Babson College CIM Software-as-a-Service Presentation
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Babson College CIM Software-as-a-Service Presentation

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Presentation given to a CIO group at Babson College November 21, 2008, examining the rapid growth of the SaaS market and the IT/business implications of the on-demand services market.

Presentation given to a CIO group at Babson College November 21, 2008, examining the rapid growth of the SaaS market and the IT/business implications of the on-demand services market.

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    Babson College CIM Software-as-a-Service Presentation Babson College CIM Software-as-a-Service Presentation Presentation Transcript

    • Tracking the Growth of Software-as-a-Service Presented by, Jeff Kaplan Managing Director THINKstrategies [email_address] 781-431-2690
    • The Evolution of Man
    • Primary Drivers of SaaS
      • Changing economic conditions
      • Changing competitive forces
      • Changing ecological concerns
      • Changing workplace requirements
      • Changing technologies
      • Changing priorities & sourcing policies
    • Today’s Perfect Storm The Economy Enabling Technologies Shifting Customer Attitudes
      • 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.
      The Shortcomings of Legacy, On-Premise Apps
    • The Nicholas Carr Affect "...Imagine what future generations will see when they look back at the current time...won't the way corporate computing is practiced today appear fundamentally illogical -- and inherently doomed?” “ The End of Corporate Computing” Nicholas Carr, The MIT Sloan Management Review, Spring 2005.
    • Changing Customer Expectations
      • Old,
      • Capital Investment
      • Complexity, Customization
      • Reactive Maintenance
      • Response Time
      • Customer Support
      • Limited Responsibility
      • Outsourcing Alternatives
      • New,
      • Operating Expense
      • Simplicity, Utilization
      • Proactive Management
      • Ongoing Monitoring
      • Automated Delivery
      • Higher Accountability
      • Out-Tasking Options
      Enterprises Seeking to Generate Greater ROI at Lower TCO.
    • Shift from Outsourcing to Out-Tasking
      • Businesses seeking functionality, not technology.
      • IT outsourcing deals have failed.
      • Selective outsourcing, or ‘out-tasking’ gaining attention.
      • SaaS & cloud computing is a form of out-tasking.
    • On-Demand Has Become Mainstream
    • Enabling Technologies Broadband networks Grid computing Blade technology Virtualization Web services & SOA Service provisioning Performance management
      • Networked applications
      • Enhanced user experience
      • Subscription pricing
      • Real-time analytics
      • Continuous enhancements
      • Self-provisioned services & toolkits
      • Aggregated data & benchmarks
      Defining SaaS
      • ASPs
      • Resold legacy applications
      • Upfront perpetual license
      • Remained inflexible
      • Limited availability
      • Single-instance, inefficient
      ASPs vs. SaaS
      • SaaS
      • Net-native applications
      • Pay-as-you-go model
      • New functionality
      • Universal availability
      • Multi-tenant, scalable
    • Interest in SaaS Growing Source: THINKstrategies/Cutter Consortium % of Respondents Using SaaS 2007 32% 2008 62%
    • Welcome to Gartner’s ‘Slope of Enlightenment’ Gartner’s Hype Cycle You are here.
    • On-Demand Market Adoption Forecast Market Penetration 2010 2008 2006 2004 Innovators Early Adopters Mainstream Buyers Laggards
    • SaaS Expands from Front- to Back- to Inter-Office Apps BUSINESS APPLICATIONS CRM SFA … Collaboration SCM … ERP Finance … Front Office Inter Office Back Office SaaS Market ‘Gold Rush’
    • Top Ten Showplace Application Categories Source: SaaS Showplace 44 Messaging 46 eCommerce 47 Human Resource Management (HRM) 49 Marketing 55 Enterprise Resource Planning (ERP) 62 Project Management 67 Document Management 78 Accounting/Financial 80 Collaboration 103 Customer Relationship Management
    • Top Ten Showplace Industry Categories Source: SaaS Showplace 42 Software 43 Telecommunications/xSPs 55 Professional Services 63 Government 69 Retail 72 Healthcare 80 Technology 91 Manufacturing 102 Banking/Financial Services 110 SMBs
    • SaaS Expands from Business Apps to IT Management BUSINESS APPLICATIONS CRM SFA … Collaboration SCM … ERP Finance … Front Office Inter Office Back Office Security Systems Mgmt … Network Mgmt Remote Access … Data Protection Storage … IT Management
    • Why IT Wants SaaS
      • Most IT organizations spend 75-80% of their time reacting to problems, keeping systems and software up and running. They would prefer to focus on more strategic business initiatives.
      • Traditional NSM = ERP of the IT World
            • Too complicated
            • Too expensive
            • Too time-consuming
            • Too ineffective
        • >40 IT/Application Mgmt solutions on the SaaS Showplace.
      SaaS Penetrating IT Management Market
    • Managed Services/SaaS Convergence Managed Services SaaS
    • Managed Services vs. SaaS
      • Managed Services
      • Provider assumes management responsibility
      • Sold on an per device basis
      • Focus on network/system availability & performance
      • SaaS
      • Provider delivers software functionality
      • Sold on a per user basis
      • Focus on application availability & performance
      • Quicker Time-to-Value
      • Lower TCO/Higher ROI
      • Shifts Burden to Provider
    • The Convergence of Managed Services & SaaS
    • Ad-Supported SaaS
      • “ iTunes of IT”
      • 250K users
      • 50,000 new users in last 2 months
      • Advertisers has grown from 4 to 40
      • Market Opportunity,
        • SMB IT pro = $125,000 annual budget.
        • 250k users = $32B in annual spend
        • Growing at more >$3B per month!
    • Open Source: The Good, Bad and Ugly
      • The Good
        • Proliferation of tools/solutions
        • Accelerated Development
        • Concepts of Community
      • The Bad and Ugly
        • Lower barriers to entry
        • Escalating price competition
    • A New Level of Value in the SaaS Market
      • Dynamic toolkit clearinghouse
      • Continuous updates, new ideas
      • Real-time, aggregated data
      • Meaningful benchmark studies
      • Practical best practices forums
    • Shifting Adoption Patterns Unilateral End-User, SBU Adoption of SaaS Solutions Enterprise-Wide Acceptance and Adoption of SaaS
    • The Role of SaaS in SMBs and Enterprises
      • Small = Fill Unmet Needs
      • Mid-Size = Fill Unmet Needs/Replace
      • Enterprise = Augment/Extend Capabilities
    • Size of SaaS Deployments Growing
    • SaaS Evolution SaaS 1.0 SaaS 2.0
      • Standalone point apps
      • Focus on ease of use/price
      • One size fits all, minimal customization
      • Horizontal applications
      • Limited interoperability
      • Emphasis on lower TCO
      • Specialized vendors
      • Combination of choices
      • Focus on added functionality
      • Multiple configurations, greater versatility
      • Vertical/industry solutions
      • Easier integration
      • Emphasis on higher ROI
      • Strategic sources
    • Moving from SaaS Apps to Cloud Computing Cloud Computing Services SaaS Apps
    • 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
    • Cloud Computing: Today’s New Enablers
    • New Challenge: Cloud Computing Outages “ Amazon S3 Outage Rains On Cloud-computing Parade” “ Outages Force Cloud Computing Users To Rethink Tactics”
    • Key Customer Concerns & SaaS Industry Responses
      • Concerns ,
      • Reliability
      • Security
      • Customization
      • Compliance
      • Integration
      • Customer Support
      • Responses ,
      • SLAs
      • Certifications
      • User Configurations
      • DR/BC
      • Connectors
      • Online/Pro Services
    • On-Demand Services & The IT Industry Inversion Services Technologies Past Future The IT Industry Inversion
    • Key Challenges Facing SaaS Vendors
      • Re-architecting applications
      • Re-structuring revenue models
      • Repositioning marketing
      • Re-orienting sales/support staff
      • Surviving market shakeout
    • No One Likes to Sell Services
      • Raises concerns about the product.
      • Complicates the sale/extends sales cycle.
      • Seldom properly incented.
      • Weak value proposition.
      • Poor track record.
    • Hybrid Model Pitfalls
      • Balancing,
      • Multiple Offerings
      • Multiple Codes/Versions
      • Differing Buyers
      • Multiple Sales Channels/ Compensation Plans
      • Differing Revenue Recognition
    • Channel/Supply Chain Opportunities Legacy ISVs New SaaS Providers Enabling Technology Vendors
      • Offshore SW Developers
      • 3 rd party SW platforms
      • 3 rd party HW systems
      xSPs
      • Hosting companies
      • Carriers
      Channel Partners
      • Distributors
      • VARs/Integrators
      • eCommerce Sites
      Corporate Customers Consumers
    • New Channels to Market?
      • Banks
      • Insurance Companies
      • Retailers
      • Web companies
      • PS Firms
    • SaaS Ecosystems – The New Channel Jamcracker
    • Changing Competitive Landscape & & & AimNet Solutions ever dream
    • A Future View Software Services Business Services Information Services Market Evolution
    • Key Questions
      • Do you have adequate networking capabilities?
      • Can you deploy SaaS more quickly, with less risk?
      • Can it give your employees a better user experience?
      • Can you gain productivity improvements?
      • Can you distribute information more effectively?
      • Can you make decisions more intelligently?
      • Can you measure performance more accurately?
      • Can you achieve a greater ROI at a lower TCO?
    • Summary & Conclusions
      • SaaS spreading
      • IT supporting & adopting SaaS
      • Market entering ‘gold rush’ era
      • Make strategic sourcing decisions
      • Use classic evaluation criteria
      • Focus on reliability, flexibility & viability
      • Expect new levels of value
    • For More Information…
      • www.SaaS-Showplace.com
      • www.thinkstrategies.com
      • [email_address]