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 »

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 »