Posts Tagged ‘SaaS’

Saas predictions for 2014

Friday, December 27th, 2013

While the bulk of enterprise software is still deployed on-premises, SaaS (software as a service) continues to undergo rapid growth. Gartner has said the total market will top $22 billion through 2015, up from more than $14 billion in 2012.

The SaaS market will likely see significant changes and new trends in 2014 as vendors jockey for competitive position and customers continue shifting their IT strategies toward the deployment model. Here’s a look at some of the possibilities.

The matter of multitenancy: SaaS vendors such as Salesforce.com have long touted the benefits of multitenancy, a software architecture where many customers share a single application instance, with their information kept separate. Multitenancy allows vendors to patch and update many customers at once and get more mileage out of the underlying infrastructure, thereby cutting costs and easing management.

This year, however, other variations on multitenancy emerged, such as one offered by Oracle’s new 12c database. An option for the release allows customers to host many “pluggable” databases within a single host database, an approach that Oracle says is more secure than the application-level multitenancy used by Salesforce.com and others.

Salesforce.com itself has made a shift away from its original definition of multitenancy. During November’s Dreamforce conference, CEO Marc Benioff announced a partnership with Hewlett-Packard around a new “Superpod” option for large enterprises, wherein companies can have their own dedicated infrastructure inside Salesforce.com data centers based on HP’s Converged Infrastructure hardware.

Some might say this approach has little distinction from traditional application hosting. Overall, in 2014 expect multitenancy to fade away as a major talking point for SaaS.

Hybrid SaaS: Oracle has made much of the fact its Fusion Applications could be deployed either on-premises or from its cloud, but due to the apparent complexity involved with the first option, most initial Fusion customers have chosen SaaS.

Still, concept of application code bases that are movable between the two deployment models could become more popular in 2014.

While there’s no indication Salesforce.com will offer an on-premises option — and indeed, such a thing seems almost inconceivable considering the company’s “No Software” logo and marketing campaign around the convenience of SaaS — the HP partnership is clearly meant to give big companies that still have jitters about traditional SaaS a happy medium.

As in all cases, customer demand will dictate SaaS vendors’ next moves.

Geographic depth: It was no accident that Oracle co-President Mark Hurd mentioned during the company’s recent earnings call that it now has 17 data centers around the world. Vendors want enterprise customers to know their SaaS offerings are built for disaster recovery and are broadly available.

Expect “a flurry of announcements” in 2014 from SaaS vendors regarding data center openings around the world, said China Martens, an independent business applications analyst, via email. “This is another move likely to benefit end-user firms. Some firms at present may not be able to proceed with a regional or global rollout of SaaS apps because of a lack of local data center support, which may be mandated by national data storage or privacy laws.”

Keeping customers happy: On-premises software vendors such as Oracle and SAP are now honing their knowledge of something SaaS vendors such as NetSuite and Salesforce.com had to learn years earlier: How to run a software business based on annual subscriptions, not perpetual software licenses and annual maintenance.

The latter model provides companies with big one-time payments followed by highly profitable support fees. With SaaS, the money flows into a vendor’s coffers in a much different manner, and it’s arguably also easier for dissatisfied customers to move to a rival product compared to an on-premises deployment.

As a result, SaaS vendors have suffered from “churn,” or customer turnover. In 2014, there will be increased focus on ways to keep customers happy and in the fold, according to Karan Mehandru, general partner at venture capital firm Trinity Ventures.

Next year “will further awareness that the purchase of software by a customer is not the end of the transaction but rather the beginning of a relationship that lasts for years,” he wrote in a recent blog post. “Customer service and success will be at the forefront of the customer relationship management process where terms like retention, upsells and churn reduction get more air time in board meetings and management sessions than ever before.”

Consolidation in marketing, HCM: Expect a higher pace of merger and acquisition activity in the SaaS market “as vendors buy up their competitors and partners,” Martens said.

HCM (human capital management) and marketing software companies may particularly find themselves being courted. Oracle, SAP and Salesforce.com have both invested heavily in these areas already, but the likes of IBM and HP may also feel the need to get in the game.

A less likely scenario would be a major merger between SaaS vendors, such as Salesforce.com and Workday.

SaaS goes vertical: “There will be more stratification of SaaS apps as vendors build or buy with the aim of appealing to particular types of end-user firms,” Martens said. “In particular, vendors will either continue to build on early industry versions of their apps and/or launch SaaS apps specifically tailored to particular verticals, e.g., healthcare, manufacturing, retail.”

However, customers will be burdened with figuring out just how deep the industry-specific features in these applications are, as well as gauging how committed the vendor is to the particular market, Martens added.

Can’t have SaaS without a PaaS: Salesforce.com threw down the gauntlet to its rivals in November, announcing Salesforce1, a revamped version of its PaaS (platform as a service) that couples its original Force.com offering with tools from its Heroku and ExactTarget acquisitions, a new mobile application, and 10 times as many APIs (application programming interfaces) than before.

A PaaS serves as a multiplying force for SaaS companies, creating a pool of developers and systems integrators who create add-on applications and provide services to customers while sharing an interest in the vendor’s success.

Oracle, SAP and other SaaS vendors have been building out their PaaS offerings and will make plenty of noise about them next year.

Source:  cio.com

IT managers are increasingly replacing servers with SaaS

Friday, December 6th, 2013

IT managers want to cut the number of servers they manage, or at least slow the growth, and they may be succeeding, according to new data.

IDC expects that anywhere from 25% to 30% of all the servers shipped next year will be delivered to cloud services providers.

In three years, 2017, nearly 45% of all the servers leaving manufacturers will be bought by cloud providers.

“What that means is a lot of people are buying SaaS,” said Frank Gens, referring to software-as-a-service. “A lot of capacity if shifting out of the enterprise into cloud service providers.”

The increased use of SaaS is a major reason for the market shift, but so is virtualization to increase server capacity. Data center consolidations are eliminating servers as well, along with the purchase of denser servers capable of handling larger loads.

For sure, IT managers are going to be managing physical servers for years to come. But, the number will be declining, based on market direction and the experience of IT managers.

Two years ago, when Mark Endry became the CIO and SVP of U.S. operations for Arcadis, a global consulting, design and engineering company, the firm was running its IT in-house.

“We really put a stop to that,” said Endry. Arcadis is moving to SaaS, either to add new services or substitute existing ones. An in-house system is no longer the default, he added.

“Our standard RFP for services says it must be SaaS,’ said Endry.

Arcadis has added Workday, a SaaS-based HR management system, replaced an in-house training management system with a SaaS system, and an in-house ADP HR system was replaced with a service. The company is also planning a move to Office 365, and will stop running its in-house Exchange and SharePoint servers.

As a result, in the last two years, Endry has kept the server count steady at 1,006 spread through three data centers. He estimates that without the efforts at virtualization, SaaS and other consolidations, they would have more 200 more physical servers.

Endry would like to consolidate the three data centers into one, and continue shifting to SaaS to avoid future maintenance costs, and also the need to customize and maintain software. SaaS can’t yet be used for everything, particularly ERP, but “my goal would be to really minimize the footprint of servers,” he said.

Similarly, Gerry McCartney, CIO of Purdue University is working to cut server use and switch more to SaaS.

The university’s West Lafayette, Ind., campus had some 65 data centers two years ago, many small. Data centers at Purdue are defined as any room with additional power and specialized heavy duty cooling equipment. They have closed at least 28 of them in the last 18 months.

The Purdue consolidation is the result of several broad directions: increased virtualization, use of higher density systems, and increase use of SaaS.

McCartney wants to limit the university’s server management role. “The only things that we are going to retain on campus is research and strategic support,” he said. That means that most, if not all, of the administrative functions may be moved off campus.

This shift to cloud-based providers is roiling the server market, and is expected to help send server revenue down 3.5% this year, according to IDC.

Gens says that one trend among users who buy servers is increasing interest in converged or integrated systems that combine server, storage, networking and software. They account now about for about 10% of the market, and are expected to make up 20% by 2020.

Meanwhile, the big cloud providers are heading in the opposite direction, and are increasingly looking for componentized systems they can assemble, Velcro-like, in their data centers. This has given rise to contract, or original design manufacturers (ODM), mostly overseas, who make these systems for cloud systems.

Source:  computerworld.com