Babson College CIM Software-as-a-Service Presentation
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Transcript of Babson College CIM Software-as-a-Service Presentation
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©2008, THINKstrategies [www.thinkstrategies.com]Slide 1
THINKstrategies Strategic Consulting Services
Tracking the Growth of Software-as-a-Service
Presented by,Jeff Kaplan
Managing DirectorTHINKstrategies
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 2
The Evolution of Man
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 3
Primary Drivers of SaaS
Changing economic conditions
Changing competitive forces
Changing ecological concerns
Changing workplace requirements
Changing technologies
Changing priorities & sourcing policies
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 4
Today’s Perfect Storm
TheEconomy
EnablingTechnologies
ShiftingCustomer Attitudes
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 5
Deployment Challenges• 31.1% of SW projects cancelled before completed.• 52.7% of projects cost nearly 190% of original estimates.
Operational Costs• Maintenance & management costs >10x original license
fee.• Escalating hardware & staff support costs.• Over provisioning and under-utilization of SW licenses
Economic/Budgetary Pressures• Need to reduce IT costs and increase business benefits.• Need to increase utilization to gain greater ROI.
The Shortcomings of Legacy, On-Premise Apps
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 6
The Nicholas Carr Affect
"...Imagine what future generations will see when they
look back at the current time...won't the way corporate computing is practiced today
appear fundamentally illogical -- and inherently doomed?”
“The End of Corporate Computing” Nicholas Carr, The MIT Sloan
Management Review, Spring 2005.
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 7
Changing Customer Expectations
Old, Capital Investment
Complexity, Customization
Reactive Maintenance
Response Time
Customer Support
Limited Responsibility
Outsourcing Alternatives
New, Operating Expense
Simplicity, Utilization
Proactive Management
Ongoing Monitoring
Automated Delivery
Higher Accountability
Out-Tasking Options
Enterprises Seeking to Generate Greater ROI at Lower TCO.
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 8
Shift from Outsourcing to Out-Tasking
Businesses seeking functionality, not technology.
IT outsourcing deals have failed.
Selective outsourcing, or ‘out-tasking’ gaining attention.
SaaS & cloud computing is a form of out-tasking.
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 9
On-Demand Has Become Mainstream
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 10
Enabling Technologies
Broadband networks
Grid computing
Blade technology
Virtualization
Web services & SOA
Service provisioning
Performance management
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 11
Networked applications
Enhanced user experience
Subscription pricing
Real-time analytics
Continuous enhancements
Self-provisioned services & toolkits
Aggregated data & benchmarks
Defining SaaS
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 12
ASPs Resold legacy applications
Upfront perpetual license
Remained inflexible
Limited availability
Single-instance, inefficient
SaaS Net-native applications
Pay-as-you-go model
New functionality
Universal availability
Multi-tenant, scalable
ASPs vs. SaaS
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 13
Interest in SaaS Growing
Source: THINKstrategies/Cutter Consortium
2007
32%
2008
62%% of Respondents Using SaaS
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 14
Welcome to Gartner’s ‘Slope of Enlightenment’
Gartner’s Hype Cycle
You are here.
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 15
On-Demand Market Adoption Forecast
Mark
et
Pen
etr
ati
on
2010200820062004
Innovators
Early Adopters
Mainstream Buyers
Laggards
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 16
SaaS Expands from Front- to Back- to Inter-Office Apps
BUSINESS APPLICATIONS
CRMSFA…
CollaborationSCM
…
ERPFinance
…
Front Office Inter OfficeBack Office
SaaS Market ‘Gold Rush’
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 17
Top Ten Showplace Application Categories
Customer Relationship Management 103
Collaboration 80
Accounting/Financial 78
Document Management 67
Project Management 62
Enterprise Resource Planning (ERP) 55
Marketing 49
Human Resource Management (HRM) 47
eCommerce 46
Messaging 44
Source:SaaS
Showplace
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 18
Top Ten Showplace Industry Categories
SMBs 110
Banking/Financial Services 102
Manufacturing 91
Technology 80
Healthcare 72
Retail 69
Government 63
Professional Services 55
Telecommunications/xSPs 43
Software 42
Source:SaaS
Showplace
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 19
SaaS Expands from Business Apps to IT Management
BUSINESS APPLICATIONS
CRMSFA…
CollaborationSCM
…
ERPFinance
…
Front Office Inter OfficeBack Office
SecuritySystems Mgmt
…
Network MgmtRemote Access
…
Data ProtectionStorage
…IT Management
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 20
Why IT Wants SaaS
Most IT organizations spend 75-80% of their time reacting to problems, keeping systems and software up and running. They
would prefer to focus on more strategic business initiatives.
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 21
Traditional NSM = ERP of the IT WorldToo complicated
Too expensive
Too time-consuming
Too ineffective
>40 IT/Application Mgmt solutions on the SaaS Showplace.
SaaS Penetrating IT Management Market
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 22
Managed Services/SaaS Convergence
Managed Services SaaS
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 23
Managed Services vs. SaaS
Managed Services Provider assumes
management responsibility
Sold on an per device basis
Focus on network/system availability & performance
SaaS Provider delivers software
functionality
Sold on a per user basis
Focus on application availability & performance
Quicker Time-to-Value Lower TCO/Higher ROI Shifts Burden to Provider
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 24
The Convergence of Managed Services & SaaS
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 25
Ad-Supported SaaS
“iTunes of IT” 250K users 50,000 new users in
last 2 months Advertisers has grown
from 4 to 40 Market Opportunity,
• SMB IT pro = $125,000 annual budget.
• 250k users = $32B in annual spend
• Growing at more >$3B per month!
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 26
Open Source: The Good, Bad and Ugly
The Good• Proliferation of tools/solutions
• Accelerated Development
• Concepts of Community
The Bad and Ugly• Lower barriers to entry
• Escalating price competition
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 27
A New Level of Valuein the SaaS Market
Dynamic toolkit clearinghouse
Continuous updates, new ideas
Real-time, aggregated data
Meaningful benchmark studies
Practical best practices forums
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 28
Shifting Adoption Patterns
Unilateral End-User, SBU Adoption of SaaS Solutions
Enterprise-Wide Acceptance and
Adoption of SaaS
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 29
The Role of SaaS in SMBs and Enterprises
Small = Fill Unmet Needs
Mid-Size = Fill Unmet Needs/Replace
Enterprise = Augment/Extend Capabilities
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 30
Size of SaaSDeployments Growing
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 31
SaaS Evolution
SaaS 1.0 SaaS 2.0
• Standalone point apps
• Focus on ease of use/price
• One size fits all, minimal customization
• Horizontal applications
• Limited interoperability
• Emphasis on lower TCO
• Specialized vendors
• Combination of choices
• Focus on added functionality
• Multiple configurations, greater versatility
• Vertical/industry solutions
• Easier integration
• Emphasis on higher ROI
• Strategic sources
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 32
Moving from SaaS Apps to Cloud Computing
Cloud Computing Services
SaaS AppsSaaS Apps
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 33
Rewiring the World,From Edison to Google
“A hundred years ago, companies stopped generating
their own power with steam engines and dynamos and
plugged into the newly built electric grid…Today, a similar
revolution is under way.”
- Nicholas Carr
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 34
Cloud Computing:Today’s New Enablers
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 35
New Challenge:Cloud Computing Outages
“Amazon S3 Outage Rains On
Cloud-computing Parade”
“Outages Force Cloud Computing Users To Rethink
Tactics”
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 36
Key Customer Concerns & SaaS Industry Responses
Concerns, Reliability Security Customization Compliance Integration Customer Support
Responses, SLAs Certifications User Configurations DR/BC Connectors Online/Pro Services
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 37
On-Demand Services &The IT Industry Inversion
Services Technologies
Past
Future
TheIT IndustryInversion
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 38
Key Challenges Facing SaaS Vendors
Re-architecting applications
Re-structuring revenue models
Repositioning marketing
Re-orienting sales/support staff
Surviving market shakeout
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 39
No One Likesto Sell Services
Raises concerns about the product.
Complicates the sale/extends sales cycle.
Seldom properly incented.
Weak value proposition.
Poor track record.
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 40
Hybrid Model Pitfalls
Balancing,
Multiple Offerings
Multiple Codes/Versions
Differing Buyers
Multiple Sales Channels/ Compensation Plans
Differing Revenue Recognition
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 41
Channel/Supply Chain Opportunities
Legacy ISVs
New SaaSProviders
EnablingTechnologyVendors
• Offshore SW Developers• 3rd party SW platforms• 3rd party HW systems
xSPs
• Hosting companies• Carriers
Channel Partners
• Distributors• VARs/Integrators• eCommerce Sites
Corporate Customers
Consumers
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 42
New Channelsto Market?
Banks
Insurance Companies
Retailers
Web companies
PS Firms
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 43
SaaS Ecosystems – The New Channel
Jamcracker
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 44
Changing Competitive Landscape
&
&
& AimNetSolutions
everdream
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 45
A Future View
Software Services
Business Services
Information Services
Market Evolution
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 46
Key Questions
Do you have adequate networking capabilities?
Can you deploy SaaS more quickly, with less risk?
Can it give your employees a better user experience?
Can you gain productivity improvements?
Can you distribute information more effectively?
Can you make decisions more intelligently?
Can you measure performance more accurately?
Can you achieve a greater ROI at a lower TCO?
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 47
Summary & Conclusions
SaaS spreading
IT supporting & adopting SaaS
Market entering ‘gold rush’ era
Make strategic sourcing decisions
Use classic evaluation criteria
Focus on reliability, flexibility & viability
Expect new levels of value
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©2008, THINKstrategies, Inc. www.thinkstrategies.comSlide 48
For More Information…
www.SaaS-Showplace.comwww.thinkstrategies.com