In my previous blog entry, I discussed the possibility of a software giant failing to adapt to the SaaS revolution. I used the history of DEC as an example of how a highly successful company could miss a major shift in the market and capsize. This blog entry is a reference guide to what each of the major software vendors are doing in the SaaS space. I won't be sensational and predict the demise of any of these vendors. I think it's far too early to tell how the future will pan out.
I can say subjectively that I am impressed with Larry Ellison's pioneering efforts in the space. I can also say that SAP is currently the media whipping boy in the space, with delays in their Business ByDesign program costing them credibility. But this revolution is far from done, so let's not waste time trying to speculate the distant future.
Note: I am now an employee of Oracle, via the BEA acquisition
Larry Ellison, Oracle's CEO, has be talking about on demand software for a long time (10 years I believe), so it is clearly on his radar. In fact, he was an investor in both Salesforce and Netsuite, showing his belief in the business. Charles Phillips, Oracle President, has also spoken to the topic.
Larry and Charles Phillips have articulated a strategy on how Oracle can deliver SaaS and retain its focus on its core market (large enterprise). Larry does not intend to make a major push into the lower end of the SMB market.
- Larry Dignan interviews Larry Ellison: he discusses why SAP's move downmarket is a big mistake, explains Oracle's strategy
- Larry Dignan: Does Larry Ellison have the best SaaS strategy?
- Dan Farber: Charles Phillips talks about Oracle's On Demand business
Current SaaS Initiatives:
Oracle supports the following SaaS initiatives:
- On Demand Managed Applications
- A SaaS offering, with Oracle hosting its applications on behalf of customers
- It is a successful program, on track to gross $700 million this year, growing quickly
- Oracle SaaS Program
- Technology and business support for SaaS ISVs
- Partner program with many ISVs already signed up
- Oracle SaaS Platform
- A product offering to help ISVs build and host their own SaaS applications
Critics have primarily focused on the lack of end-to-end multitenancy in the On Demand business. The argument is that Oracle will not be able to provide a cost efficient solution unless the entire stack is multi-tenant.
- Phil Wainewright: Oracle’s misconceived SaaS strategy
- InfoWeek: Oracle Plans Utah Data Center To Support SaaS Business
- Oracle's SaaS Blog
- Aberdeen Group positions Oracle as the leading software giant in the SaaS space
- Phil Wainewright is excited about Oracle CRM On Demand
- Oracle CRM On Demand summary
At an architectural level, Microsoft is promoting an S+S model, instead of a pure SaaS model. S+S stands for Software+Services. The idea with this is that Software as a Service is most useful when pared with local software (like Office). Microsoft obviously has a major incentive to make sure desktop software is not left behind in the SaaS world, so this makes for good strategy. Whether consumers will buy into it is another matter. See the weaknesses section below for more on this topic.
- Mary Hayes Weier: Steve Ballmer explains the S+S strategy
- Springboard Research: Microsoft updates its SaaS strategy
Current SaaS Initiatives
The following is a selection of the SaaS offerings from MSFT:
- SaaS On-Ramp Program - aids ISVs in building out SaaS solutions
- Microsoft Online Services - its businesss applications ondemand offering
- Hosted versions of Exchange, Sharepoint, and LiveMeeting
- Dynamics CRM Live - hosted version of the Dynamics CRM offering
- Windows Live - a family of hosted offerings for the small business/consumer
- Live Mesh - touted as a SaaS solution, it currently is just a file synchronization service
- Messenger (IM), Windows Live ID, Virtual Earth, Search, Spaces (blogs), and Gadgets
- Architect Center - provides architectural guidance for ISVs
There are more services listed here, but not all are really SaaS.
Critics contend that Microsoft will struggle to succeed in the SaaS market while preserving its existing franchises. It already stumbled with its business model when a European partner began offering Office as a service:
- Phil Wainewright: Microsoft in a twist over SaaSy Office deal
- Phil Wainewright: Microsoft disappoints on SaaS. Didn’t you see it coming?
- Larry Dignan: Microsoft to SaaS: We (are going to someday) have you surrounded
- Barb Mosher: Will Microsoft Office Have Go To SaaS to Survive?
Its Office franchise is already being eroded by service based offerings (Google Apps, Zoho, Adobe, etc). Somehow it has to prevent Office revenue from being decimated by pure SaaS players.
Searching for interviews on SaaS with IBM's CEO Sam Palmisano or VP of Software Steve Mills does not bring up much of interest. This is a bit alarming, remembering the lessons from my previous DEC post. Of the 5 major software giants covered here, IBM appears to have the least amount of executive mindshare for SaaS.
I am not the only one who sees this: Larry Barrett wrote an entire article analyzing IBM's apparent sluggishness when it comes to SaaS. While I don't see a high level business strategy, IBM has embarked on some SaaS initiatives, covered in the next section.
- Donna Bogatin: SaaS: IBM helps drive $10 billion Software as a Service opportunity
- Krissi Danielsson: David Mitchell on IBM's SaaS Strategy
Current SaaS Initiatives:
IBM has these intiatives:
- SaaSpace.com/Partnerworld - a consulting offering
- Helps ISVs build SaaS solutions
- Helps clients integrate SaaS solutions
- Applications on Demand - hosted IBM and non-IBM applications
- Blue Business Cloud - perhaps the successor to the current AOD offering
- Blue Cloud - a compute on demand offering (still in development)
As Larry Barrett noted, IBM doesn't appear to be aggressively pursuing the SaaS model. Sure, it has some initiatives going, but for the size of IBM those initiatives seem undersized.
Also, Jeff Nolan has pointed out that IBM lacks the business apps necessary to execute on an effective SaaS strategy.
- Erick Schonfeld: IBM’s Blue Cloud is Web Computing By Another Name
SAP CEO Henning Kagermann helped launch the major SAP SaaS initiative: Business ByDesign which is a hosted version of several of SAP's traditional heavy weight business applications. The intent was to target SMB, but due to problems in execution that strategy may be changing. It also plans to be a SaaS hybrid, with some on-premise software in the mix.
The bright spot for SAP and SaaS comes from its acquisition of Business Objects (BOBJ). BOBJ was already offering Crystal Reports at the time of the acquisition, and appears to be a healthy business.
Current SaaS Initiatives
SAP has three major initiatives:
- Business by Design - a SaaS initiative to provide business applications to the SMB market
- Crystal Reports on Demand - a collaboration solution for Crystal Reports
- NSite Platform - a platform for building SaaS applications, acquired as a part of BOBJ
By far the biggest perceived weakness with SAP is its failure to execute on its much publicized SaaS release (BBD). Critics point to the major delays (possibly 24 months) as a sign that SAP's applications are a poor fit for the SaaS model. Worse, SAP validated the concept to its customers but failed to deliver, providing key advantage to competitors like NetSuite.
- Steve Hamm: SAP Gets On-Demand Religion
CEO Brad Smith isn't the most vocal about SaaS, but his company is doing the talking for him. Intuit is clearly pushing the SaaS model, with major product offerings already available. The strategy appears to be simple: offer online equivalents of their product suite:
- Sramana Mitra: Intuit Is Not Getting SaaS Credit
- Eric Lai: QuickBase success speeding Intuit's move to SaaS
- Intuit on the SaaS March
Current SaaS Initiatives
Intuit offers the following products as SaaS offerings:
- QuickBooks Online Edition - SaaS version of its accounting software
- Quicken Online - hosted version of its personal finance application
- QuickBase - a hosted spreadsheet application
- It is an older product now finally gaining traction
- Currently in plans to provide a QuickBase SaaS application dev platform
I haven't seen any weaknesses other than stiff competition. The space Intuit plays in will become crowded, with Netsuite and Intacct already delivering SaaS, and Sage likely to become a contender as well.