On July 11, Iomega Corporation announced that it had reached a definitive agreement to acquire CSCI, Inc., a San Diego-based managed services and outsourced IT company. In the company’s announcement, CEO Jonathon Huberman said, “Iomega is taking the first step toward becoming a managed services company.”

While Iomega isn’t the first company to make the move from a product-centric to a managed services oriented organization, it is the most recent to jump on the managed services bandwagon via an acquisition strategy aimed at accelerating the transition process.

Over the past few years, a number of prominent hardware and software companies–including Sun Microsystems, Symantec and Cisco Systems–have acquired and integrated managed service providers (MSPs) into their operations with varying degrees of success.

Like Iomega, these companies have recognized that customers of all sizes have become fed up with the hassles and inefficiences of implementing … Read More »

Last month I discussed new alliances that are accelerating the market penetration of Software-as-a-Service (SaaS). I’ve also talked at length in this space about the struggles managed service providers (MSPs) have experienced keeping pace with their SaaS counterparts when it comes to gaining customer acceptance and adoption.

A new alliance between NetSuite and CompUSA not only reinforces my views about how creative partnerships are driving the SaaS market, but it also can serve as a model for MSPs who are seeking new channels to market for their solutions.

NetSuite is making its on-demand business software applications available to small- and mid-size businesses (SMBs) through CompUSA Business Services’ 250 stores across the U.S. Under this agreement, customers will receive sales, training and service support from CompUSA’s 1100 staff.

While NetSuite’s applications will not be bundled into CompUSA’s desktop and server solutions, the retailer’s staff … Read More »

As Software-as-a-Service (SaaS) rapidly gains mainstream interest and adoption, various SaaS providers are repositioning themselves to expand their sphere of influence in the market by morphing their core products into integration and development platforms.

Just as the SaaS movement has been spearheaded by Salesforce.com, the shift toward a platform orientation has been sparked by the broadbased acceptance of the company’s AppExchange within the SaaS industry and among user organizations.

For the unindoctrinated, AppExchange is Salesforce.com’s integration and development platform based on the tremendous success of its CRM and SFA applications. The AppExchange enables third-party software developers and independent software vendors (ISVs) to more easily build SaaS solutions, and integrate their applications and tools to Salesforce.com’s core applications and those of its vast partner network.

The AppExchange includes a set of application protocol interfaces (APIs), design specifications, service provisioning and support requirements, and co-branding … Read More »

Google’s new, web-based Spreadsheet is being viewed as a major challenge to Microsoft’s Excel and the dominance of its Office suite. From my perspective, it is also a significant endorsement and will be another catalyst in the movement toward Software-as-a-Service (SaaS).

Google’s move isn’t a big surprise to anyone who follows the software industry and the escalating tensions between Google and Microsoft. But, it is still a milestone in the evolution of SaaS.

While the number of web-based alternatives to Microsoft Word, Excel, Powerpoint and Project has grown–check out THINKstrategies’ SaaS Showplace for some examples–none had gained mass market attention and acceptance. Instead, they’ve been the playthings of Marc Benioff of Salesforce.com and techies who love to imagine a world without Microsoft.

Google’s Spreadsheet has made news in the popular and business press, elevating the stature of SaaS and giving it greater credibility … Read More »

As I mentioned in my previous post, I’ve been traveling to a variety of software conferences where the discussion was focused on the implications of Software-as-a-Service (SaaS) and when this market will become fertile grounds for mergers and acquisitions.

Another aspect of the discussion has been a debate about how the major, established ISVs–Microsoft, Oracle and SAP in particular–will respond to the SaaS movement.

A recent acquisition by Microsoft has been relatively overlooked despite the fact that it offers some insight into Microsoft’s plans in the SaaS market.

On May 22, Microsoft announced that it is acquiring Softricity, a company which “transforms corporate computing by changing applications into network services that no longer need to be installed. The result is a highly scalable software environment that is securely deployed, managed and immediately available anywhere in the world.”

Sounds like SaaS to me!

Microsoft unveiled its … Read More »

Since my last blog entry correctly predicted the pace of merger and acquisition activity in the Software-as-a-Service (SaaS) was primed to accelerate just three days before RightNow acquired SalesNet, I figure I’d test my prognostication skills again by predicting another important market trend in the SaaS and managed services sector.

This time I’m predicting that several SaaS and managed service providers are going to team with the major Internet companies and hardware vendors to dramatically expand their channels to market.

I’ve been suggesting this trend privately to my clients for the past six months. And, the series of joint ventures and strategic alliances announced between eBay, Yahoo, Google and Dell in the past week gives me even greater confidence that my prediction is about to come true.

Specifically, I expect eBay, Yahoo, Google and possibly AOL along with leading PC/server vendors to resell … Read More »

(It’s always fun to be right about something. In this case it is the following blog entry which was published on Friday, May 19, just three days before RightNow announced its acquisition of Salesnet, a clear indication of the M&A ramp-up which I describe in this blog. And on May 22, Microsoft acquired Softricity. Click here for my more recent blog on the implications of Microsoft’s acquisition.)

A persistent question being asked during this past week’s Software and Information Industry Association (SIIA) Software Summit in San Francisco was when will we see M&A activity heat up in the Software-as-a-Service (SaaS) industry?

Since I wasn’t tethered to my favorite online news service while I was attending the conference, I gave everyone my pre-established view that a decernible uptick in SaaS-oriented acquisitions would occur in the second half of 2006.

I emphasize acquisitions as opposed … Read More »

One measure of the growing level of interest in Software-as-a-Service (SaaS) is the expanding number of forums focused on this movement.

Over the next two weeks, the SIIA Software Summit and Pacific Crest Securities’ On-Demand Conference will examine SaaS market opportunities and software industry challenges.

While I expect these software and investor events to be valuable, I’m really looking forward to IDG World Expo’s new user-oriented show in September, called SaaScon.

There are also an increasing array of webcasts, some that I’m privileged to be a part of. One series worth paying attention to is Credit Suisse’s “Mavericks vs. Microsoft”. The series kicked off this week with a fantastic discussion between Credit Suisse’s Jason Maynard and Patrick Grady, CEO of Rearden Commerce. Anyone who hasn’t heard Grady speak is in for a treat. You can here the archived session until May 18. Just … Read More »

Although it gained little industry attention, Microsoft demonstrated its chutzpah on May 1 by unveiling a platform and set of “tools and best practices” to enable other independent software vendors (ISVs) and hosting companies to jump onto the SaaS bandwagon. This announcement came even as Microsoft fends off criticism regarding the viability of its own software-as-a-service (SaaS) offerings.

According to the company, the Microsoft® Solution for Windows®-based Hosting for Applications Version 1.0 will provide ISVs “with the tools and guidance to design service-enabled software applications and facilitate user provisioning, performance monitoring, usage tracking, and reporting and service aggregation.”

Microsoft claims that its new solution will address four critical hosted application needs: uptime, service provisioning, security and management. Specifically, Microsoft is offering,

Microsoft Operations Manager (MOM) 2005 to address the uptime needs.
Microsoft Provisioning System to handle the business service management needs.
Windows-based Hosting … Read More »

Now I know how Nicholas Carr has felt over the past three years!

Since he suggested in the Harvard Business Review in 2003 that “IT Doesn’t Matter”, Carr has been in the crosshairs of many IT professionals and product vendors who believe his views represent a blasphemy in the cathedral of traditional thinking about the strategic value of technology.

Carr has been alternatively deified and belittled for challenging the established thinking that IT is essential to create a competitive advantage. Instead, Carr has made the case that IT is quickly becoming a commodity which organizations should treat as a basic utility and acquire from third-parties rather than build themselves.

IT staffers or technology vendors whose jobs and products are threatened by Carr’s views have made a concerted effort to discredit his ideas, sometimes resorting to personal attacks in the process.

Yet, Carr hasn’t backed … Read More »