THINK IT Services

One of the hottest topics of discussion in the Software-as-a-Service (SaaS) market and broader Cloud Computing arena is the role of the channel in selling and delivering these web-based services and solutions. What few people have discussed is the opportunity for SaaS companies, as well as Cloud vendors, to become important channels to market themselves.

The most intriguing scenario in this SaaS-as-a-Channel (SaaC) possibility revolves around the Data-as-a-Service (DaaS) idea. The most recent illustration of this scenario is today’s announcement by Host Analytics of a new Decision Hub service which pulls industry data from a variety of third-party information service providers, such as Edgar Online and Data.Gov, into Host Analytics’ SaaS-based corporate performance management (CPM) solution.

The Decision Hub enables corporate decision-makers to examine their company performance in relation to a broader set of industry benchmark data or key performance indicators (KPIs).

This isn’t a new idea, but today’s leading SaaS vendors have the opportunity to aggregate this information from a variety of data sources more quickly and economically because of an assortment of application program interfaces (APIs) and generally accepted web services.

Another case in point is Salesforce.com which has had a longstanding relationship with Reuters and acquired Jigsaw earlier this year to pump valuable data through its customer relationship management (CRM) and salesforce automation (SFA) solutions to help its users achieve their business objectives.

So, as these data aggregation capabilities become more prevalent, it changes the nature of the SaaS company. Rather than simply being an application provider, it is now providing a higher level business service powered by a mixture of third-party data sources.

In essence, SaaS companies are now becoming information distributors in addition to application providers. In other words, they are now becoming an increasingly important channel to market for information service providers.

It will be interesting to watch other types of vendors attempt to employ SaaS companies and Cloud service providers as new channel partners as well. Of course, as they do, they will encounter a new set of challenges regarding how to properly package, price and promote these new relationships.

There have been a series of acquisitions over the past few weeks which clearly illustrate how the competitive landscape in the tech industry and beyond is being fundamentally changed by the rapidly evolving cloud computing phenomenon.

The two most recent examples came this week. The first was CA Technologies’ acquisition of 4Base Technology, a virtualization and cloud infrastructure consulting firm, which CA plans to use as a cornerstone of its expanded cloud computing professional services capabilities. This is the latest in a series of acquisitions which CA has made to transform the company from a software-only to a multi-dimensional corporate portfolio which personifies its new CA Technologies company name. CA’s transformation echos the moves of other players seeking to become one-stop shops for hardware, software and services. The most significant of these was Oracle’s acquisition of Sun Microsystems.

Intel made an even more dramatic acquisition this week with its announced plans to purchase McAfee. This acquisition moves Intel into the Softwae-as-a-Service (SaaS) based security solutions market by embedding security software functionality into a chip. Paul Otellini, Intel’s President and CEO, put the acquisition into perspective by stating in the company’s announcement, 

“In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences.”

These moves come on the heels of a series of other acquisitions over the past few months aimed at repositioning various technology and business services vendors seeking to capitalize on the burgeoning cloud computing market.

Less newsworthy, but equally intriguing have been the following acquisitions:

• ADP’s acquisition of Cobalt, a digital marketing services vendor, in July. This acquisition was the latest example of ADP’s efforts to offer a widening array of business and information services to make itself a more strategic, single-source of a full lifecycle of business services, such as marketing solutions.
• IBM followed ADP’s example by acquiring Unica,a marketing software solutions vendor, early this month augmenting its middleware and infrastructure enablement capabilities. IBM clearly stated its goals regarding the Unica acquisition in its announcement,

“Assembling transformational capabilities to help clients create…relevant cross-channel brand experience to promote customer loyalty and satisfaction…This acquisition along with IBM’s recent acquisitions of Sterling Commerce and Coremetrics will enhance IBM’s ability to support customers increasing demands in this growing market.”

• Salesforce.com’s acquisition of Jigsaw earlier this year was also aimed at redefining the company’s capabilities and helping to reposition it in the market.  Jigsaw’s online lead generation database will feed essential data into Salesforce.com’s SaaS-based customer relationship management (CRM) solution, making it easier for the company’s users to satisfy their needs. Jigsaw also provides analytics regarding the productivity of users’ sales efforts. As a result, Salesforce.com is able to now transform itself from a SaaS company to a business or information service provider offering Data-as-a-Service (DaaS).

The commonality of all of these acquisitions is not only that they extend the scope of the companies’ corporate portfolios, but that they do it by adding SaaS capabilities to their delivery methodologies.

These are just some of the ways various technology and software companies are transforming their businesses through acquisitions to capitalize on and  better target today’s quickly growing cloud computing opportunities. They also open a Pandora’s Box of ancillary organizational and go-to-market challenges for the acquiring companies.

Salesforce.com announced its intention to acquire Jigsaw today and is once again redefining the role of the software vendor and nature of software applications.

Jigsaw, a Best of SaaS Showplace (BoSS) winner, provides lead generation services via the aggregation of third-party data service feeds combined with a cloud–based, ‘crowd-sourcing’ model.

Jigsaw taps lead gen data from D&B, Hoover’s, LexisNexis and other data sources, and makes it available to sales organizations who in turn clean the data and share their own contact lists in hopes that they will build greater and better quality contacts as a result of participating in Jigsaw’s user community.

Jigsaw’s tight API integration with Salesforce.com makes it relatively easy for users to import third-party contact information into their Salesforce.com’s CRM system. The company’s CEO also told me that its API will be extended to connect to other CRM solutions, including Siebel and Microsoft Dynamics.

Jigsaw’s community-oriented, social network boasts 1.2 million members, which has created a contact database of more than 21 million professionals at nearly 4 million companies. The company has also built a customer base of 800 companies, generating GAAP revenue of approximately $10-$15 million and non-GAAP revenue, excluding the deferred revenue write-down related to the transaction, is expected to be approximately $17-22  million.

Salesforce.com is paying a healthy premium for Jigsaw of $142 million, plus a performance-based contingent earn out of up to 10% of the purchase price. As I see it, Salesforce.com will easily generate a far greater return from this substantial investment in the following ways,

• A CRM system is only as good as the data which it houses. Making quality contact information more easily available, will increase the value of Salesforce.com’s CRM system and increase customer satisfaction, loyalty, etc.
• Jigsaw’s data-as-a-service (DaaS) gives Salesforce.com a new revenue stream and gives it access to an estimated $3 billion cloud-based data services market. This enables Salesforce.com to further diversify its product portfolio.
• Adding Jigsaw’s DaaS to its portfolio also raises the bar to Salesforce.com’s competitors who will now have to tighten their relationship with third-party data sources or make similar acquisitions.

Salesforce.com is already gearing up a new layer of marketing efforts around this acquisition centered on a new tier of services which it will brand as the “Data Cloud”. However, it also intends to retain the Jigsaw brand for the time being to ensure that its services are viewed as vendor-independent.

THINKstrategies announced today that Jigsaw 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.
 
Jigsaw is a leading provider of business information and data services that leverages user-generated content contributed by a global business-to-business community of over one million members to give users access to contact information for 21 million business people and profiles of 3 million companies. Jigsaw provides data-as-a-service (DaaS) through a variety of low-cost and easy to access data acquisition and management services for sales, marketing, recruiting and customer service purposes.

Click here to read about the measurable business benefits which earned Jigsaw the latest BoSS Award.

Click here to read 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 as launched a new 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.