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January 19, 2008

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LatashaHanson22

Houses are not cheap and not every person is able to buy it. However, home loans was invented to aid people in such kind of hard situations.

pension annuity rates

I want to set up my own self-directed pension that I control and own?
How can it be possible?

MT

Neil, Great info in a fun, readable form - wish more people could do it so well.

One aspect is the ability to tailor/customize CES to the exact reqmts of the deploying company - I believe this is the cost what Ravi refers to but this is where the company truly gains true competitive differentiation. If Saas restricts this ability, then a lot of this value is lost and you get 'lowest common denominator' functionality.

I score CES +1 on this as of today.

Wes

Niel, thanks as always for an incredibly insightful analysis. I work for a small boutique consulting company that specializes in PeopleSoft applications for a specific industry. We also provide strategic and management consulting although that is secondary to our application expertise. In our world we increasingly see SaaS applications implemented or seriously considered for replacing legacy apps even though SaaS products usually offer a limited subset of the legacy apps functionality. If the SaaS product performs a key few functions better than the legacy app then the rapid implementation time and minimal internal footprint make these solutions incredibly attractive. Personally I find IT leading the charge, not departments looking to get around IT.

If you think about it this is analogous to the popularity of MP3 music files where the loss of sound quality is more than offset by the ease of storage, transferability and availability (even if most of the availability is illegal!). Even in the business world a similar process frequently takes place when corporations opt for MS SQL Server over Oracle or other more robust RDBMS alternatives. The ease of installation, maintenance and low price of SQL Server outweigh the inferior performance, lack of high end tools and platform options that other solutions provide. And I say this as a big SQL Server fan.

You correctly point out that integration is the biggest limitation of SaaS. Clients are not replacing back office systems because the linkages and efficiencies gained by integrated data flows far outweigh any software/hardware savings achieved by using outside HR, payroll, billing, GL, AR, etc., etc., products (or even solutions that combine some of those functions). In fact, the more important integration becomes the less attractive SaaS solutions are – those clients that have implemented SaaS solutions are willing to introduce (or reintroduce) manual or less automated steps into their processing cycles. In fact our company is contemplating whether we can offer some of our software in the SaaS space with the additional expertise of knowing how to integrate it seamlessly with large ERP apps. We haven’t figured that out yet…

Having been around IT since the late 80’s I’ve seen the decentralization/centralization shift occur a number of times. In one way SaaS (and hosting) is the natural evolution of TSO and the heyday of companies like EDS and CompuServe. It will be interesting to see whether virtualization is the main driver as you forecast in this constant swing.

Shane Cooper

Great thought provoking "blarticle" (cool name) and view on two major software deployment strategies software companies can based their focus. There is a third strategy that I'm sure you've thought about, but may not have heard much about. This approach adds a straighter S curve line in between your two curves on the napkin. There are a number of companies using a "hybrid" approach to SaaS and CES that merge "best of breed". (I know, cliche' term, but it's all I could think of.)

Approach: Build software tools on controlled platform, OS/Framework/Database of choice with Browser client as front-end (Define narrow browser support as that brings a whole new level in the support matrix). Then, through consulting approach, not CD delivery, deploy said solutions behind firewalls at a departmental level, with IT involvement through virtualization methods on predefined hardware scaled for specific deployment and/or use said companies IT purchasing power and deploy on their hardware of choice.

This methodology controls environment, manages testing in controlled labs, manage deployable environment, lengthens development cycle (where some customization/configuration is needed), shortens final deployment cycle and in general flattens costs versus revenue.

Second hybrid approach, if client doesn't want the solution in their datacenter(s) for reasons unknown, host specific dedicated server(s) in your own datacenter as a SaaS, but with CES license model. Get the benefits of SaaS and sell as CES.

There are quiet little companies and/or divisional development groups following these hybrid approaches. They're far and few in between, but I think as more software companies learn about this approach, the SaaS and CES lines will blur.

Jim

This is a great article, and does sort of beggar the question of why does one have to choose? This is the 21st century, and software should be able to do both SaaS and on-site deployments.

I was glad to see that you threw in the "aside" about Open Source software, as that is the real disruptive force in the 21st century.

For a great example of a company doing all of these things (and is perhaps just a copycat in all other ways), see SugarCRM, www.sugarcrm.com.

Of course, there are switching costs, both for customers and ISVs, but it seems to me that, if you're going to start from scratch, SaaS v. CES is not a relevant dichotomy. I think that is in fact the gist of your post.

However, Open Source v. Closed is a forced choice, and more important to the software industry going forward.

Just my $.02

Ravikanth

excellent article Neil, but you have missed out on a dirty secret of CES: Expensive implementations by an army of consultants.

To me that is a big differentiator for the SaaS companies. The implementation cost for a customer using SaaS as opposed to CES is an order of magnitude lower.

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