Matt Deacon's digestive blog : SaaS

Implications for the Future of IT

Matt Deacon — Thu, 06 Dec 2007 19:59:00 GMT

I went over to Essex University the other week to give the 1^st year and post-grad computer science students a lecture that focused on something I called “IT Mega-trends” in the afternoon I held a workshop to discuss what implications these trends might have on the students.

We split them into 4 groups each to focus on one of the following topics of population, jobs, education and information along with a set of statistics relating to each topic.

“If you’re 1 in a million in china then there are 1,300 just like you”

“Today’s learner will on average have 10-14 jobs by the age 38”

“Top 10 in-demand jobs by 2010 did not exist in 2004”

“At the start of a 3 year degree half of 1^st year material will be out of date by the end of the course”

“40 exabytes (4x10¹⁹) of unique new information will be generated this year”

These statistics were meant to act as a disturber to make the students uneasy about their potential futures and included facts such as:

At the end we came back together and drew a mind-map from their output. Iain Langdon, their lecturer re-ran the workshop later in the with some other students from the university and pulled together the following combined mind-map.

I was worried initially that the students wouldn’t engage but to be honest I was struck by how much of what we talked about they were already aware of and that they readily accept that a “career is not for life” that they will be expected to retrain and deal with enormous “rates of change”and what they learn now is really the skills of “learning how to learn”. “Life long learning” was a key phrase that struck in my mind.

I felt pretty good about things on the whole when I left. This wasn’t the ugly mob of disgruntled coders that I’d been expecting to greet a bloke from Microsoft but people who understand much more about the life we are moving towards than I had really given credit to.

[Click image to enlarge]

Software + Services Architect Forum

Matt Deacon — Wed, 30 May 2007 18:44:00 GMT

Slide decks are now (finally available) from the recent S+S Architect Forum we held at UK Microsoft Campus.

http://www.microsoft.com/uk/msdn/events/postevents.aspx

The Ox, The Jam Jar and the Architect

Matt Deacon — Fri, 18 May 2007 15:37:00 GMT

Back in 1906 at the age of 84, Francis Galton came across an Ox weighing competition at the West of England Fat Stock and Poultry Exhibition. The fair goers were asked to guess the weight of the Ox after it was slaughtered and dressed with the nearest guess winning a prize. Galton, always wanting to demonstrate that the political process was flawed and that people in general are not terribly smart asked if he could take away the individual guesses to analyse them. On averaging the combined results he was amazed to find that the average of the crowd was 1197lbs just a mere 1lb away from the actual weight of 1198lbs and in so doing he had provided amongst the first evidence that the collective intelligence of the crowd is often significantly better than that of the smartest individuals among them.

This formed the first chapter of “Wisdom of Crowds” by James Surowiecki and it and the rest of the book for that matter got my mind racing and, on the 15^th May I got my chance having organised the latest UK Architect Forum that would focus on “Software and Services”.

Neither having an Ox to hand nor the willingness to slaughter one I presented the audience with a jam jar filled with one penny coins. I provided each person with a pen and post-it note with a prize to incentivise them to make their best guess.

Of 107 guesses, 2 provided their name but no guess, 1 provided a guess with no name and 2 guesses were ignored as they we way off target at 4700 and 4500. We had 2 winners who hit the nail firmly on the head at 421 but most impressive of all was that the group average as a whole came out at 419, just 2p away from the actual amount.

For those statisticians amongst you here is the distribution curve and corresponding data:

Range	Guesses
100	6
200	20
300	21
400	16
500	13
600	7
700	6
800	4
900	3
1000	4
1100	2
1200	0
1300	1
1400	1
1500	0
1600	1

Unbundling the bank

Matt Deacon — Thu, 15 Mar 2007 17:05:00 GMT

“Technology is the primary business driver in the banking industry” or so Craig Heimark said during his session at QCon today, not that the business is really aware, all they see is the changes in the competitive landscape. However, as he argues this change is driven (although enabled might be a better word to use) by the massive growth of communications challenging and forcing a reconfiguration from centralised vertical models to decentralised models made up of single value specialists.

The consequence is to create increased value to the consumer at the expense of margins; the higher the volumes the lower the margin. This leads to mass customisation and the eventual unbundling of services driven by consumer demand.

Not dissimilar, IMHO, to the service revolutions that we are predicting across other verticals and a breath of fresh air after my experience talking about the Software and Services at the recent "Implementing SOA in the Banking industry" conference I attended last month where their view was consolidation at all costs.

However, Craig has left the bank and is now building technology that will aid this disruption ... so the innovator leaves the corporation buy more on the innovation squeeze in my next blog.

SaaS: For dummies

Matt Deacon — Sat, 17 Feb 2007 02:26:00 GMT

SaaS is a continually evolving mix of existing and emerging technologies and business models and as I have suggested seems to be best described in terms of the following six characteristics (although I am sure there are more).

SaaS, at best should be viewed as a metaphor for the state of software delivery at a particular point in time (ie. now). The significance is that now, network communication can almost be assumed to be a given; markets are no longer constrained and in fact are floating in a layer above that of the physical world; this is no longer a global market, as this suggests a change in location; the market is no pan-global; the markets are now in the cloud.

SaaS is a fad; it is a metaphor that encapsulates the evolving software landscape of today. It is only a matter of time before the term SaaS will fade away into obscurity and be replaced by the more familiar term: Software. Only this time round the term software will not mean the same as it does today.

It’s much like music; we are in a period similar to Punk; a relatively short period in time, but a significant period in musical history. The result of which has seen the explosion of an incredible array of new musical forms. Some good and some not so good. Ok so as long as we ignore the whole of the eighties, new romantics and more recently pop idol we're looking good for an analogy here!

Welcome to the future of software as we will know it.

6. SaaS: Reach

Matt Deacon — Sat, 17 Feb 2007 02:25:00 GMT

The final and perhaps all encompassing characteristic of SaaS is described in terms of reach or rather the size of the new global markets into which these products instantly play. This is an obvious draw but with significant side effects. The fact that you are ‘instantly’ global can work in two ways; either, you are an instant success in which you need to be able to scale instantly, deal with cultural and locale issues such as language and business processes etc. or you are not and your growth is slower and more drawn out. Marketing is and has always been a significance in terms of the web and so you need to play the search engine game and work on image, profile and create a brand. All of which are difficult without the other issues facing a SaaS delivery model. The pressures come from all sides, “you’re damned if you’re an instant success and you’re damned if you’re not”.

However, the truth is the tail is out there. It’s not about small numbers and large returns; it’s about large numbers and small returns. Focusing on the key features and delivering on these; listening to the feedback and nurturing through the establishment of a community of users seem to be recipes for sustainable growth. The future markets are consumer driven and reputation based, at least during the early phases of on demand software.

5. SaaS: Community

Matt Deacon — Fri, 16 Feb 2007 20:03:00 GMT

Another common characteristic of SaaS at present is the emergence of the online SaaS developer communities that typically surround a particular application often extending the platform capabilities, providing integration solutions etc. These often arise out of the early adoption community and can prove extremely influential groups on the subsequent evolution and uptake of a SaaS application. A term that has been used to refer to this phenomenon is “outsourced innovation” or “open innovation” or the “rise of intermediaries” as Mikko Ahonen puts it. The most readily identifiable example being the Apex Platform from Saleforce.com but a fun site I was introduced to not long ago is the Mashery, that boasts being able to take your web service offering and build a strong and active developer community upon it!

4. SaaS: Management

Matt Deacon — Thu, 15 Feb 2007 18:06:00 GMT

SaaS applications are characteristically completely managed by the vendor. The implementation of management tasks and responsibilities is opaque to the subscriber and Service-level agreements (SLAs) govern the quality, availability, and support commitments that the provider makes to the subscriber. The key driver here being to reduce the costs incurred by IT within an organisation especially when concerned with non-differentiating services.

Management is a pervasive characteristic across all application and location characteristics but may differ in terms of individual management requirements. Typical non-functional management requirements of a SaaS application include:

· Provisioning – that covers installation of application ranging from a zero install as per a web application to a no hassle or no user install.

· Configuration and customisation of functions, features, look and feel etc.

· Billing – see SaaS licensing

· Monitoring – health of the application such as reliability, performance, security etc.

· Support – user support etc.

Perhaps not surprising is that many of the management issues are tertiary concerns for a start-up SaaS provider, especially those who adopt the web hosted model. Most time is spent concentrating on developing the value proposition itself. Much of the management information is gleaned through the production of adhoc reports from the hosting and database tiers.

It is interesting on one hand that billing is most often handled through this adhoc approach given that it is central to how the SaaS Provider handles its income. In reality while they are undoubtedly focused on generating their revenue stream in terms of business function the fundamental truth behind this is that many providers do not yet understand the dynamics of their market place and so to invest in a particular licensing model at such a volatile stage is viewed as a waste of investment and energy.

It does not take much to imagine that there will be a rise in SaaS providers in the areas of SaaS Licenising, Management and other non-functional components as the SaaS models evolve and further differentiate ... hmmm maybe I need to build something;)!

3. SaaS: Location

Matt Deacon — Thu, 15 Feb 2007 17:27:00 GMT

In terms of location a SaaS Application is most readily associated with that of an internet hosted web application (and hence hosting may have been a better description in hindsight). However, in reality this only represents one of many location (hosting) models that are available including these described below:

· Remote; where the SaaS Application is hosted within the vendors IT environment and accessed by the consumer remotely.

· On-premise; where the SaaS application is hosted within the customers own IT environment and accessed locally.

· Appliance; where the vendor supplies hardware/software as a "black box" that is installed in the customer’s own IT environment, this can also include virtualized environments.

· Virtualised; a variant of the appliance model whereby the application may be hosted on the users desktop, but is isolated or virtualised using technologies such as that provided by Softgrid for example.

Several inhibitors to SaaS adoption, such as multi-tenancy, security and reliability are currently driving the evolution of some of these models. However, with the likes of application virtualisation it is conceivable that this will be an enabler in its own right for the myriad of applications that do not fit instantly into the classic internet hosted web application model.

An interview at last;)

Matt Deacon — Wed, 14 Feb 2007 22:05:00 GMT

Got my first blog interview for partner perspectives the other day which was kinda fun ...

2. SaaS: Licensing

Matt Deacon — Tue, 06 Feb 2007 05:31:00 GMT

One of the most defining characteristics of SaaS is probably that of licensing provided as a subscription-based model rather than the single up-front license fee sold for perpetual use as described by traditional software “products”.

This subscription model is most typically realised through a relatively simple time-based approach such as a monthly fee for example. However, in reality many SaaS providers quickly realise that there is a need to provide a far greater range of subscription models that may take on several combinations including:

· Time-based subscription models

· Usage-based transaction models

· Features / function models

· Allotted number of service transactions used

· Advertising funded revenue models

This situation is further compounded by the fact that the SaaS provider, in the early stages at least is only just starting to understand what their core services are let alone how they are going to charge for it; all this is against a backdrop of heavy investment in the development of the functional aspects of the SaaS application itself. Invariably early adopters therefore benefit from being able to negotiate terms on an individual basis and as a result one should expected that this will set an expectation that will drive the need for great flexibility in subscription models at least in the medium term as the SaaS licensing landscape evolves.

A good analogy in thinking about SaaS licensing, which may in fact prove to be more than just an analogy, is to think of the subscription models used by the mobile phone companies. The guys have taken subscription to an all new level; providing a myriad of different plans and options that typically stem from a base fixed fee with a range of extended features and options; the key driver being the massively competitive landscape of the mobile phone market. It will be interesting to see how SaaS licensing models develop. At present the SaaS market is emerging and still uncluttered but given its global nature one could imagine a dramatic surge in “copy cat services” that in order to differentiate themselves and drive competitive advantage will look to introduce more flexible pricing models much as has taken place with mobile phones.

1. SaaS: Application

Matt Deacon — Wed, 31 Jan 2007 20:08:00 GMT

Today a SaaS application is most readily recognised and associated with user interactive web applications accessed directly over the internet (eg. the web application). Already synonymous with the SaaS phenomena is the likes of the infamous Salesforce.com for example.

However, SaaS as a concept caters for the full spectrum of functional software and therefore encapsulates but is not limited to the likes of rich or smart client applications that are hosted on the client’s machine all the way through to connected atomic services such as those provided as XML Web Services whether they be based on SOAP, REST or just POX.

The fact that the range of a SaaS:Application is so broad automatically begs the question of why this is a SaaS characteristic at all. In my opinion it is important if only to dispel the common misconceptions that SaaS is all about online “web applications” alone. In fact the SaaS model is much broader and does not even necessarily dictate that a SaaS:Application is “connected” at all.

In summary a SaaS:Application can be thought of encompasses all Software that is delivered in the context of the other five characteristics of SaaS.

Six characteristics of SaaS

Matt Deacon — Wed, 31 Jan 2007 19:34:00 GMT

The world of IT doesn’t stand still and never has this been truer than it is today. SOA and related concepts are still riding strong on the wave but a new contender is starting to make its way through into the mainstream; this being the concept of Software as a Service (SaaS).

SaaS is a very nebulous term that really encapsulates a whole range of new and existing software delivery models often bundled together in different combinations in order to deliver a particular service or function to a particular consumer be that human or computer. It is a term that to me really describes a point in time, a transition in the way software is delivered and consumed, the ultimate enabler for which is down to the ubiquity of computer communication made possible as a result of the Internet, broadband and vast reduction in hardware costs.

For this reason, we shouldn’t get too stuck on crystallising a single definition for SaaS as it really represents a moving target and at some point we'll hopefully just revert back to using the good old word software once more. But for the moment, as we move through this transitional period there is definite value in highlighting the changes in software delivery that is crystallised in the acronym SaaS.

So with this in mind over the next few postings I plan to provide an overview of what in my opinion SaaS encapsulates today in terms of a set of six common characteristics that frequently re-occur when we see implementations of SaaS in the wild.

SaaS: Application

SaaS: Licensing

SaaS: Location

SaaS: Management

SaaS: Community

SaaS: Reach

As always feedback is welcomed and if there are additional characteristics then I would be interested in your opinions.