Service-now.com SaaS vs. ASP vs. traditional software

Service-now.com All roads lead to SaaS. Are you ready?

discussion points
SaaS is software evolution
Software delivery variants
Comparing ITSM ‘SaaS’ offerings
Financial advantages of SaaS

mobile evolution

Simplicity and Power Increasing Community Served 1997 2008 1992 ITSM evolution 1981 Value & Organizational Reach

SaaS is software evolution
Software ownership costs pushed to vendor - hardware, software, system security, disaster recovery, maintenance, monitoring
Return to core competency - organizations shift resources to core competencies, vendors focus on managing their SaaS
More efficient deployment – instant evaluation, more collaboration between vendor and IT organization, much faster deployments
Modern, Web 2.0 interface - drive technician usage and better customer interaction with IT
Eliminate shelfware & maintenance - pay for what you use
Always on current version – version-free software means the latest for the customer
SaaS homogeneity costs less – One version for the vendor to support means lower costs for everybody

2007 2008 SaaS adoption doubled in 12 months * ThinkStrategies and Cutter Consortium, “SaaS Market Surging,” Jeff Kaplan, Nov. 13, 2008.

Why SaaS adoption doubled * ThinkStrategies and Cutter Consortium, “SaaS Market Surging,” Jeff Kaplan

traditional on-premise deployment
Details
Full ownership
Significant implementation
Customizable
Difficult to upgrade / maintain
Examples
HP Service Manager
BMC Remedy
CA Service Desk
EMC Infra
Software publisher Customer Data Center Application Database

application service provider (ASP)
Details
Procures app and resells service
Broker between customer and publisher
Focus on ‘out-of-box’
Examples
IBM GS
HP Services
BMC AAS
CSC
Customer C Software publisher ASP Data Center Customer B Customer A Application Application Application Database Database Database

The right idea with the wrong technology
High-cost delivery model doomed ASPs
Lengthy implementations
Resource-intensive upgrades
Version and feature lock down
Higher cost than on-premise deployments
Not compatible with client/server software
the ASP meltdown

SaaS multi-tenant
Details
Hosted by software publisher
Many customers to one application set
Thought to be inflexible
Examples
Salesforce.com
Workday
Innotas
Customer C Software publisher Customer B Customer A Application Database

SaaS single-tenant
Details
Hosted by software publisher
Customers receive their own app and database
Auto-upgrades
Extensive customization
Examples
Service-now.com
InteQ
Eloqua
Customer C Software publisher Customer B Customer A Application Application Application Database Database Database Management automation

ASP vs. SaaS * THINKstrategies, “CIO’s Guide to Software-as-a-Service,” Jeff Kaplan ASP Attributes SaaS Attributes Resold legacy applications New net-native applications Retained perpetual licenses Subscription model Difficult to upgrade New functionality delivered regularly Customized Configurable

The Internet is the development and delivery platform
Quick, flexible implementations
Frequent, vendor-managed automatic upgrades
Customer has direct control of application changes and customizations
Extensive customer customization preserved through upgrades
Simplified, predictable subscription license
No infrastructure or application maintenance
why SaaS is different

application comparisons Question SaaS ASP Demo right now! ✓ ✖ Proof of Concept within minutes ✓ ✖ Implement in less than 30 days ✓ ✓ Auto-upgrades within minutes ✓ ✖ Users customize with little effort ✓ ✖ Net-native, Web 2.0 ✓ ✖ Predictable subscription licensing ✓ ✖ Maintained by the app experts ✓ ? Hosted by vendor / partner ✓ ✓

ITSM vendors and delivery models Client/Server ASP SaaS Vendor License model Perpetual Perpetual, Subscription Subscription Hosting and administration Customer 3 rd party or vendor Vendor Customization Customer, vendor or partner 3 rd party or vendor (fee-based) Customer Upgrades Customer, vendor or partner 3 rd party or vendor (fee-based) Vendor (included in subscription)

HP ‘SaaS’ for Service Manager
NOT new technology - simply offering Service Manager 7 via ASP
HP services or 3 rd party partner provides bodies to administer the system
Viewed by HP as a mid-market or enterprise solution
Assumed licensed by subscription
Stalling the market to retain customers

HP deployment
Usually hosted in HP data center
Minimal two week installation
Includes HP Implementation Accelerator which requires:
Predefined data – categories, codes, users, roles, CIs and ‘smart indicators’
Process/procedure descriptions
Required technical account manager

HP marketing
Shorter time to market
HP offers solution management expertise
System to run in professionally managed data center, manned 24x7
‘ SaaS’ mitigates customer risk
“ Transition to an on premise deployment when you are ready”

what HP is not telling you
Scoped as a traditional implementation
Lengthy implementation period with $25K conversion fee for legacy customers
Customer locked into ‘out-of-the box’ functionality
Highly disruptive upgrades remain – customer still pays for time and effort
ASP must make system customizations resulting in lengthy change cycles
Cost of technical account manager passed on to customer
Highly complex licensing model with additional costs for integrations, employee self-service, reporting, knowledge…
HP ’s one ‘SaaS’ reference customer is…HP

BMC Remedy
ASP or MSP
Managed and hosted by a partner
Remedy Application Administration Service does not currently claim SaaS
Software implementation
Designated services team for system management
Application monitoring
Global support desk
Application health Check

ca ‘SaaS’
Not currently offering Service Desk Manager in ‘SaaS’ model
CA announced Clarity Project Portfolio Management is offered via SaaS but competition calls it ASP

four magic questions Questions to ask your ITSM vendor ASP response Service-now.com response Can you set up a proof of concept or trial demo in minutes? If offered, a dedicated demo instance will take a couple of weeks to implement. Service-now.com can provide a dedicated demo instance in a matter of minutes. How can I customize the offering? All customization requirements must be submitted to the ASP – you do not control when or how customizations will be implemented. Customize to your heart ’s content with the guarantee your changes will be preserved through all upgrades. How often will the product be upgraded? Can you outline upgrade process for me? Expect an 18 month delivery cycle with a highly disruptive upgrade. Receive new functionality three times a year through our automated upgrade process. How is a hosted version of your software more cost effective than an on-premise version of the software? Your TCO will be much higher. ASPs use the same old client/server technologies with a Web front end. The only difference is that the ASP is managing the application. You will pay for the additional service. SaaS delivers higher levels of automation, not more bodies. Economies of scale allow us to deliver one low price, while auto-upgrades and Web 2.0 functionality reduce your management costs and increase your effectiveness.

three follow-up questions
How is the system administered and who is involved?
How do I change or customize the application?
Can I speak with one reference using your ‘SaaS’ product?

ASP ain ’t SaaS Highly complex, rigid ITSM applications
Require higher cost, specialized resources
No customer references
18 month roadmap with little new functionality
Archaic and complex UIs and process flows reduce adoption
Very difficult to get information for reporting
Vendors pushing “OOB” best practices
Not possible to customize the application
No flexibility to map to customer processes - dependent on ASP to make changes
Technology impedes IT service and business success
High cost
Excessive licensing costs with multiple dependencies
High-cost consulting fees for implementation, customization and upgrades
High-dollar integration efforts that break during upgrades or system changes

the Service-now.com advantage Spend less money Go with the visionary Do business your way Provide better service Be more efficient Get promoted! Enjoy a truly integrated system

ability to execute Attribute Proof Points Unprecedented implementation success 82% of our customers are in production. The rest just signed up. Unprecedented upgrade success Every customer has the most recent version. 4,200 successful upgrades last year. Global 24 x 7 customer support
Live development support
24 x 365 for P1
20 x 5 for P2 and P3
Global coverage / local support
Proven implementation and support capabilities
Solution used in more than 100 countries
Localized in English, French, German, Spanish, Italian, Chinese and Portuguese
99.97% Availability History of better than 99.97% availability. Application runs in a highly secure SAS-70 Type II certified data center.

financial advantages

financial differentiation
Hosted model, low entry cost - nothing to own, monitor, manage or upgrade; fastest and lowest cost implementation in the business
Subscription licensing, no maintenance fees - covers software, management and monitoring, upgrades, patch deployments
Investment security - phased implementation, add licenses as needed, all customizations preserved, intuitive applications ensure the application is fully used
Auto-upgrades - eliminates resource consumption and consulting costs
Cost predictability - no need to budget for upgrades, patches, maintenance; predictable annual licensing costs
Flexible deployment options - we can host or you can deploy in your data center; either way, it ’s SaaS!
Really simple licensing – one price per IT process user; reasonable subscription license means RBI (return before investment)

software costs SaaS Legacy Software capital no 15% - 35% of license MSRP customer expense and responsibility hinders upgrades, forces processes operational yes no fees Redistributed back to the business automatic all customizations preserved OpEx vs. CapEx Predictable Maintenance fees Soft-costs Upgrades Customization customer responsible for infrastructure

six year TCO 300-user environment ITSM Software as a Service SIX YEAR TCO: $1.3M Annual subscription: $1.2M 300 process users Software maintenance fees: $0 Included in subscription Consulting: $45K Flat-fee implementation, auto-upgrades Training: $2K No charge for Admin training People resources: $67K Administration Infrastructure: $0 Provided by software publisher Legacy ITSM Software SIX YEAR TCO: $5.7M Initial software purchase: $1M 300 process users Software maintenance fees: $1.8M 18 – 35% of purchase price annually Consulting: $1.2M Implementation, upgrades, ongoing Training: $52K $8,800 annually People resources: $1.6M Implementation, admin, upgrades Infrastructure: $100K Hardware, software, data center

predictability vs. volatility $ Year 1 Legacy tools Software as a Service Year 2 Year 3 Year 4 Year 5 Year 6

vendor evolution Who ’s next? ?

wrap up
Subscription models offer ultimate flexibility and low entry costs
SaaS is software evolution that substantially reduces costs and increases productivity
IT shops that have been successful with SaaS have altered culture and business mindset

questions and answers

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Service-now.com SaaS vs. ASP vs. traditional software

by Rhett Glauser on Dec 22, 2008

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Service-now.com SaaS vs. ASP vs. traditional software Presentation Transcript