Christopher Lochhead (former CMO at Mercury Interactive) makes a good point when he says that one of the most important aspects of SaaS is how it changes the acquisition model for companies: what previously took months for a purchase now can be done in hours or days. But this may be overly simplistic: staff still needs retraining and business processes need to be adjusted or redesigned around these new systems – that’s a given – in most cases…

When adopting a new SaaS application, let’s say migrating from Act to SalesForce, user retraining and business process remapping is required to make an effective transition.This can be a time consuming and expensive proposition all by itself.

The lower cost solution for those who are happy with the software they’re using is to do a relatively painless migration to an on-demand IT Infrastructure. Sometimes referred to as hosted applications, the true on-demand IT Infrastructure has SaaS model pricing (fixed cost per seat) and must be a one-stop shop where all applications a business relies on are hosted on a single platform. This releases the business from the need for owning servers, associated hardware and software and employing staff to manage all that.

That’s my 2 cents for today – happy cloud computing!

6. More self-service IT from the business-side. Many cloud solutions, particularly as they relate to SaaS, will require increasingly less and less involvement from the IT department. Business users will be able to adopt many future cloud computing solutions entirely using self-service.

The reference to self-service really speaks to adopting services hosted and managed outside of the user’s own enterprise. In our case, this is Infrastructure as a Service (IaaS). These services are easy to adopt, the cost structures are commonly fixed (fewer budget surprises) and don’t require internal IT resources.

The main benefit of this for business is that internal IT functions will increasingly be focused on real business-related, high value added services rather than basic IT Infrastructure issues. This will translate into less management focus spent on these issues allowing for greater focus on the core business.

Steute Meditech Case Study

To some, it’s elastic computing, to others, utility computing or a hosted database development platform. Yet others promote SaaS and hosted applications as the Cloud. Like a lot of things, what Cloud computing is really depends on you. And that’s a good thing.

Our point of view is in line with Serguei Beloussov, the CEO of Parallels, who recently said "We believe one of the key advantages of service clouds is the ability to offer a complete suite of applications, You have to be a one-stop shop.” (article ). We agree that a single platform, where all your applications are hosted, holds value for many midsized enterprises. These organizations would otherwise struggle to properly support, or simply pay too much, for their computing platforms. The EasyOffice is a "one-stop shop" where common applications as well as your line-of-business applications, that you’ve chosen to run your business, are all hosted on one platform.

The varying forms of Cloud Computing are useful to different firms for different reasons. As part of your technology strategy, consider what value is offered by these varying models and develop a total cost of ownership model for your computing infrastructure. Make sure your TCO model includes critical "intangibles" like the cost of management focus on IT. Then decide how the Cloud should look to you.

Happy Cloud Computing!

In one very real way, the small to mid-sized enterprise (SME, SMB) has been forgotten by the SaaS world. I know that some would say the midsized firms are the biggest beneficiary, but if you listen to the pulse, and perhaps read some of the very well researched articles by Ben Kepes , adoption of the SaaS versions of small business’s primary application, Accounting, has been, well, let’s be honest, poor.

I can think of one very simple reason for this, and we have been here before: business does not like to invest lots of time, effort and money changing the way they do things unless there is some clear, and somewhat immediate, benefit. And small business is least likely to be able to afford flights of technological fancy.

But there is hope.

We’ve Been Here Before

This isn’t the first time we (the collective We, the Internet Generation We, the venture financed We, the We who have great technology ideas and the We who subscribe to and proselytize them) had a great idea that had a hard time getting out of the starting blocks. In the larger banks and corporations I worked at for years, the movement to "webify" applications ran wild. Millions of dollars was spent in "translating" many in-house applications to web technologies.

And what was the end result? Great progress was made and proprietary application programming became easier (in some ways), but ultimately, only a relatively small number of really peach projects ever crossed the bridge and became fully webified. The cost and expense wasn’t justified and the existing "fat client" applications worked pretty well.

We’re Here Again

The difference being: now there are a plethora of options for the company that is ready to make the transition to SaaS, but that old cost benefit issue is still playing a major role. Small business is not seeing enough of a benefit to warrant the cost of transitioning to a new platform.

Let’s consider only Accounting applications for the moment. The list is long and there is no shortage of major players and seemingly high quality applications. But they all suffer from the same problem:

• SMB has software in this place that is satisfying it’s needs
• this software is tried and true (or at least it’s the "devil you know")
• there is not enough of a perception of value to inspire many SMB’s to undertake the cost of a transition to new software:
  • extensive data translation (no matter how easy they say it’s going to be)
  • relearning
  • business process reworking

Okay, so where does that leave us?

SaaS an SMB Can Love

When we take the applications that clients are currently using and host them in Cloud data centers, then package that service up as SaaS, the adoption rate goes hockey-stick. This model contains some of the best aspects of SaaS: fixed cost, it’s fully managed at the application layer, no requirement for hardware purchase. There are lots of different flavors of SaaS and Cloud Computing – this "service cloud" is one clear segment.

Some of My Favorite (SaaS) Things

• Packaging: per seat/per month pricing
  • Clients don’t want to have to purchase the farm to ride a horse
  • The service structure and pricing should allow anyone to use the software and only purchase as many seats as they need

• Multi-Tenancy
  • This is really invisible to the end-user, but it’s what allows us to do the above and achieve the density of use and scale that reduces cost to the point where hosted services become not only truly affordable, but cost-advantageous

But here’s what you’ve gotta Love: these are the applications small business is already using. No transition costs . Minus the costs of supporting your own server infrastructure. That makes the decision to go with SaaS a lot easier and that’s why we’re seeing a tremendous adoption rate of this brand of SaaS.

Please chime in! I’d love to know your thoughts.

Happy Serverless Computing!

Philip Meese