ASPnews Home

News

ASP Directory

ISPCON Events

Technology Jobs

Search ASPnews:




internet.com
IT
Developer
Internet News
Small Business
Personal Technology

Search internet.com
Advertise
Corporate Info
Newsletters
Tech Jobs
E-mail Offers
internet.commerce
Be a Commerce Partner
















NEWS
Week's Top News | Alliances | Business/Finance
Product Launches | Trends


The SaaS Steamroller
By Julie Craig

August 14, 2007

For good reason, traditional software vendors are once again taking notice of software-as-a-service providers, writes guest columnist Julie Craig of Enterprise Management Associates.

Last month's article, the first in this series, discussed the evolution of software as a service (SaaS) from the application service provider (ASP) model to today's SaaS poster child, Salesforce.com.

It discussed the forces that have been leading many companies to re-think their approach towards delivering IT services to the business and as a result move to a service-provider, rather than an in-house, delivery model. Finally, it discussed some of the advances that have helped make SaaS a viable business model where ASP **never was**.

This article details why SaaS is different and why it will likely begin to impact more and more enterprise software vendors over the next two to three years. It will also discuss why enterprise IT has to pay attention to this trend, and not simply dismiss it as "ASP revisited."

Traditional ERP and CRM

SaaS is starting to enjoy considerable success in the marketplace. Since 2001, Salesforce.com has picked up more than 30,000 customers, and its subscriber base is growing by 50 percent to 75 percent per year. And Workday.com, Dave Duffield's SaaS-based replacement for ERP applications such as those delivered by his first-born company, Peoplesoft, is only partially deployed but already has its first subscribers.

Many in the industry are starting to scratch their heads and wonder, "What is different? Is this just ASP re-packaged?" The good news is that the answer is no. SaaS is an entirely new model engineered specifically for multi-tenant delivery and economies of scale.

Although the idea behind ASP was likely ahead of its time, it had multiple disadvantages from the start. ASP deployments attempted to repurpose software designed for a single enterprise to a hosted, multi-customer paradigm.

The tiered, multi-server architectures characteristic of ERP and CRM vendors required servers for databases, applications, and Web connections to interact in a way that delivered a business application to a single company. Such architecture didn't lend itself to the replication required to support multiple companies.

Adapting such applications to multiple customers proved costly. Duplicating tiered applications added hardware and power costs. And multiple software versions added expense as well. Supporting such deployments became complex, and therefore expensive. The result was an expensive delivery model where customers benefited primarily from predictable cost, not necessarily from cost savings.

If traditional software vendors want a piece of the action, then they will have to overcome these same problems. Multi-tenant deployment requires significant modifications to software architecture and code.

ERP and CRM vendors, for example, already spend an estimated one-third of their research and development (R & D) budgets on supporting multiple product versions and another third on supporting multiple platforms. This leaves a relatively small percentage for innovation and for re-architecting for SaaS.

Seriously pursuing the SaaS market would also require significant changes in both revenue models and corporate culture. Oracle and SAP have built enormous sales organizations around selling licenses and support. Refocusing sales executives on selling subscriptions would be a "hard sell." Refocusing corporate culture from selling software to providing a service is another aspect of the SaaS model that would be problematic as well.

Page 2: What Makes SaaS Different?


Julie Craig is a senior analyst with Boulder, Colo.-based Enterprise Management Associates, an industry research firm focused on IT management. Julie can reached at [email protected].

Go to page: 1  2  Next  

Tools: Email this ArticleView Printable Version
Add aspnews.com to your favorites
Add aspnews.com to your browser search box
IE 7 | Firefox 2.0 | Firefox 1.5.x


Back to News Trends

 

Featured Links





internet.commediabistro.comJusttechjobs.comGraphics.com

Search:

WebMediaBrands Corporate Info

Legal Notices, Licensing, Reprints, Permissions, Privacy Policy.
Advertise | Newsletters | Shopping | E-mail Offers | Freelance Jobs

Whitepapers and eBooks

Intel: Get started today activating Intel� vPro Technology based PCs. Learn More Now!
Whitepaper: Introducing the Azure Services Platform
An Whitepaper: Introduction to Microsoft .NET Services for Developers
Microsoft Article: Managing Resource Allocations with SQL Server 2008's Resource Governor
Microsoft Article: SQL Server 2008 Recovery Models and Backups
Intel PDF: Intel and Microsoft Complementary Virtualization Technologies
Nokia News: New Nokia Tools Help Extend Web Content to Mobile Marketplace
IBM Whitepaper: From Fear to Value - CIO Strategies for Propelling Business Through the Economic Crisis
CA Whitepaper: The Role of Security Management in Achieving Continuous Compliance
Internet.com eBook: Becoming a Better Project Manager
Microsoft Partner Portal: What Azure Means for Microsoft Partners
Internet.com eBook: Web Development Frameworks for Java
Internet.com eBook: Developing a Content Management System Strategy
PDF: Windows Azure Blob--Programming Blob Storage
Article: Ten Things IT Professionals Should Know About Windows 7
MORE WHITEPAPERS, EBOOKS, AND ARTICLES

Webcasts

Video: Get Started with the Live Framework
Windows Azure Debugging Tips
On Demand: Privacy and IAM--Control Access to Sensitive Information in a Secure Environment
Microsoft Partner Portal Video: Microsoft Gold Certified Partners Build Successful Practices
Video: Use Logging in a Windows Azure Application
Get Started with .NET Services
MORE WEBCASTS, PODCASTS, AND VIDEOS

Downloads and eKits

Download PHP SDK for Windows Azure
Windows Azure Tools for Microsoft Visual Studio
Amyuni: PDF & PDF/A Engine for .NET and ActiveX Apps
Download Windows Azure SDK
Red Gate Free Trial: SQL Toolbelt
Iron Speed Designer Application Generator
Download Award-Winning Red Gate SQL Backup Pro
Security Features in Microsoft Online Services
MORE DOWNLOADS, EKITS, AND FREE TRIALS

Tutorials and Demos

Visit: The Windows Azure Forum
Visit: Azure Services Platform Forum
Intel ROI Calculator: Replacing Older Server Technology
Intel Resource Center: What Do You Look for in a Server?
Internet.com Hot List: Get the Inside Scoop on the Hottest IT and Developer Products
Internet.com Hot List: Java EE 6 Platform Highlights the JavaOne Conference
MORE TUTORIALS, DEMOS AND STEP-BY-STEP GUIDES