Posts Tagged ‘PaaS’

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News Analysis: Salesforce.com and VMware Up The Ante In The Cloud Wars With VMforce

Published on April 29, 2010 by R "Ray" Wang

VMWare and Salesforce.com Battle For The Hearts And Minds Of Cloud-Oriented Java Developers

On April 27th, 2010, Salesforce.com, [NYSE: CRM] and VMware, Inc. (NYSE: VMW) formed VMforce, a strategic alliance to create a deployment environment for Java based apps in the cloud.  The Platform-as-a-Service (PaaS) offering builds on Java, Spring, VMware vSphere, and Force.com.  Key themes in this announcement:

  • Growing the developer ecosystem. VMware and Salesforce.com realize that the key to growth will be their appeal to developers.  The VMforce offering courts 6 million enterprise Java developers and over 2 million using SpringSource’s Spring framework with an opportunity to build Cloud 2 applications.  VMware brings application management and orchestration tools via VMware vSphere.  Salesforce.com opens up its applications, Force.com database, Chatter collaboration, search, workflow, analytics and mobile platforms.

    Point of View (POV):     By betting on Java and the Spring framework for this Cloud2 PaaS, both vendors gain immediate access to one of the largest developer communities in the world.  Salesforce.com developers no longer have to use the highly flexible, but very proprietary APEX code base to create Cloud2 apps.   Java developers can now reach the large base of Salesforce.com customers and use the Salesforce.com apps and Force.com.
  • Creating cloud efficiencies for Java development. VMforce brings global infrastructure, virtualization platform, orchestration and management technology, relational cloud database, development platform and collaboration services, application run time, development framework, and tooling to the cloud.  Organizations can build code in Java and integrate with apps in Salesforce.com without having to retrain existing resources.  Environments can scale as needed and take advantage of the massive economies of scale in the cloud.

    POV:     As with all PaaS offerings, cost and time savings include not dealing with hardware procurement, pesky systems management software, configuration and tuning, and multiple dev, test, and production environment set up.  Developers can focus on business value not infrastructure.  What will they do with their free time not scaling up databases and app servers?

More…

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Tuesday’s Tip: Understanding The Many Flavors of Cloud Computing and SaaS

Published on March 22, 2010 by R "Ray" Wang

Confusion Continues With Cloud Computing And SaaS Definitions

Coincidence or just brilliance must be in the air as three esteemed industry colleagues, Phil Wainewright, Michael Cote, and James Governor, have both decided to clarify definitions on SaaS and Cloud within a few days of each other.  In fact, this couldn’t be more timely as SaaS and Cloud enter into mainstream discussion with next gen CIO’s evaluating their apps strategies.  A few common misconceptions often include:

  • “That hosting thing is like SaaS”
  • “Cloud, SaaS, all the same, we don’t own anything”
  • “OnDemand is Cloud Computing”
  • “ASP, Hosting, SaaS seems all the same”
  • “It all costs the same so what does it matter to me?”
  • “Why should I care if its multi-tenant or not?
  • “What’s this private cloud versus public cloud?”

Cloud Computing Represents The New Delivery Model For Internet Based IT services

Traditional and Cloud based delivery models share 4 key parts (see Figure 1):

  1. Consumption – how users consume the apps and business processes
  2. Creation – what’s required to build apps and business processes
  3. Orchestration – how parts are integrated or pulled from an app server
  4. Infrastructure – where the core guts such as servers, storage, and networks reside

As the über category, Cloud Computing comprises of

  • Business Services and Software-as-a-Service (SaaS) – The traditional apps layer in the cloud includes software as a service apps, business services, and business processes on the server side.
  • Development-as-a-Service (DaaS) – Development tools take shape in the cloud as shared community tools, web based dev tools, and mashup based services.
  • Platform-as-a-Service (PaaS) – Middleware manifests in the cloud with app platforms, database, integration, and process orchestration.
  • Infrastructure-as-a-Service (IaaS) – The physical world goes virtual with servers, networks, storage, and systems management in the cloud.

Figure 1.  Traditional Delivery Compared To Cloud Based Delivery

screen-shot-2010-03-22-at-105927-pm

The Apps Layer In The Cloud Represents Many Flavors From Hosted To True SaaS

SaaS purists often challenge vendors on delivery models in the cloud at the apps layer (see Figure 2).  Often classified as OnDemand, there are 3 common approaches:

  1. Single Instance – (a.k.a. “On Demand”). Think traditional apps deployed one cusotmer per app or per server. Many vendors provide hosting capabilities. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, customize, and in most cases choose when they want to change the code. All customers can use different versions of the software
  2. Multi Instance – (a.k.a. “Server Virtualized”). Think “VMware” like. Apps deployed into a shared-web hosting environment. A single instance copy of the app is configured and deployed into a web directory for each customer. Vendor benefit from easier to manage multi-instance environments. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, customize, and in most cases choose when they want to change the code. All customers can use different versions of the software.
  3. Multi-tenant – (a.k.a. “True SaaS”). Apps in a multi-tenant deployments provide a single operating environment shared by multiple customers. Config files are created and deployed each time a customer request services. Customers don’t worry about the IT infrastructure and retain the flexibility to modify, configure but NOT customize the code. Customers usually receive upgrades at the same time. Everyone shares the same code.

Figure 2.  Different Strokes Of OnDemand For Different Folks

screen-shot-2010-03-22-at-112728-pm

The Bottom Line – Different Models Bring Varying Degrees Of Trade Offs In Cost Versus Flexibility

Keep in mind there are cases where one deployment option is more favorable than another. Just because you are multi-tenant SaaS doesn’t mean you are better. On the other hand, when vendors tout OnDemand as a SaaS offering, then the SaaS bigotry begins. Be on the look out as more vendor provide mix-mode offerings to support disconnected modes, SaaS and On-premise, Public and Private clouds, as well as other improvements in integration with stronger client side ESB’s. Expect many vendors to put their offerings into the Cloud as Cloud/SaaS moves beyond the mainstream for apps strategy.  Let’s take a look at a two decision criteria:

Scenario 1: From least expensive to most expensive to run for a vendor:

  1. True SaaS
  2. Server Virtualized
  3. Hosting

Why is this important? Let’s see, you choose a Hosted solution and the vendor’s costs to run the app goes up with each new customer as it has to manage the different environments. No matter how hard the vendor will try to “fit” everyone to standard configurations and deployments, that’s not always possible. Flexibility has a cost. In a “True Saas” solution, the cost to add an additional customer is minimal and each customer reduces the overall cost for everyone. Ultimately, a True SaaS deployment will have the lowest cost/user/month fee. What will you do 5 years into an Hosting scenario when you are locked in?

Scenario 2: From most customizable to least customizable for a customer:

  1. Hosting
  2. Server Virtualized
  3. True SaaS

Why is this important? Your may have specific needs in an area where the SaaS vendor has not provided the deepest level of configurations. You can’t just go in and modify the code unless everyone else wants it or the vendor’s has it on the roadmap. The cost of comformity is the lack of flexibility. What will you do 5 years into a True SaaS scenario when you are locked in and the vendor won’t add the feature or functionality you need?

Your POV

What’s your view on SaaS vs Cloud?  Does this help clarify the definitions?  Are you looking at private, public, or hybrid cloud options?  Add your comments to the discussion or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Please let us know if you need help with your SaaS/Cloud strategies.  Here’s how we can help:

  • Crafting your next gen apps strategy
  • Short listing and vendor selection
  • Contract negotiations support
  • Market evaluation

Related resources and links

Take the new and improved survey on 3rd party maintenance

20100322 Monkchips – James Governor “Defining Cloud is Simple. Get Over It. The Burger”

20100319 ZD Net: Software as Services – Phil Wainewright “Is SaaS the Same as Cloud”

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.

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Tuesday’s Tip: 10 Cloud and SaaS Apps Strategies For 2010

Published on December 22, 2009 by R "Ray" Wang

Keep In Mind Basic Rules Still Apply Regardless Of Deployment Option

The proliferation of SaaS solutions provides organizations with a myriad of sorely needed point and disruptive solutions.  Good news – business users can rapidly procure and deploy, while innovating with minimal budget and IT team constraints.  Bad news – users must depend more on their SLA guarantees and deal with a potential integration nightmare of hundreds if not thousands of potential SaaS apps.  Though the 7 key benefits of SaaS outweigh most downside risks, organizations must design their SaaS apps strategies with the same rigor as any apps strategy.  Just because deployment options have changed, this does not mean basic apps strategy is thrown out the window.  Concepts such as SOA, business process orchestration, and enterprise architecture will be more important than ever.  Here are 10 strategies to consider as organizations take SaaS mainstream:

  1. Begin with the business process and desired business value. Understand the desired business value and outcome.  Map back the key performance indicators (KPI’s) to the business processes. Identify what processes will be covered by the SaaS solution.  Determine overlaps and hand-offs between on-premise and SaaS to SaaS that are required to measure the desired KPI’s.
  2. Engage stakeholders early and often. Today’s apps strategies must constantly evolve. Change is happening so fast that line of business leads and IT leaders must collaborate in real time.  The result – an ever changing list of requirements.  While SaaS allows business leaders to make go-it-alone decisions, success will require close collaboration on short term and long term requirements, dependencies, and strategy.
  3. Bet on future suites, SaaS platforms or PaaS (Platform-as-a-service). Winners and losers will emerge in this wave of Cloud computing.  Vendors such as Netsuite, Workday, Zoho, Epicor, and SAP have built or will be building suites.  They provide safe bets as more and more functionality will be rolled into their offerings. Concurrently, organizations should also choose vendors who bring a vibrant and rich ecosystem to the table because those vendors will win in the market.  Salesforce.com and NetSuite already provide users with a platform to build on apps.  Other vendors such as as Google Apps Engine, Microsoft Azure, IBM, and Zoho provide rich developer communities.  Partner and customers will drive innovation which is why platform adoption (i.e. today’s middleware) makes a difference.
  4. Augment with best of breeds, but avoid best of breed hell. No one platform can provide every solution, but choose wisely.  Best of breeds provide deep vertical capabilities and rich last mile solutions.  However, no one wants to manage hundreds of vendor relationships.  Create frameworks that allow business users to work with vendors which support open standards, integrate well with your existing integration strategies, and follow the bill of rights.   Reduction in the number of vendors will become a priority in 2010 going on into 2011.
  5. Assume hybrid will be the rule not the exception. Prepare for hybrid deployments throughout the decade.  Despite the benefits of SaaS and broad adoption in 2010, legacy apps will not go away.  Just count the number of mainframe and client-server apps still in use today.  Many on-premise apps will take time to migrate to SaaS. In some cases, legal requirements will prevent data from being stored off-site.  Software plus services offerings from companies such as Infor, Lawson, Microsoft Dynamics, and SAP may become the norm in 2010 as companies seek private and public cloud solutions.
  6. Design with good architecture. Keep your enterprise architects (EA’s) or hire some more.  Inevitably, more and more SaaS solutions will enter the organization.  EA’s will proactively plan for new scenarios and account for future business requirements.  Organizations should keep some rigor in terms of standards for solution adoption while accounting for the need to rapidly innovate.  Business leaders will need some frameworks on which solutions to adopt.
  7. Choose the right integration strategy for the right time. SaaS integration strategies will evolve based on the organization’s SaaS adoption maturity.  The first set of solutions will probably require point to point integration of data.  Over time, users often migrate to centralized integration services that account for process.  Some will go full enterprise service bus (ESB) and look at business process orchestration as well.  Consider solutions from CastIron, Boomi, Pervasive Software, Informatica, and SnapLogic.  Going forward customer data integration and master data management will be more important than ever.
  8. Minimize long-term storage costs with archiving. Storage represents a significant long term SaaS cost.  Savvy clients can reduce the cost of SaaS storage with a myriad of technologies such as EMC, IBM Optim, and RainStor.  By archiving, organizations will experience faster transaction times, maintain compliance, and reduce storage fees.
  9. Hedge risk with SaaS escrows. Most SaaS vendors will require 5 to 7 years to achieve profitability.  End users often demand software escrows in the on-premise world when they are concerned about vendor viability, takeover threats, and other related breaches to performance or service level agreements.  Software escrows vendors serve as the trusted third party independent organization which holds a copy of the software code.  This often includes user data, source code, documentation and any application executables. SaaS escrows work in a similar way.  Vendors such as EscrowTech, InnovaSafe, Iron Mountain, NCC Group. and OpSource can provide such services.
  10. Protect your rights. Client – vendor relationships in SaaS are perpetual.  Organizations have one shot to get the contract right and begin the relationship with the right tenor.  Apply best practices from The Customer Bill of Rights: SaaS. Work with vendors to find the right balance in approach.

The Bottom Line For Customers – Build Frameworks That Support Easy Line Of Business Adoption

The broad adoption and trajectory of SaaS solutions requires organizations to rapidly replace edicts and 5 year plans with guidelines and policy frameworks.  The goal – enable anyone in the organization to procure a SaaS solution that meets key guidelines and standards.  The result – flexibility, security, and scalability that allows solutions to be used on-demand and in concert with existing applications.

Your POV.

As you work out your SaaS apps strategies, drop us a line and let us know how you are deploying, what challenges you’ve faced, and what successes have you achieved.  We’re happy to weigh in.  Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

Copyright © 2009 R Wang and Insider Associates, LLC. All rights reserved.

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Monday’s Musings: Why On-Premise Vendors and SI’s Should Go on the Offense with SaaS

Published on July 13, 2009 by R "Ray" Wang

On-premise vendors still see SaaS as a loss leader due to huge ramp up and punishing revenue recognition rules

When it comes to the topic of SaaS, many on-premise vendors appear to be living in denial, hoping that SaaS fails, and/or creating confusion in the market place.  These tactics have merit as a shift to SaaS requires plenty of work with minimal return and a destruction – disruption of the current business model.  In conversations with 61 vendors and building off of SaaS evangelist Jeffrey Kaplan’s post (July 2, 2009, Seeking Alpha – “From the Vendor’s Point of View: Why SaaS Sucks”), vendors who have made this transition or have started the investment put in heavy lifting in these activities must:

  • Re-architect apps
  • Find balance between configuration and optimization of SaaS platform
  • Design product road map and rollout strategy
  • Determine SLA’s
  • Identify a hosting strategy
  • Craft pricing and licensing policies
  • Harmonize SaaS pricing with On-premise and other models
  • Create go to market strategy
  • Alleviate channel conflict with partners, resellers, distributors

After all this work to be ready for SaaS deployments, vendors also discover that FASB SOP 97-2 software revenue recognition rules prohibit them from immediately recognizing multi-year contracts. Even worse, subscription revenue can only be recognized on a month-to-month basis – leading to a long road to profitability.  In fact, vendors such as Lawson, estimated a 7 to 10 year break even period for a full SaaS model.  No wonder Harry Debes was fired up on how SaaS could be a fad in his interview with Victoria Ho at ZD Net last year.  In private, most software executives also echo such sentiments and wholeheartedly agree with his comments about the business model challenges.

Yet, SaaS adoption moves beyond the Tipping Point in 2009

However, the confluence of recessionary forces, stalled innovation from many on-premise software vendors, and success of early SaaS pioneers such as SalesForce.com and NetSuite has put Software-as-a-Service into the mainstream.  Vendors can no longer resist the move to SaaS without negatively impacting their license sales and customer mind share.   Additional facts highlight the shift:

  • Forrester State of Enterprise Software 2009 survey results confirm significant adoption rates from 2008 to 2009. Of 1000 IT executives and decision-makers, 24% were interested/considering, 11% implemented or planning to expand, and 5% piloting SaaS solutions (see Figure 1).
  • Clients continue to vote with their budgets despite marketing FUD by many on-premise vendors on the perils of SaaS. Success Factors‘ win at Siemens for 420,000 employees, Workday‘s win at Flextronics for 240,000 employees, and Ultimate Software’s win at P.F. Chiang’s for 30,000 employees reinforces how SaaS is more than CRM and SMB.
  • Concerns over SaaS have dropped significantly over the past year. Successful deployments mitigate concerns and highlight the attitudinal shift towards acceptance.  Major decreases include integration issues (43%), total cost (31%), lack of customization (31%), complicated pricing models (30%), performance (23%), can’t find the specific application (20%), security (17%), and lock in with existing vendor (17%) (see Figure 2).

Figure 1: Users expect to increase SaaS adoption in 2009

saas-deployment-2009

Source: Forrester

Figure 2.  Concerns over SaaS have dropped significantly over the past year

2009 Enteprise and SMB Survey - SaaS Concerns Declinet

Source: Forrester

Defensive SaaS strategies by vendors miss the opportunity to take market share.

As customer’s continue to demand SaaS solutions for rapid deployment, pay-as-you-go pricing models, and timely innovation, traditional on-premise vendors without a SaaS offering must now explain, defend, or develop their own SaaS story.  Concerns about the impact of SaaS have many vendors in defensive mode.  Defensive strategies have included:

  • Creating counter marketing about SaaS and the viability of the market
  • Responding with hosting options and financing options
  • Building SaaS options for a limited set of popular SaaS solutions such as sales force automation (29%), strategic HCM (29%), and customer service and support (27%) (See Figure 3.)

At first glance, mega vendors such as SAP and Oracle have started with the first two points and are evolving to the third.  They aim to counter the success of Ariba, SalesForce.com, Success Factors, Taleo, Workday, and Ultimate Software with their own offerings.  SAP’s OnDemand for LE release and John Wookey’s ComputerWorld UK interview by Mike Simons, confirms that the strategy will include “CRM on-demand and e-sourcing, with expense management set for a 2010 release.”  Wookey’s approach appears to first shore up areas where SAP customers have been defecting and then worrying about what’s next (see Note 1).  Meanwhile, discussions with Oracle product teams also hint that a release of 5 to 9 SaaS offerings to complement Oracle Siebel CRM OnDemand offerings could be announced soon.  This defensive strategy shores up competitive SaaS solutions such as incentive comp, procurement, and strategic HCM.

Figure 3.  Rate of adoption of key SaaS solutions show significant interest in CRM and other areas

2009 Enterprise and SMB Survey SaaS Interest Areas

Source: Forrester

The bottom line -SaaS gives software vendors and system integrators an opportunity to take market share.

Instead of playing defense, vendors should look at the opportunity to take market share through SaaS.  SaaS vendors and their investors have realized they can target any install base and win by providing compelling functionality.  Why shouldn’t on-premise vendors bite the bullet and go on the offense?  To make this work software vendors would want to take advantage of their partner ecosystems and customers to extend capabilities beyond what’s being delivered in on-premise.  Vendors must make an initial investment in a SaaS/PaaS platform, agile development methodologies, and integration technologies to support hybrid deployment options.  From there, white spaces in the product road map will provide direction into the future opportunities such as vertical and other pivot points that have not been well served.  SAP’s acquisition of Clear Standards for carbon compliance, NetSuite’s acquisition of OpenAir for project based solutions, and Intuit’s acquistion of Entellium for CRM highlights examples of going on the offensive with SaaS.  Of equal importance, system integrators can shift the balance of power and deliver new IP via SaaS solutions while reducing their dependency on the mega vendors.

Recommendations: 7 best practices for crafting a SaaS strategy at an on-premise vendor

Imagine you could start from scratch and build a new software company.  That’s the question I posed to 61 software executives this year.  Most stated they would start with a SaaS deployment option for the scale and the business model.  Now what to do if you are an on-premise vendor?  Answer – build a separate SaaS software division within an on-premise software company.  This could be the next trend among the on-premise vendors for both investment and revenue recognition reasons.  What would be a good strategy:

  1. Reuse similar business process parts as the on-premise product
  2. Harmonize the data model and common objects
  3. Build a brand new RIA based UI and UX
  4. Assume that all data sources will be heterogenous
  5. Design the product to run stand alone
  6. Attack white spaces of new growth in a competitor’s install base
  7. Keep a PaaS platform in mind to attract partners and customers to extend the solution

Your POV.

Totally turned off by SaaS? In the midst of a SaaS strategy? Ready to embark on a SaaS strategy?  If you need assistance, don’t hesitate to reach out?  Please post your point of view here or send me a private email to rwang0 at gmail dot com.

Note 1: The large enterprise (LE) SaaS platform will not come from NetWeaver or SAP’s SME Business by Design (ByD) technology, but come from the acquired Frictionless platform.  While this may leave some SAP customers concerned, Wookey and product super stars Kevin Nix and Peter Lim (of Siebel fame) counter by highlighting where SAP components will be reused and highlighting the home base integration advantage.

As also seen in the July 14th, 2009 SandHill.com”Moving to a SaaS Offensive”

Copyright © 2009 R Wang. All rights reserved.

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News Analysis: Oracle Launches Fusion Middleware 11g

Published on July 1, 2009 by R "Ray" Wang

Oracle Fusion Middleware 11g launch starts countdown to 100 days of innovation until Oracle Open World

In short, Oracle is putting forth a suite of middleware solutions that not only enable developers and software publishers to build their future solutions, but also deliver the middleware tools that will serve as the foundation for its go forward Oracle Fusion Applications.  There are a number of product updates in this Oracle Fusion Middleware 11g launch.  They include the Oracle Application Grid, Oracle SOA and Process Management, Oracle JDeveloper and Oracle ADF 11g, Oracle Applied WebCenter, Oracle Identity and Access Management, and Fusion Middleware Enterprise Manager (Note: the version of Oracle Enterprise Manager to manage Oracle Fusion Middleware 11g is 10g R3, this is the version currently available. – added 7/6/2009) What’s positive about this release is the number of customers who have already tested and proven that these solutions can work. In each one of the components, there are a list of customers who already use these solutions in their production environments.  Here are some high level product details:

  • Oracle Application Grid puts forth a foundation built on the Oracle WebLogic Suite (i.e. Oracle WebLogic Server 11g ) that adds GridLink for RAC, enterprise grid messaging, real operations automation, real operations insight, active cache, and enterprise manager. high availability – added 7/6/2009
    POV: Oracle pulls together their integrated platform for application development in a high performance computing SOA world.  This will prove to be the Oracle internal foundation for hosting and other OnDemand capabilities.
  • Oracle SOA and Process management infrastructure brings together technologies such as Oracle JDeveloper, Oracle BPA Suite, Oracle BPM Suite, Oracle BAM, Oracle BPEL Process Manager, Oracle CEP, Oracle Service Bus, Oracle Enterprise Repository, Oracle Services Registry, and Oracle Web Services Manager.
    POV    : These common infrastructure components provide a way to mediate, orchestrate, manage business events and processes that support external integration, process governance, customizations, and change.  These will prove critical in hybrid deployments that bring the Web 2.0 world to Enterprise 2.0
  • Oracle JDeveloper and Oracle ADF 11g -the new team center and application development framework provides desktop integration to Microsoft Office and Java apps; new ADF Faces such as hierarchy viewers and carousels, SCA/SDO integration, and mobile development.
    POV    : Hopefully, Oracle customers can benefit from a richer set of dev tools that can be used in custom development and for Fusion Apps.  This could provide the foundation for extending Oracle Fusion Applications or building apps on JDeveloper in a PaaS platform.
  • Oracle Applied WebCenter- solutions pulls together their Oracle WebCenter becomes the backbone collaboration infrastructure and Oracle Fusion Middleware architecture for collaboration in content management, business process management, and analytics.
    POV    : Oracle customers get treated to a unified environment to deliver a consistent user experience for a Web 2.0 and more social enterprise experience.  The new release of Applied WebCenter may provide customers a unified UI strategy they have been looking for.
  • Oracle Identity and Access Management 11g includes enhanced features in areas such as identity management, provisioning and role management, web access management, Federation, entitlements management, fraud prevention, applications centric, and identity platform.
    POV    : Oracle focuses on addressing reliable security, regulatory compliance, and help desk efficiencies for identity and access management.  Customers seek this level of single accountability and role based access as they keep adding SaaS and other deployment options.  With best of breed coming back in the form of SaaS, enterprises must move beyond single sign on (SSO).
  • Oracle Fusion Middleware Enterprise Manager builds management and monitoring across the stack including apps, middleware, database, and Virtualized Host/ OS / Network
    POV:  Oracle showcases a more unified attempt at managing the entire Oracle stack and environment.  Will it replace your HP, BMC Remedy or IBM Tivoli tools? No. Not completely, but it’s a good start.

The bottom line – Oracle raises the stakes in the stack wars with IBM and showcases its middleware foundation for Fusion Apps

Announcements today by Charles Phillips and Thomas Kurian provide insight into the compendium of Oracle product investments in Middleware. Oracle Fusion Middleware provides the critical “glue” to tie Oracle’s acquisitions back into a cohesive IT strategy for not only its customers but also Oracle’s “Red Stack”.  The stack wars with IBM, Microsoft, and Oracle focus on gaining the greatest percentage of the IT budget.  Oracle’s investments today and pending acquisition of Sun will change the landscape from a perceived apps rivalry with SAP to more a stack competition with Microsoft and a battle for the IBM “Blue Stack”.  In fact, as Oracle continues to acquire and invest in the service based industries IBM dominates today, expect Oracle to make the case for a “Red Stack” and create “Purple” stacks in the years to come.  The eventual prize – converting IBM “Blue Stack” clients to the “Red Stack”.  Don’t expect IBM to stand still so let’s see what the next move is in the continuing Stack Wars!

Your POV

What do you think about Oracle Fusion Middleware 11g?  Vaporware or real competition in the stack wars?  Will you be more compelled to bet on Oracle as part of your apps strategy?  Please post or send on to rwang0 at gmail dot com and we’ll keep your anonymity.

Copyright © 2009 R Wang. All rights reserved.

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Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows

Published on June 2, 2009 by R "Ray" Wang

With 2009 rapidly becoming the “Year of SaaS” and the tipping point for Cloud Computing, it’s hard not to notice the growing number of SaaS start ups (along with the legacy application vendors rushing to provide an “On-Demand”, but not really multi-tenant deployment option).  My snarky SaaS bigotry aside, we can expect hybrid deployment options to be here to stay.  As with the early days of on-premise packaged apps, we have to ask the question, “What to do about the risk in working with fly-by-night SaaS vendors who might not be around in 2011?”  In fact, this was an interesting part of the panel disucssion at the “Honeymoon and Divorce: Changing SaaS Providers” session at Interop with Jerry Smith (CTO of Symphony Services) , Michael Topalovich, (CTO of Delivered Innovation), and Rick Nucci (CTO of Boomi).

SaaS escrows provide a key safety net for the SaaS users

End users often demand software escrows in the on-premise world when they are concerned about vendor viability, takeover threats, and other related breaches to performance or service level agreements. Software escrows vendors serve as the trusted third party independent organization which holds a copy of the software code.  This often includes user data, source code, documentation and any application executables.  For SaaS escrows, expect a few unique distinctions such as:

  • More frequent intervals of version updates, almost similar to live data backups.
  • Hot backups that the end user can immediately and legally swap to the escrow version without business disruption
  • Requirements for SaaS vendors to provide detailed software configuration management and data management

The bottom line – SaaS code is rented so protect yourself

With no access to the code or application when a SaaS vendor goes bankrupt or fails to meet performance requirements, now’s the time to ask your SaaS provider if they provide a SaaS software escrow.  This should be included in all criteria during SaaS vendor selection.  Those who provide SaaS escrow deliver an additional benefit – peace of mind that data will be doubly backed up both by the vendor and the software escrow company.

Companies providing SaaS Escrow Services

Here’s a list of a few vendors in the market.  They have not been rated or reference checked so caveat emptor.  If you provide SaaS escrow services and weren’t listed, feel free to add a comment to the post.

For more about how to shape your apps strategy to include SaaS, read the Forrester Report found here.

Your POV

Have you worried about whether your SaaS vendor will be around in 2011?  Did you successfully enter into a SaaS Escrow agreement?  Considering a SaaS Escrow?  Send me a private email to rwang0 at gmail dot com.  Posts are preferred!   Thanks and looking forward to your POV!

Copyright © 2009 R Wang. All rights reserved.

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Research Summary: Shape Your Apps Strategy To Reflect New SaaS Licensing And Pricing Trends

Published on April 16, 2009 by R "Ray" Wang

FORWARD AND COMMENTARY
“Shape Your Apps Strategy To Reflect New SaaS Licensing and Pricing Trends” represent the seventh report in an on-going series to provide clients with insight on how to better align their packaged apps strategies.  As more and more clients seek SaaS solutions as options to pipe in innovation and potentially control costs, clients should be aware of how to build a SaaS strategy that remains sustainable and prevents vendor-lock in.

Other documents as part of the ongoing series on packaged apps strategy include:

  1. Why You Need A Long-Term Apps Strategy
  2. Forrester’s Long-Term Packaged Applications Strategy Framework
  3. Does Your Apps Strategy Support Your Corporate Business Drivers?
  4. Packaged Apps Strategies Take A Back Seat At Most Enterprises
  5. The ROI Of Packaged Apps Instance Consolidation
  6. Five Steps To Building A Recession Proof Packaged Apps Strategy
  7. Shape Your Apps Strategy To Reflect New SaaS Licensing And Pricing Trends
  8. Third Party Apps Maintenance Rebounds
  9. Craft Your Negotiations Strategy To Reflect New Packaged Apps Licensing And Pricing Trends

RESEARCH HIGHLIGHTS

A. Introduction

Recessionary forces drive applications professionals to seek new delivery models such as software-as-a-service (SaaS), platform-as-a-service (PaaS), and other XaaS (X-as-a-Service) models. But with these options’ upfront benefits in choice, value, and predictability come new ownership risks that applications professionals and business stakeholders should explore. Forrester’s review of 11 vendors in SaaS enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM) confirms that, motivated by heavy competition for new customers, these vendors remain vigilant in mitigating such end-user concerns. In fact, SaaS vendors continue to improve and refine subscription models for new buying scenarios beyond cost/user/month. Forrester recommends that all applications professionals include SaaS in their firm’s long-term packaged apps strategy and that they take five key actions to mitigate risk while avoiding lock-in.

B. Research Findings

The Recession Is Driving Increased SaaS Adoption 

Faced with impending IT budget cuts, increasing business demands, and the encumbrances of legacy packaged apps, enterprises are increasingly turning to true multi-tenant SaaS delivery options during the downturn.  SaaS adoption as part of a long-term apps strategy keeps growing because:

  • Subscription pricing reduces capital expenditures (capex).
  • SaaS enables more-rapid deployment.
  • Enterprises expect frequent updates with new functionality.
  • Business leaders drive more and more software decisions.
  • Vendor success generates buzz and increased interest.

Vendors Demonstrate Continued Evolution And Value of SaaS Pricing Models
Forrester analyzed the completed, work-in-progress, or ongoing initiatives for the latter half of 2008 for seven SaaS applications vendors. The software licensing and pricing trends Forrester found include refined pricing models, new bundling and unbundling options, and a focus on fixed-price implementations. Specific trends for these SaaS apps vendors include:

  • Amitive delivers a usage-based model to foster collaboration and community participation.
  • Intuit attaches a SaaS services model to on-premise QuickBooks Enterprise Solutions.
  • Intacct reduces the barrier of entry for SMBs while simplifying channel pricing.
  • NetSuite continues to expand vertical-edition bundling and flat-fee pricing for add-ons.
  • QuickArrow delivers choice with tiered and bundled user-based pricing models.
  • salesforce.com provides more value for existing license fees and more user tiers.
  • Workday maintains a simple subscription pricing model based on company size.

Recommendations – Adopt SaaS Benefits While Mitigating Risks In Your Long-Term Apps Strategy

Keep in mind that while cost/user/month SaaS pricing models may seem simple at first, factors such as connection points, storage, support, and module-based pricing can quickly add to their complexity. In addition, true multitenant SaaS models leave users without the software code should the vendor go bankrupt or the client choose to end its relationship with the vendor. While considering SaaS as part of a long-term apps strategy, enterprises should follow these simple suggestions to get the most out of SaaS and mitigate risk:

  • Balance pay-as-you-go month-to-month terms with long-term contracts.
  • Compare SaaS versus on-premise over an appropriate period.
  • Understand long-term ownership implications.
  • Seek more than just refunds for outages in service-level agreements.
  • Choose a financially viable SaaS vendor or seek a software escrow-like mechanism.

C. Report Links

Click on the link for the detailed report along with the “What It Means” and “Alternate View” for: Shape Your Apps Strategy To Reflect New SaaS Licensing And Pricing Trends. For media courtesy requests, please send me an email to rwang@forrester.com

Your POV.

Would love your feedback on the report.  You can post here or send me a private email to rwang0 at gmail dot com.

Copyright © 2009 R Wang. All rights reserved.

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