Tuesday, July 29, 2008

SaaS Innovations Heating Up: The End of Software as we know it!

Bill Gates, Founder of Microsoft, stated in 2005:

"This coming 'services wave' will be very disruptive…Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses.”

SaaS Market Growth Trends

A November 2007 survey conducted by THINK strategies and Cutter Consortium found that the majority (53.8%) of SaaS survey respondents are utilizing horizontal SaaS applications, over a fifth (21.5%) are employing industry-specific SaaS solutions and another quarter of the respondents are using both. They also found nearly three-quarters (72.3%) of the people who responded are using SaaS solutions to fill unmet needs and the remainder are swapping out their legacy applications for new SaaS solutions.

As customers become more receptive to SaaS alternatives, the number of SaaS players is exploding. This ‘gold-rush’ effect is creating greater competition and confusion in the market as customers try to weed through a proliferation of SaaS solutions.

And, as customers become more knowledgeable about SaaS alternatives, their expectations are also rising as they attempt to make more strategic sourcing decisions to control the number of vendors they must manage and ensure that their SaaS solutions can easily integrate together.

In response, the SaaS market is also undergoing a maturation process that resembles the shift which occurred in the traditional software industry.

SaaS Platform Strategies

Today’s SaaS platforms are built on a combination of multi-tenant architectures, third-party integration technologies and cooperative business partnerships, or ‘ecosystems’. Just as the legacy application leaders of the past—such as Microsoft, Oracle and SAP— used software suites to address a greater share of their customers’ application requirements, so are SaaS companies today seeking to win a greater share of the rapidly growing market via their platform strategies.

These platforms are aimed at aspiring SaaS vendors and user organizations. The aspiring SaaS vendors can leverage a SaaS platform to accelerate their development processes, and reduce their costs and time to market. By aligning themselves with an established platform provider, SaaS companies can also overcome customer concerns regarding integration issues.

User organizations can utilize these platforms to develop their inhouse applications so they can interoperate with pre-existing applications. A quarter (24.6%) of the respondents to Cutter’s SaaS survey reported that they are selecting SaaS providers that offer platform capabilities. Nearly a third of the respondents (35.4%) said they are selecting SaaS companies that offer platform and point solutions.

Promising Early Stage SaaS Market Leader - Corent Technologies

One of the early stage market leaders to watch is Corent Technology which is an innovative developer of enterprise-scale software solutions with a focus on the Software as a Service (SaaS) model. Corent recently won the award for Best Funding Opportunity, and the People's Choice award at the Harvard Entrepreneurs Conference’s Tech Coast Angels Fast Pitch event. It is the first time that an early stage company has been recognized by two award recognitions in the prestigious Harvard and Tech Coast Angels Pitch Event.

Unlike some early stage companies, Corent has a very strong leadership team with experience from market leaders like HP, IBM, Sun Microsystems, AT&T, Open Text, Northrop Grumman, Actel, and Jamcracker.They have taken a very focused approach to developing their go-to-market offerings and have positioned in the market three key offerings:

SaaS-Engine™ - Corent’s SaaS enabling software at the heart of every application. SaaS-Engine™ provides a wide range of functions and rich capabilities that form the core of every Corent SaaS solution developed. This allows for the rapid, efficient development, deployment and maintenance of applications that meet the need for robust, reliable, scalable, flexible, service oriented offerings.

SaaS-Factory™ - People, methodology and tools to build custom SaaS offerings powered by SaaS-Engine™.

SaaS-Powerplant™ - The ability to deliver the application as a service to end users; encompassing the servers, storage, bandwidth, operational management and support necessary to provide the services. Corent’s SaaS-Powerplants are operated as a collaborative service with our datacenter infrastructure provider partners.

Corent Technologies will be a much sought after platform as companies continue to recognize the cost efficiencies of having a robust SaaS platform and software toolkits to reduce time to market for new applications. Early clients include Boeing, and Micron Technology.

In a recent interview with the CEO, Feyzi Fatehi in San Francisco, I asked him what were his current go-to-market challenges. Here are his comments: The first operating growth hurdle like most early stage Software companies is attracting Smart Money from Smart Investors. There is always money in the valley but is it the right money. This is what we need to be careful with. The second hurdle is securing rapid growth in the sales pipeline with strong customers and channel partners. The third hurdle is remaining focused on the growth strategy due to the constant demands on the most precious resource which is time. We will all see this as a worthwhile journey as long as we are surrounded by positive and energy giving talent - these plays are hard enough - being surrounded by the right talent and partners - we have the opportunity to transform the software industry further with our SaaS know-how.

Feyzi and his leadership team recognized the growth in the SaaS market early and have spent the last four years developing a robust SaaS platform and SaaS toolkits for the SaaS Prime Time Tango. Check them out - based on my venture capital experience and early stage growth acceleration and deep knowledge of the SaaS and on demand market place, Corent Technologies is a company that HP, SAP, Oracle, IBM, SunGuard, Unisys, should all have on their radar screens for acquisition.

Additional SaaS Best Practice Sources

For more information on SaaS, check out the SaaS Showcase Best Practices Portal and also pick up a copy of the book that the Founder of WebEx, Subrah Iyar and I recently wrote called: Why Buy The Cow? which provides case studies and lessons learned from leading SaaS CEOs from Lulu, NetSuite, Right Now Technologies, WebEx, and others.


alex said...
This comment has been removed by the author.
alex said...


Interesting article. This blog mentions a report which forecasts the market growth for content management systems which would seems to be leading the SaaS platform charge. The report forecasts up until 2010. I thought you might be interested.



Denise said...

An interesting article about SaaS. It is worth reading for. Thanks for sharing this article and the links. It is indeed a helpful one. Big thanks to you and your blog. Keep it up!


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