Guest View: Traversing the SaaS hype cycle



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February 15, 2010 —  (Page 1 of 3)
Many software product firms typically focus on developing cutting-edge software that are customized and deployed at the users' locations. It is not uncommon for mission-critical products, like ERP or CRM systems, to go live six or eight months after the contract is signed—perhaps even longer.

But in recent times, SaaS and cloud computing have emerged as disruptive innovations. Some pundits even talk about the death of IT as we know it. The new deal clearly places the day-to-day software operational responsibilities on the vendor rather than on the IT department of the customer.

The most striking historical parallel for this phenomenon is the oft-quoted evolution of electricity as a commodity service over customers having to install power generators. This tectonic movement towards a service-oriented business landscape is driving firms to redefine their core competencies.

To stay competitive and effective, SaaS providers can source their contextual/non-core activities through partnerships. After all, they themselves are in business because their customers have chosen to outsource something, whether it’s e-mail services, office applications, CRM, accounting, or whatever.

What does this mean for software developers?

Given the necessity to shrink go-to-market timeframes, the complexities of building new software are abstracted by using frameworks and reusable plumbing components. For example, Platform-as-a-Service offers a complete platform replete with IDE and visual development methodologies to accelerate development. This phenomenon is a logical progression of how, for example, Java-based software is built with frameworks like Struts and Spring. In fact, PaaS is often proclaimed the Cloud Operating System for SaaS applications.

Similarly, Infrastructure-as-a-Service is an excellent way to expand/contract the computing power and memory based on user traffic. Pay-per-usage is the norm in such xxxx-as-a-Service environments.

These are all significant innovations and offer excellent advantages by simplifying development processes, transferring responsibilities to other vendors who are best equipped to handle such complexities, and shrinking go-to-market times. But the challenge lies in the ensuing tight coupling with the underlying platform.

Your software is not as portable as it will be if you do develop your software from scratch. This leads to the classic build-vs.-buy conundrum. While ground-up-development and PaaS are two ends of the spectrum, there is the middle path too. Some firms provide off-the-shelf SaaS building blocks (e.g., tenant provisioning, license management) in the technology platform of your choice. Such go-to-market accelerators can be leveraged to avoid lock-ins.



Related Search Term(s): SaaS

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Comments


02/19/2010 11:00:30 AM EST

Great article. There is no doubt that the SaaS / Cloud model is transforming the IT industry for the better. Our company has developed an online CRM application called intelecrm. The fact our clients do not need an in-house team of IT professionals to manage the app means that it is readily available for small and medium sized businesses without the drawn out installation process required for on-premise software. Our pricing model fully embraces the cloud by basing subscription costs on the amount of data accessed, rather than the number of licensed user seats. I believe we are the only CRM provider currently doing this. It will be interesting to see if it becomes a trend.

United StatesStafford McKay, Jr.


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