THINK IT Services

I’ve just returned from two days in a chilly Florida where I was participating in a sales kickoff meeting for an independent software vendor (ISV) that is preparing to add a Software-as-a-Service (SaaS) component to its portfolio.

I’ve presented to plenty of sales teams about SaaS, cloud computing and managed services, what made this session unique was that this ISV isn’t planning on rolling out its new SaaS solutions for another 9-10 months.

To the credit of the company’s management team, they know that it will take a long time to fully prepare the sales team to properly sell their new SaaS solutions.

Especially, because they’ve been successfully selling the value of their legacy, on-premise applications against a competitor’s “ASP” solution for the past five years.

While the company was confident that it has employed the latest in Web 2.0 technologies and techniques to leapfrog its competitor functionally, it knows that it still has plenty of work to do operationally and from a sales perspective to be successful.

The company asked me to participate in the meeting to educate the sales team about the market forces which are driving the on-demand services market, explain how SaaS differs from the old ASP model, and coach them about how to talk to IT and business decision-makers about the functional benefits and cost-advantages of SaaS solutions.

In addition to giving a one-hour keynote presentation about the overall marketplace, I participated in three breakout sessions aimed at addressing the sales team’s specific questions and concerns.

I was joined in these sessions by company executives who provided candid insights about their SaaS goals, objectives and even uncertainties. They readily admitted that they are making a ‘big bet’ on SaaS and still have plenty of piece parts to put in place regarding how the new offerings will be packaged, priced and positioned.

Their candor was refreshing and rewarded with an enthusiastic response from the sales team which recognizes that times are changing, and they have an opportunity to offer their customers new game-changing SaaS solutions and greater options to meet their corporate objectives.

The sales team and company management both know that it could be a bumpy ride into the SaaS world, but they are giving themselves plenty of time to make the proper preparations.

While I’m happy to help aspiring SaaS vendors at any stage of their evolution, it is nice to be invited in early rather than be called when a company is trying to recover from a false start.

The findings of a 2006 survey recently released by Gartner has brought renewed attention to the fundamental shortcomings of today’s major network/system management (NSM) platforms from companies such as IBM, HP, CA and BMC.

The survey found that 40% gave their NSM vendors a mediocre “C” and nearly 30% of the respondents gave their vendors a “D” because of their frustrations with the costs and hassles involved in deploying and administering the vendors’ platforms.

These frustrations aren’t news. When I was the director of strategic marketing at International Network Services (INS), we were the first company to rollout a network performance management software service on a subscription pricing basis in response to these same frustrations. Our EnterprisePRO solution was unveiled in 1996, prior to the advent of the managed service provider (MSP) and application service provider (ASP) ideas.

Unfortunately, although there were plenty of IT managers and business executives who were dissatisfied with the total cost of ownership (TCO) and return on investment (ROI) of their NSM platforms, most were unwilling to entrust their NSM responsibilities to remote services offered by unproven providers. This led INS to convert its EnterprisePRO software service into a shrink-wrap software product, incorporating the application performance management capabilities we acquired as a part of VitalSigns into our solution. This same customer resistance led to the collapse of the MSP/ASP business with the demise of the dot.com era.

Today, we are living in a different economic, business and technological climate. Most organizations would prefer to offload the hassles of day-to-day IT operations, especially if they can find someone who can do it better and cheaper. An indication of this change in attitude can be found in Gartner’s survey which found many IT managers are considering open source and software-as-a-service (SaaS) solutions. This confirms THINKstrategies’ research which has found the same attitudinal changes are fueling the growing receptivity toward managed services as well.

Click here to read my latest commentary in NetworkWorld on this topic and learn about some of the new SaaS solutions aimed at helping IT managers overcome their NSM frustrations.