About two months ago I had 14 hours to spend alone in a car - I was meeting some friends out in Telluride and decided to drive it from my home near Boulder Colorado. Fortunately, I prepared myself. I stocked up on a collection of tech podcasts and made productive use of the time as I rolled through the beautiful mountains. Because I am the architect for BEA's SaaS Platform (code name Genesis), a fair number of the podcasts were focused on SaaS. This blog entry recaps the key insights from some of those SaaS podcasts. Links are provided to the original audio.
NOTE: this blog entry was originally posted April 24th, 2008 on my previous blogging system (dev2dev.bea.com).
SaaS at BEA
For those that know me as an architect on WebLogic Portal, this blog entry may seem odd. What does SaaS have to do with WLP, or even BEA?
The answer is I took on responsibility for the BEA SaaS Platform architecture a few months back and have been hard at work defining that (and not blogging, if you notice the gap in posts). The idea at BEA is to provide a platform for building SaaS applications that includes features like metering and billing, multi-tenancy, and cloud provisioning.
If you pay attention to the space, you will notice that 2008 appears to be the year of Platform as a Service (PAAS). Perhaps I will explain what is going on with that in a future blog entry. This post is focused on podcasts. For those of you are interested in learning about SaaS, I have provided links to podcasts that I found very helpful in understanding the business of SaaS.
The Podcasts
Here is the collection of podcasts that I would recommend.
| Podcast Title | SaaS is Mainstream |
| Podcast Participants | Jeff Kaplan (THINKStrategies), Paul Gillin |
| Podcast Series | SaaSAdvantage Series, SaaSCon |
| Podcast Link | SaaSAdvantage #1 |
Podcast Notes:
- Compliance/security issues were expected to prevent the adoption of SaaS, but are actually helping.
- SaaS vendors are savvy on compliance, and implement it as well/better than IT can.
- SaaS vendors have been certified on compliance standards such as SAS-70.
Further Reading:
| Podcast Title | Living in a SaaS World |
| Podcast Participants | Mitchell Ashley, Jeff Kaplan |
| Podcast Series | Converging on Microsoft, NetworkWorld |
| Podcast Link | SaaS Podcast |
Podcast Notes:
- SaaS and IT
- SaaS growing faster than Gartner thinks, because Gartner just interviews IT.
- A fair amount of SaaS is sponsored directly by the business, outside of IT.
- However, more SaaS solutions are now targeting IT instead of trying to work around IT
- Microsoft SaaS Strategy
- They are very cautious, so much to lose
- Microsoft Live solution is an experiment
- They can’t alienate their all important VAR sales channel
- Channel sales and Offering SaaS products
- Role of the sales channel changes
- Historically have helped to implement complexity
- SaaS removes complexity
- Channel partners must evolve into advisors, not just implementors
- Business buyers of SaaS are trying to figure out the sourcing model for apps
- Outsourcing is changing from major deals (outsourcing entire IT dept) to focused SaaS deals
- “Outtasking” more appropriate name for this
Further Reading:
- SaaS IT Management - Michael Cote
| Podcast Title | What is Saas (Part II) |
| Podcast Participants | Jeff Kaplan |
| Podcast Series | WhatIs.com |
| Podcast Link | WhatIs Podcast |
Podcast Notes:
- Industry is ready for SaaS
- Cost conscious, especially now with possible recession in the US
- Outsourcing of IT functions is now a proven model
- Internet bandwidth is in place to support this (to the office, home)
- 75% of IT budget locked in maintenance, not a successful model
- TCO is proven to be lower with SaaS
- How ISVs need to adapt when selling a SaaS solution:
- Technology – must adopt web application model for delivering product
- Revenue model – subscription model requires longer time to receive revenue
- Must continually invest in the relationship – not a one time sale
- Lower switching costs mean more competitive market
Further Reading:
- Suddenly SaaS is a CIO's Best Friend - John Soat
- Why IT Now Sees SaaS as a Savior - Jeff Kaplan
| Podcast Title | Lecayla Session |
| Podcast Participants | Conor Halpin, Jeff Kaplan |
| Podcast Series | Spotlight on SaaS, THINKStrategies |
| Podcast Link | Lecayla Podcast |
Podcast Notes:
- Per user pricing is the obvious, but is not a totally effective billing model
- Easy to turn into a compete-on-price model with competitors
- If the other guy charges $20 less per user, it's too easy for the customer to focus on that.
- All users are not equal, some will use the system every day, some twice a year
- Key is to bill based on added value – transactional events
- One of Lecayla’s tenants offers a hybrid model to their customers
- User based for frequent users
- Transaction based for infrequent users
- Easy to turn into a compete-on-price model with competitors
- Vendors with existing perpetual license products are afraid of cannibalization
- Can avoid by pricing based on type of usage as well as transactional
- Example: BI vendors make a ton of money off of end of quarter financial roll ups
- Low transaction volume, but high value transactions and very time sensitive
- Priced out of low end markets that are high transaction volume, low value per transaction
- Can continue on-premise model for former, SaaS for the latter
- Enforce through contract
Further Reading:
| Podcast Title | Understanding SaaS Architecture |
| Podcast Participants | Gianpaolo Carraro, Fred Chong (MSFT), Paul Gillin |
| Podcast Series | SaaSAdvantage Series, SaaSCon |
| Podcast Link | SaasAdvantage Podcast #8 |
Podcast Notes:
- SaaS barrier: Loss of control
- Lack of workarounds if the software doesn’t provide what you need
- Cannot just query the DB
- Ops and SLAs are in the hands of the SaaS vendor
- Internet connections aren’t as reliable as LAN
- Lack of workarounds if the software doesn’t provide what you need
- SLA issues
- Outages
- Data security
- Termination terms – how to extract the data
- Compliance issues
- Response times, backups
Further Reading:
- Microsoft Whitepaper: SaaS an Enterprise Perspective
| Podcast Title | Understanding SaaS Architecture |
| Podcast Participants | Colleen Smith (Progress Software), Dana Gardner |
| Podcast Series | Briefings Direct (Interarbor) |
| Podcast Link | Progress Podcast |
Podcast Notes:
- Business Implications of SAAS Software
- Cash flow
- Down market opportunities (long tail)
- SMB opportunities
- ASP vs. SAAS
- ASP was all about hosting
- ASPs did not manage application
- No multi-tenancy with ASPs
- ASPs had no application expertise
- Why time is right for SaaS
- Cost of computing is low – web browser is the distribution
- Long tail is reachable – new Geos, adjacent markets, low end
- Computing clouds
- Business Service Providers
- Combination of SOA and SAAS
- BSP provides an end to end service
- Vertically focused
| Podcast Title | Software as a Service and IBM |
| Podcast Participants | Dave Mitchell (IBM), Scott Laningham |
| Podcast Series | IBM developerWorks |
| Podcast Link | Mitchell Podcast |
Podcast Notes:
- What is SaaS?
- SAAS is all about transfer of risk to the ISV
- SAAS implies a subscription model/pay as you go
- SAAS is served remotely, with little/no option to bring back in house
- What is ASP?
- Software is purchased up front by the customer, not a subscription
- Hosted remotely, but can be brought back in house
- Ajax/RIA is enabling more applications to become SaaS
- SaaS requires a web application
- RIA/Ajax allows more applications to become viable as web applications
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