SaaR or Software as a Revolution

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Mark Benioff, the CEO of Salesforce.com states that he has the intention to ‘change the Software industry’, and many would agree he has made an interesting start in the Customer Relationship Management, or CRM, sector. However what caught my eye was the relatively low key announcement of the new capability that allows Salesforce.com customers to develop their own applications on the Salesforce.com servers, using the Salesforce.com Apex Platform toolset. After completion and I assume testing, the resulting applications will be delivered and managed by Salesforce.com on a Software as a Service, SaaS, basis.

Saleforce.com claim their Apex Platform toolset can enable ‘non technical’ people to ‘extend’ the existing CRM capabilities to create fresh value for business. I doubt if Mark Benioff actually meant to echo the original claim from Tom Siebel when he first ‘invented’ CRM, stated that it was the centre of any Enterprise with all other IT systems sub systems integrated to its central role. However there is a massive difference in the approach.

The CRM value that Siebel created was in the production of software itself, to which was added the cost of implementation by skilled practitioners, together this would ensure industry best practice was created in your Enterprise. However the complications that Salesforce.com has mastered, and value that people want to pay for, are all in delivery and support, and not in the production, or implementation of the software. In fact the design of the process is apparently now so obvious that it doesn’t equate to any value; the creation of the software is now considered so simple that it’s also considered not worth paying for; instead the challenge appears to have shifted to implementation, and maintaining a service level, for users.

Maybe it’s me, but that seems a pretty big, even revolutionary, change somewhat in line with Mark Benioff’s aims. It’s arguable that it’s not so far different from Open Source in some aspects of the core value of the software code, but it’s a whole different game in terms of the cost and type of service support it offers.

Actually I think that this revolution is also connected to a shift away from Enterprise applications, meaning those applications purchased, and provisioned, from the centre of the Enterprise for the common good of all users, to what I will call User chosen software. Smarter Users individually, or as a group in a small department, increasingly can, and are, setting up their own ‘drag and drop’, or simple scripted, applications. The gotcha for this activity is the ability to provision to those who need it, and to manage a decent support model to keep it in service, on the basis of this being a business grade reliable service for all users who may need it. The term all users’ means from a few who can write it, through to many who need help to use it.

Finally for how long will it be required before it is necessary to change the software again? And how do you build all the business cases to gain the funding for all this frequent change? Well, the Saleforce.com answer is that this all not required, even better they are making available sophisticated tools to help as well as the operational code. So is this a small quiet beginnings of revolution or not, certainly it's an innovation in the SaaS market if nothing else.

Posted by Andy Mulholland on September 17, 2007 in Software Engineering | Digg this | Seed Newsvine

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Comments

# on September 18, 2007 7:45 PM, Ed Dodds said:

Next, they need to a repository of co-branded apps built by the clients' developers ( see my post on mixed source consultancy ).

# on September 19, 2007 5:55 AM, Vijeesh Papulli said:

A very informative and thought provoking article. I am surprised that this development isn't really up there on the top of the developments among the various newsfeeds that feed my daily read. This blog is a great service. SaaS is truly a SaaR.

# on September 19, 2007 5:56 AM, Vijeesh Papulli said:

# on October 1, 2007 3:15 AM, Urban Nilsson said:

SaaS, yes it will change the way that we think about functionality. But what about diffrentiation? will we get the unique functionality with
SaaS? probably not, but in the same way as a suite of enterprise software dont give the business the edge to be best in class nor will SaaS be everything. I think that we will see usage of SaaS to cut cost of standard functionality, but the last effort to become best in class will be proprietary.

You will get some of the proprietary functionality by combining services to a unique functionality, but the success of that will also depend on granularity

# on October 1, 2007 9:55 AM, andy mulholland said:

Does SaaS provide differentiation? This is a great question Urban, and allows us to develop some further thinking together. i think there are two possible mainstream possibilities to this.

In the first and more conventional i would say the answer is no, and this is based on SaaS providing individuals with the 'standard' tool to do their job. Very much the approach taken in the first round of tools provided by SaaS for sales people as an example.

Its the second possibility that is more thought provoking, and i will use FaceBook as an example. The format is standardised with the differentiation in the people and the content they use about themselves. In a later post - just about to come out - on the use of mashup debates for the USA politians, i speculate on how this might work.

The key point being the person is using the standardised environment - SaaS - to show themselves, and their skills in a unique way. In the case of knowledge workers and consultants that would be an example of diferentiation.

i would love to hear some more thoughts on this idea.

# on October 4, 2007 11:26 AM, Urban Nilsson said:

SaaS, is it functionality or is it content? It can be booth I guess, the content shapes the functionality in a way ... and the consequence of using the information presented by SaaS is probably outside the "technical" SaaS discussion or? :-)

I think that the combination of "fine" granular SaaS modules can create a unique base for a company to some level ... but when the granulaity of the SaaS becomes to fine, we are closing into something that we have seen before ... functional libraries ...

That tells us that we have to use the knowledge that we have built up during the years, and use a better level of granularity. But then we are coming back to the fact that a SaaS with more standardised functionality will not give the same business benefit, think of the case of SCM planning! if that is where your business advantage is, you would not want to share that functionality with others, but for example the general ledger functionality is probably not the business advantage, so that functionality is then very interesting to share (use SaaS)

Of course ... using a planning solution most likely depends on your ability too feed it with the correct information, and not only the algorithms ... so now we come back to the fact that content is important to the SaaS and it drives the uniqueness of the SaaS.

My present feeleing (open for change if someone gives my good arguments) is that SaaS is great for services in a business where you do not need the advantage of having both better functionality and content ... But when you need that advantage, it will be hard to use SaaS

# on October 5, 2007 8:43 AM, Mats Gejnevall said:

One way to avoid the fine granular services Urban is talking about would be to create services that are run-time configurable through the individual service contracts. It would mean that a SaaS supplier could deliver the same service, but it would behave differently dependent on the user. You would then be able to uniquely use the smaller set of services to create your differentiation.

But I think the idea Andy is proposing that SaaS will enable a new type of open source (OSaaS = Open SaaS) where companies like SalesForce or NetSuite will provide a platform where these OSaaS are developed and delivered. Ít's just a matter of finding the best business model. Postsale support can always be a lucrative business.

# on October 5, 2007 5:44 PM, andy mulholland said:

The battle for SaaS is hotting up with Microsoft and IBM both now announcing moving into this space in the comming months.

actually the IBM move seems that it might go more in this direction. its difficult to get facts as they briefed industry analysts on an embargo but an IDC blog inadvertenty let slip that they had 338 developers signed up to offer elements. that sounds like Matts comments on how to gain diiferentiation

# on October 11, 2007 5:54 AM, Samiullah Khan said:

It seems that the next wave in IT industry would be the SaaS with company vying for this to outclass each other. Its a good news for consumers as they can be benefitted a lot from this. Kudos to Salesforce.com for the SaaS initiative!

# on October 12, 2007 7:27 PM, andy mulholland said:

i think we are starting to see a new round in the competition in the software industry. generally!!!

just been watching SAP acquiring Business Objects, and now Oracle going after BEA. Consolidation versus innovation in the provision of software is my summary of this.

# on May 7, 2008 8:57 AM, Outsourcing Software said:

We have succeeded in providing a quality edge to our online business with outsourcing software technology. Additionally, this promises to cut project cost and enhance project management capability along with improvement in efficiency of in-house staff allocation.

# on May 7, 2008 3:31 PM, andy mulholland said:

hey guys - rule of the game is no advertising, but its fine to provide insightfull information on a product or a technique that will help others to understand.

can you provide a better statement without advertising on what helps and why etc?

thanks andy

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