The Web Conferencing Blog

Important Tech Trends: SaaS

Software as a Service (SaaS) is one of the most important and pervasive technology trend today. We are seeing large on-premise application providers like Microsoft, SAP, Oracle, and IBM embracing the SaaS trend with acquisitions.

The acquisition of WebEx by Cisco last year not only raises SaaS awareness but also validates the fact that the SaaS market is here to stay. This key acquisition is the beginning of more acquisitions to come from other companies and should significantly benefit any stable and profitable company with a SaaS business model.

It should also be noted that Abhijit Dubey, associate principal for McKinsey, told attendees at the Interop Conference in Las Vegas that in a survey of IT buyers found that 62% believed the SaaS industry was at the beginning of the innovation cycle and that SaaS ranked as the most important item for their businesses this year.

Dubey also mentioned that the value of a SaaS model is tremendous: companies deploying traditional software spend 60 to 70 cents on every dollar invested on software over a five year period on the underlying platform driving the applications. For SaaS users, that amount drops to 20 to 30 cents on the dollar.

Goldman Sachs said it perfectly, "SaaS solutions solve many of the problems that traditional software faces, including large upfront license fees, long time to implementation, and access issues by mobile workforce, outside of the company network." In many instances, customers prefer this style of delivery and the large incumbents have to adjust their strategies accordingly. Over the next several years it will become pervasive in almost all areas of the software market."

Key SaaS Players:

- Customer Relationship Management (CRM): Salesforce.com, Oracle On-Demand and PeopleSoft Enterprise On-Demand, RightNow, NetSuite, Kintera, SugarCRM, Intacct, SAP Business ByDesign, Zoho.com
- Learning Management Systems (LMS): SumTotal, Learn.com, GeoLearning, Saba, Blackboard
- Supply Chain Management (SCM): Digital River, Manugistics, SAP
- Content Management: EMC eRoom, Vignette, Interwoven
- Business Intelligence: Business Objects, WebTrends, DemandTec
- Web Conferencing: Cisco/WebEx, Adobe, Microsoft, Centra
- Web Analytics: Omniture, Google Urchin, CoreMetrics, WebTrends
- Human Capital Management: Taleo, Salary.com, SumTotal, Kenexa, SuccessFactors, PeopleClick

Thanks,
David Chao
The Web Conferencing Expert

Gartner Report on Software as a Service

Worldwide total software revenue for software as a service (SaaS) within the enterprise software markets is projected to surpass $5.1 billion in 2007, a 21 percent increase from 2006 revenue, according to Gartner, Inc. The market is poised for strong growth through 2011, when worldwide revenue will reach $11.5 billion. (Within e-learning and Web conferencing, SaaS accounts for more than 60 percent and 70 percent of total market revenue.)

“SaaS adoption is highest in applications that support simplified, common business processes or large, distributed virtual workforce teams,” said Sharon Mertz, research director at Gartner. “Ease of use, rapid deployment, limited upfront investment in capital and staffing, plus a reduction in software management responsibility all make SaaS a desirable alternative to many on-premises solutions, and they will continue to act as drivers of growth.”

“Major on-premises software vendors are re-architecting their application stacks to service-oriented architectures. Their customers will invest in migration for those processes that are complex or proprietary, but they also have an opportunity at this juncture to evaluate whether SaaS is an appropriate alternative for other aspects of their business,” Ms. Mertz said. “Small and midsize businesses that have insufficient resources to convert their applications will also find SaaS an attractive 21st-century solution to their legacy systems.”

Thanks,
David Chao
The Web Conferencing Expert

SaaS Has Staying Power

The Software as a Service model is certainly here to stay. I think there is a misconception that SaaS is geared only for the CRM market. Sure SaaS has been successful in this space, as seen by a short list of CRM providers listed below, but we are seeing more and more successful SaaS-based companies emerge in other markets: supply chain, email marketing, recruiting, content management, etc.

SaaS has not been around as long as the traditional client-server model but over the last 5-7 years SaaS companies have made huge strides. WebEx, the leader in the online meeting market, now has close to 30,000 corporate customers and over 5 million users per month. Over 85,000 online WebEx meetings take place across 70 different countries per day! Salesforce.com has over 20,000 customers and about 400,000 subscribers. These numbers are not only impressive but will continue to grow.

The fact that many Fortune 1000 companies are also adopting SaaS technologies means that no longer is SaaS geared for only the small businesses. Large corporations can also benefits from the low start up costs, quick deployment times, and ease of use. Imagine being able to deploy a SaaS technology quickly and efficiently across a single business unit as a test piece and then rolling the technology out on an enterprise level once the technology proves itself out. Little financial investment, little IT resources during implementation, very low risk. Why not?

CRM:

• Salesforce.com
• Netsuite
• SugarCRM
• Pivotal
• Intacct
• RightNow
• Kinterra

Other SaaS Companies:

• WebEx: online web meetings and collaboration
• Taleo: talent/recruiting management solution
• ClickCommerce: supply chain
• OpSource: SaaS consultants
• Live Person: online customer interaction applications
• Sage Software:
• ExactTarget: email communications and marketing
• Clickability: web content management
• OpenAir: project-based management applications
• Vocus: corporate communications and PR
• Concur Technologies: expense management
• CrownPeak: website and content management
• Omniture: business optimization and web analytics solutions
• EmailLabs: email marketing solutions
• Intranets: document management and virtual web office solutions (Acquired by WebEx)
• DealerTrack: automotive retail solutions

SaaS has staying power and will not be going anywhere in the long term. It will continue to disrupt the traditional client-server model and revolutionize the way companies receive products and services in a real-time, cost-effective, scalable, and reliable manner.

Your Ad Here

Thanks,
David Chao
The Web Conferencing Expert

Microsoft Vista

With the new Vista Operating System, Microsoft has once again proven that is stands behind it's traditional fat-client business model. Considering that Windows and Office account for more than 60% of the companies revenue, I suppose it make sense to stick with what has worked in the past. Only problem is that ultimately it's the customer that suffers in the end with the hefty annual fees for the upgrades.

I am still a huge believer in the Software as a Service model simply because of the benefits that the customer immediately realizes. Low risk, low cost, zero implementation.

Thanks,
David Chao
The Web Conferencing Expert

The Importance of Integration

I believe that one of the strategic IT objectives of all companies is to increase utilization and efficiency of existing infrastructure investments. Most companies have a hodgepodge of systems that each perform a unique set of functions. Sometimes these systems are designed to serve only the needs of either one region, one office, or one department. The problems that arises is a siloed IT infrastructure where multiple systems cannot work together. There is no standardization. There is no commonality that interconnects these disparate systems so they can act as one. This is where integration comes into play.

Imagine if you could better leverage your existing IT infrastructure. Imagine if you could log into one single access point and have the ability to utilize all systems or databases. No longer would you have to log onto one system to perform one task only to have to log onto another system to run a report. This is the beauty of integration.

The companies that provide integration capabilities or open API's are the companies that will develop the strongest long-term strategic partnerships while increasing adoption across the technology ecosystem.

When you take a close look at the Software as a Service market, companies like WebEx have a slew of partners with out of the box integration solutions, as well as, provides open API's for specific customization. The benefit is tremendous flexibility to pick and choose which of your existing systems you want to interconnect.

Increased asset utilization, greater productivity, reduced costs.

Partial List of WebEx Integration Partners:

• Mindjet: information mapping and brainstorming application
• Salesforce.com: CRM
• Viewcentral: event management
• Remedy: case ticket management for customer support or helpdesk
• AOL Instant Messenger: integrated enterprise instant messaging
• GeoLearning: learning management application (LMS)
• Learn.com: learning management application (LMS) 
• Xerox 
• SumTotal: Docent and Click2Learn merger, performance and learning management
• Plateau Systems: learning management

Thanks,
David Chao
The Web Conferencing Expert

The Impact of Web Conferencing for Small Businesses

Wainhouse Research recently released a new study on web conferencing and its impact on small businesses. Wainhouse Research had over 1,500 survey participants, of which 75% worked at companies with less than 500 employees. A majority of the small businesses leverage web conferencing as a competitive advantage to drive revenue, penetrate markets, and expand territory reach with minimal resources. Most even stated that web conferencing has become such a vital part of day to day business that they could not conduct business without it.

"Considering that SMBs constitute about 99.7% of U.S. businesses, comprise approximately 44% of the overall U.S. private payroll, and are responsible for more job creation than any other sector of the marketplace, Web conferencing is proving to be a strategic business tool," reported Alan Greenberg, senior analyst and partner at Wainhouse Research. "Next-generation Web conferencing solutions give SMBs the capability to impact local and global economies as never before possible."

Survey Highlights:

• "Outbound" Web conferencing applications that involve customers and prospects are most important to SMBs.
• 75% of SMB respondents believe the ability to involve/reach more people and save travel costs and time are major reasons to use Web conferencing; 59% say it makes meetings more productive.
• 55% of SMBs (and 44% of large enterprise respondents) say that in addition to the more predictable improvements in business practices, Web conferencing enables users to solve problems they could not solve before.
• 69% of all respondents use Web conferencing to enable new meetings that could not be held in any other way due to cost constraints, timing and several other issues.

"The majority of companies polled indicated they are increasing their use of Web conferencing, and are enjoying a high to very high return in value," said Greenberg. "Though companies of all sizes use Web conferencing to drive business processes, SMBs are much more aggressive in using online presentations and demonstrations to drive marketing and close sales by facilitating meetings with customers and prospects."

It is evident that even the smallest of small businesses need web conferencing.  Companies like WebEx, have designed programs specifically for small businesses: cost effective and flexible price models to match the needs of any small business. Without web conferencing, and reviewing these results, any small business that does not have a reliable, secure, and easy to use web conferencing solution will not reach cash flow positive status any time soon.

To view other similar research reports by Wainhouse Research, click here.

Your Ad Here

Thanks,
David Chao
The Web Conferencing Expert

Software as a Service Viability

The old adage of "Never outsource your mission-critical business functions or processes," no longer holds true. More and more companies are seeing the benefits of a Software as a Service (SaaS) business model. It enables companies to focus on revenue-generating activities and lets the service provider handle the product upgrades, hardware, performance and network connectivity. IT departments do not need extensive training nor do they have to worry about implementation, database configurations, or wonder if the technology with integrate interoperably with the existing infrastructure. Deployment is a matter of days compared to a matter of months so ROI is achieved that much faster.

There is absolutely a paradigm shift to the SaaS model. Even giants like SAP are moving into this space for a competitive advantage. SAP is taking the NetWeaver platform and moving their Enterprise Services Achitecture (ESA) to a services architecture. They even went as so far to acquire a SaaS company to provide added functionality to their CRM/SRM solutions.

Microsoft is another company that is trying its best to adapt to a changing world where legacy software is no longer king. A source close to me in the Microsoft camp told me that there is much confusion these days. He is told to say that their customers still prefer on-premise solutions yet they went out and acquired Placeware 2 years ago to provide a SaaS web collaboration solution. (They have not been successful in selling Live Meeting to their customers. Even their Microsoft Gold Partners opt for WebEx because of the added security (WebTrust Certification), robust functionality, and real-time communications architecture where nothing is ever stored on the WebEx network.) Instead of admitting that the Live Meeting technology is not where it should be from a reliability, ease of use, or functionality standpoint, Microsoft simply says, "our customers like on-premise solutions. They do not like and stay away from Live Meeting because all content is stored on our servers." This is 100% correct! What company in their right mind would feel comfortable storing content and company data on servers outside of their firewall? Talk about increasing one's RISK exposure.

My personal recomendation to any IT individual is to look closely at the Live Meeting solution from an infrastructure and data transmission perspective. Ask them about the "iVault server" and how and why content needs to be upload, converted and stored on their server. Ask they why they cannot support video if communications are truly "real-time?" Microsoft is a great company. I own stock in it myself and it has made me plenty of money over the past 8 years but to invest in Live Meeting simply because it is from Microsoft is foolish.

One of the most successful companies in the Software as a Service market is WebEx and Salesforce.com IDC market research named WebEx #1 SaaS provider. From the IDC Report:

WebEx is helping customers experience on-demand software delivery by providing more people with access and exposure to the model," said Erin Traudt, IDC software as a service research analyst and co-author of the report, "Recent studies have shown increased customer interest in the SaaS delivery model and web conferencing applications is high on the list in terms of SaaS adoption."

The report also states that, "IDC finds that not only are cost-savings benefits and rapid implementation times fueling overall SaaS adoption, but also intangible benefits such as increased employee productivity and efficiencies are being recognized."

I predict we will start to see more and more companies following in the footsteps of WebEx. 27 consecutive quarters of revenue growth...hard to argue against the SaaS model.

Thanks,
David Chao
The Web Conferencing Expert