THINK IT Services

Despite growing customer adoption of Software-as-a-Service (SaaS), many companies and conservative industry observers still believe that SaaS solutions are simply a skinnied-down version of traditional, on-premise applications that offer little value add other than quicker deployment times and lower upfront costs.

IT/business decision-makers need look no further than at how today’s SaaS solutions are addressing age-old sales and marketing challenges to see that their capabilities go well beyond yesterday’s legacy software.

For instance, LucidEra announced a new offering today, called Lead Insight, which enables companies to analyize how marketing programs impact sales productivity. The LucidEra Lead Insight on-demand service offers over 65 prebuilt templates which enable users to analyze the quality and performance of their marketing leads and how effectively the sales team is converting these leads into opportunities and closed deals.

LucidEra’s new service enables companies to measure the cost effectiveness and return on investment (ROI) of their marketing programs. It also ensures a tighter bond between sales and marketing departments by tracking how well the sales team follows up on marketing leads. And, the service includes reporting capabilities which allows all the key stakeholders within the company–executives, salespeople and marketing folks–to track their performance over time and see how various tactics and strategies can impact sales success.

LucidEra has been a pioneer in the SaaS business intelligence sector and recognizes that sales intelligence is the area of greatest concern to most companies. Although its new service touches on measuring the performance of marketing programs as well, LucidEra recognizes that there are numerous SaaS solutions aimed at managing and analyzing the effectiveness of marketing programs. Therefore, it is positioning its solution as complementary to these.

One such company is called Printable, a provider of intelligent marketing solutions. Printable’s SaaS solutions enable enterprise users and print service providers to manage their online and hardcopy collateral to permit personalized marketing campaigns. Built into Printable’s solutions are extensive analytic and reporting tools that allow users to measure the effectiveness of their campaigns.

Another example is Clickability, a leading SaaS content management company, which has built analytics into its solutions that enable corporate, sales and marketing decision-makers to more effectively measure and manage their activities.

While ease of deployment/use and lower cost of ownership are important attributes of SaaS solutions, providing powerful and practical analytics is the key differentiating quality of today’s leading SaaS companies.

Click here to find my blog about other key attributes of being ’saasy’.

I’ve just returned from my fourth trip to Las Vegas in four months where I spent three days attending my second annual Symantec Vision user conference and worldwide industry analyst briefing. The event offered a number of important insights regarding the state of the Software-as-a-Service (SaaS), as well as the managed services market.

I’ve stated in this blog numerous times, we are entering a pivotal new stage in the evolution of the SaaS market in which IT professionals are starting to view on-demand services as a powerful means of addressing many of their age-old management challenges, rather than a threat to their operations.

The Symantec executives who spoke at the conference and shared their candid views with me during the event confirmed my perspective by reporting that they are seeing rising receptivity toward SaaS ‘out-tasking’ alternatives to traditional management products among the company’s existing IT customers, as well as prospects of all sizes.

They suggested that this change in the IT department’s attitude is being driving by a number of trends,

• Escalating complexity due to the proliferation of new technologies and business challenges.
• Ecological concerns, escalating energy costs, and ‘green’ initiatives.
• Consumerization of IT as the result of end-users introducing their own technology devices into the corporate environment.

Generational changes among new employees demanding a wide array of Web 2.0 and social networking tools to perform their jobs.

The latter two trends are blurring the lines between the corporate and consumer worlds. Symantec’s prominence and brand equity in both worlds gives it a competitive advantage addressing the convergence of these two IT environments.

Symantec first started to talk about its SaaS intentions in 2006 and rolled out its initial SaaS solution aimed at online backup and storage services under the Symantec Protection Network brand name in 2007. However, the company encountered a series of internal operational problems dealing with service provisioning issues and external challenges responding to channel conflict concerns that slowed the rollout process.

Despite the bumpy start, Symantec’s resolve to deliver a full portfolio of SaaS solutions was made clear throughout this week’s conference. The first indication was during the kickoff keynote address by John Thompson, Symantec’s Chairman/CEO, who alluded to the company’s SaaS initiatives in his opening remarks.

The seriousness of Symantec’s focus on SaaS was even more strongly stated during an analyst briefing by the company’s new Chief Strategy Officer, Greg Hughes. Hughes previously ran Symantec’s service business, including everything from support and professional services to SaaS and managed services.

Hughes admitted that his service background has shaped his views regarding Symantec’s future direction. As a result, he revealed that the company’s top three emerging market priorities and new incubator focus areas are SaaS, cloud computing and virtualization. The company views SaaS as business oriented on-demand solutions and cloud computing as its consumer oriented services. Although I see this as an artificial distinction, the heavy emphasis on the overall development of on-demand solutions is the most important message.

The SaaS theme even permeates Symantec’s virtualization strategy. An example is the company’s new SaaS oriented Veritas Storage and Availability Management Operations Service aimed at large-scale enterprises. This service automates numerous virtualization management tasks and provides a web-based repository of management best practices to service subscribers. Over 1000 customers have participated in the Beta version of the service, creating a massive ‘ecosystem effect’ via social networking model.

Symantec isn’t planning to abandon its traditional, packaged product business, but is beginning to formulate a strategy for building an integrated set of complementary on-premise and on-demand solutions across all of its IT management competency areas and product families to satisfy the diversity of customer needs.

Demonstrating this point, SaaS was a part of every presentation during the analyst briefing.

Enrique Salem, Symantec’s new Chief Operating Officer (COO), also referred to SaaS as a ‘game changing’ trend during his brief talk with the analysts. He said that one of his goals is to simplify Symantec’s product/service portfolio to make it easier for customers to identify the right solution to meet their IT/business and make it easier for Symantec and its channel partners to sell these solutions.

Part of this effort includes an internal reorganization to consolidate related products and services into integrated business units. For instance, the company has merged its NetBackup and Backup Exec product teams, and integrated their capabilities. Symantec has also aligned these product groups with the company’s SaaS Symantec Protection Network (SPN) SaaS platform.

Enrique also stated that Symantec is now measuring its success on three criteria, including Net Promoter Scorecards based on customer loyalty. This customer satisfaction metric is now a key variable in employee compensation and recognizes that offering SaaS solutions is essential to enhancing the customer experience and to Symantec’s long-term success.

The company is also making acquisitions to fortify its SaaS capabilities. It announced the acquisition of SwapDrive which gives it added storage service resources which have been used to power Dell’s storage services.

The company executives I met with on a one-on-one basis said they are not only gratified with the positive response their new SaaS solutions have received from customers, but are also pleased with the dramatic change in attitude among Symantec’s product management and sales teams toward the company’s SaaS strategies. They admitted that a year ago, these internal groups viewed Symantec’s SaaS initiatives as a cannibalistic threat to their traditional products and sales efforts. Today, they recognize that SaaS can produce net-new revenue opportunities and want to jump on board the bandwagon.

Symantec is not likely to be the first to market with its SaaS solutions because of the myriad of internal and external challenges it faces. However, it could become one of the most prominent players in the IT management segment of the SaaS market over the longhaul as customers seek strategic sources to meet their needs. Along the way Symantec will have to overcome the ‘me too’ look and feel of its SaaS solutions.

In addition to attacking the overt market opportunities in the consumer and corporate worlds, the executives I met with during this week’s conference also suggested a long-term vision of Symantec become a key SaaS platform supplier for a wide array of Internet service providers (ISPs), leading telecommunications carriers and business service vendors. For instance, the company is planning to rollout a new Symantec Secure Scalable Storage (S4) cloud-based platform later this year.

While all of these developments represent a strong endorsement of the SaaS movement, the user conference attendance was noticeably smaller than a year ago raising questions about Symantec’s overall standing in the market. The decline could be a reflection of the recessionary times. However, other analysts attending the conference reported that they had seen attendance growing at other vendor user conferences this year.

Nonetheless, Symantec’s SaaS strategies and solutions are an important indicator of the rapid evolution of the on-demand services market.

As the Software-as-a-Service (SaaS) “gold-rush” intensifies, industry consolidation is inevitable. The latest example of this consolidation process is today’s announcement by NetSuite that it intends to acquire OpenAir.

This announcement not only reaffirms the SaaS industry consolidation trend, but it also is the latest example of a company profiled by THINKstrategies being acquired shortly thereafter. Other examples include,

• Vtrenz which was acquired by Silverpop
• Everdream was acquired by Dell
• AimNet was acquired by Cognizant
• Corio was acquired by IBM

(Contact me if you’d like a copy of our Strategic Thinking profiles on these companies.)

I had the privilege of talking with Zach Nelson, CEO of NetSuite, and Morris Panner, the CEO of OpenAir, moments before today’s announcement was made public. They indicated that the acquisition was based on a trend which THINKstrategies has seen coming for a few months now.

Prospective SaaS users are not only seeking more industry-specific SaaS solutions, they are also looking for more strategic sources for these SaaS solutions. Instead of contracting for a series of SaaS point products from a wide array of vendors, corporate decision-makers, both business and IT, are taking a closer look at the SaaS vendors’ overall portfolios, platforms, partner ecosystems and financial viability so they can establish broader, long-term relationships with a fewer number of SaaS suppliers.

While the OpenAir acquisition gives NetSuite a stronger foothold in the professional services market, I think the acquisition also gives NetSuite a stronger set of human resource management (HRM) capabilities in its horizontal portfolio of enterprise applications.

Although the acquisition is another example of a Boston-based tech vendor being acquired by a west coast based company, the good news for OpenAir’s employees and the Boston area SaaS community is that NetSuite plans to use the acquisition as a beachhead for further investment aimed at establishing a greater east coast presence centered in the Hub.

Interestingly, NetSuite refers to its OpenAir plans as based on Oracle’s acquisition model and plans to operate OpenAir as a stand-alone product group with tighter integration to NetSuite’s platform. This reference just reinforces market perceptions of the close alignment of NetSuite with Oracle, and keeps alive suspicions that NetSuite may be acquired by Oracle in the future.

In the meantime, Zach Nelson and Morris Panner told me they will do all they can to maintain OpenAir’s relationship with Salesforce.com via the AppExchange, and build on their other third-party relationships, including their respective channel partners.

Having gone through a number of unsuccessful acquisitions, I know first-hand about the various issues that can get in the way of these transactions achieving their business objectives. However, I think NetSuite and OpenAir have a very good chance of succeeding because they have the right combination of complementary executive personalities, solution capabilities, channel partners and geographic orientations.

The next question is what this acquisition means for OpenAir’s primary competitor, QuickArrow? My bet is that they will also be an acquisition target in the coming months.