SaaS industry 'will collapse' in two years!

Nindak niyare rakhiye, aangan kuti chhawaye;
Bin pani sabun bina, nirmal karat subhaye.

(Keep a critic near you in your backyard for they will help you cleanse yourself without soap and water)

A famous doha by Kabir, and shows the vision and mature thought the famous saint-poet had, which I think should be applied in all walks of life, to be able to see a situation from all possible viewpoints.

Applying the same approach to what I've been all praise for - SaaS, I found an interesting interview on the internet - an old interview, but a contrasting and bold comment made by CEO of a lesser known Enterprise app company -

The article reads "SaaS industry 'will collapse' in two years", and I really appreciate his viewpoint (and guts) in line with the same doha or adage that I said upfront. It is vital to have people who point to the possible negative aspects of a phenomenon currently sweeping the world of enterprise apps. Also he speaks from his experience and analysis and I think there are valid points in the statement too, which highlight the big risk the SaaS operators of the world sit on. Because in contrast to an on-premise world where there is no onus on the software company for maintaining the infrastructure/hardware or worry about its maintenance and upkeep - the SaaS vendors have to bother about all that - and also be on the firing line from the customer in case it is not managed well. Which actually can go to the extent of customers turning away from the SaaS vendor, as the contracts go year on year !

So, the risk that a SaaS vendor takes and the investment he makes upfront or on a regular basis - definitely is bigger than a software-as-a-product manufacturer's, which ultimately can also be a reason for its own death. But we all know that businesses revolve around the customer, and so is the case with this model - where the risk and investment that the vendor is making - is taken off the heads of the customer, which possibly is the key reason for its success too.

Now, with the prediction on SaaS industry going kaput in two years - we'll need to wait for another year to rule out entirely - as it's already been almost an year since the interview, and the SaaS market leader Salesforce.com has been going from strength to strength in that duration. The irony also is that the interviewee himself uses Salesforce.com! but he has a valid point again when he says that he uses it because the product is good, and not because its SaaS, and I agree again. Apart from the model - the key lies ultimately in the product being a good product. So you can do off shoring or outsourcing, but if you are not a good service provider - no one can help you from getting doomed. And so there would be many 'me-too' SaaS offerings, but the one that will stand out in the long run would be the best product, offering the best service at the best price.

So an interesting 'prediction' and viewpoint - but as long as the SaaS industry is in safe and able hands and keeps attracting bigger companies and better brains - I don't see a 'collapse' happening anytime in the near and far future. But critics, please keep those viewpoints coming, we need you in our backyard ! :-)

From Desktops, to Laptops and now NetTops !

As we all know one of nature's biggest irony is that the only thing which remains constant is 'Change'. And nothing demonstrates that faster and better than Electronic and IT gadgets, (I hope you've seen the amazing Salesforce.com video that demonstrates IT system's evolution, a MUST WATCH), The evolution has had us move from mainframes to PCs to Desktops to Laptops and now we hear of NetTops ! What exactly are these NetTops ?

Quoting the Wikipedia "A Nettop is a type of mini desktop or small form factor computer designed for performing basic computation tasks such as surfing the Internet, accessing web-based applications and rich internet applications, document processing and audio/video playback etc."

But why this move from race for computing devices Desktops/Laptops going high end every other month, to a device that is really basic? Isn't this a step back in time ?

The answer is no, and the reason partly lies in my earlier post 'Future-as-a-service'. Imagine if the future is Software-free, with all software being available as a Service that you can use through a basic computing device that only provided internet connectivity, a browser and basic OS level administration capabilities - won't it complement the on-demand or SaaS world perfectly ? Why would one need to carry high end, heavier laptops everywhere he/she goes if all they are using is a browser to access their enterprise applications, documents (Google docs/spreadsheet e.g.), mails etc.

Great lateral thinking once again I'd say, and I'm positive that the future of NetTops would be bright as well. But there is still time where we had a world with 'no-software' and NetTops became omnipresent. And I'm sure before that there will be a transition period where we had both a Laptop and a NetTop - almost like having both a regular Car and a Tata Nano ! :-) .. both serving different purpose and complementing coexistence.

Edit-[28-Aug-09]: Just read this interesting news article on CIO.com 'Students Abandoning Apple MacBooks for Cheap Netbooks' and thought would capture it here to track the trend on this topic- this definitely looks like a tiny step in the direction I indicated above. BTW, Netbooks are not exactly NetTops, but very close to this category - simply put, it's a no-frills Laptop.

The Future as-a-Service

I'm sure we all have heard of SaaS or Software-as-a-service, which is a pathbreaking concept introducing a way of 'serving' software which traditionally was always a physical and locally installed entity. I would say it all started few decades back when 'outsourcing' got coined as a futuristic concept to bring efficiency to business operations. It was an inevitable move to optimize costs by moving operations to lower cost locations. This concept, initially limited within a country or region, got expanded across countries and geos as economies became global .. and we all know that it's such an integral part of doing business now that it's here to stay. (unless the human brain finds another brilliant cost optimization idea, while avoiding some of the possible issues outsourcing poses)

But why these jargons, concepts, theories keep on getting coined every now and then, are these mere buzzwords? I don't think so; I think it’s a necessity, apart from being a reflection of human nature. Being part of a professional organization all of us know that the only way to move, for a professional org like ours, is to move ahead. The sales, revenue, delivery efficiency targets every year have to be more aggressive for any organization worth its salt that wants to be a front runner. Now, the question is 'HOW' you can get more and more efficient with almost similar resources you had earlier. 'HOW' do we cut corners and be on the lookout for finding possible redundancy in the seemingly 'frills-detached' way that we work. The answer I think lies in 'Innovation'. And all these concepts are brainchild of some very innovative people, and packaged well too! by some marketing gurus.

I was listening to Eric Schmidt (Chairman & CEO, Google) on YouTube in a press conference, and he was asked - "We all know about Web 2.0, What would be Web 3.0"; and he said on a lighter note - "Web 2.0 is a Marketing term, and I think you've just invented Web 3.0". So, there definitely is a Marketing air about these jargons but one cannot rule out the important impact they bring to the way businesses are run, by their underlying design and meaning.

On the Human nature aspect - I'm sure we all sometimes feel that how easy work life was a few years back and if we had a time machine we all can go back a few years in our lives, have much less work pressure and better work-life balance. Those years and those targets seem like a cakewalk now. But the irony is that when we were physically living that year, the situation was very much the same, meaning, the years past that, used to look easier and simpler then!

So, I think it’s in the human nature to challenge its limits and move ahead, put tougher targets and try to constantly beat them, the basic reason why we are where we are, from the prehistoric Stone Age days. This inherent nature is what differentiates us human from animals and other forms of life.

I think 'SaaS' takes the same urge to bring in efficiency, innovate and move ahead further, bundled with a proven concept of ‘outsourcing’, and applies it to a different area. Only that this time, not operations but software installation, hosting, maintenance, upgrade and associated pain areas are being 'outsourced'. A brilliant way of applying the same outsourcing concept indeed!

Proliferation of the internet is a major contributor in promotion of this concept, where it is becoming increasingly valid to assume that all professionals are connected or can connect to the internet most of their working hours. So, exploiting Internet as its vehicle, some brilliant brains applied the service concept to Software and transformed ‘Software-as-a-Product’ to ‘Software-as-a-Service’.

From a budding concept almost a decade back, when Salesforce.com became flag bearer for this model promoting "No-Software", it has matured in a massive way where customers are now considering Enterprise SaaS offering a must-have in their IT portfolio, primarily with an aim to reduce TCO and realize ROI faster. And in my own experience we have companies of all sizes - from large Manufacturing or Retail companies, to Airlines or Hi-tech companies, Telcos and even Banks & FIs keen on evaluating and/or migrating to this model.

Despite the slumping worldwide economy, the adoption of SaaS is growing and evolving in the enterprise markets. To cash in, many vendors are rechristening their offerings as SaaS, but as Gartner notes, it is important to keep in mind that the true SaaS/on-demand is comprised of the following:

* Delivery of multi-tenant service
* From a remote location
* Over an internet protocol (IP) network
* Via a subscription-based outsourcing contract

Garther further predicts SaaS revenue reaching US$ 14.8 billion in 2012, with SaaS within the office suites reaching 99.2% compound annual growth rate from 2007 through 2012. Salesforce.com just proved that plausible, by crossing $1bn in revenue last fiscal, becoming the first Enterprise SaaS company to do so.

Indian IT powerhouse Wipro too has recently shared its plan and intent to enter the Cloud computing market [Wipro To Enter Cloud Computing]

So, with a positive backup of prediction-gurus, proven past performance, acceptance increasing by the day, innovation happening across areas to apply the 'Services' tag and concept; I would just say - let’s brace ourselves for the future - for it will be the Future-as-a-Service.