As more companies launch free, ad-based, online services, the debate about their long-term effectiveness grows. Two Software-as-a-Service (SaaS) companies have recently unveiled new, innovative approaches to circumvent the controversy and create new value for customers and sponsors.

The debate revolves around two quesitons. The first question is whether customers will take advantage of these services if they have to put up with a user-interface cluttered with banner ads or search engine listings. The second question is whether the services will generate enough qualified leads for the sponsors to justify the marketing expense.

Klir Technologies is an on-demand IT management solutions vendor which is offering a free, on-line performance measurement service to enable enterprises to improve the reliability of their data center operations. Rather than simply include a Google search engine which produces a listing of potentially competitive IT management solutions, Klir unveiled … Read More »

If the center of the Software-as-a-Service (SaaS) universe is the San Francisco Bay area, then one of the satellite galaxies to keep an eye on is Dublin, Ireland.

I was invited to this amazing city by Enterprise Ireland, the high-tech arm of the country’s economic development authority, to serve as the keynote speaker and moderator of a one-day symposium regarding the SaaS movement. As in the case of IDG World Expo’s SaaScon event in September, I was pleased to also help Enterprise Ireland formulate the agenda and recruit the speakers for the SaaSie seminar.

I got my first taste of Ireland’s unique culture, and its potential to become a hotbed for SaaS, the evening before the event when a scheduled dinner among the event speakers quickly grew into a enthusiastic gathering of local software entrepreneurs and executives thirsting not only for a … Read More »

The convergence of the managed services and software-as-a-service (SaaS) markets came into focus again recently when Everdream and Verizon unveiled new offerings and alliances aimed at covering customers’ desktop management needs.

As I’ve suggested previously on this blog, the line of demarcation between managed services and SaaS can be fuzzy. In fact, there are many who use the terms interchangeably. I tend to differentiate them this way–managed services are those offerings in which vendors/providers assume responsibility for performing a management function, while SaaS gives the customers the functionality to perform a management task themselves.

This distinction becomes blurred when the vendor/provider offers both options to its customers. BMC is an example of a vendor offering both managed services and SaaS solutions to its customers in addition to its traditional packaged software.

Everdream illustrated how the managed services and SaaS worlds are rapidly converging … Read More »

One of the common myths about Software-as-a-Service (SaaS) solutions is that they can’t be customized to meet the specific needs of individual users.

I’ve always felt that this, and many other concerns about SaaS, was unfair because there is a growing number of SaaS providers, as well as an ‘ecosystem’ of third-parties, offering a variety of open source alternatives, application protocol interfaces (APIs), meta-configuration options and integration services which address the customization issue.

Salesforce.com–the spiritual leader of the SaaS movement–has made the latest and most dramatic effort to dispel the customization myth.

At its Dreamforce 2006 conference in San Francisco earlier this week, Salesforce unveiled Apex, a new multi-tenant programming language and platform that enables customers, partners and developers to manipulate the company’s code, triggers and stored procedures. They will also be able to leverage the programming language and platform to create their … Read More »

This past week’s SaaScon event in San Francisco marked the first conference dedicated to educating end-users about the business benefits of Software-as-a-Service (SaaS).

The vendor response to the event was so strong, that the conference organizers added a track aimed at helping new and established, independent software vendors (ISVs) capitalize on the SaaS movement.

I had the privilege of helping to shape both session agendas, identify conference speakers and moderate many of the panel sessions as a member of the conference advisory board.

While there were some unanticipated audio/video problems due to poor hotel staff and ISV attendance problems due to local traffic, the attendees were nearly unanimously enthusiastic about the quality of the content.

The user-oriented sessions went beyond proselytizing about the virtues of SaaS to dig into the practical steps for successfully deploying this rapidly evolving software alternative in enterprise environments. Many … Read More »

On September 12, AT&T announced it will acquire privately held USinternetworking, Inc. (“USi”), one of the early applications service provider (ASPs) pioneers, that has had a hard time maintaining a leadership position in a rapidly changing market.

Like Cognizant’s acquisition of AimNet Solutions earlier this month, this represents another transaction which is reducing the number of the original ASPs and managed service providers (MSPs) in the market. It also reinforces the trend among larger players seeking to expand their service portfolios via acquisition to become more strategic solution providers for their customers and channels for their partners.

Unlike the managed services concept which survived the dot.com bust and is now experiencing solid growth, the ASP model has never gained widespread acceptance for a number of reasons. In particular, ASPs positioned themselves as resellers of traditional software applications that are fundamentally flawed. These … Read More »

On September 5, 2006, Illinois Tool Works Inc. (NYSE:ITW) announced will acquire Click Commerce, Inc. (NASDAQ:CKCM), a leading provider of on-demand supply chain management solutions for a variety of worldwide industries.

The total value of the deal, including payment for outstanding stock options, will be approximately $292 million, a 33% premium over the closing price of Click Commerce’s shares at the time, and approximately 4x Click Commerce’s trailing 12 months revenue. This is a healthy premium compared to other recent software transactions.

This is the latest in a series of Software-as-a-Service (SaaS) providers to be acquired by established companies. In August, Employease was acquired by ADP, marking the beginning of the convergence of business services and SaaS. The ITW acquisition of Click Commerce represents the start of a new trend among specific sector leaders seeking to expand their portfolios via SaaS solutions.

While … Read More »

The convergences of various forms of IT and business process services continues to accelerate.

After witnessing the merger of business services and software-as-a-service (SaaS) in August with the acquisition of Employease by ADP, the latest transaction to signal a new stage in the evolution of the IT services industry is Cognizant’s acquisition of AimNet Solutions.

This transaction is driven by the growing demand among customer organizations of all sizes for their strategic vendors to assume greater responsibility for both their application and infrastructure requirements.

Cognizant is a U.S.-based, offshore IT services company with strong applications development, integration, reengineering, consulting and business process outsourcing (BPO) skills. It is a leading provider of application services for large-scale providers.

AimNet Solutions Inc. offers a suite of managed and professional services aimed at helping a variety of small- and mid-size businesses (SMBs), as well as large-scale enterprises, with … Read More »

I had the privilege of attending a pre-announcement briefing last night during which Salesforce.com’s Chairman/CEO, Mark Benioff, discussed the company’s acquisition of Kieden Corporation and the launch of a new offering called Salesforce for Google AdWords.

Unless you are a faithful Salesforce.com user or follower of the company’s AppExchange, you probably have never heard of Kieden. The fact is that the company is less than nine months old, only has four employees and boasts just 45 customers. Yet, the company’s decision to acquire Kieden was seen as important enough for it to orchestrate a multi-city briefing tour led by Benioff. The kickoff of the tour was in Boston where it attracted a mix of analysts, press and major Salesforce.com customers.

What makes acquiring a little company such a big deal?

Search engine marketing is a huge and rapidly growing advertising mechanism which still … Read More »

On August 17, 2006, ADP announced its intention to acquire Employease, Inc., in a move that will certainly become a watershed event for both the Software-as-a-Service (SaaS) and business services industries.

Although the financial terms of the deal have not been revealed, the market implications of this transaction are significant.

Unlike previous SaaS acquisitions which have been discussed in this blog, the Employease acquisition is the first that doesn’t involve another technology company. Instead, it is the first major acquisition of a SaaS vendor by a business services company.

The acquisition further legitimizing the functional capabilities and scaleability of SaaS.

The transaction demonstrates that business service companies are beginning to recognize that they can more quickly and cost-effectively enhance and expand their solution portfolios by buying SaaS vendors rather than building their own on-demand applications and service delivery infrastructures.

One of the primary attributes which … Read More »