Estrategias para explotar las tendencias de SaaS y Cloud Computing


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Estrategias para explotar las tendencias de SaaS y Cloud Computing

  1. 1. Estrategias para explotar las tendencias de SaaS y Cloud Computing Luis Aburto, CEO Scio Consulting
  2. 2. Objetivo Proporcionar un marco de referencia acerca de SaaS y Cloud Computing, así como estrategias para aprovechar estas tecnologías y volverse más competitivas. 22
  3. 3. Agenda What is SaaS and Cloud Computing? Why are they important? How do they relate to the software industry in Mexico? Strategies and recommendations Q&A 33
  4. 4. What is SaaS? SaaS = Softwar e as a Ser vice It is a Deployment/Deliver y model Hosted and Managed by vendor Delivered across the Internet It is a Business Model: usa ge-based pricing (vs. perpetual license model of on-premise software). Examples: Per user per month Per transaction Per GB of storage per month 4 Scio Consulting
  5. 5. SaaS Examples Looking for a specific SaaS provider in your industry? 5 Scio Consulting
  6. 6. History Born during dot-com era (late 90’s) “ASP” (Application Service Provider) ● Apps hosted/managed by Vendor ● Remote access through VPN ● Almost died with dot-com bust Early SaaS companies born in early 00’s 2003-2005 High-speed Internet connectivity growth = trigger for SaaS Feb 2009 – reported annual revenues of $1,000 Million USD 6 Scio Consulting
  7. 7. What makes a product SaaS? Network-based access to commercially available software Multi-tenancy (one-to-many) Payment Model Central Application Management Software Infrastructure Control of Upgrade Process 7 Scio Consulting
  8. 8. What is Cloud Computing? IaaS – Infrastructure as a Service Utility computing (servers by the hour, storage by the GB, etc.) Amazon EC2, GoGrid, Mosso, etc. SaaS – Software as a Service Specialized components Billing, CLM, Monitoring, Integration, etc. PaaS – Platform as a Service Infrastructure + Technology Stack + Solution Services SaaSGrid, Generic vs. SaaS-specific Enterprise Cloud Use of PaaS and/or Virtualization technology within corporate IT
  9. 9. SaaS vs ASP ASP: Application Service Provider Single-tenant architecture (one customer per instance) Multiple instances running (as many as there are clients), typically hosted by third parties Disadvantages Significant management overhead Difficult maintenance No economies of scale 9 Scio Consulting
  10. 10. Why is SaaS important?
  11. 11. Benefits of SaaS – For Clients Lower entry point No large up-front investment in ● Software licenses ● IT infrastructure Lower operating/maintenance costs Fast, easy deployment (Web browser) Vendor maintains/upgrades application No IT staff necessary to keep running Consumption-based expenditure Pay As You Go (OpEx vs CapEx) Scale up/down as needed 11 Scio Consulting
  12. 12. Benefits of SaaS – For End-Users Easy deployment/ramp up Typically based on Web browser access No additional hardware/software needed Any time, Any where access Outside the corporate firewall Transparent updates Support direct from Vendor 12 Scio Consulting
  13. 13. Benefits of SaaS – For Vendors Market Reach – Catch the Long Tail Traditional Model 13 Scio Consulting
  14. 14. Long Tail - continued SaaS Model 14 Scio Consulting
  15. 15. Benefits of SaaS – For Vendors Economies of Scale Derived from Multi-tenant architecture ● Better resource utilization ● Simplified maintenance For a well designed app, operating costs per customer drop as customer base grows Better understanding of usage patterns To drive innovation and enhancements Faster release cycles to keep up with market and competition De-facto access to Global market 15 Scio Consulting
  16. 16. SaaS Growth Forecast According to Gartner: 9 out of 10 companies plan to grow their use of software-as-a- service in the next year (2009) and more than 30% plan to replace on-premises software with SaaS to drive down TCO (Gartner) 2008 market value: $6.3 Billion USD (6% of the 2008 software market) Growth to $19.6 Billion USD for 2011 (25% of the total software market) Investors, VC, M&A look for recurring revenue model 16 Scio Consulting
  17. 17. Primary Drivers of SaaS ü Changing competitive forces ü Changing workplace requirements ü Changing economic & ecological conditions ü Changing technologies Ø Changing priorities & sourcing policies
  18. 18. The Shortcomings of Legacy, On-Premise Apps Deployment Challenges 31.1% of SW projects cancelled before completed. 52.7% of projects cost nearly 190% of original estimates. Operational Costs Maintenance & management costs >10x original license fee. Escalating hardware & staff support costs. Over provisioning and under-utilization of SW licenses Economic/Budgetary Pressures Need to reduce IT costs and increase business benefits. Need to increase utilization to gain greater ROI.
  19. 19. Changing Customer Expectations Old, New, § Capital Investment § Operating Expense § Complexity, § Simplicity, Utilization Customization § Reactive § Proactive Management Maintenance § Ongoing Monitoring § Response Time § Automated Delivery § Customer Support § Higher Accountability § Limited Responsibility § Outsourcing § Out-Tasking Options Alternatives Enterprises Seeking to Generate Greater ROI at Lower TCO.
  20. 20. Rewiring the World, From Edison to Google “A hundred years ago, companies stopped generating their own power with steam engines and dynamos and plugged into the newly built electric grid…Today, a similar revolution is under way.” - Nicholas Carr
  21. 21. SaaS Adoption Source: THINKstrategies/Cutter Consortium © 2007
  22. 22. SaaS Deployment Plans Source: THINKstrategies/Cutter Consortium © 2007
  23. 23. On-Demand Market Adoption Forecast Laggards Market Penetration Mainstream Buyers Early Adopters Innovators 2004 2006 2008 2010
  24. 24. Shifting Adoption Patterns Unilateral End- Enterprise-Wide User, Acceptance and SBU Adoption of Adoption of SaaS SaaS Solutions
  25. 25. Size of SaaS Deployments Growing SaaS Vendor Customer # Users Misys 40,000 SuccessFactor Wachovia 85,000 “A Financial Concur Services Company” 185,000 Workday Flextronics 200,000 “A Leading Food Authoria Services Company” 340,000
  26. 26. An Equation for Greater Market Opportunities Economic Tighter Greater SaaS + = Uncertainty Budgets Opportunities
  27. 27. Building & Operating a SaaS Product
  28. 28. Top SaaS Considerations Click to edit Master text styles Second level ● Third level ● Fourth level ● Fifth level 28 Scio Consulting
  29. 29. SaaS Technical Architecture Traditional SaaS Application – built from the ground up User Interface, Business Logic, Database Multi- User •Non-strategic Security Scale tenancy system •Difficult •Time consuming Provisio •Costly Pricing Billing Etc. ning Hardware (Datacenter)  Build vs Buy  Till recently there was no choice – all this had to be built
  30. 30. Technology Choices From the Ground Up Through a PaaS Combining Cloud Services (Platform as a Service) Deployment Platform Billin Integration g Analytics IaaS Platform Examples: PaaS Examples: Cloud Services exist for • LAMP • SaaSGrid • Infrastructure • Win, IIS, ASP.NET, SQL Server • Ruby on Rails • • Development • Google App Engine • Business functions Hosting Alternatives: Hosting: • Monitoring • In-house • Included in PaaS • Interoperability • Co-location • Cloud Computing (EC2, GoGrid)
  31. 31. PaaS for SaaS SaaS Applications Using a SaaS-specific PaaS Your 1st SaaS Your 2nd SaaS App App UI, Business Logic, UI, Business Logic, Database Database (SaaSGrid, Multi- User Security Scale A Cloud OS tenancy system For SaaS Apps Provisio Pricing Billing Etc. ning Hardware (Datacenter)
  32. 32. Commercial Cloud Services for SaaS Billing Aria, OpSource Billing CLM, Zuora, Vindicia Customer Management OpSource Billing CLM (Customer Lifecycle Management), Aria Systems Payment Processing Paypal, etc. Monitoring TrustSaaS, Absolute Performance Integration Boomi Analytics Sonoa
  33. 33. Mix and Match Combinations of Cloud services can be used to deploy SaaS applications faster and cheaper App App App A B C SaaS Common Components Multi- Payments Scalability tenancy Metering User Mgmnt Billing Cloud Services Provisioning Reporting Security Infrastructure
  34. 34. SaaS App Scenarios Application X Billing & CLM Integration Monitoring Flexible Infrastructure Third-party App
  35. 35. SaaS App Scenarios – cont’d Application Y Multi- Payments Scalability tenancy User Metering Billing Mgmnt Provisioning Reporting Security Infrastructure
  36. 36. SaaS Business Model Implications New sales & marketing approach Greater emphasis on web-centric cycle New sales & marketing compensation New release cycles and maintenance model New deployment/delivery approach New/higher expectations on customer service Uptime and SLA Professional Services 36 Scio Consulting
  37. 37. Meaning of Community in SaaS Real-time, aggregated data Meaningful benchmark studies Practical best practices forums Continuous updates, new ideas
  38. 38. SaaS/Cloud Challenges & Objections Reliability Security Interoperability Lock-in
  39. 39. Case Study Cost Comparison
  40. 40. Overview Scio Consulting, a SaaS product development and consulting company, was hired by a medium size on- premise software company with an on-premise niche market vertical solution to perform a study comparing the cost of developing a SaaS application under 2 different scenarios. ● Building all components from scratch (thus a proprietary SaaS platform) ● Leveraging a 3rd party Platform-as-a-Service (PaaS)
  41. 41. Development Costs - Proprietary PaaS Only 4 months remain for selling in Year 1 Launch Date Application development can only start when there is enough architectural foundation Incr. Production Servers to maintain performance Dev. Servers Add Production Servers Add Test Servers
  42. 42. Development Costs – 3rd Party PaaS Launch Date 7 months remain for 3 months selling in Year 1 earlier – Application development saving 40% can start on day 1 PaaS costs only start when the ISV begins generating revenue
  43. 43. Accumulated Cost Comparison Majority of investment goes into Lower total investment when ISVs product, rather than SaaS using a 3rd party PaaS intricacies.
  44. 44. Study Results Technology PaaS = SaaSGrid, Technology Stack = .NET Cost Savings Overall, using a 3rd party PaaS allows for a cost savings of $200,000, or 50% of the total R&D for year 1. Time to Market With a 3rd party PaaS, the ISV is able to launch 3 months earlier, allowing for 3 additional months of selling and revenue generation. Focus on Solving the Customer Need The majority of R&D spending goes into building and enhancing the customer application, not into SaaS intricacies, allowing the ISV to focus on their core competency. Flexible Expense Hosting infrastructure is a variable cost proportional to revenue, not a fixed cost.
  45. 45. Opportunities & Strategies for Software Companies in Mexico
  46. 46. Opportunity in Mexico - Context Limited number of Mexican SW product companies Most of them focused their sales and applications to the domestic market. ● Financial, accounting and operation related applications (ERPs) ● Sold using the licensing model (initial fee for each user) ● Additional income for the producer is the upgrade and support & maintenance fees. ● Small set in other areas: CRM, facility planning, construction, point of sales, manufacturing, electronic commerce, and content management systems 46 Scio Consulting
  47. 47. Opportunity in Mexico – cont’d. Level of use of computer applications in México is very low (1) Vicious circle: low demand yields low application development High cost of implementation (SW + HW + Operations + Support) reduces the number of companies that are implementing advanced systems within Mexican enterprises. Immense barrier to entry This can be mitigated by SaaS with its pay-by-use model opens which opens new opportunities for software companies. 47 Scio Consulting
  48. 48. Opportunity in Mexico – cont’d With SaaS, Mexican SW providers can Have customers in any place in the world without an international sales force and installation crews. Go after a substantially larger market ● The opportunity for growth is more realistic – The company becomes more attractive to its investors and shareholders. 48 Scio Consulting
  49. 49. For SI and CSD companies New Platforms –> New Value Proposition –> New Opportunities Google App Engine ● Custom-built Cloud Automation/ERP ● Rapid App Dev for LofB Private Clouds (SaaSGrid, LongJump) ● Maximize infrastructure investment ● Enable new cost accounting models for Internal IT Teams (e.g., internal SaaS providers)
  50. 50. Most Attractive Possibilities For SW vendors Get into a niche market to provide a specific Line-of-Business solution ● Combine software applications and a set of services (based on best practices) that provide value added For SI Expand service offerings to include Cloud/PaaS capabilities to provide more cost-effective solutions to clients 50 Scio Consulting
  51. 51. Conclusions
  52. 52. SaaS Model SaaS is different from on-premise software in more ways than one. 52 Scio Consulting
  53. 53. Use the Cloud for SaaS… Accelerate time to market (40-60%) Reduce development costs (20-50%) Leverage solutions with greater functionality and based on best practices Simplify scalability and application maintenance More system components can be a variable cost instead of a capital investment or fixed cost
  54. 54. But Evaluate Trade-offs… Dependencies on vendors Availability of SaaS solution depends on availability and performance of all pieces ● Reliability – if each component has a 99.99% SLA your app cannot get to 99.99% Lock-in Vendors going out of business Potentially higher cost if volume of transactions is very high
  55. 55. Conclusions SaaS/Cloud open new opportunities and provides access to new market segments Leverage the Cloud Minimize development costs and duration Minimize fixed operating costs Scale smoothly Simplify building and delivering SaaS applications to focus on gaining market share Lower barrier to entry Never before access to global market had been so inexpensive Expect growth and innovation – look at SaaS in India!
  56. 56. Preguntas y Respuestas Luis Aburto, CEO Scio Consulting +1 408 404 3897 ext 254 +52 443 324 6176 ext 254