Conferences Highlight the Emerging SaaS Cloud

To many SaaS vendors, OpSource is a partner as well as the home town wonder, one of the biggest and most diversified of the SaaS players. OpSource provides billing, analytics, on-demand hosting and other services to online and SaaS vendors throughout the maturity spectrum. Vendors transitioning to the on-demand world, as well as those engaged in full-fledged SaaS delivery are customers and partners. This reflects the SaaS marketplace itself, which is very much one of partnerships and interdependencies.

While these vendors certainly compete with one another, they are also much more symbiotic than the ISVs of the past, purchasing SaaS components from each other for delivery as part of their own branded services. This interdependency is one likely reason for the diverging paths of the two shows, and for the fact that vendors seem to be gravitating towards the OpSource sponsored conference.

Beyond the SMB

SaaSCon 2008 also drove home the fact that SaaS is not simply an SMB play, but is penetrating the enterprise. The SaaS value proposition is ready-made for small to medium sized businesses (SMBs) that are struggling to deploy and maintain increasingly sophisticated business applications with limited access to skilled technology specialists. SaaS offers comparable IT applications, supported by world-class talent, at a fraction of what it would cost to host them on site. SaaS has moved beyond the SMB, however. Enterprise customers are combining SaaS delivered and on site hosted software to take best of breed to the next level.

Manjit Singh, VP and CIO for Chiquita, presented a particularly impressive story. His point was that “best of breed” has evolved from being a collection of stand-alone, enterprise vendor products towards becoming integrated platforms combining on site and SaaS solutions. However, both types of applications must be architected for integration.

Once SOA is deployed within an IT organization, SOA services can be leveraged as integration points for both on premise and cloud based services. This approach has enabled Chiquita to assemble best of breed applications, while leveraging SaaS where it makes sense. At the same time, they have made a conscious choice to keep key internal applications—financials is one—in-house. Chiquita is delivering non-core services very cost effectively; freeing up personnel and funding for critical, business differentiating applications.

Gaining and Losing

While Salesforce was not in evidence at SaaSCon, Ariel Kelman, the company’s senior director of Platform Product Marketing, did present at the SaaS Summit. RightNow Technologies, a Salesforce competitor in the CRM space, was part of the IBM Partner Pavilion at SaaSCon. Salesforce recently posted 2008 earnings growth of approximately 50% over 2007 earnings, a blockbuster year by anybody’s standards.

In contrast, RightNow may be losing ground. Its 2007 revenues were relatively flat over 2006, and the company posted a net loss of $18.6 million in 2007 compared to a 2006 net loss of $5 million. It is interesting to note that neither company sponsored either show, prompting one to wonder whether SaaS-based CRM is now so main stream that neither feels pressure to mix and mingle with the rest of the industry.

In contrast, Absolute Performance sponsored both shows—of particular interest to those of us who cover the Enterprise Management space. Absolute Performance provides robust SaaS-based IT infrastructure and business application management services. On site enterprise management solutions, particularly suite based solutions that cover multiple technologies, are notoriously complex to deploy and maintain. Absolute Performance offers online alternatives that are monitored 24/7, eliminating the need for IT organizations to hire and maintain enterprise management experts for around the clock support coverage. Klir, a competing solution that was extremely visible in 2007, was not represented at this year’s show.