THINK IT Services

THINKstrategies announced the launch today of a new awards program aimed at showing how cloud computing services are helping organizations of all sizes across every industry respond to today’s unprecedented business challenges.

THINKstrategies’ new Cloud Computing Business Value (CCBV) Awards are aimed at highlighting the measurable business benefits which Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) providers are delivering to enterprises and other end-users.

The CCBV awards is an ongoing program which will identify and promote IaaS and PaaS providers which can demonstrate that their web-based, on-demand solutions have produced tangible business benefits for specific organizations, such as lower costs, reduced deployment times, increased sales, higher customer satisfaction, etc.

The new award program builds on the success of THINKstrategies’ Best of SaaS Showplace (BoSS) Awards which were launched in January, 2009. The BoSS Awards program identifies and promotes Software-as-a-Service (SaaS) vendors offering on-demand business applications and enabling technologies solutions which are generating measurable business benefits for their customers. In the past year, forty-four (44) companies have received BoSS Awards. The CCBV Awards will focus on the top IaaS and PaaS applications that are leaders in the Cloud Computing market.

Click here for more information regarding the new CCBV Awards program or to apply for an award.

THINKstrategies announced today that ActiveConversion 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 by THINKstrategies as an initiative aimed at bringing greater attention to SaaS and cloud computing companies that are producing tangible business benefits for specific user organizations. These benefits include increased sales, lower costs, higher customer satisfaction, faster operations and greater profitability.

ActiveConversion is a leading provider of marketing measurement, lead management and demand generation systems for companies with fewer than 1000 employees. Its solutions make it easy for companies to see which marketing initiatives are paying off, and to produce sales-ready leads. ActiveConversion delivers its solutions as a hosted solution through a low monthly subscription which has been certified by KPMG and Salesforce.com.

Click here to read about the measurable business benefits that earned ActiveConversion a BoSS Award.

Click here to learn more about the BoSS Award program or to apply for an award.

This week’s announcement that Microsoft and Intuit are linking their respective Platform-as-a-Service (PaaS) capabilities has attracted lots of attention and generated plenty of speculation. It is also the latest escalation of the PaaS wars I predicted would take center-stage this year.

Although Salesforce.com’s Force.com PaaS has gained the lion’s share of industry attention because of the company’s unparalleled marketing machine, I’ve felt that Intuit’s Partner Platform (IPP) represented a dark-horse in the PaaS race because of the vast installed base of small- and mid-sized businesses (SMBs) using Intuit’s QuickBooks and QuickBase, along with its powerful channel relationships.

I’ve also believed that Microsoft would make considerable progress in penetrating the cloud computing market this year, not because of the technical capabilities of its Azure PaaS, but because of its historical prowess in building a vast partner network of ISVs and developers.

With those thoughts in mind, here’s my take on the strategic business implications of this alliance,

1. Both companies are aggressively attempting to catch up to Salesforce.com’s Force.com PaaS initiatives both in terms of mindshare and marketshare. Both companies want to quickly expand their reach into the ISV/developer community to strengthen their competitive position in the PaaS market. (Disclosure: I’ve written a series of whitepapers on behalf of Salesforce.com regarding the Force.com capabilities.)
2. Both companies also want to demonstrate the ‘openness’ of their PaaS capabilities to offset the alliances which Salesforce.com has made with Amazon, Google and Facebook, and capitalize on accusations that Salesforce.com’s Force.com PaaS is limited because it is built on a ‘proprietary’ language.
3. Gaining greater market penetration via access to the other party’s installed base of customers and partners is a given, but capitalizing on their respective functional capabilities and channel relationships is important.
4. Intuit is primarily seeking to make its IPP more attractive to developers by expanding the functionality it can provide its PaaS users. Adding Microsoft’s development and collaboration tools, including the Business Productivity Online Suite (BPOS) which consists of SharePoint Online, Communications Online, Exchange Online, and Office Live Meeting gives developers greater functional capabilities to satisfy their customers’ needs.
5. Microsoft is primarily interested in adding the service management capabilities embedded in Intuit’s Partner Platform (IPP) which include service provisioning and monitoring, along with pay-as-you-go billing and pricing. Adding these capabilities makes Azure more relevant to developers from a business perspective.

While this alliance is squarely focused on small businesses, it could also appeal to the regional offices or small divisions of larger enterprises. It could also attract crossover opportunities in the consumer market, especially when you consider the growing influence of consumerization in the corporate world.

But, most importantly it could open new opportunities within traditional channels and create new channel opportunities for cloud services and vendors. Salesforce.com, Google, Amazon and Facebook have not made much progress penetrating the channel and will face serious challenges gaining the trust and confidence of traditional channel organizations who feel threatened by the cloud computing phenomenon. Intuit and Microsoft can leverage their established relationships with key channel companies to overcome their concerns.

This alliance is the most recent in Microsoft’s escalating efforts to regain its dominant position in the software market which has been quickly slipping away with the accelerated growth of SaaS and broader cloud computing services. Microsoft also announced earlier this month that it is teaming with HP in a three-year, $250 million initiative to develop and deliver a new generation of cloud-based solutions.

Conspiracy theorists will also point out that Microsoft announced last June that it is discontinuing its Money software service, which leaves a convenient gap for Intuit to fill with its QuickBooks solutions.

While ‘coopetition’ is not a new idea or business practice in the tech industry, this week’s Microsoft-Intuit alliance is certainly an important new test of the concept. Whether this proves to be a win-win relationship or simply a Machiavellian maneuver by these companies remains to be seen.

It is also important to note that this isn’t a mutually exclusive alliance. Microsoft is already working with Amazon, for instance. In fact, it will probably spark additional discussions and agreements with the other players by both parties.

Back to back announcements this week have brought renewed attention to the IT service management (ITSM) market as a key battleground for Software-as-a-Service (SaaS) competition.

On January 19, BMC announced its latest Remedy ITSM Suite On Demand solution, a SaaS-based offering which promises to integrate with BMC’s Atrium Configuration Management Database (CMDB) and Business Service Management (BSM) platform.

That same day, Service-now.com announced that PepsiAmericas had selected its SaaS-based ITSM solution. In Service-now.com’s announcement, PepsiAmericas’ IT Customer Service Manager, Amy Irwin said, “Our old tool couldn’t meet our needs so we went shopping for a tool that could. We quickly determined SaaS would best fit our tool requirements.”

IT acceptance of SaaS-based solutions isn’t new. THINKstrategies first identified this trend in our 2007 customer survey in conjunction with Cutter Consortium.

However, SaaS vendor focus on this segment of the market has intensified over the past two years. Service-now.com has experienced significant growth in the mid- and large-scale enterprise market with its SaaS-based ITSM solution. The company won a Best of SaaS Showplace (BoSS) Award for the measurable business benefits its solution delivered Unitus Community Credit Union.

BMC has been dabbling in the SaaS market for a few years. THINKstrategies published a profile of BMC’s initial SaaS offerings in 2006.

Like other established independent software vendors (ISVs), BMC has been attempting to rearchitect it software application, realign its go-to-market strategies, and reorient its business operations in order to integrate its SaaS offerings into its legacy portfolio. Last November, BMC announced at Salesforce.com’s Dreamforce conference that it was developing new ITSM solutions on Salesforce.com’s Force.com Platform-as-a-Service (PaaS).

It is no coincidence that Salesforce.com has targeted this market with its Service Cloud offerings. CA also announced at Dreamforce its intent to ‘SaaSify’ its ITSM capabilities via Force.com.

HP has also been circling these waters with its cloud-oriented solutions.

Why all the attention on this segment of the SaaS marketplace?

Because this is one of the few places within an organization that touches everyone and where the IT department and business end-users directly intersect. Therefore, the SaaS solution plays a pivotal role in this area and can have a tremendous strategic impact on an organization’s day-to-day operations standpoint.

I expect activity in this segment of the SaaS market to escalate and a series of acquisitions to follow.

Many people confuse Software-as-a-Service (SaaS) with ad-supported online services.

They are independent ideas, but can be combined to quickly entice potential customers to try a web-based service without making a financial commitment.

In most cases, the vendor’s goal is to convert as many of these free trial users into paying customers as quickly as possible. Given the challenges associated with this conversion process in nearly every segment of the cyberworld, it isn’t surprising that most SaaS industry observers question the viability of using this tactic in the B2B market, especially among SaaS solutions geared toward IT managers.

Spiceworks is proving the cynics wrong.

The company offers web-based network monitoring tools for corporate IT and managed service providers (MSPs). Users can sign up for free if they don’t mind ads intermixed with their online tools. They can subscribe to a more full-featured, ad-free service if they prefer. Many of Spiceworks’ users have been willing to accept the free service because the ads promote relevant and complementary IT management tools and services.

As a result, Spiceworks claims to have more than 850,000 users in total, across 196 countries, and says its customer base is growing at the rate of over 1,000 new IT users per day. The company also believes its solutions are now installed in over 25 percent of all businesses with more than 100 employees.

With this type of customer base and growth, it isn’t surprising  that Spiceworks calls itself “iTunes of Network Management” and calls its business model, “Social IT”.

With this kind of following, or ‘community’, it is easy to understand why a growing number of technology companies like Cisco, Citrix, Dell and Intel are offering plugins for Spiceworks’ platform.

And, this week the company raised another $16 million in series C funding led by Institutional Venture Partners (IVP), joining previous investors Austin Ventures, Maple Investments and Shasta Ventures.

These are impressive backers — IVP has also backed Twitter, MySQL, Netflix, Business.com and Zynga. Maples Investments has backed Digg, Solarwinds and Twitter. And, Shasta Ventures supported Mint.com, Lithium and Logoworks.

A rapidly growing customer base, expanding partner ecosystem and quality investors clearly demonstrate that a properly targeted, ad-supported SaaS model can work in the B2B world.

Spiceworks’ success also shows how IT professionals are getting more comfortable with SaaS-based management solutions.

THINKstrategies announced today that Thrive Technologies has been named the first 2010 winner of the Best of SaaS Showplace (BoSS) Awards program, in recognition of the measurable business benefits which Thrive’s Software-as-a-Service (SaaS) solutions have delivered to its customers.

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

Thrive Technologies develops and markets web-based demand forecasting and inventory replenishment software that increases profits for distribution intensive companies in high service supply networks by maximizing their inventory performance.  Thrive’s on–demand SaaS system removes the burden on their customers’ IT resources for server procurement, installation, upgrades, and maintenance.  By providing their system as a SaaS solution, Thrive Technologies can help their customers gain control over their inventory much quicker and at a lower cost than traditional systems.

Click here to read more about Thrive Technologies’ award-winning SaaS capabilities.

Click here to read more about the BoSS Awards or to nominate a company for an award.

The first week of 2010 was marked with three quick mergers and acquisitions in the Software-as-a-Service (SaaS) market.

They each were in different sectors of the industry and involved differing types of transactions, but still clearly illustrated that there are a variety of companies seeking to capitalize on the escalating demand for SaaS solutions and position themselves as strategic sources of these on-demand services.

The first was an acquisition by EMC of Archer Technologies, a privately-held governance, risk and compliance (GRC) software vendor who offers both on-premise and SaaS solutions. Archer claims to have more than six million licensed users, including 25 of the Fortune 100.

EMC plans to combine Archer’s information risk management capabilities with the information security solutions provided by EMC’s RSA Security Division to enable customers to automate and gain visibility and policy enforcement capabilities across both physical and virtualized IT environments.

The second transaction was the $100 million acquisition of Peopleclick–a provider of SaaS-based Talent Acquisition and Workforce Compliance and Diversity solutions–by private equity firm, Bedford Funding who plans to merge Peopleclick with Authoria, an existing portfolio company of Talent Management solutions.

Bedford hopes the combination of these companies, operating under the new name of Peopleclick-Authoria, will create a leading provider of  Talent Management software, services and consulting solutions for enterprises worldwide.

These two transactions are in keeping with my previous prediction that we would see a consolidation in the SaaS market as various companies attempt to pull together end-to-end portfolios that can better position themselves as strategic sources in the eyes of IT and business decision-makers within customer organizations.

The EMC acquisition of Archer is the latest in a year-long buying spree that has spread the vendor’s reach well beyond its core storage solution capabilities. In particular, EMC has been making a concerted effort to strengthen its position in the security, automation and management areas.

The merger of Peopleclick and Authoria is a typical private equity roll-up maneuver aimed at trying to generate greater business value by pulling together a series of under-performing assets. While this type of strategy is textbook material for PE firms, it will take a lot more ’special sauce’ to make it successful from a competitive point of view.

Meanwhile, Salesforce.com made an unannounced acquisition of GroupSwim, a provider of on-demand social software for businesses. GroupSwim was developing a Web 2.0-based user interface that captures collaborative work in multiple formats using semantic technology. The company’s software automatically tags,  rates and searches content (discussions, emails, documents, wikis), and identifies topical experts.

The GroupSwim acquisition fits well with Salesforce.com’s recent initiative, Chatter, aimed at providing enterprise-class social networking to businesses. It also is in keeping with the company’s past practice of acquiring companies while they are young, relatively inexpensive and can easily be merged into Salesforce.com’s ongoing operations and corporate culture.

This flurry of activity may be a barometer of a busy year of M&A transactions to come.

Google’s new Nexus One Android phone has created a lot of buzz as a ‘game-changer’ in the smart-phone business. Many believe this device, and Google’s new business model which supports it, could redefine the phone industry.

It is always exciting to witness a company challenge the status quo in an established industry by offering a bold new value-proposition to customers.

Yet, most companies have responded to today’s economic malaise and extended downturn with a risk-adverse, reflective stance which has manifested itself in more aggressive cost-cutting strategies rather than more innovations.

I can’t blame them for shying away from the innovation tact. The cynic in me also recoils from the business pub jargon which would have us believe that any company can adopt a bold strategy to recreate themselves in this type of environment.

However, there is plenty to be said for taking this risk and attempting to redefine your business in such a way that you also redefine an industry.

When Apple was struggling to stay alive in the computer business, it decided to recreate itself into a media distribution company, and look at what iTunes, iPod and the iPhone have produced. They’ve redefined the music, movie and broader entertainment industry while also breathing new life into its core computer business.

Or, when Amazon was trying to elevate itself above the clutter of web-based retailers, it rediscovered its roots as a distribution company and started selling processing power by the ‘drink’, giving birth to the cloud computing business. In turn, Amazon Web Services (AWS) has redefined the IT industry.

Apple and Amazon set out to disrupt markets when they were first born, but their originally targets were the computer and retail markets, not media and IT.

While both of these companies had the advantage of bold leaders and plenty of brain-power to push them into new markets, they still represent compelling case study examples for others to emulate.

Let me know of other companies you think fall into this category of innovators, or if you’re looking for help redefining your business and industry.

Salesforce.com gave its customers a belated New Year’s gift of unscheduled downtime yesterday, which extended into today in some regions, according to its Trust.Salesforce.com site.

While many of its corporate users might welcome a respite later in the year, most probably came back to work this week with the idea of pounding on their customer databases to generate new revenue opportunities to kickoff the new year. Being unable to access their online customer relationship management (CRM) system probably didn’t make them too happy.

So, will this service disruption derail Salesforce.com, the Software-as-a-Service (SaaS) and broader cloud computing movement? Only if these isolated incidents evolve into an ongoing pattern of declining performance.

Occasional problems happen. Back in 2007, I predicted that the on-demand services market would continue to soar despite more severe service delivery problems at NaviSite that year, because customers were already becoming convinced they could get a better return on investment (ROI) at a lower total cost of ownership (TCO) from SaaS. And, the SaaS market has grown faster and further than the industry analysts ever imagined.

The latest round of Salesforce.com outages are certainly important reminders that SaaS and cloud computing vendors are vulnerable to service delivery issues. But, they shouldn’t distract us from the fact that most corporations and private institutions are equally, if not more susceptible to similar operational problems.

The only difference is that the IT staff within corporations and private institutions only have to support and report to a single customer, in most cases. Salesforce.com and other SaaS/cloud vendors have rapidly growing customer populations to satisfy. Until now, this has been an inherent incentive to build highly resilient service delivery infrastructures and management processes to govern them.

In order to continue to scale and keep their customers happy, SaaS/cloud vendors must mitigate these risks and clearly demonstrate they can outperform inhouse IT/data center staff in the following ways,

• Deliver better uptime rates
• Provide greater proactive notification of service performance issues
• Offer more information regarding the cause of problems and plans to mitigate future risks
• Invite and act on customer feedback

In 2006, Salesforce.com experienced a series of service outages which raised serious concerns about the reliability and quality of its services. In response, the company launched the Trust.Salesforce.com site and set a new industry standard for service transparency.

If the company’s service issues continue, it will have to pull another ‘bunny’ out of its hat to keep customers from jumping ship. Not a bad test for the new year.

For the sake of the overall cloud computing movement, let’s hope they are up to the task.

As the new year and decade get underway, here are a few of the areas of the cloud computing market which I think will be important competitive battlefields for established and emerging players:

1. Collaboration Wars: Collaboration is the ‘killer app’ in the Software-as-a-Service (SaaS) segment of the cloud computing market. The rapid adoption of Google Apps has demonstrated the latent demand for these web-based solutions. Now, IBM is promoting the enterprise-class qualities of its LotusLive offering to win a share of the market. Cisco Systems is also intensifying its efforts to promote its collaboration solutions built around WebEx and Telepresence. I also think Microsoft will accept a greater level of cannibalization of its Office products to win a bigger share of the collaboration market with OfficeLive.
2. Business-Oriented Social Networks: These are closely linked to collaboration and have gained a tremendous amount of attention because of the explosive growth of Facebook and Twitter. Although many corporate executives are still uncertain about how to harness social networks, Salesforce.com’s introduction of Chatter at Dreamforce clearly shows that offering an enterprise-class solution can create a competitive advantage.
3. Platforms-as-a-Service Wars: Salesforce.com will continue to push its Force.com PaaS capabilities hard. And, Google App Engine will continue to be a popular development environment with start-ups and tech heads. But, I think Microsoft Azure will experience surprising success in 2010 because the company has a better understanding of how to work with third-party developers and is less likely to create channel conflicts because it would prefer not to develop and deliver its own SaaS solutions. There are also plenty of niche PaaS vendors who will be acquisition candidates in 2010.
4. Cloud Governance: HP, IBM and an assortment of niche players are capitalizing on the lack of unified management systems for cloud computing services. While price competition threatens to commoditize raw Infrastructure-as-a-Service (IaaS) offerings, management vendors that can help the IaaS providers and their customers monitor and control their cloud resources will gain a competitive advantage. HP and IBM are realigning their legacy management portfolios to address these needs. A proliferation of niche players are also seeking to win a share of the market, especially focused on single sign-on and access control.
5. IT and Service Management: IT professionals are learning about how SaaS-based management solutions can help them do their day-to-day jobs more cost-effectively. In response, a plethora of new web-based players are emerging and established players, such as BMC and CA, are shifting their attention toward SaaS-based solutions. Salesforce.com has also helped to bring greater attention to the ’service cloud’, where other SaaS companies like RightNow and Service-now.com are experiencing rising demand.
6. Communications-as-a-Service (CaaS): HP and Cisco Systems are on a collision course to compete for unified communications enablement opportunities among service providers and end-user organizations, large and small. Unified communications has been an ideal for over a decade, and now cost-effective, web-based solutions are becoming a reality. CaaS can also be a key enabler of end-to-end enterprise collaboration solutions.
7. eHealth and Energy Management: With the Obama administration promising to plow billions of dollars into modernizing healthcare systems and everyone trying to reduce the cost of their ‘carbon footprint’, these segments of the market are ripe for SaaSification. Brand-name corporations, as well as a new generation of web-based ventures, will ratchet up their efforts to win mindshare as well as marketshare offering cloud-oriented services to address these important issues.
8. Millennials and Generation Z: Companies positioning themselves for the longhaul are already trying to win the hearts and minds of our children. Apple has converted years of cultivation work within the classroom into a new generation of corporate workers who prefer Macs over PCs. Google is attempting to do the same by encouraging public school systems and universities to use its Apps. Although many kids use Microsoft’s Xbox, few have any allegiance to Microsoft Office and are adopting Google Apps. Other vendors will try to follow Apple and Google’s lead into the classroom.

Escalating cloud computing battles in these areas will also fuel additional acquisitions by established players seeking to accelerate the rollout of new services and penetration of new markets. Oracle and Cisco have been active acquirers for years. Salesforce.com will likely make additional acquisitions and continue to be a target of acquisition speculation as well.

I also think SAP will make a substantive SaaS/cloud acquisition in 2010, in an attempt to overcome some of the internal obstacles which have prevented it from successfully rolling out its BusinessByDesign solution. An acquisition could also offset the growing success NetSuite has had nimbling away at the SAP customer base.

Let me know if there are other important competitive battlefields I missed.