THINK IT Services

One of the most controversial aspects of the rapidly evolving cloud computing market among industry insiders is the idea of ‘private clouds’.

Purists insist that cloud computing is all about exchanging legacy, on-premise, inhouse IT resources and functions with online, shared resources via the Internet (i.e., the ‘cloud’).

While this is the origin of the cloud computing concept, a variety of forces have conspired to create an alternative approach referred to as ‘private clouds’.

These include valid customer concerns regarding privacy, security, reliability and performance; along with proprietary concerns among various hardware and software vendors seeking to usurp some of the spotlight away from cloud upstarts like Amazon, Google and Salesforce.com.

In addition to the sourcing and marketing forces fueling the idea of private clouds, there are various debates regarding the technical implementation of private clouds which have raised questions about the viability of this idea.

Just as it pioneered the practical deployment and delivery of public clouds, Amazon Web Services (AWS) is now taking the lead in offering ‘virtual’ private clouds as well.

Anyone who shares my background and experience in the telecom world, can easily see the parallels of today’s AWS announcement with the evolution of the virtual private network in the 1980s to meet the peculiar needs of individual organizations.

Numerous members of the AWS ecosystem have been offering enhancements to its public cloud capabilities to make it more palatable for enterprises to use individually in a safe and secure fashion. Now, AWS is lending more of its resources and reputation to extend their capabilities further to meet users’ unique requirements.

This move will stimulate more customer interest in cloud computing and spark more competition among legacy vendors seeking to legitimize their private cloud efforts.

Last year, I predicted that 2009 would be the year of the channel in the Software-as-a-Service (SaaS) market and a growing number of SaaS industry leaders have obliged me by expanding their sales efforts in this direction.

The latest is Salesforce.com which announced today that it is launching a new value-added reseller (VAR) program to encourage third-party companies to build on its Force.com platform and extend the reach of its AppExchange into new market segments.

Salesforce.com’s announcement comes on the heels of NetSuite’s recent enhancements to its VAR program aimed at strengthening its position in the market.

Because of Salesforce.com’s greater prominence in the marketplace, its new initiative is bound to bring even more attention to the rapidly evolving role of channel companies in the SaaS market. In Salesforce.com’s case, there move represents an important milestone in the company’s evolution and that of the SaaS movement as a whole.

Until now, the company has placed all of its sales efforts on selling directly to end-users. Although it was also well-aware of the importance of encouraging third-party developers to build applications that enhanced its core applications via the AppExchange and ultimately the Force.com platform, it readily admitted in the past that it didn’t see much opportunity to build channel partners into its go-to-market strategies. As a result, the company aggressively recruited enterprise salespeople instead to attack the mid- and large-scale enterprise market.

In my view, the following forces have combined to change Salesforce.com’s attitude toward VARs in the SaaS market,

1. Today’s economic environment has made it more difficult to penetrate new accounts. With the cost of sales escalating, SaaS vendors must find more economical ways to win new business instead of relying on high-priced sales executives. (Salesforce.com recently recruited Doug Dennerline from Cisco’s Collaboration/WebEx unit to become its new Executive VP for enterprise sales in the Americas to reinvigorate its direct sales efforts.) 
2. VARs are a natural target for sales expansion. Although customers are fed up with their legacy applications, they are still wedded to their ‘trusted’ suppliers, and are reluctant to move to new products or technologies without the help of their current suppliers. These ‘trusted’ suppliers tend to be their local and/or industry-specific VARs.
3. Enlightened VARs are increasingly recognizing that they must migrate to a SaaS orientation in order to survive and thrive in the future. Traditional VARs have been fearful and resistent to SaaS solutions because they threatened their fundamental value proposition (complexity) and potentially undercut their relationship with the customer (account control). Now, they are willing to explore ways to build SaaS into their business model.  
4. Technological advancements are also facilitating third-party development and delivery of SaaS applications. Today’s Platform-as-a-Service (PaaS) offerings, such as Force.com, make it possible for VARs to develop and deliver industry-specific solutions.
5. Maturing SaaS vendors are identifying new revenue-sharing opportunities in the SaaS supply/value-chain that can permit them to enlist VARs, and other channnel partners, without seriously hurting their operating margins.

In addition to these market forces, Salesforce.com’s VAR program is built on its own history of success working with companies, such as Veeva Systems (formerly, Verticals OnDemand), who have been configuring its basic apps into industry-specific solutions for years. I suspect that more companies of this nature will emerge as a result of Salesforce.com’s new program.

At the same time, a new generation of professional services/system integrator is also arising. This new breed is typified by Appirio which not only helps customers build unique apps on top of PaaS offerings, but they also retain the marketing rights to these custom apps so they can be resold via AppExchange and other online outlets. In so doing, these new PS/SI companies are blurring the line of demarcation between their role and that of the traditional VAR.

A case in point is Appirio’s latest professional services automation (PSA) offering, which escalates its growing competition with NetSuite’s PSA suite built on the combined resources of OpenAir and QuickArrow.

All of this adds up to an exciting new dimension of third-party activity surrounding the rapidly evolving SaaS and cloud computing world.

PS: In addition to reporting and consulting on these topics on an ongoing basis, I’m pleased to be participating in the following industry events which will also examine the implications of these trends: Cloud Futures and the SIIA’s OnDemand Conference.

Contact me at info@thinkstrategies.com if you’d like to discuss these trends further or need help addressing these issues.

THINKstrategies announced today that Adaptive Planning has been named the latest winner of the Best of SaaS Showplace (BoSS) Awards program, which is aimed at promoting the measurable business benefits being delivered by today’s Software-as-a-Service (SaaS) solutions.

The BoSS Awards program was initiated by THINKstrategies to bring attention to SaaS and cloud computing companies which are producing tangible business benefits for specific user organizations. These benefits include increased sales, lower costs, higher customer satisfaction, faster operations, and greater profitability.

Adaptive Planning is a leading provider of on-demand budgeting, forecasting and reporting solutions that help finance organizations improve operational efficiency, strengthen collaboration, and drive better business decisions in companies of all sizes.

Click here to read about Adaptive Planning’s award-winning SaaS capabilities.

Click here to read about the BoSS Awards program and to apply for an award.

After chairing last week’s Cloud World conference in San Francisco last week, I’m pleased to be serving as the chairman of the Cloud Futures for Software Vendors Conference taking place in San Jose, CA, this October 5 – 6.
 
This event is for established software vendors who are attempting to overcome the challenges associated with migrating to a Software-as-a-Service (SaaS) and cloud computing model so they can capitalize on this rapidly growing market.
 
The conference will include speakers from the National Institute of Standards and Technology (NIST), Forrester Research and Cloud Security Alliance, along with presentations by representatives of many leading vendors in the SaaS and cloud computing industry, including Amazon Web Services, IBM, Salesforce.com, LiveOps, Callidus Software, Enomaly and others.
 
Our goal is to help software vendors achieve:

• CLOUD ECO-SYSTEM EXCELLENCE: Identify the partners you need to get your SaaS off the ground and run it the way you want – without compromise or change to your goals.
• SAAS BUSINESS MODEL BEST PRACTICES: Find out the best way to re-architect your applications, re-phrase your marketing and re-structure your pricing and distribution model to make sure you are reaping the in your SaaS profits as soon as possible.
• REACH NEW REVENUE THROUGH THE CLOUD: Take home the top tips to take your business global and access brand new markets through the SaaS distribution channel – enabling you to rack up revenue from across the world and on-demand.
• GET BROAD BUY-IN FOR CLOUD: Learn how to overcome your board’s concerns on security, data and supply chain management by delivering a projected balance sheet that clearly shows cloud computing’s silver lining – big time profits.
• BUILD A CLOUD COMPUTING ROADMAP: Discover the best way to take your first steps into the cloud by hearing how top SaaS providers such as Callidus On-Demand built their profitable businesses from the ground up.
• REDUCE RISK AND RAMP UP CLOUD SECURITY: What you need to know about enterprise risk, information & lifecycle management, compliance and audit, incident response and more.

You can find the rapidly evolving conference agenda at www.cloudfutures.com/usa/agenda.shtml.
 
You can obtain a $200 voucher by following these easy steps:

1) Register for the conference online at secure.firstconf.com/cloudfutures/usa/register.htm and type “think1633″ into the discount box provided, or

2) Call the Cloud Futures team at 800-814-3458 ext 220 and mention “think1633″ when you register, or

3) Email ravi@cloudfutures.com and type “think1633″ into the subject line (don’t forget to include your contact details). 
 
Contact me at info@thinkstrategies.com if you are interested in speaking and sponsorship opportunities, or have any further questions.

I look forward to seeing you in San Jose.

THINKstrategies announced today that Widen Enterprises has been named the latest winner of the Best of SaaS Showplace (BoSS) Awards program, which is aimed at promoting the measurable business benefits being delivered by today’s Software-as-a-Service (SaaS) solutions.

The BoSS Awards program was announced in January 2009 as an initiative by THINKstrategies to bring attention to SaaS and cloud computing companies which are producing tangible business benefits for specific user organizations. These benefits include increased sales, lower costs, higher customer satisfaction, faster operations, and greater profitability.

Widen Enterprises, provides premedia and color management services specifically for assisting customers with building brand equity and supporting consistent brand representation across print and Web communications. Through its suite of Web-based digital asset management applications, Widen software services provide marketing networks with real-time Web-based access to the clients’ digital asset libraries, subsequently eliminating manual search and file preparation time, costs related to replacing images and videos that cannot be located, and the added cost for hardware, software and upgrades.

Click here to read about Widen Enterprises’ award-winning story.

Click here to learn more about the BoSS Awards and to apply for an award.

A combination of work, travel and summertime distractions have prevented me from commenting on a series of small, yet significant announcements and activities over the past couple of weeks in the Software-as-a-Service (SaaS) and cloud computing market.

My latest travels started last week at Pacific Crest’s 11th Annual Technology Leadership Forum in Vail, CO, where I met with a series of the investment firm’s ‘buy-side’ clients as a part of its Mosaic program, and interacted with a variety of cloud computing executives and VCs in a SaaS workshop.

Nearly all of Pacific Crest’s clients are concerned about the financial implications of the cloud computing movement on their large-cap investments in companies such as Microsoft, Oracle and SAP on the software side, and IBM, HP, EMC, Dell and other systems vendors on the hardware side. They are also curious about whether Amazon, Google, Salesforce.com, SuccessFactors and other upstart SaaS/cloud companies can sustain their onslaught against the established players. My response to their inquiries echoed the commentary which I published in E-Commerce Times last month, the SaaS/cloud computing movement is already fundamentally changing the the technology industry but doesn’t necessarily mean the demise of the established players. Those legacy players who can adjust their business models to respond to changing customer demands can survive the industry tranformation.

The discussion during the SaaS workshop at the PacCrest forum also reflected the rapidly changing realities of today’s marketplace. While the CXOs and VCs in attendance during the session confirmed that demand for SaaS and cloud computing solutions is accelerating, they also acknowledged that tightening corporate budgets and growing confusion due to vendor proliferation were combining to make it more difficult to succeed and survive. As a result, PacCrest’s staff and the attendees agreed with my prediction that the SaaS/cloud computing industry will see more company failures and greater M&A activity in the latter half of the 2009 and first half of 2010.

Despite these concerns, customer interest and adoption of SaaS and cloud computing alternatives continues to grow. A reflection of the growing interest was last week’s first Cloud World conference in San Francisco which I had the privilege to chair. The event was co-located with IDG World Expo’s OpenSource World and Next Generation Data Center conference. Despite the event happening in a down economy and dead of August, it attracted approximately 2000 attendees.

I chaired a terrific keynote roundtable session entitled, “Assessing the Real Market Opportunities and Obstacles for Making Cloud Computing Mainstream”,  at the end of the first day of the event which included Joe Weinman of AT&T Business Solutions, Sam Charrington of Appistry, James Urquhart of Cisco Systems and the CNET Blog Network, and Timothy Chou of Ming Holdings. The second morning of the conference, I also had a chance to introduce Lew Tucker, vice president and CTO of cloud computing at Sun Microsystems.

Cloud Bursts: Here are a few other news items which crossed my radar-screen over the past two weeks which are worth noting:

• Coupa Offers Its On-Demand Procurement Solution to the Government for Free. Salesforce.com has had a lot of success giving its on-demand customer relationship management (CRM) solutions to non-profit agencies for free. This altruistic move also produces huge benefits to Salesforce.com because it not only generates good PR and goodwill, but also exposes the members of the board and other volunteers who come from the corporate world to the power of Salesforce.com’s solutions. If Coupa can convince the government to take it up on its offer, it could get a tremendous bounce by exposing corporate contractors and others to its on-demand procurement capabilities.
• Fujitsu Consulting Teams with NetSuite to Offer On-Demand ERP Solutions to Mid-Size Enterprises in Japan. NetSuite’s latest partner deal clearly illustrates how rapidly the SaaS market has evolved. This is not your typical, joint press release agreement. Instead, it specifically states, “The plan calls for 500 new customers within three years.” This bold statement wasn’t necessary to bring attention to the alliance, but proves that SaaS is taking hold in the back-office and gaining acceptance worldwide, even in relatively conservative regions such as Japan.
• i2 Looks to Spur Sales with SaaS. Another indication of the rapid growth of SaaS and the disruption it is causing traditional, legacy application vendors is the recent strategy move by i2 Technologies to add SaaS solutions to its portfolio. Like many legacy software vendors, i2 has seen a significant slowdown in sales and sees SaaS as an essential element in resuscitating its business. The success of Plex Systems and other SaaS vendors in the manufacturing sector has proven that companies in this industry are ready to acquire SaaS alternatives to meet today’s tough challenges.
• Microsoft Acquires Office.com URL. Microsoft continues to take a variety of steps to fortify its defenses against the growing competitive threat of Google Apps and other on-demand office productivity solutions. Grabbing the Office.com URL will certainly strengthen its search engine optimization (SEO) and branding efforts. But, Microsoft still has a long way to go to deliver a coherent message and compelling SaaS/cloud computing solutions.

THINKstrategies announced today that Intuit Quickbase has been named the latest winner of the Best of SaaS Showplace (BoSS) Awards program.

The BoSS Awards program was announced in January 2009 by THINKstrategies to bring attention to SaaS and cloud computing companies which are producing tangible business benefits for specific user organizations. These benefits include increased sales, lower costs, higher customer satisfaction, faster operations, and greater profitability.

Intuit QuickBase allows users to create unique business applications tailored to meet their specific process and industry needs – without technical expertise or coding. Business users can easily build new on-demand business applications from scratch or select from more than 200 available templates to customize.

Click here to read more about case study examples that  illustrate the measurable benefits which customers have gained from Intuit QuickBase.

Click here to read more about the BoSS Awards program or to apply for an award.