View from the Edge

All About the Cloud...

Last week I spent 3 days at the 'All About The Cloud' conference in San Francisco, an event that is primarily targeted at ISV's, and where for the first time Progress had a booth in the vendor Expo.  Let's just review that, Progress had a booth at a Cloud conference, to many that may come as a bit of a surprise, a welcome one I hope! So what does Progress have to offer with regards to Cloud?  More than you may realize.

If you read my last Blog post you will know about Progress Arcade, our initiative to simplify the task of getting to the Cloud for our customers & partners. In addition to Progress Arcade, there is also the work that the DataDirect folks have been doing around connectivity with the DataDirect XE for JDBC, Salesforce.com driver that enables Java based SQL to connect directly to Salesforce.com using JDBC,  making it easier and faster to query and modify data in Salesforce.com  from custom-developed and commercial Java-based applications.  Last, but certainly not least, there is the Cloud Ecosystem vision that was delivered by Progress CTO John Bates at the recent Analyst Day in New York, which envisions the concept of Vertically specialized ecosystems utilizing Solution Accelerators running in the Cloud, all heady stuff!

 

The general theme of the conference was around the concepts of Cloud, and its perceived value and adoption, with each speaker having some strong numbers to back things up:

• Bill McNee from Saugatuck Research asserted that 'By 2015, 50% of new IT spend will be based upon some element of Cloud'
• Kara Swisher of the Wall Street Journal - 'Every Business will be in the Cloud in the next 10 years, it's just one of those inevitable things'
• Matt Thompson of Microsoft - 'By 2014, Greater than 80% of all new software will be deployed in the Cloud, with 33% of all business applications being consumed via SaaS'

 

It was also interesting to hear from Matt Thompson that the investment being made by Microsoft into Cloud is the single biggest investment in Microsoft's history, period, and by an order of magnitude.

 

In addition to the booth, Progress also had a breakout session where our very own Colleen Smith, along with the CEO of RightScale, and the ISV Manager for Amazon Web Services, discussed the topic of Successfully Partnering in the Cloud, and how through building Progress Arcade we have partnered to have a solution that is a win-win for all parties involved. Maybe that should be a win-win-win...:-) Talking of Arcade there is a great article by Martin Banks 'Progress aims to open Cloud by abstracting it' that discusses the potential of opening up the Cloud to the non-tech-savvy brand masters via Progress Arcade!

One cautionary note in a keynote speech by Treb Ryan, CEO of OpSource, and also a guy who sold a company for $1.4b, yes, that's a b, was the issue of Cloud vendor lock-in, The concern that once an application is deployed with one vendor, how easy is it to move to a different vendor, especially in light of the recent Amazon outage.  Ryan's longer term vision was that of peer Clouds, which just as with peer networks, are transparent to the application and it's users, but the application can be seamlessly moved from one Cloud to another.  It's an interesting concept and will be something to watch, but he also stated that the only viable solution to achieve this today was by utilizing RightScale.  Remember them, the company that we at Progress are partnering with for our win-win-win!

Overall it was a great conference, well attended, we had some good discussions at the booth, and some cool feedback following the presentation by Colleen & co.  But it's also good to see Progress is at the vanguard of what's happening, as Jim Whitehurst, CEO of RedHat said in his keynote, "Cloud is a fundamental paradigm shift, like the move from mainframe to client server', and I couldn't agree more!

 

Thanks for reading

Mike

The Four Pillars of transitioning to the SaaS/Cloud Business Model…

I have the pleasure of spending a vast majority of my time working with ISVs or as well call them APs on their business strategy, specifically those that are looking to move from a traditional software business model to that of a Software as a Service(SaaS) business model.  Yesterday I was reading a favorite blog of mine Phil Wainewright’s Software as Services ZDnet Blog (http://blogs.zdnet.com/SAAS/) and I thought it was a very insightful piece on the Four Pillars of the Transition to SaaS.  The four pillars he highlights are:

Partner strategy. It’s clear that providers have to work with partners— but it’s equally clear that the old partner models have to be radically revised.

Pricing, packaging and selling. Makes a huge difference in timespan and ease or difficulty of the sales cycle, and the value of upsells and renewals. Once these decisions have been taken, there’s then the question of how to organize and incent the sales process.

As-a-service infrastructure. A highly automated operational infrastructure is needed to deliver the necessary partner, sales and customer relations in a cost-effective and responsive manner.

Customer relationships. Moving from a product sales cycle to a continuous, iterative service provider relationship is a complete culture change both for vendors and for their customers.

It is as though he has been on the phone with me and talking to our APs – the only thing that I would change is the order, as the biggest obstacle for most of our APs is the PRICING, PACKAGING and SELLING.  I work very closely with our partners to help them understand that SaaS is not just a pricing model – but the pricing is critical to the successful transition to the SaaS business model.   Understanding the target market and who the buyer is and how they are looking to consume the service is absolutely critical to understand, before making the transition.

Next, I would put the infrastructure requirements – only because that is a “COST” factor in the delivery of the service – so you need to understand your underlying costs – before you price and package your offering – so that one is also a critical component.

I would be remiss if I did not next say that the “CUSTOMER” is next on the list.  I mentioned before knowing your “buyer” is important – but just as critical is the understanding of the customer relationship on a go-forward basis.  You are no longer just selling them a piece of software or an application.  In the SaaS business model – you are now a SERVICE provider and the relationship that you have with your customer is just different.  You are now their “go to” person whenever anything goes wrong…and so you need to be prepared to address all of their business requirements.  Otherwise they will leave you and go elsewhere.

Finally, the PARTNER STRATEGY, but I would look carefully at this in more than just one dimension.  The partnering strategy changes considerably in a SaaS model – mostly because you are now most likely relying on multiple players for successful delivery of your service/product to the customer.  For example – there is the provider of the Internet connection for your customer, there is the hosting or Cloud provider that will be responsible for the hardware, virtualization and operating system delivery and finally there is who you will partner with to deliver the integration and the access to other applications that need to work very closely with your business application.  There might even be someone in your ecosystem that in the past has delivered training and/or implementation services for your application – the question then is: are they still needed? If not, what have you done to your application to make it easier for end-users to get up to speed and knowledgeable on using the application?  Have you investigated the “ease of use” aspect of your SaaS application – or are you still thinking “old school”?  Is your application now more likely to be part of a broader ecosystem and how do you fit into that system? 

These are just some of the questions that you need to be thinking about as you transition to a SaaS business model.  Most of our APs that have made the transition will tell you that after a few years, it can turn out to be a very lucrative growth model.  However, that does not mean that it was an easy transition.  But just keep in mind we are here to help, as we also have thought about our partnering strategy as it relates to the SaaS business model.  As always – any questions – feel free to contact me at cosmith@progress.com.

Webinar Reminder

Hi

Just a quick reminder about the SaaS & Cloud Webinar that's happening tomorrow, Oct 28th.  See Nancy's post below for more details.

Mike

Webinar on Cloud Computing and SaaS

Register to learn more about Cloud Computing and Software as a Service (SaaS) and how you can plan and deploy and modernized OpenEdge applications that takes advantage of these new technologies.   We are making it easy to take the first step with a webinar on Wednesday, October 28, 2009 at 11:00 am EST.  Join Colleen Smith, Director of OpenEdge Product Marketing and SaaS along with Mike Ormerod, Architect, SaaS & Cloud Computing Strategy for this technology focused session.

Contracts And Set-Up Fees: How You Can Profit From The SaaS Business Model?

This is the last SaaS Podcast of this three part series, please see listed podcast in this blog:

Technical Concerns: Does SaaS Involve Reengineering Your Traditional Applications?

SaaS vs Traditional On-Premise Implementations

Progress Software kicks off a three part Q&A podcast series with Colleen Smith, SaaS expert, to address the most frequently asked questions by our application partners as they consider moving their software applications to an On Demand SaaS offering.

3 Common Mistakes Made When Moving to SaaS

One of the questions that I get asked a lot is “What are the mistakes that others have made when moving to Software as a Service (SaaS)?”  I think that software vendors are always looking to learn from others mistakes – so they don’t make the same ones.  So, I thought I would highlight some of the common mistakes that I have seen by some of the vendors that I have spoken with over the past few years.

1) Thinking that SaaS is a replacement for the current offering
Many times when I first meet with a vendor, they are thinking about their SaaS offering in relationship to their existing product and their current target market.  The problem with this is that if you come in thinking that this new SaaS offering is just to replace your existing product offering – then that is called “cannibalization” and that is a bad thing.  What you want to do is develop a new adjunct or complementary service/offering for your existing customers – or even better - to develop a new offering for a completely new target market.  It may be based on your existing product/expertise – but you need to think of it as a new service offering to a new customer base and not just as a replacement to your current offering. The last thing you want to do is cannibalize your current product offering.
 
So, my advice is as follows: If you feel you have found an untapped market for your existing product capability – then go after this new market with a new service offering.  If you feel you only have access to your current target market/customers – then you need to develop a new service to be offered in addition to your existing on-premise product.

2) Targeting too broad of a market segment with the initial SaaS offering
The next thing that happens after many vendors decide to move to SaaS is that they try and take on the world all at once with the new offering.  Too many times when I first meet with a vendor and I ask who their target market is – they come back with an answer that almost includes everyone.  Now, I know that many times a product can solve many problems for many types of companies – but one thing to keep in mind when bringing a new product/service offering to market is to FOCUS.   What I mean by that is for your initial SaaS offering – think about starting small and targeted.  Maybe you can pick a subset of a broader market – or maybe you can limit your target by geography or by a particular set of business processes – whichever way you choose – the key is to start small – become successful and work out all the kinks. 

Once you have shown success – then it is time to open up the field a bit more and expand – but my advice would be to start small and target your offering at a set group of prospects and then once you have achieved success – expand into other areas.

3) Treating the SaaS customers the same as the current customers
Another mistake that I hear a lot about is around the level of service and customer support that is provided to a SaaS customer.  When I first meet with existing software vendors they always tell me that support is not a problem – because they have been doing software support for their customers for years and that is something they know a lot about.  Well – maybe they know a lot about product support – but servicing a SaaS customer is different.  Here is what I mean by that: in the SaaS model – it is all about service levels – that includes: product support, technical support, operational access and overall customer service experience.  I think that most software vendors are good at product and technical support – but it is in the areas of operational support and the overall customer experience that sometimes is forgotten or in many cases – just not thought about at all.

The customer experience will not only be critical to the renewing of the service – but it also counts in terms of how much the service is used as well as many times – how many additional services will be utilized/desired by the customer.  SaaS success is all about “stickiness” – and that means you need to get more customers using the system and you want them to think about going to you for additional services and not to another service provider.

So, my advice is to create a separate account management function to make sure that the needs of the SaaS customers are always being looked after.  You may also want to incent those account managers to continuously ask about how the service is going and provide them with additional service offerings.  Also, make sure from an operational perspective that service levels are constantly being met- if not exceeded – as it has been shown that a happy customer is much more likely to buy more and an unhappy customer is always ready to tell someone else how unsatisfied they were with a vendor.

Transforming your Application in a SaaS-y kind of way…..

The SaaS approach to deploying software solutions is emerging and evolving. As customers continue to expand their acceptance of SaaS, as existing software vendors seek to take advantage of this model and as more new SaaS vendors emerge, it is helpful to develop an architectural model that encompasses all of the issues a SaaS offering may need to address.

Faster implementations, automatic upgrades, increased software flexibility, and higher customer responsiveness all are needed to increase your software's value. These change the application software cost/benefit equation and enhances the customer ownership experience for the better.
 
SaaS providers have to design and operate their software using a new approach that results in a higher value, but with a far lower cost structure. While on the surface SaaS offerings will look the same as hosted legacy software, it is not always the same “under the covers”.
 
SaaS offerings have several characteristics that lower costs and increase value significantly for customers, both up-front and over time. Many costs that legacy software providers incur are completely eliminated by a SaaS vendor's product design and business model, so the SaaS vendor can deploy its resources in ways that provide far higher value to customers.
 
SaaS solutions are architected to be extremely configurable to avoid customizations. The terms customization and personalization are sometimes used distinctively and sometimes interchangeably. Personalization is often used to describe presenting content to individual users based on knowledge of who they are and customization is thought of as defining certain preferences that affect how an application behaves. Providing functionality in a SaaS application to allow customers and their users to configure the solution according to their specific needs (as opposed to code changes) is critical to achieving the goal of providing a single application shared by everyone. This requires careful thought, advance planning and design in the overall application.

The key to success is to provide as much configurability in your application as possible.  Thus code customization and implementation delays that customers typically incur in an on-premise solution are completely eliminated, both during initial implementation and with each upgrade, removing another significant cost of ownership for customers.

Delivery of the SaaS application via the web lowers the deployment costs associated with the application, and expands the reach to more end-users.  The key to remember is to keep it as simple as possible for users to find what they need and understand what to do next. The old standard concepts of top navigation to get to the main areas of an application and sub navigation to get to the different functions within a main area has become so well known that virtually anyone with any experience clicking around the web will feel comfortable following this general paradigm.

Most existing ISVs do not transform their applications overnight, but instead do so as their SaaS business evolves.  Many have developed a “playbook” to guide the evolution of their offerings. The playbook does not start or end with the technology, but rather focuses on the new business opportunities that can be built around SaaS-based technology.

Progress Software recently developed a series of Whitepapers that outline the Architectural components to be considered when developing a SaaS application.  Go to PSDN Online to access the SaaS Expertise Center to view these SaaS Architectural overview papers. http://www.psdn.com/library/kbcategory.jspa?categoryID=2129  And as always – any questions or comments – let me know at cosmith@progress.com.

24 x 7 in a SaaS World – What does that mean?

Most of the time, when we think of Software as a Service (SaaS), we focus on the first “S”, or the one that addresses the Software side of things.  But I think that the second “S” or the one that is about Service is the one that needs to be thought of a little more, as I believe it differentiates a SaaS provider and clearly is what customers will value the most.

Now, I know that it is important to have the business functionality of the application, otherwise you will not be able to attract customers, but it is definitely the service they receive that makes them not want to look elsewhere and stay on as a customer.  So in SaaS, it is the service that addresses customer retention, or more appropriately customer satisfaction.  Most traditional on-premise software vendors have been doing technical/phone support for their entire existence, so when I mention the word “service”, they always nod their heads and say – “Yes, we know we have been doing service for years now”.  But that is when I get concerned, because service in a SaaS world is more extensive, than in a traditional on-premise world.  Service in the traditional software world was about implementation/installation services and then phone support, as part of an escalation procedure, once all internal resources had exhausted their best efforts at fixing a problem.

In a SaaS model, the service provider takes on a new role, and that is one of full application management and support.  What I mean by that is they are no longer just about escalation, the SaaS provider is the only level of support in most cases, and the types of support issues are going to most likely be much more unique to a customer’s business process, and less about a technical glitch in the software.  Application support will now includes things such as password support, application accessibility, business process questions, and potentially even other user process inquiries.  The role of technical support increases to include upgrades, patches/fixes, and overall scheduled system maintenance, many of which most traditional software providers, have always relied on the internal IT organization to handle.  The other big change may come in the area of 24 x 7support - of course this may depend on the type of business application and customer - but it is still something that everyone needs to think about as part of their total service offering.  The other area that should be discussed is backup & recovery services – as the SaaS provider is now responsible if anything should happen to the data of their customer, as well as of their own systems and data.

Progress has offerings that can help SaaS providers in both of these areas.  Some SaaS providers are now looking at offering 24 x 7support not only from their application standpoint, but also from a Progress perspective, which we offer as part of our extended support option.  Many SaaS providers use OpenEdge Management to monitor and manage the Progress environment, and even potentially offer this as a monitoring service to their customers.  The other area that I find SaaS providers looking at is using OpenEdge Replication for backup & recovery of data, as well as data protection. 

Of course keep in mind that these service offerings are above and beyond “basic” support, so the customer should understand the value of these services and should be willing to pay for them.  One of the biggest mistakes made by early SaaS providers is to create one price for their offering, thus making it very difficult to add other service offerings and with that – up the price.  SaaS providers need to take a lesson from the hosting providers and potentially offer an “a la carte” pricing menu and along with that, make sure that they can position the value associated with each of the service deliverables.

Look for more information in the next coming months about the SaaS journey, as we see it happening.  As always, any comments or questions just let me know at cosmith@progress.com.