Cloud Computing/SaaS opportunity

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Cloud Computing and the
Mid-Market SaaS Opportunity

SAP Partner Event, 10th December 2010

Dale Vile - Freeform Dynamics

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Cloud Computing/SaaS opportunity

  1. 1. Copyright 2010 Freeform Dynamics Ltd Cloud Computing and the Mid-Market SaaS Opportunity SAP Partner Event, 10 th December 2010 Dale Vile Managing Director Freeform Dynamics Ltd www.freeformdynamics.com
  2. 2. Key Questions <ul><li>What’s behind all of the latest cloud bluster? </li></ul><ul><ul><li>Haven’t we heard it all before? </li></ul></ul><ul><ul><li>What’s changed? </li></ul></ul><ul><li>Is there really any money to be made here? </li></ul><ul><ul><li>Are customers and prospects that interested? </li></ul></ul><ul><ul><li>Isn’t there a risk of just cannibalising traditional revenues? </li></ul></ul><ul><li>What’s really required to take SaaS on board? </li></ul><ul><ul><li>Does the sales cycle need to change? </li></ul></ul><ul><ul><li>How are financial and remuneration practices impacted? </li></ul></ul><ul><li>Will we be forced to change at some point? </li></ul>
  3. 3. About Freeform Dynamics <ul><li>‘ Boutique’ UK based industry analyst firm </li></ul><ul><li>Small group of highly experienced guys </li></ul><ul><li>Straight talking, no promotion, no pandering </li></ul><ul><li>Solid buyer/user research foundation </li></ul><ul><li>‘ Robin hood’ community research model </li></ul><ul><li>Strong media partnerships </li></ul><ul><li>Mainstream focus </li></ul>
  4. 4. Reaching our audience
  5. 5. Reaching our audience
  6. 6. Cloud computing <ul><li>Industry hype or revolution in IT? </li></ul><ul><li>Lots of conflicting agendas </li></ul><ul><li>Lots of different views </li></ul>Platform as a Service Software as a Service Community Cloud Infrastructure as a Service Public Cloud Elastic Cloud Private Cloud
  7. 7. “ Two men say they’re Jesus; one of them must be wrong” Dire Straits, Industrial Disease Cloud Computing Q. What is cloud? A. Depends who you ask and what they are trying to sell
  8. 8. Would you regard the following as legitimate examples of cloud computing? Source and copyright 2010 Freeform Dynamics Ltd, online survey of 401 IT professionals, April 2010 Hosted server infrastructure Other infrastructure based services Hosted email/messaging Hosted comms (web conferencing, VoIP, unified comms) Hosted business apps (e.g. office tools, CRM, project mgmt, etc) Other hosted services On premise solutions
  9. 9. Would you regard the following as legitimate examples of cloud computing? (Hosted Apps) Source and copyright 2010 Freeform Dynamics Ltd. Online survey of 401 IT professionals, April 2010 Niche application vendors moving to hosted model
  10. 10. Some down to earth education and advice <ul><li>Understanding the context for the discussion…. </li></ul>
  11. 11. Some down to earth education and advice <ul><li>Understanding the industry jargon …. </li></ul>
  12. 12. Horses for courses <ul><li>Different applications and workloads will naturally run in different places </li></ul><ul><li>Hybrid and overspill requirements exist </li></ul><ul><li>Bottom line: It doesn’t make sense to force-fit everything to a single deployment model </li></ul>HOSTED ON-PREMISE SHARED/DYNAMIC DEDICATED/STATIC
  13. 13. Lots of hosted service options, lots of potential ON-DEMAND SERVICE CATEGORIES Business application services It is in this area that the term ‘Software as a Service’ (SaaS) was originally coined. Services at this level are typically focused on the delivery of complete business functionality, e.g. CRM, ERP, etc. Hosted productivity tools Services here are more concerned with horizontal capability ranging from desktop suites for end users, through to modelling, development and project management tools for analysts and developers. Hosted comms/collaboration Spearheaded initially by hosted email and web conferencing, the number of services offerings in this area has exploded to include full unified communications and/or social media (directories, blogs, wikis, etc). Trading community services As supply chain automation has gathered momentum in some industry sectors, services have emerged aimed at facilitating the way in which customers and suppliers collaborate and transact electronically. Plug-in services A myriad of services exist which do not provide complete business functionality but ‘plug into’ existing applications to enhance or extend them. Examples include everything from mapping to credit checking. Application platform services As an alternative to consuming pre-built services from external providers, application platform services provide development and runtime environments allowing custom applications to be built and hosted online. Operational services This often overlooked but highly important category is where we find services concerned with online backup, archiving, security (e.g. email filtering), etc., and even full blown monitoring and management tools.
  14. 14. The market reality <ul><li>Marketing and media coverage well ahead of demand </li></ul><ul><ul><li>Lots of different propositions still causing uncertainty </li></ul></ul><ul><ul><li>Mainstream just moving from awareness to genuine interest </li></ul></ul><ul><ul><li>Initial interest and activity at high end only just moving down market </li></ul></ul><ul><li>But some serious plays are being made </li></ul><ul><ul><li>Megahosters – Google, Microsoft, Amazon </li></ul></ul><ul><ul><li>Global business providers – IBM, Salesforce, Netsuite, Oracle, SAP </li></ul></ul><ul><ul><li>ISPs and Telcos – Rackspace, Fasthosts, BT, Vodafone </li></ul></ul><ul><ul><li>Big consulting and SI firms skilling up </li></ul></ul><ul><ul><li>Enablement of niche players and the channel </li></ul></ul><ul><li>Vendors still learning how to position and sell </li></ul><ul><li>Concerns and objections still commonplace </li></ul>
  15. 15. Early experiences highlight some notable disjoints
  16. 16. Strong link between business performance and adoption of hosted services CHANGE IN REVENUE OVER PAST 12 MONTHS SaaS activity skewed towards progressive organisations
  17. 17. What originally interested you in hosted services? Effectiveness as well as efficiency
  18. 18. What originally interested you in hosted services? Drivers vary by culture
  19. 19. Packaged application wants & desires
  20. 20. Given that no solution is ever a 100 per cent fit, when differences arose during your last ERP implementation did your organisation tend towards... Familiar historical behaviour
  21. 21. Would you do things differently if you were replacing your core ERP system today? If so, how would the emphasis differ? } Don’t want to repeat the same mistakes
  22. 22. The psychology of SaaS <ul><li>Self contained solutions </li></ul><ul><li>Inherent user friendliness </li></ul><ul><li>Best practice baked in </li></ul><ul><li>Minimal tailoring </li></ul><ul><li>Focus on ease of access to incremental capability </li></ul>Natural fit with generic ERP/CRM desires and wants
  23. 23. Back down to earth… COMMON OBJECTIONS <ul><li>Other issues arising </li></ul><ul><ul><li>Ongoing level of cost </li></ul></ul><ul><ul><li>Regulatory compliance </li></ul></ul><ul><ul><li>Integration challenges </li></ul></ul><ul><ul><li>Accountability questions </li></ul></ul><ul><ul><li>Loss of control </li></ul></ul>The unspoken biggie: Lack of trust
  24. 24. Working around ‘gut feeling’ <ul><li>Perceived suitability depends on nature of application </li></ul><ul><li>ERP in the top right </li></ul><ul><li>Need to reinforce ERP/SaaS synergy </li></ul><ul><li>Need to provide confidence on complexity handling </li></ul>Already using SaaS in this context Consider SaaS suitable in theory Consider SaaS to be unsuitable
  25. 25. Role of the channel
  26. 26. Channel considerations New commercial models more palatable and make transition easier ‘ Big gun’ promotion educating the market and creating demand SaaS shifting the lines to increase the addressable market and scope of requirements
  27. 27. Key Questions Revisited <ul><li>What’s behind all of the latest cloud bluster? </li></ul><ul><ul><li>Haven’t we heard it all before? </li></ul></ul><ul><ul><li>What’s changed? </li></ul></ul><ul><li>Is there really any money to be made here? </li></ul><ul><ul><li>Are customers and prospects that interested? </li></ul></ul><ul><ul><li>Isn’t there a risk of just cannibalising traditional revenues? </li></ul></ul><ul><li>What’s really required to take SaaS on board? </li></ul><ul><ul><li>Does the sales cycle need to change? </li></ul></ul><ul><ul><li>How are financial and remuneration practices impacted? </li></ul></ul><ul><li>Will we be forced to change at some point? </li></ul>Technology developments and maturing commercial practices has made SaaS more ‘mainstream ready’. No, but there are benefits to acting sooner rather than later Demand being driving by continued heavy promotion, natural evolution of requirements, and ‘cloud psychology’. Traditional channel role, but with shifted emphasis and new objections in sales cycle. Vendors can help with transition.
  28. 28. Copyright 2010 Freeform Dynamics Ltd Cloud Computing and the Mid-Market SaaS Opportunity SAP Partner Event, 10 th December 2010 Dale Vile Managing Director Freeform Dynamics Ltd www.freeformdynamics.com

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