How SaaS is Changing Technology
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How SaaS is Changing Technology

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  • 1. How SaaS is Changing Technology 2006 SaaS Summit Treb Ryan
  • 2. The Enterprise Moves to “On-Demand” Consumption Old New Model Model Service •In house platform •On-Demand Delivery Model •Labor intensive •Technology Driven Architecture •Monolithic •Integrated •Client-Server • Services Orientated • “Money-Pit” Architecture • Legacy •Standardized • Non Standard Payment •Pay In Advance •Pay As Consumed •High CapEx
  • 3. Software as a Service Characteristics Benefits Network delivered access to No local infrastructure or commercially available software software to purchase or maintain Applications & data are available anywhere with network connectivity Application delivery is one-to-many Operating costs are reduced by model managing infrastructure in central locations rather than at each customer’s site Built on optimized & robust platform Improved availability and reliability Customer pays for as much as they Lower TCO need when they need it
  • 4. Customers Buy Much Less with SaaS Items to Purchase with Items to Purchase with SaaS Enterprise Software • Software • Laptops and Desktops • Hosting and Networking • Software – Internet Connection – Internal Networks – Network Administrators • Servers • Laptops –Systems Administrators –Systems Management Soft. –Applications MiddleWare • Internet Connection • Database Software – Disk Arrays for DB – Backup Software – Tape Drives – OffSite Storage – DBA’s • Security – IDS Software – Security Experts • Application Management Experts • End User Help Desk – Follow the Sun Support
  • 5. 3 Huge Impacts to Infrastructure Vendors • New Customer • New Technologies • New Revenue Model
  • 6. Traditional Sales • Hardware, Software and Services Vendors all have enterprise as customer • Both sell up-front capital intensive solutions to Enterprise
  • 7. SaaS Sales • Infrastructure Companies (Hardware, Software and Services) Sell to SaaS Vendor • SaaS Vendor Sells to customer
  • 8. Infrastructure will evolve to On-Demand • Repackaging enterprise products not enough • SaaS companies are selling on-demand • Infrastructure companies who sell to SaaS companies will have to sell on demand
  • 9. Properties of SaaS Technologies • Will have to be priced based on usage • Will need to be able to leverage multiple SaaS offerings • Open Standards Based Technologies • Uptime will be key – Reliability – Disaster Recovery – Security
  • 10. Changes in IT Spend • Currently most 80% of IT Spend is on Hardware and Worldwide IT Software Spending • IT is focused on Information “TECHNOLOGY” 39% 41% 20% Services Software Hardware
  • 11. SaaS Companies Much Different • When an Enterprise Buys SaaS most revenue goes to SaaS Margins SaaS company 20% • SaaS COGS represents amount going to infrastructure hardware, software and head count • IS is now focused on Information “MANAGEMENT” 80% Margin COGS
  • 12. The Shift Has Already Happened • Consumer Tech is already • First Generation SaaS there Companies are leading the • Look who is capturing a way for enterprise spend large portion new consumer • These companies capturing technology spend up to 90% margins
  • 13. What Does It all Mean • Infrastructure Companies (Hardware, Software and Services) will need to retool their offerings to serve the SaaS vendor and the On-Demand Model • SaaS Vendors will take a much higher proportion of the technology spend than traditional Software Vendors • In the end, the companies that provide the most value to either the end user or the SaaS company who supplies the end user will emerge the victors
  • 14. OpSource, Inc. Success Based Delivery of Software as a Service (SaaS)