Software as a Service - Maturity model and a way of Life for Small and Medium Business?
Software as a Service (SaaS) exploded into the market during the early 2000, however only non -core application have sufficient level of traction using the SaaS model. During the nascent phase of the SAAS buzz cycle, many CIO’s jumped into the band wagon hoping to reduce the Total Cost of Ownership (TCO) by going for a subscriber model or license fee (based on volumes) based model for utilizing non-core application E.g. Marketing life cycle management, Partner Accreditation System, Human resource and performance management, CRM solutions etc. However with the advent of Sarbanes Oxley and the need for transparency of data updates (organizational data hosted within organization and by SAAS providers) along with rampant case of Security breach of critical data during data management (storage, transmission and hosting from the organization to the SAAS provider) many organization has planned to manage such processes internally or have plans of pulling back SAAS implementation in-house.
However in the case of Small and Medium business, there has been sufficient level of traction especially within the Hi-Tech, Pharmacy, Retail and Manufacturing industry. The major drivers for going toward a SAAS model is
1) Focus on core competency and core system.
2) Outsource IT operation and hosting discrete applications to third party SAAS provider.
3) Manage the customer life cycle management and employee performance management externally etc.
Now let us look at a quick overview of the major players within the SaaS model are
1) CRM – Salesforce.com and Siebel on Demand
2) HR applications – Performance management using Workday
3) Partner management solution for Hi-Tech industry - JobPartners
4) Hosted application for patient management in the Health industry.
5) Customer interaction hub – Rightnow
Various Opportunity spaces have been identified a few of this is listed below.
1) Research content – RSS feed or Webservices feed similar to credit history feed – Banks, small time investors and portfolio managers, brokering firms may require such data. This is a huge opportunity space.
2) XBRL based reporting – with the economic downturn, trust based financial decision making requires reporting of all financial facts based on extensible Business Reporting Language (XBRL). Can a SaaS provider obtain the required data from a vendor and publish the data in this format?
3) Can a certification and capability management vendor offer package certification as SaaS?
4) Investment banking space and Customer centric operations irrespective of industry or domain?
5) Human resource performance management and performance management of sales force would require targets and performance measure to be managed by third party (transparency)?
Market research firms such as Forrester Research have come up with Maturity model to address client requirements in terms of addressing a road map view for implementing SaaS or in various stage of implementing SaaS. Forrester’s SaaS Maturity Model was published in the August 2008 report “Forrester's SaaS Maturity Model”. Forrester Analyst Stefan Reid, author of the report, also discussed the model in his personal blog (http://www.stefan-ried.de/2008/09/24/forresters-saas-maturity-model/). A quick overview of the SaaS maturity model is depicted below (http://blogs.msdn.com/architectsrule/archive/2008/08/18/saas-maturity-model-according-to-forrester.aspx). Forrester classifies the maturity of SaaS solutions on six levels. We define each level according to its answer to the question of who provides what to whom (see Figure 1).
Level 0: Outsourcing is not SaaS.
Level 1: Manual ASP business models target midsize companies.
Level 2: Industrial ASPs cut the operating costs of packaged applications to a minimum.
Level 3: Single-app SaaS is an alternative to traditional packaged applications.
Level 4: Business-domain SaaS provides all the applications for an entire business domain.
Level 5: Dynamic Business Apps-as-a-service is the visionary target.
Source: http://www.forrester.com/Research/Document/0,7211,46817,00.html
Many players within the SaaS implementation space can now utilize the SAAS Maturity model to
a) Evaluate which stage they need to adopt for implementation a SaaS model?
b) What state they are within the SaaS implementation model?
As an organization evaluating SaaS for your business processes, what would be your determinants to make this choice?
Comments
Hi, I am a newbie to SaaS and the Cloud concepts. When we talk about a core functionality being implemented in the Cloud and offered as SaaS, is it legal or feasible to expose an interface that is a replica of the UI of the desktop software, for instance an open-source version of say Photoshop.
Now the customer uses that interface to produce stuff and I process his commands and inputs in the server side using an API of the open source software and run a batch process to generate the output and display it to the customer. Suppose i use Photoshop itself which is proprietary then does it violate IP laws and stuff?
Just a line of thought and wanted an expert opinion.
Posted by: Krishnakumar | April 8, 2009 7:45 AM
Hi KrishnaKumar,
Thanks for your comments. Yes, based on the illustration given by you, using Photoshop (Adobe) for processing of a batch print job would be violating the IP law. However, it may be possible for certain companies to move part of their software stack into a cloud, i.e., the software can be utilized for cloud computing. An interesting read is about IBM participating in the Amazon cloud initiative. (http://www-03.ibm.com/press/us/en/pressrelease/26673.wss)
Now, it is possible for developing software using these product stacks and expose them in the cloud. The opportunity is endless.
Another example is the case of Google cloud, with their reader applications. Surely, we would be able to see more players participating in such initiatives.
Posted by: Jairaj Asok Kumar | May 7, 2009 7:19 AM