I recently recorded a webinar for TechTarget’s Expert Advice Center re: the “Myths and Realities of SaaS” that identified six common myths about SaaS. These myths are:

SaaS is just another over-hyped fad that will only achieve limited market penetration.
SaaS is just another form of ASPs.
SaaS solutions only address CRM/SFA needs.
SaaS is an insignificant sideshow in the evolution of overall software industry.
SaaS is easy to deliver and many providers will enter the market.
Selecting SaaS is an either/or proposition for organizations.

There are many more myths that I could address, but I’d like to dedicate this post to the myth that SaaS is a simple, one-size-fits-all application solution which inherently falls short in mid- to large-scale organizations which require significant customization and integration.

First, many mid- and large-scale organizations are discovering that their application needs are not as unique or unusual as … Read More »

As the concepts of software-as-a-service (SaaS) and managed services gain mainstream acceptance and adoption among enterprises of all sizes, we are also beginning to see some of the adverse side-effects of a rapid growth market taking hold.

For instance, every established independent software vendor (ISV) must now determine how they are going to play in the SaaS market. For some, this means simply offering a relatively unchanged, hosted version of their existing packaged apps to satisfy to ‘on-demand’ preferences of a segment of their customers. Microsoft’s Live Office and SAP’s CRM On-Demand offerings fall into this category. For others, it means fundamentally transforming their applications to make them truly web-enabled and versatile. Differentiating between the two camps is already becoming tough for some unsophisticated companies.

In the managed services realm, various players are just rebranding, rather than truly restructuring their traditional maintenance, … Read More »

Although the trend among enterprises of all sizes is to outsource, or ‘out-task’, an increasing proportion of their IT operations to third-parties to reduce costs and increase operating efficiencies, the rate of adoption continues to vary between managed services and software-as-a-service (SaaS).

According to THINKstrategies research, SaaS is gaining acceptance among organizations of all sizes in almost every industry, while managed services continue to be of greater interest to small- and mid-size businesses (SMBs). And, even in this category managed service providers (MSPs) still find the sales cycles longer than they would like, making the managed service business more challenging than they imagined.

Ironically, managed services and SaaS are similar in many ways and the terms are often used interchangeably. Both assume responsibility for performing an IT or business function. Both alleviate the hassles and upfront costs of performing the function. Both … Read More »

I had the privilege of participating in Opsource’s SaaS Summit March 1-3 at the Silverado Resort in Napa Valley, CA.

The event brought together everyone from the 800 pound guerilla of the Software-as-a-Service (SaaS) industry–Salesforce.com–to an assortment of neophides still formulating their SaaS strategies and solutions. The attendees and speakers included system vendors like IBM and Hewlett-Packard, software vendors like Microsoft and Business Objects, as well as many of the top venture capitalists and investment bankers focusing on the SaaS market.

OpSource’s senior executives and marketing staff deserve praise for not only taking the bold step of hosting this industry event, but having the skill to pull it off in first-class fashion. The company has aggressively asserted itself as a pivotal player in the SaaS market by not only organizing the Summit but also evangelizing the business benefits of SaaS and establishing … Read More »

GM’s recent decision to initiate a ‘multisourcing’ strategy that will result in it parceling out its IT outsourcing responsibilities to multiple solution providers has gained a lot of attention within the IT industry, as well as among corporate management and business publications.

Maybe I’ve been in the IT industry too long, but I don’t get what all the commotion is about.

‘Multisourcing’ has been a part of the IT industry since the landmark Eastman Kodak outsourcing agreement in 1989. For anyone who doesn’t go back that far, the Eastman Kodak deal was the first mega-outsourcing contract to generate headlines inside and outside the IT industry. The company decided to outsource its data center operations to IBM, its network operations to Digital Equipment Corporation–remember them?–and outsource its desktop operations to BusinessLand–remember them also?

Not only did the Eastman Kodak deal represent a multisourcing arrangement, … Read More »

According to most of the IT market research firms, managed services is one of the fastest growing segments of the IT/networking industry. THINKstrategies’ own research and consulting engagements also confirm greater interest and receptivity to managed services among enterprise decision-makers in both large-scale organizations and small/mid-size businesses (SMBs).

Yet, every managed service provider (MSP) that I talk to admits that the business is a lot harder than they expected. They are struggling with longer sales-cycles, smaller scale contracts and less up-selling opportunities than they anticipated.

The struggles of the MSPs to gain broad-based market penetration is also obvious when you compare the customer lists of the Software-as-a-Service (SaaS) providers vs. the MSPs listed on THINKstrategies’ SaaS Showplace and Managed Service Showplace online directories. Many of the SaaS providers boast an impressive assortment of Fortune 500 and other brand-name companies among their customers, … Read More »

SAP’s decision to enter the software-as-a-service (SaaS) is a victory for the SaaS industry and enterprises of all sizes that are fed up with the frustrations of traditional, ‘shrink-wrapped’, software applications.

Prior to today’s much-anticipated announcement, SAP had publicly questioned the long-term value of SaaS and the viability of the SaaS business model. By adding its name to the growing list of SaaS providers, SAP has acknowledged that its customers deserve an SaaS option and the SaaS market is more than just another over-hyped, short-term fad.

SAP’s entry into the SaaS market will certainly accelerate industry growth and maturation. SAP refers to its new offering as the beginning of a third generation of SaaS solutions. The first generation was the ‘single-tenancy’ hosting model that emerged during the dot.com era and was pioneered by Corio and USinternetworking. The second generation has … Read More »

One of the myths about software-as-a-service (SaaS) is that it is primarily geared toward small and mid-size businesses (SMBs). While SMBs may feel the most immediate benefits from SaaS, large-scale organizations have become big beneficiaries of SaaS as well.

Just as Internet leveled the playing field for many SMBs competing with major corporations by giving them instant access to global markets via eCommerce, SaaS has done the same by giving SMBs equal access to many of the enterprise applications which big companies have relied upon for years to manage their businesses.

However, SMBs aren’t alone in recognizing the business benefits of SaaS.

Fortune 500 companies and other brand-name corporations are showing up on the customer lists of many of the SaaS providers that are now listed on THINKstrategies’ online SaaS Showplace directory.

These companies have found that many of today’s SaaS solutions are … Read More »

“Mash ups” has become a popular term in the rapidly changing IT industry. It generally refers to the convergence of divergent technologies and markets to create new solutions.

For example, we are currently seeing a surge of mash-ups that are bringing together digital content and mobile communications to create new media alternatives such as a variety of ‘on demand’ music and movies now readily available on your Ipod or cellphone.

The merging or “mashing” together of disparate markets is also occuring in the outsourcing and software-as-a-service (SaaS) markets.

The prime example of this new trend is the recent announcement of a strategic alliance between Tata Consultancy Services (TCS) and Salesforce.com.

Under this agreement TCS will use many of the SaaS solutions in Salesforce.com’s AppExchange as the basis of new outsourced services. Instead of relying entirely on traditional long-term outsourcing contracts, TCS intends to … Read More »

The cover-story of this week’s issue of BusinessWeek sings the praises of the rapidly expanding outsourcing business. The article points out that corporations of all sizes are leveraging services from a myriad of providers in India, China, Eastern Europe and beyond to satisfy nearly every aspect of their R&D, manufacturing, distribution and support needs.

Yet, today’s outsourcing business hasn’t been kind to many of the traditional industry leaders. IBM announced on 1/17/06 that its Global Services division had another disappointing quarter because of rising competition in its core outsourcing business. Even one of its primary offshore competitors, Wipro, reported on the same day that it was having trouble matching the margins of its India-based peers despite a 25% rise in its fiscal 3rd quarter net profits.

Given these discouraging financial results, it is not surprising that the deal to sell Affiliated … Read More »