy applications as well. According to recent studies by both Saugatuck and Forrester suggest that integration has surpassed security and compliance as Enterprise IT’s chief concern with implementing (or growing) SaaS applications.

This is an extremely encouraging sign. It shows the acceptance of SaaS as a legitimate enterprise software solution by the majority of Enterprise IT shops. Up to now, SaaS has been primarily a departmental sale. HR departments buy Taleo for human capital management, Marketing buys Marketo for marketing analysis, and call centers buy SupportSoft to manage their ticketing. As you know from past posts, selling immediately recognizable value at the departmental level is key to a strong success story in SaaS andwe can see how that has happened.

But now these apps are growing up and reaching across the organization (growing your app is another key SaaS sales strategy.) When that happens, IT is willing to accept the app’s growth, but needs it to do more now. Enterprise IT doesn’t want a separate employee record in Taleo from their payroll system. The want to be able to correlate all this marketing data back to their sales productivity, and they want to use the same master customer record for their ERP system as for their ticketing system. And they don’t want to have different log-ins for each employee, they want a single sign-on solution for all of their SaaS as well as on-premise apps (ala TriCipher.)

So SaaS applications have to stop being Silo’s that work just inside themselves. They need to start using web services to integrate with other SaaS apps and with legacy applications. By doing so, they’ll open up three great new areas for growth

1. Increased Functionality by working with other Apps
2. Enterprise Growth by integrating with existing Apps
3. The Opening of New Sales Channels

Their is so much to talk about in each of those three areas, they will get their own posts in the coming weeks.

In the meantime, think about adding web services, playing nice with others and growing up. It’s a great time to be an adult.

Posted: May 22nd, 2008 under SaaS - Software As A Service, Uncategorized, Web Services, Web applications.
Comments: 2

As many who know me, know that I have not been a big fan of Google. I love the desktop search (or I did until I got a Mac with Spotlight) but am not a big fan of their corporate culture. Just because they got search right (emphasis on the past tense, but that’s a later post) doesn’t give them the license to walk around the valley looking down their noses. (Prius anyone?)  They are a notoriously difficult company to partner with and to sell to (probably the real genesis of my distaste.)

I especially dislike the “Do No Evil” motto. As if other companies have the motto ”Do Evil.” It’s like an ad campaign that asserts “Trebelicious BubbleGum has no Spider Eggs in it.” (Although we know that certain telco’s bubblegum does have spider eggs.)

But lately, I’m beginning to like Google. They really do seem committed to an open web, and that is good for everyone. First was their support of Net Neutrality. Actively fighting the telcos in their effort to control what traffic they deliver is critical to the success of the Internet. To see what would happen if AT&T and Verizon got their way on Net Neutrality, one would just have to look at how horrible the mobile web browsing experience is (another area Google is trying to address with it’s gPhone initiative.)

Now one could argue that Google supports Net Neutrality because they don’t want to pay telcos for carrying terabits worth of YouTube videos. Except that Google has more than enough cash to pay the telcos and serve their cafeteria meals in disposable gold happy meal boxes.  If Google didn’t believe in an open web, it would do just that. The truth is while Google can afford to pay the telcos off, start-ups would not. They could effectively bar a good portion of their next generation of competitors from the market by allowing the telcos to set up a content tax that would be a market killer.

Google’s latest salvo of course is their OpenSocial initiative. Again, Google has come down on the side of an open platform over using its muscle to promote a Google-only platform. The cynics of my readers (also known as my family minus my wife) would point out that’s because Google is getting its seat handed to them on a platter in social networking by Facebook and this is their way of fighting back.

And the cynics would be right. They also would completely miss these two points:

1. It doesn’t matter if Google’s self interest helps everyone else. What matters is that we keep moving to an open web platform that fosters innovation and interconnectivity.
2. Google seems to be the only big company that realizes that an open internet is the best way to expand it’s market presence. By making the web more open (and by extension better) they believe they will have more opportunity, not less.

Not surpisingly the old line telco’s and software companies doen’t understand this, which is why we have so many proprietary platforms (from Verizon’s vCast to SAP’s NetWeaver.) Suprisingly, some of the coolest and smartest new companies don’t seem to realize it either. I love Facebook, SalesForce.com and Apple and I use their products every day, but all of them are closed proprietary systems. That makes it difficult for me to interconnect them and other apps in a way I find as useful.

So hats off to Google today. From Net Neutrality, to OpenSocial, to the gPhone - they are making the internet a more interesting place. I’m sure they will benefit from that openness mightily, but so will OpSource, and our customers and thousands of other companies who have yet to be formed.

And to thank them, I have now changed my default search engine from Yahoo to Google. Think that will get me a ride on Google Jet?

Posted: November 5th, 2007 under SaaS - Software As A Service, Uncategorized, Web applications.
Comments: 5

Reading M.R. Rangaswami’s recent post Where are Software’s Children, I am struck by the continued belief that enterprises will continue to use installed applications through the next generation of software. That is simply not going to happen.

Mr. Rangaswami’s observation of the age of the ruling class of software companies is aging and that most good young programmers and executives are going to Web 2.0, open source, and SaaS companies. He makes a number of suggestions on what the TBA “traditional business application” companies can do to combat that trend. While Mr. Rangaswami is correct in observation, his suggestions in the end will be spitting in the wind.

That is because the young talent is attracted to these companies because of what they are doing, creating the next generation of applications. They have no interest in working on client server technologies. They grew up on the web and they want to be building Web Applications on next generation platforms. The idea that better mentoring will get these people to work on a fading technology is absurd. So the real interesting question is what is the world going to be like when these “Children” grow up.

I remember a similar shift when I first got in to the business world back in the late 80’s. The company I worked for did all their computing on a VAX, and made very minimal use of PCs (just for word processing and some spreadsheets). I was charged with putting together a corporate training database and employee scheduling tools. I never once considered doing it on the VAX. The idea of using that technology was as a complete anathema.

The same thing is happening in todays technology world. These new generation of technologists grew up on-line. They look at client server computing and installed software the way I looked at the VAX. They probably realize the power of it, but would never consider using it or working on it. It’s as separated from their existence as an ATM network would be to todays network engineers.

Which of course leads back to one of my favorite assertions. In the next twenty years all applications will be Web Applications. Not because they are cheaper or easier to use or better platforms for group work (though they are all three), but because they are how the next generation of users and programmers are used to working. This young guard will be the old guard by then and they won’t be installing software any more than I am using a VAX to run my business today.

The hardest part of all of this is realizing I’m the old guard now (I guess turning 40 had something to do with that as well). I love this next generation of applications and I almost wish I could create a training database today so that I could use a Rollbase, or Dataweb, or Coghead to do it. Unfortunately, that will be the job of the Jason Cumberlands of the world. I’ll just have to be content with coming up with ways to help these guys grow in to the “Adults of the Web.”

Posted: October 18th, 2007 under SaaS - Software As A Service, Uncategorized, Web applications.
Comments: 1