This blog first appeared on Everest Group blog portal. See here
Do you ever think about the lamp in your living room? Probably not today, as it serves its purpose well. But its newness, beauty, and usefulness gave you great satisfaction when you first bought it.
SaaS adoption is much the same. In the last decade, clients bought SaaS applications because they were “SaaS,” outside their premises, and offered interactive interfaces, better access, quicker new features, and cost savings. Adopting SaaS used to be a priority…SaaS was the means and the goal. But in and of itself, SaaS is now a table stake that is being relegated to the background by four key trends.
- Mobile has taken the center stage: All SaaS providers worth their salt, (e.g., Salesforce.com, NetSuite, and Workday.com), and traditional vendors that have embraced SaaS, (e.g., Oracle, SAP, and Microsoft), are now focusing on offering mobile services leveraging their SaaS solutions. Therefore, enabling mobility is taking a priority over being a “SaaS company.” Salesforce.com, the global SaaS leader, acknowledged this market trend and launched “Lightning,” its mobile platform, to enable developers to quickly develop and deploy mobile apps. I expect other providers to make mobile their chosen computing platform and architect their SaaS offerings accordingly. Making end-user mobile leveraging SaaS concepts will take precedence over offering “SaaS” applications.
- Platform service has become crucial: All the major SaaS providers cited have developed their platform offerings to enable developers to create application extensions and integration. SaaS may lose its sheen when not accompanied by a meaningful platform service. To scale, every SaaS provider will require a platform service to integrate with the legacy and broader enterprise IT landscape. Think about Salesforce.com, which integrated its disparate platform services (Force.com, Heroku, etc.) within the Salesforce1.com umbrella to create an integrated platform offering that assists developers and IT operation teams. Private platform providers such as Apprenda, Cloud Foundry, and Engine Yard, as well as traditional integration vendors such as Dell Boomi, Informatica, and IBM, are also eyeing this opportunity for application integration, and are exploiting the gaps left by SaaS offerings running in standalone environments. Technology providers that continue to offer point solutions will experience a natural ceiling to growth once they generate a critical mass. These providers may be acquired by other larger players that can offer more comprehensive, end-to-end services integrating different cloud components.
- Analytics has become integral: In the last six months, both Salesforce.com and Workday committed to their vision of analytics services by launching multiple applications and platforms such as Salesforce Wave and Workday Insights. This is market leader acknowledgment that clients need value from their SaaS offerings that goes beyond day-to-day operations. SaaS companies are sitting on a treasure trove of client data, and mining it could provide significant benefits to their customers. While these applications are generally delivered in a SaaS model, companies will not buy them for delivery ease or cost savings, but for functionality and value. I expect most other serious SaaS providers will offer analytics services, especially in domains that require data crunching by vast numbers of humans or machines (e.g., Social, CRM, HR, Finance, IT spend, and M2M.)
- SaaS’ novelty has faded away: SaaS has become one of buyers’ preferred mechanism for deploying applications. Even if they are hesitant to leverage a public cloud service, they end up in a private SaaS model and make their developers create “SaaS-like” applications. As most applications are now available in the SaaS delivery model, SaaS’ newness and cachet as a point solution are gone. Most buyers now incorporate “SaaS architecture” in their applications, regardless of whether they are delivered as a SaaS or not. SaaS is now so entrenched as a concept that it is no longer a novelty or a David competing with the Goliath’s of the traditional application world.
Today’s buyers expect SaaS to be better than on-premise systems. They no longer adopt SaaS just because it’s delivered in an “as-a-service” model. They want SaaS because it can solve business problems that on-premise systems may not (or may be exorbitantly costly and time consuming). Buyers no longer buy delivery models; rather, they buy solutions and outcomes.
SaaS as we knew it is gone. However, now it will drive the broader ecosystem of IT consumption, aid clients in running and transforming their businesses, and help end-users perform meaningful tasks. It is the backbone of the entire application landscape. SaaS needs to perform this work in the background and let the new-age concepts and value drivers take the front seat. SaaS needs to become the lamp in the enterprise living room.