MC+A

Software As A Service(Saas) has become a mainstream discussion in the Information Technology world in the past 12 months. Year over year, many companies with a SaaS delivery model are seeing tremendous growth. While SaaS offerings such as SalesForce.com and NetSuite has been around for many years, Salesforce.com is successful among its rivals for its ability to take a general business requirement and provide a solution for it that is individual in nature. Every company needs automation and analytics into its sales process. Each company’s unique approach and process is of strategic value.

Traditional software delivery and implementations have been complex and costly. Procurement organizations are responsible for buying light bulbs and enterprise resource planning. To implement an intranet solution can involve multiple hardware vendors, multiple software vendors a team of systems integrators, consultants and internal resources.

As much of 80% of Information Technologies budget is spent maintaining the company’s environment. Since a majority of the money is being spent maintaining applications, this should be largest area to focus on. Why to companies spend so much, just to keep the lights on? There are many causes for this, but fundamentally, internal resources are organized in functional operational support not into innovation. Often project teams are often drafted out of a pool. That pool is committed general to maintain existing applications. Team members are versed in typical project management.

Because of these challenges, there has been much interest in SaaS as a solution to these. SaaS outsources the application development and maintenance to a company that focuses on that particular piece. A SaaS solution can be created and deploy to the customer on simply signing the agreement. Rollouts take a fraction of the time. However, SaaS solutions have disadvantages.

First when acquiring a SaaS solution, you’re locking into the current feature set (and cost). There is no guarantee of what the features will be implemented in the future nor if they will be implemented at an additional cost. Second, you’re limited to a WAN outside of your control. A denial of service or a tree falling can cripple your enterprise for the day (as I type this…I’ve lost my Internet connection twice). Thirdly, you have little control over how often the data is backed up. Fourthly, SaaS offerings typically do not scale. While they require little upfront capital, SaaS’s are priced as a lose leader and the fees are upgrade prohibitive.

A different approach is to combine the deployment of SaaS, to the operationally focused infrastructure with a traditional pricing model. Enter in Appliance Based Software Delivery (AbSD). AbSD combines the promised with the ability of sustained execution. It reduces the complexity of implementation by encapsulation of the software into a service. It eases procurement since it fits within the standard acquisition methods. Appliances can be purchased, leased and owned. They do not require a continual cash drain. Once it’s paid for you can choose when to upgraded.

The evolution of AbSD will be to solutions from integrators. Integration of systems can no longer be a black art. Companies change faster then the integrations takes. There are many advantages for integrators to adopt a physical delivery model. First it “gels” the solution. Secondly it limits the solutions reuse. Thirdly, it reduces the risk and implementation time for all parties.

As services become comoditized both on and off shore, services based firms will look for increased profit through new means. The AbSD model works both with traditional software companies and with services firms. Watch with me this evolution.