SaaS vs. ASP vs. traditional software


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An overview of various IT service management software architectures.

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  • The iPhone is a parallel to the technology innovation that has occurred during the last couple of decades. You don ’t see people using a Walkman and a brick for a cell phone today, why do we still see decades-old, enterprise technology being pushed by vendors like it is something new.
  • Driven by simplicity and accessibility Driven by need for more IT interaction
  • SaaS is Software Evolution “… Software as a Service is the most impactful trend in software currently. SaaS solutions solve many of the problems that traditional software faces , including large upfront license fees, long time to implementation, and access issues by a mobile workforce…” – Goldman Sachs Investment Research November, 2007 The many advantages of Software as a Service range from: Hardware, software, system security, disaster recovery, maintenance and monitoring costs pushed to the vendor Maintenance responsibilities shift to the vendor that wrote the code allowing organizations to focus on their core competencies Instant evaluations allow organizations to run Proof of Concepts with little effort and cash outlay for hardware and personnel Deployment methodologies typically focus on collaboration using the SaaS application set as the basis for project and release management Much faster deployments in all cases
  • Cutter Consortium conducted its fourth annual SaaS survey via the Web in September/October 2008. The survey was completed by 113 respondents, representing a broad cross-section of industries worldwide.
  • Cutter Consortium conducted its fourth annual SaaS survey via the Web in September/October 2008. The survey was completed by 113 respondents, representing a broad cross-section of industries worldwide.
  • Application Service Providers deliver software publisher client/server technology with a Web front end. Because the technology is client/server, the ASP will be responsible for maintaining the application set and delivering all customizations. In this scenario, every unique feature, function or customization increases system complexity and maintenance costs exponentially. In this model, the ASP is responsible for delivering upgrades and often succumb to the same issues client/server on premise implementations run into.
  • Application Service Providers deliver software publisher client/server technology with a Web front end. Because the technology is client/server, the ASP will be responsible for maintaining the application set and delivering all customizations. In this scenario, every unique feature, function or customization increases system complexity and maintenance costs exponentially. In this model, the ASP is responsible for delivering upgrades and often succumb to the same issues client/server on premise implementations run into.
  • We have heard from several customers and interview candidates that HP and BMC are offering a Managed Service
  • Using, you will… Spend less money We guarantee it! Your licensing costs will be lower than your current maintenance, application infrastructure costs will disappear, administrative costs will be lowered by more than 50% and upgrade costs will be zero. Significant savings you can ’t afford to pass up – your IT service management costs will be reduced by 60 to 80 percent. Lowering costs is always a good business decision, but never more than now considering current economic conditions. How: Reasonable subscription fees, no maintenance Rapid, predictable, lower-cost implementations Automatic upgrades liberate staff for more important things Free data center resources and leave maintenance work to us Customer Results: Deutsche Bank (Global 2,000 financial organization) cancelled $4.5M in annual maintenance fees and refused to spend significant money on vendor recommended upgrade. World Wide Technology, Inc. (leading Systems Integrator) saved more than $1M by eliminating consulting costs and maintenance fees. Implemented incident, change, CMDB, service catalog and custom applications without the use of high-cost professional services. Be more efficient Start using a system that truly works for a larger user community than you have today. Many of our customers came from older client/server technology and have found the Web 2.0 approach to be a breath of fresh air. Add that to the way the system interacts via email and sms and you have a process collaboration tool that drives productivity. Your staff will see as a tool that helps get work done, not an impediment. How: Access anywhere, any time, via any browser Lightweight, browser-based app fosters better communication Multiple communication options speed delivery of information in a format users want Automatically inform end users of completion, progress, need for information Customer Results: Qualcomm (Fortune 1,000 global technology company with 14,000 employees) increased staff efficiency by assigning accountability and is able to better manage the support business through real-time reporting and trend analysis. Watson Pharmaceuticals, Inc. (multi-billion dollar US pharmaceutical company with 5,700 employees) reduced call volume significantly and is able to handle more work without increasing head-count. Do business your way There is prevailing wisdom in the IT world to try and use applications “out-of-the-box” with no customization or personalization. This wisdom was born from the abysmal upgrade experience that follows customization from the clientserverozaic era. We say this is nonsense! Give customers the freedom to deploy their business and process model - we guarantee it will work in the upgraded system, without exception. How: Customize behavior and user interface with simple right-click functions and GUI-based tools Integrate faster and more often using open, SOA standards As your organization matures, the application can grow with you Quickly build integrated, custom applications Customer Results: enables H & R Block (Fortune 500 services company) to be more agile allowing them to better manage change as they expand and contract with the tax season. Allianz Global Corporate and Specialty (Global 2,000 financial services firm with 177,000 employees in 70 countries) built custom project and procurement management applications to manage projects against cost centers and IT budgets. Enjoy a truly integrated system The applications in our suite were designed to be integrated from day one. We knew about ITIL V3 before we wrote our first line of code. Most of our competitors have acquired software or partnered to cobble together a “solution” that frequently leaves a bulk of integration work to the customer. Not the case with Roll out the system modularly knowing that as you add each piece, it will fit hand-in-glove with the other applications. How: Single platform and administration across all ITIL processes Native integration drives more automation and more control Staff liberated to focus time fine-tuning business processes Information is easily shared and presented to provide better service in less time Customer Results: Clark County Information Technology, Las Vegas, NV (15th largest county in the US with 12,000 employees) leverages a single system for cross application reporting, shared workflow, robust knowledge management, and integration to LDAP. OhioHealth (large Midwest healthcare organization with 14,000 employees) replaced a rigid CA system with natively integrated incident, knowledge, service request, service catalog and built a custom service continuity management application on Provide better service Our lightweight, but comprehensive approach to IT service and asset management has been successfully deployed in more than 200 of the world ’s largest, most complex and demanding businesses. Our approach delivers a system that everyone can benefit from. How: Auto-upgrades eliminate version lock Three releases per year provides new functionality usable on day one Intuitive, familiar Web 2.0 interface entices users to actually use the application Combine ITIL V3 and unique processes to support your needs Customer Results: Jo-Ann Stores (leading US specialty retailer) provided quality support for their SAP Retail Suite rollout to 775 stores by implementing employee self-help and reduced call volume by 50 percent. Dolby Laboratories ($500M annual revenue technology company with 1,000 employees) defined more than 60 IT and facilities catalog items within three months resulting in better quality, more measurable services. Go with the visionary The latest Gartner Service Desk Magic Quadrant (NOT YET RELEASED) names as the only visionary software vendor in IT service management. Clearly, that would be how you want your customers to perceive you! In five years time, we have surpassed the competition through simplification and a much faster release cycle. Join the leader and position your organization to drive innovation. How: Powerful technology through simplification, while the competition works on feature lists Web 2.0 + SaaS + ITIL V3 = more productivity for far less Progressive licensing model designed for you Freedom to expand and change without risk Customer Results: While legacy incumbent service desk vendors fumbled with getting their application to work, CBS Corporation (Fortune 100 entertainment firm with 24,000 employees) found to be the only modern, truly Web-based applications built on ITIL V3 processes. Oklahoma University Medical Health Sciences Center (large university health services organization) stated “ is the first piece of software I have ever delivered, when, on the day we put it into production, I didn't want to [shut it off]”. Get promoted Sure, people say, “you never get fired for buying HP or IBM”, however this has proved to be a defeatist position. The truth of the matter is that several of our customers have not only enjoyed a better working environment, but have been promoted for creating it! We can’t guarantee this one, but we can guarantee that we will do everything in our power to ensure you are as happy and satisfied as the rest of our 200+ customers.
  • Financial Differentiation There are many technical and financial advantages provided by Because our technology speeds POC to production time, is intuitive to use, extremely customizable, natively integrated and functionally complete; customers can receive immediate financial benefits, even without including the financial benefits associated with our SaaS delivery model: Faster POC to production – technology purchases go to immediate use without high implementation costs Intuitive technology – because the product is easier to use, more staff will use the technology, technicians and business users will be more productive Extremely customizable – Expand functionality to support specific requirements and ensure all customizations are preserved through the upgrade process. Your investment is secure with S – no dead ends due to customization efforts Native integration – our single Platform as a Service delivers comprehensive integration throughout all ITIL processes and keeps your staff from building and maintaining integrations. Our customers realize deep ongoing cost savings; because is responsible for infrastructure and application management as part of the subscription fee including: upgrades, patches, hardware, software, monitoring, redundant security systems, and Support Services. Because is delivered via software as a Service; there is nothing to own or manage creating a very low cost to move from proof of concept to production. Our annual subscription licensing eliminates unnecessary maintenance fees. Budgeting for usage and maintenance is easier; because you can predict your annual maintenance costs. With you will always know the cost to upgrade, deploy patches, and maintain the system - zero dollars.
  • Software Cost Comparisons From an accounting perspective, costs can be applied as operational costs. Our costs are predictable, does not include maintenance fees, helps companies focus on their core competencies by shifting system maintenance responsibilities to the software publisher, and all customizations are preserved through the upgrade process.
  • Subscription SaaS license remains the same assuming a six-year subscription license agreement.
  • SaaS vs. ASP vs. traditional software

    1. 1. All roads lead to SaaS. Are you ready?
    2. 2. discussion points <ul><li>SaaS is software evolution </li></ul><ul><li>Software delivery variants </li></ul><ul><li>Comparing ITSM ‘SaaS’ offerings </li></ul><ul><li>Financial advantages of SaaS </li></ul>
    3. 3. mobile evolution
    4. 4. mobile evolution
    5. 5. Simplicity and Power Increasing Community Served 1997 2008 1992 ITSM evolution 1981 Value & Organizational Reach
    6. 6. SaaS is software evolution <ul><li>Software ownership costs pushed to vendor - hardware, software, system security, disaster recovery, maintenance, monitoring </li></ul><ul><li>Return to core competency - organizations shift resources to core competencies, vendors focus on managing their SaaS </li></ul><ul><li>More efficient deployment – instant evaluation, more collaboration between vendor and IT organization, much faster deployments </li></ul><ul><li>Modern, Web 2.0 interface - drive technician usage and better customer interaction with IT </li></ul><ul><li>Eliminate shelfware & maintenance - pay for what you use </li></ul><ul><li>Always on current version – version-free software means the latest for the customer </li></ul><ul><li>SaaS homogeneity costs less – One version for the vendor to support means lower costs for everybody </li></ul>
    7. 7. 2007 2008 SaaS adoption doubled in 12 months * ThinkStrategies and Cutter Consortium, “SaaS Market Surging,” Jeff Kaplan, Nov. 13, 2008.
    8. 8. Why SaaS adoption doubled * ThinkStrategies and Cutter Consortium, “SaaS Market Surging,” Jeff Kaplan
    9. 9. traditional on-premise deployment <ul><li>Details </li></ul><ul><li>Full ownership </li></ul><ul><li>Significant implementation </li></ul><ul><li>Customizable </li></ul><ul><li>Difficult to upgrade / maintain </li></ul><ul><li>Examples </li></ul><ul><li>HP Service Manager </li></ul><ul><li>BMC Remedy </li></ul><ul><li>CA Service Desk </li></ul><ul><li>EMC Infra </li></ul>Software publisher Customer Data Center Application Database
    10. 10. application service provider (ASP) <ul><li>Details </li></ul><ul><li>Procures app and resells service </li></ul><ul><li>Broker between customer and publisher </li></ul><ul><li>Focus on ‘out-of-box’ </li></ul><ul><li>Examples </li></ul><ul><li>IBM GS </li></ul><ul><li>HP Services </li></ul><ul><li>BMC AAS </li></ul><ul><li>CSC </li></ul>Customer C Software publisher ASP Data Center Customer B Customer A Application Application Application Database Database Database
    11. 11. <ul><li>The right idea with the wrong technology </li></ul><ul><li>High-cost delivery model doomed ASPs </li></ul><ul><li>Lengthy implementations </li></ul><ul><li>Resource-intensive upgrades </li></ul><ul><li>Version and feature lock down </li></ul><ul><li>Higher cost than on-premise deployments </li></ul><ul><li>Not compatible with client/server software </li></ul>the ASP meltdown
    12. 12. SaaS multi-tenant <ul><li>Details </li></ul><ul><li>Hosted by software publisher </li></ul><ul><li>Many customers to one application set </li></ul><ul><li>Thought to be inflexible </li></ul><ul><li>Examples </li></ul><ul><li> </li></ul><ul><li>Workday </li></ul><ul><li>Innotas </li></ul>Customer C Software publisher Customer B Customer A Application Database
    13. 13. SaaS single-tenant <ul><li>Details </li></ul><ul><li>Hosted by software publisher </li></ul><ul><li>Customers receive their own app and database </li></ul><ul><li>Auto-upgrades </li></ul><ul><li>Extensive customization </li></ul><ul><li>Examples </li></ul><ul><li> </li></ul><ul><li>InteQ </li></ul><ul><li>Eloqua </li></ul>Customer C Software publisher Customer B Customer A Application Application Application Database Database Database Management automation
    14. 14. 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
    15. 15. <ul><li>The Internet is the development and delivery platform </li></ul><ul><li>Quick, flexible implementations </li></ul><ul><li>Frequent, vendor-managed automatic upgrades </li></ul><ul><li>Customer has direct control of application changes and customizations </li></ul><ul><li>Extensive customer customization preserved through upgrades </li></ul><ul><li>Simplified, predictable subscription license </li></ul><ul><li>No infrastructure or application maintenance </li></ul>why SaaS is different
    16. 16. 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 ✓ ✓
    17. 17. 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)
    18. 18. HP ‘SaaS’ for Service Manager <ul><li>NOT new technology - simply offering Service Manager 7 via ASP </li></ul><ul><li>HP services or 3 rd party partner provides bodies to administer the system </li></ul><ul><li>Viewed by HP as a mid-market or enterprise solution </li></ul><ul><li>Assumed licensed by subscription </li></ul><ul><li>Stalling the market to retain customers </li></ul>
    19. 19. HP deployment <ul><li>Usually hosted in HP data center </li></ul><ul><li>Minimal two week installation </li></ul><ul><li>Includes HP Implementation Accelerator which requires: </li></ul><ul><ul><ul><li>Predefined data – categories, codes, users, roles, CIs and ‘smart indicators’ </li></ul></ul></ul><ul><ul><ul><li>Process/procedure descriptions </li></ul></ul></ul><ul><li>Required technical account manager </li></ul>
    20. 20. HP marketing <ul><li>Shorter time to market </li></ul><ul><li>HP offers solution management expertise </li></ul><ul><li>System to run in professionally managed data center, manned 24x7 </li></ul><ul><li>‘ SaaS’ mitigates customer risk </li></ul><ul><ul><li>“ Transition to an on premise deployment when you are ready” </li></ul></ul>
    21. 21. what HP is not telling you <ul><li>Scoped as a traditional implementation </li></ul><ul><li>Lengthy implementation period with $25K conversion fee for legacy customers </li></ul><ul><li>Customer locked into ‘out-of-the box’ functionality </li></ul><ul><li>Highly disruptive upgrades remain – customer still pays for time and effort </li></ul><ul><li>ASP must make system customizations resulting in lengthy change cycles </li></ul><ul><li>Cost of technical account manager passed on to customer </li></ul><ul><li>Highly complex licensing model with additional costs for integrations, employee self-service, reporting, knowledge… </li></ul><ul><li>HP ’s one ‘SaaS’ reference customer is…HP </li></ul>
    22. 22. BMC Remedy <ul><li>ASP or MSP </li></ul><ul><ul><li>Managed and hosted by a partner </li></ul></ul><ul><li>Remedy Application Administration Service does not currently claim SaaS </li></ul><ul><ul><li>Software implementation </li></ul></ul><ul><ul><li>Designated services team for system management </li></ul></ul><ul><ul><li>Application monitoring </li></ul></ul><ul><ul><li>Global support desk </li></ul></ul><ul><ul><li>Application health Check </li></ul></ul>
    23. 23. ca ‘SaaS’ <ul><li>Not currently offering Service Desk Manager in ‘SaaS’ model </li></ul><ul><li>CA announced Clarity Project Portfolio Management is offered via SaaS but competition calls it ASP </li></ul>
    24. 24. four magic questions Questions to ask your ITSM vendor ASP response 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. 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.
    25. 25. three follow-up questions <ul><li>How is the system administered and who is involved? </li></ul><ul><li>How do I change or customize the application? </li></ul><ul><li>Can I speak with one reference using your ‘SaaS’ product? </li></ul>
    26. 26. ASP ain ’t SaaS Highly complex, rigid ITSM applications <ul><li>Require higher cost, specialized resources </li></ul><ul><li>No customer references </li></ul><ul><li>18 month roadmap with little new functionality </li></ul><ul><li>Archaic and complex UIs and process flows reduce adoption </li></ul><ul><li>Very difficult to get information for reporting </li></ul>Vendors pushing “OOB” best practices <ul><li>Not possible to customize the application </li></ul><ul><li>No flexibility to map to customer processes - dependent on ASP to make changes </li></ul><ul><li>Technology impedes IT service and business success </li></ul>High cost <ul><li>Excessive licensing costs with multiple dependencies </li></ul><ul><li>High-cost consulting fees for implementation, customization and upgrades </li></ul><ul><li>High-dollar integration efforts that break during upgrades or system changes </li></ul>
    27. 27. the 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
    28. 28. 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 <ul><li>Live development support </li></ul><ul><li>24 x 365 for P1 </li></ul><ul><li>20 x 5 for P2 and P3 </li></ul>Global coverage / local support <ul><li>Proven implementation and support capabilities </li></ul><ul><li>Solution used in more than 100 countries </li></ul><ul><li>Localized in English, French, German, Spanish, Italian, Chinese and Portuguese </li></ul>99.97% Availability History of better than 99.97% availability. Application runs in a highly secure SAS-70 Type II certified data center.
    29. 29. financial advantages
    30. 30. financial differentiation <ul><li>Hosted model, low entry cost - nothing to own, monitor, manage or upgrade; fastest and lowest cost implementation in the business </li></ul><ul><li>Subscription licensing, no maintenance fees - covers software, management and monitoring, upgrades, patch deployments </li></ul><ul><li>Investment security - phased implementation, add licenses as needed, all customizations preserved, intuitive applications ensure the application is fully used </li></ul><ul><li>Auto-upgrades - eliminates resource consumption and consulting costs </li></ul><ul><li>Cost predictability - no need to budget for upgrades, patches, maintenance; predictable annual licensing costs </li></ul><ul><li>Flexible deployment options - we can host or you can deploy in your data center; either way, it ’s SaaS! </li></ul><ul><li>Really simple licensing – one price per IT process user; reasonable subscription license means RBI (return before investment) </li></ul>
    31. 31. 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
    32. 32. 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
    33. 33. predictability vs. volatility $ Year 1 Legacy tools Software as a Service Year 2 Year 3 Year 4 Year 5 Year 6
    34. 34. vendor evolution Who ’s next? ?
    35. 35. wrap up <ul><li>Subscription models offer ultimate flexibility and low entry costs </li></ul><ul><li>SaaS is software evolution that substantially reduces costs and increases productivity </li></ul><ul><li>IT shops that have been successful with SaaS have altered culture and business mindset </li></ul>
    36. 36. questions and answers