SaaS (Software as a Service) and the cloud is in a state of flux at the moment with traditional hardware vendors delivering converged solutions to service providers who in turn are looking to grow their IaaS (Infrastructure as a Service). At the same time independent software vendors are looking to move their products to SaaS to meet increasing customer demands.
Gartner recently reported that 71 percent of organisations in 10 countries have been using SaaS for less than three years. According to the research, investments in SaaS are expected to increase across all regions; 77 percent of respondents expected to increase spending, while 17 percent planned to keep it stable.
Licence to SaaS
The interest in SaaS comes with end users seeing the benefit in not holding onto a lot of software licences for long periods of time. They now want to be able to use the right quantity of licences ‘on demand.’ If they’re increasing the size of their workforce, they want to easily be able to upscale their licences. The industry is beginning to look to a ‘pay-as-you-go’ approach through SaaS – something service providers have been doing for years and have had plenty of success implementing.
Dispelling SaaS myths
Implementing the SaaS model is not necessarily a ‘cheaper’ solution but what it can do is focus finances exactly where they’re needed. A company can reduce licence expenditure in ineffective areas of the business while trying out a new system more cost effectively: they don’t have to fork out lump sums up front. This dynamic approach to software usage allows a company to try out whole new business models utilising specific software solutions for say – six months – and still keep a grasp of IT expenditure.
I believe SaaS is on a journey right now – we have started with IaaS which is becoming more mature; customers are running this quite happily now in a number of key areas such as test and dev, DR and big data analysis. This will lead to larger PaaS (Platform as a Service) requirement as partners start to write their own software that end users will consume as SaaS. Business partners are beginning to evolve their business strategies. While offering IaaS they are becoming aware that the real opportunity is with the applications and application integration. Some partners will switch their focus to building applications in the cloud, while others will integrate these disparate applications into a cohesive business solution; it is this area that is largely untapped and very interesting.
Look at LinkedIn, Facebook, Google Mail and Twitter – they’re all managed independently and all have their own interfaces. Now here is the challenge, could you synchronise all the contacts across these applications? Probably yes. Could you segregate it so LinkedIn and Facebook entries were keep apart but were all in your Gmail? With tags maybe. Would it be robust and reliable? I doubt it. Could it be done reliably by everyone without any IT skill? Realistically no.
Moving forwards in the Big Data business world, we really can’t work in those silos. Therefore as SaaS matures there is going to be a great opportunity for business partners to integrate those applications and build connectors which will enable data to flow more freely and securely between them. This won’t be a short term process – it’ll be over the next five to ten years.
Essentially, with SaaS, management overheads decrease considerably as the interface must be intuitive and therefore less complicated to use. It should be as easy as setting up a personal Gmail or Yahoo account and managing that on a daily basis. You can offload the software complexity to experts who manage it for you and the interface is something you just ‘plug in’ and use.
A key challenge is security. Let’s take your Google account again; what are the consequences of letting the world see your personal calendar as a friend of mine did. No big deal until I pointed out that I could see a party he had three months ago, which included his address on the invite and he was telling the world he was about to go on holiday for two weeks “so help yourself”. Now map that mistake onto your business, multiply it by your staff count and overlay your compliance and you can see the risk you are taking. This is where your companies IT staff will deliver their value in the future. Far from being redundant in this new SaaS world they will be there to work with the business partner to not only deliver on the SaaS that is being demanded by the business but also ensure it is done in a compliant, secure and efficient manner.
Learning from service providers
In the future it will become more important to remove yourself from the traditional ‘solutions sell’, or in other words, you sell a solution, move on to the next piece of business, returning in two years to hopefully repeat the process.
It’s a ‘hands on’ approach now, which is new to some partners in the channel. It’s about being in touch with the customer every single month and being flexible enough meet customer needs. Similar to the way a service provider works, resellers are dealing with smaller amounts of money up front but over the long-term, continuous billing can be rolled out to reduce customer churn and improve loyalty. Resellers offer the scalability service providers need. This isn’t going to be a quick win. Resellers need to work with trusted and experienced partners to help them to migrate slowly from traditional solution sales today to an annuity based XaaS business in the future.
Read our second blog in the SaaS series to learn ‘top tips for selling SaaS’ coming up next week.