I attended SaaScon 2009, a conference focusing on Software as a Service and Cloud computing as themes. This was hosted by ComputerWorld at the Santa Clara Convention center.
At the outset, host Jeff Kaplan and Ron Milton said that $6.8B was the SaaS revenue in 2008, according to Gartner group. IDC said 76% of US companies had at least one SaaS deployed. Top five applications in SaaS delivery model are (not surprisingly) – CRM, HR, Collaboration, Travel expenses, and Sales Incentives. Top five drawbacks are – integration with current in-house applications, potential security exposures, offline connectivity, vendor lock-in, and network bandwidth issues. As expected the top five benefits are – fast roll-out, monetary savings from a lack of capital investment, option of plain-vanilla vs. customized implementation, and lower TCO (total cost of ownership).
Under the current economic realities and tight IT budgets, SaaS makes lot of sense. One surprising fact is that 75% of all SaaS deals do not have SLA (Service Level Agreement) according to Gartner. The conference speakers also talked about PaaS (Platform as a Service) and IaaS (Infrastructure as a Service). Examples of SaaS – SalesForce.com (CRM), and NetSuite. Examples of PaaS – Force.com, and Google App. Engine. Examples of IaaS – Amazon EC2 (elastic computing cloud) and AT&T Synaptic Hosting.
Speakers said PaaS is a stepping stone to Cloud where development environment is offered to build own applications (similar to what Microsoft did 20 years ago, but on their platform). One future scenario could be your own information grid at the center interacting with several clouds such as data services, application services, hardware services, storage services, network services and others. This will include not only interaction with your internal cloud or grid, but also intra-cloud communication, something still at a very nascent stage.
The parallel to the commoditization of electricity was drawn a few times. How that grid (electricity) finally emerged with self-organizing, self-registration, and self-assembly features. Computing will eventually get to that stage – full compliment of services executed in a highly differentiated grid environment.
But the journey has started and there is no looking back to the good old days of huge capital expenditure of building in-house infrastructure with hundreds of humans managing it. We see the beginnings of that already, all of us using our iphones to access mail, calendar, maps, stock prices, airline information, and social networking like facebook, Twitter, and Linked-In.
One CIO explained how he reduced his IT spend from $607K in 2007 to $259K in 2008 by switching to SaaS (Google Apps for gmail, videochat, documents, spreadsheets, charts, etc.). He adopted Netsuite as the core ERP/CRM application and picked other packages like WorkOasis (facility management), Halogen (performance management), ADP (payroll. HRIS), and admin tools like Webex, Echosign, eFax, Zoomerang, and VisualCV. His staff cost was reduced from $166K in 2007 to zero in 2008. Hardware cost was reduced from $52K to $8K. His is a small size company selling exercise equipments. No wonder the first adopters of Saas are the small to medium size companies.