cloud computing/saas opportunity

Copyright 2010 Freeform Dynamics Ltd 1 Copyright 2010 Freeform Dynamics Ltd

Cloud Computing and the Mid-Market SaaS Opportunity

SAP Partner Event, 10th December 2010

Dale VileManaging Director

Freeform Dynamics Ltd

www.freeformdynamics.com

http://www.freeformdynamics.com/

Copyright 2010 Freeform Dynamics Ltd 2

Key QuestionsWhat’s behind all of the latest cloud bluster?

Haven’t we heard it all before?What’s changed?

Is there really any money to be made here?Are customers and prospects that interested? Isn’t there a risk of just cannibalising traditional revenues?

What’s really required to take SaaS on board?Does the sales cycle need to change?How are financial and remuneration practices impacted?

Will we be forced to change at some point?


About Freeform Dynamics

‘Boutique’ UK based industry analyst firm

Small group of highly experienced guys

Straight talking, no promotion, no pandering

Solid buyer/user research foundation

‘Robin hood’ community research model

Strong media partnerships

Mainstream focus


Reaching our audience


Cloud computing Industry hype or revolution in IT? Lots of conflicting agendas Lots of different views Platform

as a Service

Softwareas a Service

CommunityCloud

Infrastructureas a Service

PublicCloud Elastic

Cloud

PrivateCloud


“Two men say they’re Jesus; one of them must be wrong”Dire Straits, Industrial Disease

CloudComputing

Q. What is cloud?A. Depends who you ask and what they are trying to sell

Would you regard the following as legitimate examples of cloud computing?

Source and copyright 2010 Freeform Dynamics Ltd, online survey of 401 IT professionals, April 2010

Hosted server infrastructure

Other infrastructure based services

Hosted email/messaging

Hosted comms (web conferencing, VoIP, unified comms)

Hosted business apps (e.g. office tools, CRM, project mgmt, etc)

Other hosted services

On premise solutions


Would you regard the following as legitimate examples of cloud computing? (Hosted Apps)

-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100%

Bespoke hosting of your application,dedicated setup, annual contract

Subscription based, fee per user per month,dedicated instance, 12 month contract

Subscription based, fee per user per month,shared multi-tenancy, 12 month contract

Subscription based, fee per user per month,dedicated instance, no minimum contract

Subscription based, fee per user per month,shared multi-tenancy, no minimum contract

On demand service, fee per resources used,shared multi-tenancy, no ongoing obligation

Yes No

Source and copyright 2010 Freeform Dynamics Ltd. Online survey of 401 IT professionals, April 2010

Niche application vendors moving to hosted model


Some down to earth education and advice Understanding the context for the discussion….


Some down to earth education and advice Understanding the industry jargon ….


Horses for courses

Different applications and workloads will naturally run in different places

Hybrid and overspill requirements exist

Bottom line: It doesn’t make sense to force-fit everything to a single deployment model

HO

ST

ED

ON

-PR

EM

ISE

SHARED/DYNAMIC

DEDICATED/STATIC


Lots of hosted service options, lots of potentialON-DEMAND SERVICE CATEGORIES

Business application services It is in this area that the term ‘Software as a Service’ (SaaS) was originally coined. Services at this level are typically focused on the delivery of complete business functionality, e.g. CRM, ERP, etc.

Hosted productivity tools Services here are more concerned with horizontal capability ranging from desktop suites for end users, through to modelling, development and project management tools for analysts and developers.

Hosted comms/collaboration Spearheaded initially by hosted email and web conferencing, the number of services offerings in this area has exploded to include full unified communications and/or social media (directories, blogs, wikis, etc).

Trading community services As supply chain automation has gathered momentum in some industry sectors, services have emerged aimed at facilitating the way in which customers and suppliers collaborate and transact electronically.

Plug-in services A myriad of services exist which do not provide complete business functionality but ‘plug into’ existing applications to enhance or extend them. Examples include everything from mapping to credit checking.

Application platform services As an alternative to consuming pre-built services from external providers, application platform services provide development and runtime environments allowing custom applications to be built and hosted online.

Operational services This often overlooked but highly important category is where we find services concerned with online backup, archiving, security (e.g. email filtering), etc., and even full blown monitoring and management tools.


The market reality Marketing and media coverage well ahead of demand

Lots of different propositions still causing uncertainty Mainstream just moving from awareness to genuine interest Initial interest and activity at high end only just moving down market

But some serious plays are being made Megahosters – Google, Microsoft, Amazon Global business providers – IBM, Salesforce, Netsuite, Oracle, SAP ISPs and Telcos – Rackspace, Fasthosts, BT, Vodafone Big consulting and SI firms skilling up Enablement of niche players and the channel

Vendors still learning how to position and sell Concerns and objections still commonplace


Early experiences highlight some notable disjoints


Strong link between business performance and adoption of hosted services

CHANGE IN

REVENUE OVER

PAST 12 MONTHS

SaaS activity skewed towards progressive

organisations


What originally interested you in hosted services?

Effectiveness as well as efficiency


What originally interested you in hosted services?

Drivers vary by culture


Packaged application wants & desires


Given that no solution is ever a 100 per cent fit, when differences arose during your last ERP implementation did your organisation tend towards...

Familiar historical behaviour


Would you do things differently if you were replacing your core ERP system today?

If so, how would the emphasis differ?}

Don’t want to repeat the

same mistakes


The psychology of SaaSSelf contained solutions

Inherent user friendliness

Best practice baked in

Minimal tailoring

Focus on ease of access to incremental capability

Natural fit with generic ERP/CRM desires and wants


Back down to earth…

COMMON OBJECTIONS

Other issues arisingOngoing level of costRegulatory compliance Integration challengesAccountability questions Loss of control

The unspoken biggie:

Lack of trust


Working around ‘gut feeling’

Already using SaaS in this context

Consider SaaS suitable in theory

Consider SaaS to be unsuitable

Perceived suitability depends on nature of application

ERP in the top right Need to reinforce

ERP/SaaS synergy Need to provide

confidence on complexity handling


Role of the channel


Channel considerationsNew commercial

models more palatable and make

transition easier

New commercial models more

palatable and make transition easier

‘Big gun’ promotion educating the market and creating demand

‘Big gun’ promotion educating the market and creating demand

SaaS shifting the lines to increase the

addressable market and scope of requirements

SaaS shifting the lines to increase the

addressable market and scope of requirements


Key Questions RevisitedWhat’s behind all of the latest cloud bluster?

Haven’t we heard it all before?What’s changed?

Is there really any money to be made here?Are customers and prospects that interested? Isn’t there a risk of just cannibalising traditional revenues?

What’s really required to take SaaS on board?Does the sales cycle need to change?How are financial and remuneration practices impacted?

Will we be forced to change at some point?

Technology developments and maturing commercial practices has made SaaS more ‘mainstream ready’. Technology developments and maturing commercial practices has made SaaS more ‘mainstream ready’.

No, but there are benefits to acting sooner rather than later No, but there are benefits to acting sooner rather than later

Demand being driving by continued heavy promotion, natural evolution of requirements, and ‘cloud psychology’.

Demand being driving by continued heavy promotion, natural evolution of requirements, and ‘cloud psychology’.

Traditional channel role, but with shifted emphasis and new objections in sales cycle. Vendors can help with transition.

Traditional channel role, but with shifted emphasis and new objections in sales cycle. Vendors can help with transition.

Copyright 2010 Freeform Dynamics Ltd 28 Copyright 2010 Freeform Dynamics Ltd

Cloud Computing and the Mid-Market SaaS Opportunity

SAP Partner Event, 10th December 2010

Dale VileManaging Director

Freeform Dynamics Ltd

www.freeformdynamics.com