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 »

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 »