TWIS#11 – This Week in SaaS number eleven- how will iPad effect SaaS

TWIS # 11

I’ve had such a great response from people about hiring me- I’ve written a blog post about it. If you want a great SaaS product specialist- don’t be afraid to contact me!

Each TWIS seems to have a theme running through it- a reflection of what’s been happening in SaaS that week. Unless you’ve been dead this week… you can’t possibly have missed the launch of the Apple iPad. Feminine product jokes aside- I think this is going to have a major effect on the SaaS business.

For a long time- there’s been a gap in situational devices- between your laptop and a phone.

The iPhone bridged that gap enormously better than any other device before it- I actually put away my laptop most evenings now- a sensitive point in my house before. But the fact remains, the iPhone screen is just too small to do some things really well, like email, browsing the net or even reading.  For that, we need something bigger.

Enter the iPad.

A device with a big enough screen to accomplish most tasks with ease, yet small enough to carry around and beautiful enough to leave out on your coffee table or desk.

With Wifi, Bluetooth, GPS and 3G from $629.00 – it’s connected and location aware (No 3G and GPS is $499.00).

Great, so I can watch movies and browse the net from my sofa, read books on the plane- what difference is that going to make in SaaS?

I think it’s going to be huge.

Just look at how many SaaS providers today produce serious app’s for the iPhone: Salesforce, Netsuite, Omniture, Concur. And the iPhone screen is tiny!

For example- I’ve been talking with various people recently about the time management problems across many industries. Last week Lincoln gave an example in construction (maybe a bad sector for a beautiful device- but you get the idea). The workers are very mobile, don’t like / make time to sit in front of a computer and yet mismanaging their time can have a huge impact on the profitability of the company.

I know all about that problem from my days running a 26 person Value Added Reseller.

With a device like the iPad, scheduling, evidencing, communicating and feedback could be done using an app, driving immense value for the business without having to purchase specialised hardware, software and consulting… But by being a competitive platform, i.e. open to competition from app makers, innovations are going to be released all the time, driving value for business, so companies aren’t stuck with an obsolete device.

That’s not the only part of the SaaS business that’s going to change- Steve Woods from Eloqua thinks it’s going to change B2B marketing:

1) Returning relevance of print media
2) Integration of offline and online experiences
3) Books and whitepapers become interactive
4) Location awareness in everything
5) Application explosion

I think he’s onto something.

Ben Kepes and Krishnan Subramanian released a great paper this week- Before You Buy! 10 Questions You Need To Ask A Collaboration Vendor. I enjoyed it, it has some great thoughts if you’re going into the enterprise and if you’re in there- the questions you should be able to answer. They asked:

I particularly like #10- How Viable is your business model-They said:

As such, prospective customers need to assess the ongoing viability of the software company. This should be seen as a core due-diligence test, just as important as assessing the suitability of the software itself.

Customers would be well advised to seek information about the vendor’s customer successes. Do their customers continue to use and innovate on top of their offering? Are they so pleased that they’ve done case studies with the vendor, in essence, linking their brand with the vendor’s? Have independent industry analysts positively recognized the vendor based on market evidence and research? Does the vendor warrant industry coverage from trusted publications? Affirmative responses to these types of questions should be considered positive additions to your due diligence activities.

I really like that- it expresses in customer centric language what they should be looking at when they’re looking at a SaaS product for selection. Todd Lane from Cloud Consultancy Appregatta said when they’re looking at prospective solutions for their clients:

We look at customer acquisition as part of our vetting process.

And rightly so- readers of this blog know that the hardest thing in SaaS is acquiring customers effectively.

Late last week Cisco announced their IaaS solution for service providers- marking their début into IaaS. Krishnan from CloudAve went onto say:

This offering by Cisco includes UCS for the compute, VMWare’s ESX Vi4 Hypervisor for the virtual machines, Cisco Nexus™ 1000V for virtual access, their best of the breed switch products like Redundant Cisco Nexus 5020 Series Switches, Redundant Cisco 7600 Series Routers, etc.. This unified offering provides service providers a solution to offer their customers the flexibility of capacity on-demand, at scale with multitenant capabilities to maximize the use of their infrastructure across multiple customers.

They also released an accompanying ROI calculator. Unsurprisingly the clouderati were somewhat upset about some of the calculations Cisco had used and it spewed out from twitter onto blogs. What it has done is highlight the complexities involved when calculating ROI for IaaS. Reuven Cohen summarised really nicely:

In a nutshell that’s the problem facing many data center and hosting providers looking to offer utility style IaaS products & services to their customers. To put it lightly, currently it’s an overly complicated endeavor. To be competitive today means competing against Amazon Web Services. They’ve in a very real sense set the bar and the bar has been set extremely low. Not only does Amazon continue to produce new products and services at an amazing speed and consistency, they also continue to innovate on their cost model with latest improvements including Spot pricing and reserve instances. This means that AWS can offer their IaaS sometimes at less then a cent or two an hour while [mostly likely] continuing to turn a profit. Combined with these economic pressures are the competitive pressures to differentiate your service offering from that of your competitors. For example bundling additional software and services on top.

The reality is that Cloud offerings are poorly differentiated and providers are potentially becoming resource constrained. I still think we need a marketplace, an exchange if you will, where providers can differentiate themselves on things like support, SLA’s, security and most importantly speed. If I was starting a company- that would be a great problem to be solving at the moment (I’m not). Tom from Soasta is already thinking about the consequences of this:

That said, there are a few very popular cloud-based applications that have clearly pushed the envelope of the existing cloud server supply. Companies such as Animoto, Google, Twitter and SOASTA have all stretched the existing fabric of cloud capacity. Their applications require (at times) thousands of cloud servers to handle sudden or unpredictable spikes in web traffic, or in SOASTA’s case, that they create for testing purposes — always bending but not breaking the existing cloud capacity. This should all change in 2010 when demand for cloud servers is expected to explode — leaving all to wonder — will we eventually discover the limits of the cloud’s capacity? (Emphasis- Ed.)

What about all those hosting providers with perfectly good compute- how can we help them leverage the demand? Anyway- hopefully someone is listening!

One last thing on IaaS- Oracle finally announced Sun’s cloud is dead.

IBM seems to picking their SaaS/Cloud game up- last week with the announcement of the Panasonic email win and more/better news about the Lotus platform emerging. I don’t know if you’ve come across Project Vulcan- but it’s described as Google Wave for business:

IBM Project Vulcan is not a brand-new effort.  It builds on the existing capabilities, and represents the future versions of, the IBM Lotus product portfolio — including Notes.  One of its key themes is social analytics and business analytics combined and applied to industry-specific scenarios — making collaboration more focused and relevant.  The vision of Project Vulcan intends to deliver collaboration across company boundaries; make it easy to deploy the technology; and include developer-friendly services and APIs.

More news on IBM over the coming weeks but I got an email from Saugatech this week entitled Cloud “Rip-and-Replace” Deals Suggest Business Solutions Maturing- (subscription required)

Cloud business solutions are changing the rules when it comes to even the most traditional business systems and operations.  Evidence is mounting, especially in recent weeks, that “rip-and-replace” is emerging as a viable SaaS strategy for some users – and a threat to traditional software.

Google-City of Los Angeles (34,000 seats) and IBM-Panasonic (380,000 seats) are two recent, large deals that have called attention dramatically to the viability of Cloud business solutions in addressing large enterprise computing requirements – with both deals at the expense of Microsoft’s on-premise software. But this is not just a large-enterprise phenomenon, and not just an email and office / collaboration phenomenon. Recent Saugatuck interviews with SME-focused SaaS providers such as Intacct and NetSuite indicate rapidly-increasing numbers of “rip-and-replace” strategies being deployed of traditional, on-premise SME accounting and Finance applications for solutions in the Cloud.

These are important signposts that point toward an important and powerful mid-to-longer term trend. The bottom line for IT markets is that “rip and replace” strategies becoming more of a reality – and more of a threat for on-premise software vendors.

Yes- people are moving to the cloud, but I’m seeing most of the “rip and replace” in email, not finance. Finance is great sector for SaaS, but without effective migration strategies and a supportive channel (read accountants), this is a tough sector unless you start at the new business end and grow with them. Thoughts?

Have a great weekend.

Justin