Software As A Service


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  • Source: Gartner, Deloitte , IDC
  • Software As A Service

    1. 1. Changing Landscape <br />From ISV Monopoly to Integrated “SaaS”<br />
    2. 2. Executive Summary<br />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 <br />How IT can Do More with Increased Efficiency with the Existing Resources at a Lower Cost!<br />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!! <br />SaaS market continue to see rapid growth, despite<br />macroeconomic volatility<br />“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.”<br /> - Gartner<br />“I expect enterprise computing to collapse like Communism and the Berlin Wall.”<br /> - Bob Moul President & CEO Boomi<br />“The next five years<br />will see an explosion in SaaS.”<br /><ul><li>John Girard, CEO </li></ul>Clickabilty<br />“In five years when<br />we look back on the<br />software market, it<br />will be very clear that SaaS was the most important trend of the<br />decade” - Byron Deeter, Partner, Bessemer Venture Partners<br />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, Omniture, NetSuite and SuccessFactors continue to grow much faster than Oracle and SAP. <br />“The most important driver of SaaS businesses is the customers’ needs.” – Josh James, President and CEO, Omniture<br />Growing prominence of SaaS will change traditional<br />business thinking and metrics<br />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<br />Technology advancements, Virtualization and<br />Cloud Computing will fuel SaaS adoption! <br />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! <br />“SaaS not only disrupts the market, but also expands it.” - Mark Gorenberg, Managing Director, Hummer Winblad Venture Partners<br />SaaS market will evolve many folds over the next five years<br />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. <br />“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<br />
    3. 3. Software as a Service is….<br /><ul><li>a Stable, Flexible , Standardized, Dynamic Multiple tenant Platform
    4. 4. a new way to deliver and consume software over the Internet
    5. 5. a new pricing/financial model for the payment of software
    6. 6. SaaS does compress the supply chain for software and eliminates IT responsibilities for the end-customer
    7. 7. ISVs
    8. 8. New ISVs ( Or ISVs developing new SaaS Applications
    9. 9. Transitioning ISVs (ISVs Migrating their Existing Apps to SaaS)
    10. 10. IT Services Players
    11. 11. Enterprises
    12. 12. IT Leaders
    13. 13. Business Leaders</li></ul>Stakeholders<br />SaaS 3.0<br />Integration-as-a-service<br />Development-Platform-as-a-service<br />Service Application-as-a-Service<br />SaaS 1.0<br />SaaS 2.0<br />ASP<br />SaaS providers sourced software from 3rd party software providers<br />Application Centric<br />SaaS providers own the software<br />SOA<br />Vendors provide platforms for development, run-time, and integration as a service.<br />Runtime-Platform-as-a-Service<br />Infrastructure As A Service<br />Supply Side<br />Demand Side<br />Public<br />Private<br />Hybrid<br />Multi Tenant<br />MT through Partners<br />Single Tenant<br />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.<br />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.<br />Computing environment in which an organization provides and manages some resources in-house and has others provided externally.<br />This architecture allow numerous enterprises to subscribe to the computing capabilities while retaining privacy and security. This is the common and dominant model. <br />E.g.: NetSuite, Oracle CRM, Microsoft,<br />Multi-tenant model offered through SaaS provider’s hosted partners.<br />E.g.: Microsoft Dynamics provides SaaS services to its customers through its thousands of hosted partners across geography. <br />Typically, large companies prefer to deploy isolated / single-tenant models. This doesn’t share services with other enterprises. <br />E.g.: Oracle CRM provides single-tenant model<br />Source: McKinsey& Other Secondary Sources<br />
    14. 14. Software as a Service is….<br />Software Delivery Model<br />Software as a Service Model<br />Traditional<br />SaaS<br />Hosting Of Traditional Applications<br />Net-Native SaaS<br />On Premise<br />On Demand<br />License + Subscription<br />Subscription<br />Software<br />Service<br />Single Tenant<br />Multi Tenant<br />CAPEX+ OPEX<br />OPEX<br />Dedicated Infrastructure<br />Shared Infrastructure<br />Components of Market<br />Popular Pricing Models<br />Flexibility in the pricing is critical so SaaS provides ISVs with 3 ways to acquire software to run their services<br />Enterprises and individuals<br />Consumers<br /><ul><li>ISVs pay on a hourly basis based on usage
    15. 15. No Commitments,
    16. 16. Minimums , or termination fees
    17. 17. Cost can be as low as 25c per hour
    18. 18. Monthly usage basis engagement.
    19. 19. Variable Plan: Pay as you go model, no minimum monthly commits
    20. 20. Committed: commitment of a base level monthly usage and then on a usage basis</li></ul>ISVs with predictable software usage requirements can maximize their discounts and flexibility by purchasing software through their existing channels<br />Hourly<br />Monthly<br />Perceptual<br />Integrators<br />Regulators<br />SaaS Market<br />Govt Institutions /Industry Regulators<br />Companies facilitating implementations<br />Providers<br />Companies operating SaaS systems to deliver services<br />Source: IBM White Paper & Other Secondary Sources<br />
    21. 21. SaaS Applications<br />SaaS Platform<br />SaaS PlatformStack<br />SaaS Platform is a set of technologies and Services used to develop, Deploy, Integrate and Deliver SaaS Applications.<br /><ul><li>SaaS Platforms contains components that simply didn’t exist in traditional software platforms.
    22. 22. SaaS Platform is designed for multi-tenancy , which affects layers across the stake in many ways.
    23. 23. SaaS platform components are often provided as a service (i.e . On –demand and over the cloud)</li></ul>SaaS Platform Components<br />Middleware<br />(SaaS on Premises)<br />Mash Ups (SaaS-SaaS)<br />Multi-tenant database,<br />metadata customization<br />Application Development<br />Billing , Metering & Monitoring<br />Provisioning & authentication<br />Run time cloud<br />Development<br />Runtime Cloud<br />SWOT Analysis on ISV Prospective<br /><ul><li>Domain knowledge
    24. 24. Customer Relationship
    25. 25. Customer Understanding
    26. 26. Existing Applications and Solutions
    27. 27. Web-Centric Sales & Marketing
    28. 28. Web 2.0 Usability/User Experience, Infrastructure & Operations
    29. 29. Web 2.0 Customer Service
    30. 30. Internet-scalable Applications
    31. 31. Service Level Management</li></ul>Remote Infrastructure Management<br />Computing as a service<br />Storage as a service<br />S<br />W<br />Physical Data Centre<br /><ul><li>Incremental Revenue Opportunity in New Market Segments
    32. 32. Annuity-like Recurring Revenue
    33. 33. Higher Total Revenue Opportunity
    34. 34. Alignment with economic climate
    35. 35. Pure-Play SaaS Competitors
    36. 36. Traditional Competitors with SaaS Offerings
    37. 37. Traditional Competitor acquisition of SaaS Startup in Your Market</li></ul>o<br />T<br />Source: McKinsey<br />
    38. 38. Benefits & Criticism<br />Reduce capital expenditures and improved capital utilization through infrastructure pooling and reduced license cost<br /><ul><li>Reduce IT Labor Cost in configuration, Operations, Management & Monitoring
    39. 39. Rapidly Provisioned from weeks to minutes
    40. 40. Centralize operations
    41. 41. Managed as a single Large Resource (Virtualized)
    42. 42. Increase admin efficiency
    43. 43. Services at Elastic Scaling
    44. 44. Improve service levels
    45. 45. Standardize offerings
    46. 46. Appropriate service level for applications
    47. 47. Technology advancements: Can shape the software for better operational efficiency
    48. 48. Best of breed services from the author of your application.
    49. 49. Flexibly Priced - Pay as you go
    50. 50. Pay only for what you need-useful when the service demand fluctuates
    51. 51. Enforced Security
    52. 52. Reduced TCO</li></ul>Benefits<br />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 <br /><ul><li>Security and Transparency
    53. 53. Fixed Cost Advantage vs Variable Rental Cost
    54. 54. Meeting various Non functional SLAs like Reliability, Performance etc
    55. 55. Inefficiencies of Generic Computing
    56. 56. Perception exists as more generic, more complex, less understandable, performance drop, not easy to migrate
    57. 57. Vendor Lock-in</li></ul>Criticism<br />Survey Data - Cutter Consortium<br />Source: Making the SaaS Decision: Jeff Hagins, Cutter Consortium white paper and Other Secondary sources <br />
    58. 58. Competitive Landscape<br />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<br />Between the Established Mega Vendors & pure play SaaS Vendors<br />Between different archetypes of SaaS Platforms <br />The SaaS Market will be shaped as much by the demands of the stake holder as by platform vendor action .<br />Vendors have to focus on Four critical Elements of their business to succeed.<br />Build a robust Offering<br />Monetize Effectively<br />Deliver Extensive Value Added Service <br />Drive Ecosystem Growth<br />Success Mantra!<br />Large Customers<br />Typical Customers<br />Non Addressable Customers<br />Newly Addressable Market<br />Source: Making the SaaS Decision: Jeff Hagins, McKinsey and Other Secondary sources <br />
    59. 59. SaaS Stats<br />Top 50 SaaS Vendors (Q1 2010)<br />5 Key Process Areas<br />Business<br />Technology<br />Operations<br />Business & Financial Management<br />Application Architecture<br />Operations Management<br />Go to Market Effectiveness<br />Hosting Architecture<br /> Operation Support<br />Top 10 Application Areas (based on number of SaaS providers(n>1500))<br />Top 10 Application Areas (based on number of SaaS providers (n>80))<br />
    60. 60. Spreading SaaS: Horizontally & Vertically<br />SaaS Market Share Projection<br />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.<br />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% ($96.2bn) in 2008. SaaS market will share 13% in 2013, growing at a CAGR of ~17% from 2009<br />Source: Data Monitor, Gartner and Other Secondary sources <br />
    61. 61. SaaS Associated Industry Dynamics<br />Industry Value by Revenue In US$B (Projected)<br />Industry Value by % Growth (Projected)<br />Source: Data Monitor, Gartner and Other Secondary sources <br />
    62. 62. The SaaS Opportunity<br />31% Growth (CAGR) for<br />On-Demand CRM<br />61% Growth In Enterprise Adaptation<br />25% Penetration of $220 Billion Software Industry by 2011<br />25%<br />61%<br />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.<br />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.<br />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.<br />1. Current Macroeconomics favor SaaS model<br />2. Enabling technologies will fuel SaaS acceptance:<br />3. The “Consumerization” of Technology is inevitable:<br />Source: Making the SaaS Decision: Jeff Hagins, McKinsey and Gartner <br />
    63. 63. Market Segmentation<br />Key Providers In Each Key Segment<br />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, 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<br />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<br />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%<br />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<br />Worldwide Software Revenue for SaaS Delivery Within the Enterprise Application Software Markets & Demand Side Trends<br />Source: Gartner, Deloitte, IDC<br />
    64. 64. Analysis of Key Providers<br />CRM<br />ERP<br />Source: Other Secondary sources <br />
    65. 65. Evaluation and Selection of Partner<br />Survey - Cutter Consortium<br />When considering a hosting service provider to partner with for hosting your<br />SaaS solution there are many important criteria you should evaluate. Some of the most important criteria you should consider are depicted in the chart.<br />N=650<br />Buyer Behavior Segmentation/Polarization<br />Business Centric<br />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.<br />Best Opportunity Buyer for SaaS<br />Web Agnostic<br />Web Centric<br />Buyers who are primarily interested in On-Premise Software<br />Buyers who<br />are primarily<br />interested in<br />SaaS<br />Best Opportunity Buyer for SaaS<br />Technology/ Feature Centric<br />Source: McKinsey, Data Monitor, Gartner, IDC and Other Secondary sources <br />
    66. 66. IT Consulting Landscape<br />Market Value: The global it consulting market shrank by 0.6% in 2009 to reach a value of $498.2 billion.<br />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.<br />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.<br />Market segmentation II: Americas accounts for 51.9% of the global it consulting market value. <br />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.<br />Market Value: $ billion, 2005–14<br />Market Segmentation II : % share, by value, 2009<br />Source: Data Monitor, and Company filings<br />
    67. 67. Significant Development<br />Coverage (Q4-2010)<br />Top 20 SaaS/ Cloud Computing Acquisitions of 2010<br /><ul><li>Canada’s Government the First to Step into the Cloud
    68. 68. Call Center Software Provider MRI Launches SaaS Offering
    69. 69. ‎CDC Software Updates SaaS for Government, Non-Profits
    70. 70. IBM Tivoli Launches SaaS Help Desk Software for Small Businesses
    71. 71. IBM Announces Blueworks Live, 'Lite' SaaS Based BPM
    72. 72. IBM, ADP Launch Cloud Tax Service For SMBs
    73. 73. Navajo Systems Virtual Private SaaS for LotusLive Included by IBM ...
    74. 74. Microsoft launches Office 365 cloud suite a day after Ozzie retires
    75. 75. Microsoft & CambridgeSoft target SaaS data sharing
    76. 76. Dell picks Symantec for e-mail security for SaaS services
    77. 77. SAP's StreamWork Now Available in Google Apps Marketplace
    78. 78. Orange, Cisco, EMC, VMware form cloud computing alliance
    79. 79. SaaS Specialist Reels In Cisco As Investor, Reseller
    80. 80. Epicor Unveils On-Demand Carbon Accounting Solution
    81. 81. ‎Salesforce's Fat SaaS Here We Come!
    82. 82. unveils cloud database and free Chatter
    83. 83. Further Integrates with Google Apps, Data
    84. 84. ‎'Best SaaS LMS' Awarded to GeoLearning for Sixth Consecutive Year
    85. 85. Brit Insurance Moves to IT Management in the Cloud
    86. 86. AppFirst Upgrades Cloud Management for Amazon, Rackspace, Others
    87. 87. One to One Connect's MessageMaker Goes Social, Mobile with Version 3.8 Release
    88. 88. Kawasaki Motors Corp., U.S.A. Chooses SaaS Service Desk InfraDesk to Automate IT Service Management
    89. 89. ‎OpenLogic Exchange Expands Open Source Compliance Capabilities</li></ul>‎<br />Dell Acquires Boomi<br />‎Dell buys Big Blue-based health cloud piccy firm inSiteOne. ‎<br />HP Purchases Stratavia<br />Google Snaps up DocVerse<br />Red Hat Snags Makara<br />IBM Buys Cast Iron System<br />CA Picks up 3Tera<br />CA Purchases Nimsoft<br />CA Nabs 4Base Technologies<br /> Acquires Heroku<br />Cisco System Buys Linesider Technologies<br />‎J2 Global Acquires Protus IP Solutions For $213 Mln<br />Citrix buys European SaaS firm Netviewer<br />Rackspace Buys Cloudkick <br />‎Teradata Acquires Aprimo<br />VMware jumps further into SaaS with Zimbra<br />Epicor to Acquire Spectrum HR<br />Paychex to Acquire SurePayroll<br />Lawson buys human-resources specialist Enwisen<br />NIIT Technologies acquires IP assets for foray into Healthcare segment<br />‎<br />‎<br />Source: Google news & other secondary resources<br />
    90. 90. Thank You! <br />