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Software As A Service

Software As A Service






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  • Source: Gartner, Deloitte , IDC

Software As A Service Software As A Service Presentation Transcript

  • Changing Landscape
    From ISV Monopoly to Integrated “SaaS”
  • Executive Summary
    Prolonged recession - slow recovery, Capital investment Crunch and EU debt crisis has impacted business of all sizes causing tightening budgets and forced the business leaders to rethink how they can leverage software and technology as a consolidated service with optimum productivity, transparency and accountability. Which will better support their rapidly changing business requirement & corporate objectives. Now The expectation is
    How IT can Do More with Increased Efficiency with the Existing Resources at a Lower Cost!
    SaaS platform is a rapidly maturing and emerging as the most powerful business model for emerging markets. Customized low cost rapid implementation is the key in overcoming the barriers to adaptation – either real or perceived!!
    SaaS market continue to see rapid growth, despite
    macroeconomic volatility
    “Momentum shows no signs of slowing as SaaS and cloud continue to converge in 2011, with the firm predicting a more than 16 percent growth rate for 2011 SaaS revenue to hit $10.7 billion.”
    - Gartner
    “I expect enterprise computing to collapse like Communism and the Berlin Wall.”
    - Bob Moul President & CEO Boomi
    “The next five years
    will see an explosion in SaaS.”
    • John Girard, CEO
    “In five years when
    we look back on the
    software market, it
    will be very clear that SaaS was the most important trend of the
    decade” - Byron Deeter, Partner, Bessemer Venture Partners
    SaaS will see not only rapid growth but accelerating growth, not in spite of the macroeconomic slowdown, but because of it. SaaS will become an inevitable choice to maximize technology ROI and organizational effectiveness…especially when barriers like integration, security and customization – are being addressed. SaaS Deployment is a win-win situation for Users-Vendors-Investors. We can expect more rapid growth relative to the traditional software market as companies like Salesforce.com, Omniture, NetSuite and SuccessFactors continue to grow much faster than Oracle and SAP.
    “The most important driver of SaaS businesses is the customers’ needs.” – Josh James, President and CEO, Omniture
    Growing prominence of SaaS will change traditional
    business thinking and metrics
    In terms of SaaS, the most important word is ‘service,’ which means that customers can vote each month whether or not they’re still happy with their vendor. As a result, SaaS companies are very focused on time-to-value, and those that can truly serve their customers are being rewarded handsomely. SaaS is a disruptive force in the industry, and has made the business leaders to think differently. ‘Five C’s’ will be the game changer in shaping the business: Contracted Monthly Recurring Revenue (CMRR), Customer Acquisition Cost (CAC), Cashflow, Customer Lifetime Value, and Churn. “You will see more companies drifting into the cloud, whether they like it or not.” - Zach Nelson, CEO NetSuite
    Technology advancements, Virtualization and
    Cloud Computing will fuel SaaS adoption!
    With the emergence of cloud computing platforms and the maturation of virtualization SaaS Business benefits two ways First, businesses will able to take advantage of some of these technologies in rolling out go –to–market solutions. Second, these technologies (and in particular SOA) will make it much easier for SaaS applications and platforms to talk with one another, and to talk to installed or on-premise applications which will make “integration in the cloud” relatively trivial, and will allow the companies to stitch together. Industry is already seeing the emergence of full SaaS platforms now as well and the economics are just too compelling to ignore with cost advantages!
    “SaaS not only disrupts the market, but also expands it.” - Mark Gorenberg, Managing Director, Hummer Winblad Venture Partners
    SaaS market will evolve many folds over the next five years
    The next five years will see an explosion in SaaS. The penetration of SaaS is still tiny compared to its potential. Two major categories of SaaS vendors will clearly emerge: displacers and niche providers. There will be changes in the market landscape – specifically, the distinction between SaaS and Platform-as-a-Service (PaaS)/cloud computing (platform providers) will start graying. Pressure will build, perhaps for the next several years, but then the mass exodus for on-demand technology will happen very, very quickly.
    “Over the next five years we see a world where many companies are deploying 100 percent SaaS applications to run their businesses.” - Michael Braun, CEO, Intacct
  • Software as a Service is….
    • a Stable, Flexible , Standardized, Dynamic Multiple tenant Platform
    • a new way to deliver and consume software over the Internet
    • a new pricing/financial model for the payment of software
    • SaaS does compress the supply chain for software and eliminates IT responsibilities for the end-customer
    • ISVs
    • New ISVs ( Or ISVs developing new SaaS Applications
    • Transitioning ISVs (ISVs Migrating their Existing Apps to SaaS)
    • IT Services Players
    • Enterprises
    • IT Leaders
    • Business Leaders
    SaaS 3.0
    Service Application-as-a-Service
    SaaS 1.0
    SaaS 2.0
    SaaS providers sourced software from 3rd party software providers
    Application Centric
    SaaS providers own the software
    Vendors provide platforms for development, run-time, and integration as a service.
    Infrastructure As A Service
    Supply Side
    Demand Side
    Multi Tenant
    MT through Partners
    Single Tenant
    Service from vendors which can be accessed across the internet using systems in one or more data centers, shared among multiple customers with varied degrees of data privacy control.
    Computer architecture built, managed and used internally by an enterprise and using a shared services model with variable usage of a common pool of virtualized computing resources.
    Computing environment in which an organization provides and manages some resources in-house and has others provided externally.
    This architecture allow numerous enterprises to subscribe to the computing capabilities while retaining privacy and security. This is the common and dominant model.
    E.g.: NetSuite, Oracle CRM, Microsoft, Salesforce.com
    Multi-tenant model offered through SaaS provider’s hosted partners.
    E.g.: Microsoft Dynamics provides SaaS services to its customers through its thousands of hosted partners across geography.
    Typically, large companies prefer to deploy isolated / single-tenant models. This doesn’t share services with other enterprises.
    E.g.: Oracle CRM provides single-tenant model
    Source: McKinsey& Other Secondary Sources
  • Software as a Service is….
    Software Delivery Model
    Software as a Service Model
    Hosting Of Traditional Applications
    Net-Native SaaS
    On Premise
    On Demand
    License + Subscription
    Single Tenant
    Multi Tenant
    Dedicated Infrastructure
    Shared Infrastructure
    Components of Market
    Popular Pricing Models
    Flexibility in the pricing is critical so SaaS provides ISVs with 3 ways to acquire software to run their services
    Enterprises and individuals
    • ISVs pay on a hourly basis based on usage
    • No Commitments,
    • Minimums , or termination fees
    • Cost can be as low as 25c per hour
    • Monthly usage basis engagement.
    • Variable Plan: Pay as you go model, no minimum monthly commits
    • Committed: commitment of a base level monthly usage and then on a usage basis
    ISVs with predictable software usage requirements can maximize their discounts and flexibility by purchasing software through their existing channels
    SaaS Market
    Govt Institutions /Industry Regulators
    Companies facilitating implementations
    Companies operating SaaS systems to deliver services
    Source: IBM White Paper & Other Secondary Sources
  • SaaS Applications
    SaaS Platform
    SaaS PlatformStack
    SaaS Platform is a set of technologies and Services used to develop, Deploy, Integrate and Deliver SaaS Applications.
    • SaaS Platforms contains components that simply didn’t exist in traditional software platforms.
    • SaaS Platform is designed for multi-tenancy , which affects layers across the stake in many ways.
    • SaaS platform components are often provided as a service (i.e . On –demand and over the cloud)
    SaaS Platform Components
    (SaaS on Premises)
    Mash Ups (SaaS-SaaS)
    Multi-tenant database,
    metadata customization
    Application Development
    Billing , Metering & Monitoring
    Provisioning & authentication
    Run time cloud
    Runtime Cloud
    SWOT Analysis on ISV Prospective
    • Domain knowledge
    • Customer Relationship
    • Customer Understanding
    • Existing Applications and Solutions
    • Web-Centric Sales & Marketing
    • Web 2.0 Usability/User Experience, Infrastructure & Operations
    • Web 2.0 Customer Service
    • Internet-scalable Applications
    • Service Level Management
    Remote Infrastructure Management
    Computing as a service
    Storage as a service
    Physical Data Centre
    • Incremental Revenue Opportunity in New Market Segments
    • Annuity-like Recurring Revenue
    • Higher Total Revenue Opportunity
    • Alignment with economic climate
    • Pure-Play SaaS Competitors
    • Traditional Competitors with SaaS Offerings
    • Traditional Competitor acquisition of SaaS Startup in Your Market
    Source: McKinsey
  • Benefits & Criticism
    Reduce capital expenditures and improved capital utilization through infrastructure pooling and reduced license cost
    • Reduce IT Labor Cost in configuration, Operations, Management & Monitoring
    • Rapidly Provisioned from weeks to minutes
    • Centralize operations
    • Managed as a single Large Resource (Virtualized)
    • Increase admin efficiency
    • Services at Elastic Scaling
    • Improve service levels
    • Standardize offerings
    • Appropriate service level for applications
    • Technology advancements: Can shape the software for better operational efficiency
    • Best of breed services from the author of your application.
    • Flexibly Priced - Pay as you go
    • Pay only for what you need-useful when the service demand fluctuates
    • Enforced Security
    • Reduced TCO
    The primary concern stems from the fact that the data is being stored, and controlled, by third parties.Further more SaaS is often rejected due to concerns and perceptions based on
    • Security and Transparency
    • Fixed Cost Advantage vs Variable Rental Cost
    • Meeting various Non functional SLAs like Reliability, Performance etc
    • Inefficiencies of Generic Computing
    • Perception exists as more generic, more complex, less understandable, performance drop, not easy to migrate
    • Vendor Lock-in
    Survey Data - Cutter Consortium
    Source: Making the SaaS Decision: Jeff Hagins, Cutter Consortium white paper and Other Secondary sources
  • Competitive Landscape
    The SaaS Market has an intense competitive landscape given the number of Mega-vendors and the startups that have entered or likely to enter the space . Two Types of competition emerging among SaaS Platforms
    Between the Established Mega Vendors & pure play SaaS Vendors
    Between different archetypes of SaaS Platforms
    The SaaS Market will be shaped as much by the demands of the stake holder as by platform vendor action .
    Vendors have to focus on Four critical Elements of their business to succeed.
    Build a robust Offering
    Monetize Effectively
    Deliver Extensive Value Added Service
    Drive Ecosystem Growth
    Success Mantra!
    Large Customers
    Typical Customers
    Non Addressable Customers
    Newly Addressable Market
    Source: Making the SaaS Decision: Jeff Hagins, McKinsey and Other Secondary sources
  • SaaS Stats
    Top 50 SaaS Vendors (Q1 2010)
    5 Key Process Areas
    Business & Financial Management
    Application Architecture
    Operations Management
    Go to Market Effectiveness
    Hosting Architecture
    Operation Support
    Top 10 Application Areas (based on number of SaaS providers(n>1500))
    Top 10 Application Areas (based on number of SaaS providers (n>80))
  • Spreading SaaS: Horizontally & Vertically
    SaaS Market Share Projection
    Worldwide market for software-as-a-service is $7.5 billion in 2009, which represents 7.7% of the total enterprise application revenues and constitutes 89% of the cloud computing market.
    On-premise software market is expected to grow at a CAGR of ~4% up to 2013. The market share will reduce to 87% ($117.8bn) in 2013 from 91% ($96.2bn) in 2008. SaaS market will share 13% in 2013, growing at a CAGR of ~17% from 2009
    Source: Data Monitor, Gartner and Other Secondary sources
  • SaaS Associated Industry Dynamics
    Industry Value by Revenue In US$B (Projected)
    Industry Value by % Growth (Projected)
    Source: Data Monitor, Gartner and Other Secondary sources
  • The SaaS Opportunity
    31% Growth (CAGR) for
    On-Demand CRM
    61% Growth In Enterprise Adaptation
    25% Penetration of $220 Billion Software Industry by 2011
    The economics of purchasing SaaS solutions in a down-trending market are more attractive to IT buyers than purchasing enterprise software. Rising oil prices, limitations on access to credit, and the financial market uncertainty will apply more pressure on capital expenditures – forcing companies to lower their risk, and pay-as-you- go services provide a credible alternative.
    Increasing interest in simplified IT management and demand for better utilization of IT assets are creating a greater focus on the development of enabling technologies such as SOA, virtualization, and cloud computing. Further cost reduction and efficiencies to implement SaaS solutions will fuel adoption.
    Consumerization is beginning to drive innovation at the enterprise level. There is a real surge when it comes to the consumerization of technology and leveraging the power of the masses. Part of this is the transformative force of the Internet and the burgeoning market for mobile and wireless applications; as consumers and businesses become increasingly more comfortable with using reliable and secure apps that are not on their desktops, adoption of SaaS will be inevitable.
    1. Current Macroeconomics favor SaaS model
    2. Enabling technologies will fuel SaaS acceptance:
    3. The “Consumerization” of Technology is inevitable:
    Source: Making the SaaS Decision: Jeff Hagins, McKinsey and Gartner
  • Market Segmentation
    Key Providers In Each Key Segment
    CRM – Sales will remain the largest contributor (70%) while marketing and servicing segments have weaker penetrations but are expected to experience higher growth. About half of the sales revenue within CRM market is contributed by Salesforce.com, which maintains its leadership in CRM SaaS market. The bigger IT organizations like Oracle and SAP are heavily investing in developing and acquiring on demand solutions
    ERP - On demand represents a 5% of total ERP market. The Human Capital Management segment (such as e-recruitment, performance and talent management, and expense management) is promising mainly due to out-of-box- functionalities that can be applied across industries. However, SaaS has a weaker presence of Enterprise Asset Management (EAM), Manufacturing/ Operations and Financial Management Systems s a result of their higher process and integration complexity
    CCC - The strongest segments are web conferencing and e-learning and to a lesser extend e-mail and team collaboration. However, Enterprise Content Management and Instant Messaging sub-segments remains barely adopted at ~3%
    SCM – On demand represents 11% of total SCM market. The higher adoption areas will be Procurement and Logistics. Supply chain planning will experience lower growth due to higher business process complexity
    Worldwide Software Revenue for SaaS Delivery Within the Enterprise Application Software Markets & Demand Side Trends
    Source: Gartner, Deloitte, IDC
  • Analysis of Key Providers
    Source: Other Secondary sources
  • Evaluation and Selection of Partner
    Survey - Cutter Consortium
    When considering a hosting service provider to partner with for hosting your
    SaaS solution there are many important criteria you should evaluate. Some of the most important criteria you should consider are depicted in the chart.
    Buyer Behavior Segmentation/Polarization
    Business Centric
    Both Technology and Business models are very nascent in SaaS market, and innovation levels are high. While this is an opportunity for vendors to shape the market, it is a major issue for stake holders that are struggling to identify the market’s direction. In addition due to extensive use of open technologies and web services by vendors SaaS Platforms are more disaggregated and open compared with traditional software platforms.
    Best Opportunity Buyer for SaaS
    Web Agnostic
    Web Centric
    Buyers who are primarily interested in On-Premise Software
    Buyers who
    are primarily
    interested in
    Best Opportunity Buyer for SaaS
    Technology/ Feature Centric
    Source: McKinsey, Data Monitor, Gartner, IDC and Other Secondary sources
  • IT Consulting Landscape
    Market Value: The global it consulting market shrank by 0.6% in 2009 to reach a value of $498.2 billion.
    Market value forecast: In 2014, the global it consulting market is forecast to have a value of $561.5 billion, an increase of 12.7% since 2009.
    Market segmentation I: Integration & development services constitute the largest segment of the global it consulting market, accounting for 49.5% of the market's total value.
    Market segmentation II: Americas accounts for 51.9% of the global it consulting market value.
    Market share: IBM Global Services is the leading player in the global it consulting market, generating a 6.7% share of the market's value.
    Market Value: $ billion, 2005–14
    Market Segmentation II : % share, by value, 2009
    Source: Data Monitor, and Company filings
  • Significant Development
    Coverage (Q4-2010)
    Top 20 SaaS/ Cloud Computing Acquisitions of 2010
    • Canada’s Government the First to Step into the Cloud
    • Call Center Software Provider MRI Launches SaaS Offering
    • ‎CDC Software Updates SaaS for Government, Non-Profits
    • IBM Tivoli Launches SaaS Help Desk Software for Small Businesses
    • IBM Announces Blueworks Live, 'Lite' SaaS Based BPM
    • IBM, ADP Launch Cloud Tax Service For SMBs
    • Navajo Systems Virtual Private SaaS for LotusLive Included by IBM ...
    • Microsoft launches Office 365 cloud suite a day after Ozzie retires
    • Microsoft & CambridgeSoft target SaaS data sharing
    • Dell picks Symantec for e-mail security for SaaS services
    • SAP's StreamWork Now Available in Google Apps Marketplace
    • Orange, Cisco, EMC, VMware form cloud computing alliance
    • SaaS Specialist Reels In Cisco As Investor, Reseller
    • Epicor Unveils On-Demand Carbon Accounting Solution
    • ‎Salesforce's Database.com: Fat SaaS Here We Come!
    • Salesforce.com unveils cloud database and free Chatter
    • Salesforce.com Further Integrates with Google Apps, Data
    • ‎'Best SaaS LMS' Awarded to GeoLearning for Sixth Consecutive Year
    • Brit Insurance Moves to IT Management in the Cloud
    • AppFirst Upgrades Cloud Management for Amazon, Rackspace, Others
    • One to One Connect's MessageMaker Goes Social, Mobile with Version 3.8 Release
    • Kawasaki Motors Corp., U.S.A. Chooses SaaS Service Desk InfraDesk to Automate IT Service Management
    • ‎OpenLogic Exchange Expands Open Source Compliance Capabilities

    Dell Acquires Boomi
    ‎Dell buys Big Blue-based health cloud piccy firm inSiteOne. ‎
    HP Purchases Stratavia
    Google Snaps up DocVerse
    Red Hat Snags Makara
    IBM Buys Cast Iron System
    CA Picks up 3Tera
    CA Purchases Nimsoft
    CA Nabs 4Base Technologies
    Salesforce.com Acquires Heroku
    Cisco System Buys Linesider Technologies
    ‎J2 Global Acquires Protus IP Solutions For $213 Mln
    Citrix buys European SaaS firm Netviewer
    Rackspace Buys Cloudkick
    ‎Teradata Acquires Aprimo
    VMware jumps further into SaaS with Zimbra
    Epicor to Acquire Spectrum HR
    Paychex to Acquire SurePayroll
    Lawson buys human-resources specialist Enwisen
    NIIT Technologies acquires IP assets for foray into Healthcare segment

    Source: Google news & other secondary resources
  • Thank You!