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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
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?
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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
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Reaching our audience
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Reaching our audience
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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
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“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
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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
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Some down to earth education and advice Understanding the context for the discussion….
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Some down to earth education and advice Understanding the industry jargon ….
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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
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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.
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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
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Early experiences highlight some notable disjoints
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Strong link between business performance and adoption of hosted services
CHANGE IN
REVENUE OVER
PAST 12 MONTHS
SaaS activity skewed towards progressive
organisations
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What originally interested you in hosted services?
Effectiveness as well as efficiency
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What originally interested you in hosted services?
Drivers vary by culture
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Packaged application wants & desires
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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
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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
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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
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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
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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
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Role of the channel
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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
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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