THINK IT Services

My travels this week have taken me from Miami to San Francisco, for Parallels Summit and Pacific Crest Securities’ Emerging Technology Summit to hear and see the latest developments in the ‘clouds’.

In Miami, I witnessed the emergence of a key new player in the rapidly evolving cloud computing industry. Parallels is not a new company, but it has recently realigned its various corporate capabilities into a singular focus on cloud computing enablement.

The company is specifically targeting the vast community of service providers – hosting companies, VARs and telcos — that are supporting the IT needs of small businesses with limited or no IT staff.

In short, Parallels is seeking to help these service providers replicate the success of Amazon Web Services (AWS) in the mainstream small business marketplace.

Although AWS has found a very receptive audience among start-ups and enterprise developers, it hasn’t generated much interest with mainstream small businesses which lack IT skills and demand ongoing support. These small businesses are already turning to various hosting companies, telcos and VARs to support their traditional IT needs and would welcome a broader assortment of cloud services, ranging from packaged Software-as-a-Service (SaaS) apps to pay-as-you-go storage and processing power from these same service providers.

Hosting companies, telcos and VARs have recognized this opportunity, but have been unable to fully address it because it has required considerable technical skills and financial resources to build the service delivery infrastructure, provisioning and management engine to support a cloud computing business.

While there are plenty of virtualizations vendors, led by VMware, and business service management vendors, including BMC and HP, they are primarily focused on the enterprise, as well as the major telcos’ operational support systems (OSS). Jamcracker has also struggled trying to help telcos generate meaningful revenue from its SaaS marketplace capabilities.

This has left a gap in the market for an ‘end-to-end’ cloud services solution which Parallels is attempting to fill. Its product portfolio has evolved via a series of acquisitions and organic development to now include the following elements,

• Server virtualization
• Management automation
• Service provisioning & billing
• SaaS marketplace creation

These elements enable a service provider to build and administer a cloud computing business which can help them win and retain customers who are seeking a strategic source for their widening array of on-demand service needs.

This is a very appealing value proposition for service providers who have found themselves in an increasingly competitive marketplace and need to better differentiate themselves and reduce the risks of customer churn.

With these ideas in mind, Parallels appropriately used the tagline of “Profit from the Cloud” as the theme for this year’s Summit. The timeliness of this theme and Parallels’ newly realigned portfolio was clearly illustrated by the jump in the conference registrants, from 800 last year to 1400 this week, and sponsors, doubling from 30 to 60, including Google, HP, Intel, Novell and Microsoft.

The tone and energy of this event reminded me of the ConnectWise Partner Summit which I attended last year.

It is also important to note that Parallels has added senior executives from Amazon, Microsoft, VMware and other major players to accelerate the company’s growth. I had an opportunity to meet with the executive team during an analyst briefing session the day before the conference. (Disclosure: Parallels paid for my travel expenses for this trip.)

The company has not only aligned its product portfolio around cloud enablement, it has moved its headquarters to the epicenter of cloud innovation, Seattle. This puts the company closer to the pioneer in this market, Amazon, and Parallels’ key partner, Microsoft. 

I couldn’t stay for the entire Parallels conference because I had to fly to San Francisco for the Pacific Crest Securities event where much of the discussion centered on how Amazon is revolutionizing the computing industry in the same way Salesforce.com and an assortment of SaaS vendors have disrupted the software industry. (I serve as a member of Pacific Crest’s Mosaic expert program.)

As further confirmation of the timeliness of Parallels’ cloud enablement strategy, Pacific Crest reported that its latest CIO survey found that the organizations it is tracking expect to dedicate upwards of 30% of their software spending on SaaS solutions in 2010. This is two years ahead of the pace which Gartner predicted.

THINKstrategies announced today that TeamSupport.com 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 goal of the  BoSS Awards program is 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.

TeamSupport.com is a wholly-owned subsidiary of Muroc Systems, Inc., a Dallas-based holding company focused on developing productivity enhancing software products delivered via the SaaS model. TeamSupport.com’s integrated SaaS-based customer service, product management, and bug tracking system allows manufacturers, their customers, and key client-focused teams to better communicate so they can reduce the time and cost to perform critical business functions.

Click here to read more about the customer success story which lead to TeamSupport.com’s BoSS Award designation.

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

Based on the success of the BoSS Awards program which focuses on SaaS solutions, THINKstrategies has launched the Cloud Computing Business Value (CCBV) Awards program to recognize companies which are delivering Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) solutions producing measurable business benefits for their customers.

Click here for more information regarding the CCBV Awards.

One of the key battlefields in the cloud computing market for 2010 which I identified earlier this year is IT service management (ITSM). Last month, I discussed BMC’s latest foray into the SaaS-based ITSM world, as well as Service-now.com’s recent win at PepsiAmericas.

Last week, Service-now.com issued a press release summarizing its 2009 accomplishments. The company reported that its recurring revenue increased approximately 136 percent in 2009. Cynics might discount the significance of this growth rate by suggesting it’s easy to report a substantial jump when you’re starting at a low base. However, the company’s CEO, Fred Luddy, revealed to me during a private lunch preceding a company marketing event in Boston that Service-now.com is generating signficant, albeit confidential, revenues and is on a run-rate to double its revenues again in 2010.

The company’s success in the enterprise was personified by the room full of customers who spoke and attended last week’s event in Boston. The speakers were senior IT managers from Starwoods Hotels and Staples. They both told similar stories about how pleased they were with the ease of deployment, use and extensibility of Service-now.com’s ITSM solution. In each case, the companies initially deployed a small set of Service-now.com’s ITSM capabilities and then adopted additional modules in response to positive feedback from end-users and greater than expected use among their employees.

Although Service-now.com is hesitant to refer to its solution as a “platform” because of the overused nature of this term, the Starwoods and Staples success stories illustrated how Service-now.com’s functional capabilities can be extended to meet a wide array of business needs, including field service and financial management.

In its most recent announcement, Service-now.com boasts that it ended 2009 with over 365 customers and 94,000 IT professionals using its ITSM solution. And again, these are not just a bunch of ‘no-name’ small- and mid-size businesses (SMBs). Instead, Service-now.com reported that it has added the following brand-name companies to its customer base in the last six months alone: Ascension Health, Associated Wholesale Grocers, Balfour Beatty, British Council, Cameron International, Canwest, Career Education Corp., Centrica, Chiquita Brands, CITEC, Colorado Springs Utilities, Emory University, First American, Foodstuffs Limited, Getronics, Great American Financial Resources, Henry Ford Health System, International Securities Exchange, Intuit, JDS Uniphase, Jefferson County Colorado, Key Energy Services, KGB, Kimberly-Clark, Lennox International, Logicalis, Mediterranean Shipping Company, Morrison & Foerster, Motricity, National Australia Bank, NetApp, Ohio State University, Patni Computer Systems, PepsiAmericas, Perot Systems, ProBuild Holdings, PSEG, Queensland Department of Public Works, Royal Bank of Scotland, Shaw Communications, Smith International, Temple-Inland, ThyssenKrupp Steel USA, UCLA, Underwriters Laboratories, and the University of Birmingham.

Service-now.com’s growing success makes me feel even better about the Best of SaaS Showplace (BoSS) Award we issued the company last April.

What is also interesting to note is that Service-now.com has achieved this success even though the rollout of its solution isn’t necessarily as quick as its tagline might suggest, “On-Demand IT Service Management”. Instead, Luddy presented a slide during the Boston session which listed the deployment times of some of the company’s recent enterprise wins, ranging from 10-48 weeks. The slide set an honest expectation for the seminar attendees that ‘on-demand’ is a relative term.

While the application can be delivered to a customer quickly, there are still plenty of organizational obstacles, such as integration and data migration as well as change management and training, which have to be overcome to successfully adopt a SaaS-based ITSM solution. Luddy told me over lunch that this is good news for various consultancies, including established players such as Accenture and a myriad of other players, which might have been concerned about being ‘dis-intermediated’ by a SaaS-based ITSM solution.

Of course, Service-now.com’s deployment durations are still far shorter than those for legacy ITSM software. And, the company’s success rates far exceed traditional players as well.

In my latest column for E-Commerce Times, I suggest that “once again, Microsoft may be a late entrant in the market with a set of solutions that lag those offered by today’s industry innovators, but it is still in a good position to regain its momentum and become a dominant force in the rapidly evolving cloud computing marketplace.”

Click here to read why.

The resignation of Leo Apotheker as CEO of SAP has sparked significant speculation re: the issues which drove this decision and where SAP will go from here.

The significance of this event was clearly underlined by the role SAP’s Co-Founder and Chairman of the Supervisory Board, Hasso Plattner, played as the primary company spokesperson during a corporate conference call this morning.

During the call, Plattner made an emotional defense of the company’s strategies and tactics in response to rising criticism in the face of SAP’s financial struggles. Plattner used the occasion to dispute claims that SAP isn’t moving fast enough to respond to changes in the market by proclaiming that SAP is well on its way to becoming a “multiple product company”. He gave Apotheker credit for “turning around” BusinessByDesign and said the rollout of the v2.5 of the on-demand solution is “close”.

The reality is that BusinessByDesign has only had isolated success in a handful of deployments in the field, and its scalability from a technological and go-to-market point of view is yet to be proven.

The truth is that BusinessByDesign’s lack of success is a reflection of SAP’s lack of commitment to the solution and an overall SaaS strategy.

The company’s leadership has never fully acknowledged the fundamental changes disrupting the software industry as a result of rapidly changing customer preferences and competitive pressures. For example, various SAP leaders in the past have suggested that BusinessByDesign would primarily serve as an ‘on-ramp’ to its on-premise customers rather than a solid standalone solution. This half-hearted approach not only turned off prospective customers, it didn’t incent its own staff to make a concerted effort to develop and deliver a competitive solution.

But, SAP’s reluctance to accept these market realities may finally be giving way to a new awakening about the critical crossroads facing the company.

Although Plattner refused to specify the reasons for Apotheker’s resignation, he admitted that the company was facing growing dissatisfaction among customers in response to SAP’s decision to increase its maintenance fees and a recent employee survey also found growing disenchantment among its own staff. He also acknowledged that the cloud computing model poses a significant challenge for SAP’s underlying software architecture.

As a consequence, Plattner said ”we need to reestablish the trust inside and outside” and “in order to be profitable, SAP has to be a happy company…with happy customers and employees.”

The company has decided the best way to move in this direction is with a Co-CEO leadership structure. Plattner used Larry Ellison and Ray Lane at Oracle, and Bill Gates and Steve Ballmer at Microsoft as models for success, but failed to point out that in neither case did these duos operate as Co-CEOs.

I think the Co-CEO structure may only be a temporary move to stem the negative tide until a single leader can emerge from the current duo or a new CEO can be recruited from the outside to bring fresh leadership to the company.

Ideally, this person will be able to pull the company together under a strong unified strategy backed by a series of solid tactical moves in the same way Lou Gerstner did at IBM in the 90’s.

Whether a leader comes from outside the company or within, SAP’s only hope for success is a strong, long-term commitment to change. SAP’s painful journey down the SaaS path is just the most prominent example of the many reasons why established ISVs are suffering in today’s environment. A strong leader is necessary to withstand today’s challenges.

(Disclosure: I have done consulting work with various groups within SAP.)

THINKstrategies announced today that InteQ InfraDesk 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.

InteQ is a leader in On Demand IT Service Management. InteQ’s ITIL SaaS Service Desk application, InfraDesk, is a web-based solution built on InteQ’s process automation expertise and experience. Through its Software as a Service (SaaS) delivery model, InfraDesk enables large organizations to eliminate costly maintenance upgrades and lengthy implementation cycles commonly associated with traditional on-premise software while providing the affordability to small and medium-sized organizations without sacrificing functionality or flexibility.

Click here to read about the measurable business benefits which InteQ’s customers are gaining by using its InfraDesk solution.

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

Based on the success of the BoSS Awards program which focuses on SaaS solutions, THINKstrategies has launched the Cloud Computing Business Value (CCBV) Awards program to recognize companies which are delivering Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) solutions producing measurable business benefits for their customers.

For more information regarding the CCBV Awards, go to http://www.thinkstrategies.com/cloudcomputingawards.html

SuccessFactors, Inc. announced today that it is acquiring Inform Business Impact, an Australia-based provider of workforce analytics and planning solutions.

Here are my quick impressions about the business implications of this announcement:

1. This move confirms my prior predictions that the pace of acquisitions within the Software-as-a-Service (SaaS) would accelerate and that major U.S.-based SaaS vendors would put greater emphasis on growing internationally in 2010.
2. The acquisition of an Australia-based SaaS vendor, on the heals of yesterday’s revelation that Salesforce.com recently acquired a Scotland-based SaaS vendor, illustrates that the on-demand services movement is taking root globally. In fact, approximately 30% of the over 1200 companies listed on THINKstrategies’ SaaS Showplace are headquartered outside the U.S.
3. This is SuccessFactors’s first acquisition, and it is clear that it plans to do many more because the company also announced today the hiring of Cisco Systems veteran Judy Blegen as its new VP of M&A integration. Few companies have made more acquisitions over the past decade than Cisco, and Blegen has been in the middle of their many transactions.

One of the knocks against Software-as-a-Service (SaaS) and the broader cloud computing movement is that these web-based, on-demand services can’t be customized to cater to the complex requirements of specific enterprises.

While SaaS solutions have increasingly included a growing array of user configuration capabilities to respond to the individual needs of various organizations, Platform-as-a-Service (PaaS) solutions have emerged over the past couple of years to permit end-users and third-party developers to build their own apps to meet their unique requirements.

The latest indication of the escalating power of these PaaS tools is today’s announcement unveiling Salesforce.com’s new Force.com Visual Process Manager. This new feature will allow users to design and build business process-oriented applications quickly so they can automate them across corporate departments.

Although the new Force.com Visual Process Manager won’t be generally available until later this year, it is the latest sign that cloud computing alternatives to traditional, legacy applications and systems are becoming more and more competitive with their on-premise predecessors.

PaaS solutions may never be able to match the level of customization of legacy applications. However, that isn’t necessarily a bad thing given the black-hole that many enteprises have faced trying to customize traditional enterprise apps to meet their unique needs. This has often been an endless and costly chore for most organizations which has seldom met their corporate objectives. Instead, it has resulted in many organizations being unable to adopt the latest software updates and upgrades from their vendors.

Rather than employ an army of consultants to customize traditional applications, Force.com Visual Process Manager promises to give corporate end-users the ability to create and implement business process-oriented applications which can achieve greater utilization in a shorter time-to-value.

It is also important to note that this new functionality is the outgrowth of another recent, yet unannounced, Salesforce.com acquisition of a small SaaS vendor, called Informavores, founded in Scotland.