Monday Aug 02, 2010
Ideal ISVs for Cloud hosted SaaS
In 2009, we did some interesting market validation to see how potentially large the Australian SaaS (Software as a Service) ISV (Independent Software Vendor) market was. As part of this exercise, I created a chart to help me to find the ideal candidate ISV for the cloud hosted SaaS provisioning project we were working on at that time.
The following diagram is that chart:
On the vertical axis we were focusing on the characteristics to on-ramp a new customer. With the horizontal axis representing the amount of consulting work required. The ideal candidate for us would of been an ISV, where the customer can self provision through the Internet without need for upfront consulting.
The intriguing item that arises from this, is that a traditional IT company focuses on selling Consulting services, or for that matter as an ISV it is potentially the Channel that provides the consulting. Here in Australia, we found few ISVs that purely concentrated on development of a product. In fact, it would appear more so, that consulting organisations have software that helps uniquely differentiate their consulting offerings in a competitive situation.
That then means that the complexity to get a new customer onboard quickly is not a priority. There were long sales cycles, with long implementation projects, where the business grew through providing more professional services.
Now this of course was in strong contrast to what we had researched on the Internet. The growth rates were going to be coming through SaaS enablement of software (reduce post-sales signup complexity and cloud hosted) to get customers onboard quickly. Or was it?
Well it is, but not within the Australian ISV markup that was concentrating on selling just within their local markets. The volumes of customers just aren't there. For some product offerings the market is for all intensive purposes saturated and their customers, at that time were not asking for SaaS based offerings.
As we were unable to find multiple ISVs that considered onramping new customers a current or perceived future issue we were unable to find within the Australian market, our ideal ISVs. I'm sure that one day they will exist, but I'm not just not sure when!
Tags growth saas isv complexity cloud | Comments 0
Wednesday Jan 07, 2009
Is SOA really dead?
A blog post titled "SOA is Dead; Long Live Services" was directed to me by a couple of persons. It highlights, what I first started to describe a couple of years ago as "Journalist led technology"; sometimes I do believe that it is Analyst led as well. That is, that the potential promise of the technology genres and acronyms, in this case SOA, take over. Without necesarrily having the real world experiences to back it up, to cut through the hype.
We most not forget that SOA means Service Oriented Architecture. It is an architectural style, that is a different style, then what has been used in the past in the client/server world of old. "to SOA or not to SOA" which I wrote about a couple of years ago, is always an interesting question.
"What are the alternates to a SOA style architecture?" still holds true in my opinion, that if you are not using a monolithic 80s/90s style client/server model, then there will be a business tier that exposes services at some granularity to be consumed by a presentation tier or another business tier service. Its the pace layering that becomes the issue (my thoughts here on timeless software).
To me Anne has highlighted the true issue that has been missed which is the important stuff: architecture and services.
Tags soa saas middleware technology analyst cloud journalist business | Comments 0
Wednesday Dec 31, 2008
The rise of the intangible business model
Around this time last year I wrote a prediction blog entry for 2008 where I used my then delicious cloud tag as the basis of formulating the subject of the entries. Well this year, the top two tags from last year, being SaaS and Business are still the same. So instead of repeating what I did last year, I thought I'd summarise what I see emerging in 2009 as more dominate, being that of the intangible business model.
Let me explain this over the next few paragraphs. I work, and most likely if you are reading this you do to (or at least in your department), in a business that is focused around the production of intangible assets - they cannot be seen, touched or physically measured. That is, there is no physical product or building (bricks & mortar) produced.
However, to produce these intangibles assets some property, plant and equipment also known as fixed assets (eg buildings, land, software, computers) are acquired. In the case of a software company that hosts software for other organisations, this may also extend to include a production data center. These costs quickly mount up, and financing operations until profitability or an exit is achieved has become near impossible. Not to mention the expectation of customers to not pay as much for the software or services as they view it as a commoditised transaction.
This means you either need to sell more volume at a lower price, or reduce your costs to achieve a cash positive position sooner.
Cash is good, Assets are bad
I've heard the above phrase a number of times in the past, and the first time I heard it, I was a little confused as I thought Cash was an asset to. Which it is, but I believe that it is a current asset (eg cash, receivables, inventories and prepayments) as opposed to a non-current asset (eg investments, fixed assets, intangibles and deferred tax assets). I also thought that not all non-current assets are bad, maybe it should really say fixed assets are bad.
I apologise for all the accounting speak, it is not my native tounge either, so I hope it is making sense so far! If you have an accounting background and I've got this wrong, please be gentle on me; but please tell us where?
The intangible business model in my mind, will minimise fixed assets, hence the need for debt (liability) to finance it. Who is going to be able get financing anyway in 2009? (unless of course they already have it)
In the case of a software company, how are they going to get the costs down? They'll provide it as a SaaS based service over the internet, right? If they host it themselves, up goes those fixed assets and liabilities through the debt to fund it. Well, thats not going to work is it? (fixed assets are bad) So they'll use cloud based services, such that costs will rise propotional to sales and the major non-current assset on the balance sheet will be the intangibles comprising the software service. Operational costs will be reduced, thus lower pricing for customers in an increasingly commoditised SaaS world.
So in my humble opinion I'm predicting that in 2009 we will see the rise of the intangible business model. Hopefully also better recognition that a larger preportion of our economies depend on them and not on factories that produce physical products with inventories.
Tags saas intangible tangible assets business | Comments 0
Sunday Nov 30, 2008
Cloud computing from the couch
I found this panel discussion from a new twitter follower today lucidera. It gives great insight into how some of the market leaders in this space perceive the future of SaaS businesses.
Tags google oracle cloud salesforce saas amazon sap adobe | Comments 0
Saturday Oct 25, 2008
The "Keeping the Lights on" Mentality
Mike Kavis (aka Mad Greek) has done it again and written an excellent blog entry - The "Keeping the Lights on" Mentality. I see this all too often, in a number of accounts that I visit. IT as a cost center, with the focus on "Keeping the Lights on", not as a driver of innovation in the business.
I was hoping that I saw signs of movement away from this, last year, when I wrote about Empowering IT to enable innovation. My concerns are that any gains that may have been made, over the last year or so, have just been eroded with the recent events surrounding the credit crunch. However, I view it as potentially an opportunity for some organisations to facilitate innovation that allows them to get ahead of their competitors. I wrote more about this issue in this entry Uncertain times - can SaaS based applications be used to get an edge.
Tags culture mentality lights soa saas innovation | Comments 0
