Software Licensing & Master Service Agreements : Chicago Software Licensing Lawyer & Attorney : Sam Conforti Law Firm : Master Service Agreements, Negotiations, Outsourcing : Cook County, Illinois

Richard Adhikari reports on a recent summit of SaaS executives in his article Are Changes Coming in the SaaS World?  The direction the industry should take was discussed but with little consensus.  It seems that those assembled see the huge potential in acceptance of SaaS by the large global enterprises, but no one can quite figure out how to break through the barriers.  Adhikari has done an excellent job of presenting the plethora of diverging views on why or why not the SaaS vendors should target the large enterprise market and how to go about doing it.  I am not privy to their marketing research nor have I suffered the trials and tribulations that some of the participants relate.  It just seems to me that sometimes it might be best to let the sleeping giants sleep.  Will these large enterprises come on board sooner or later?  Adhikari cites Maynard Webb, CEO of virtual call center company LiveOps who states:

It's a vicious circle: SaaS vendors can't sell to the enterprise because they haven't solved many of the concerns IT has with on demand software, so they don't try.  Most SaaS vendors target the SMB market, while the rest aim "at niches in the enterprise such as human resources"

What becomes apparent when reading Adhikari’s article is that there isn’t just one reason for the reticence of large enterprises to accept the SaaS model.

In my research in this area I have come across varied opinions and insight into just what exactly SaaS is and who should take advantage of it.  In my February 10, 2008 posting to this Blog SaaS is the Future software developers were scrambling to meet the demands of their market.  At that point their market was the SMB enterprise.

A further explanation as to the non-universal acceptance of SaaS can be gleaned from an insightful comment by Sybase CEO John Chen:

“ … But the reality is that every new technology and every new method will have its audience – but it won’t wipe out the previous ones.”  For the full story and an interesting perspective see my May 1, 2008 posting What Customers Want from their Software Vendors.

Of course there also is the other side of the coin.  The SaaS software developers themselves have their own internal hurdles to surmount.  In my June 1, 2008 posting Growing Pains of OnDemand I highlight one of the problems of managing a subscription business:

“Simply put, the business processes needed to run a subscription business do not yet exist, and when these new business processes do come on line, they will be incompatible with the existing business processes for a large enterprise software company.”

Perhaps it is best summed up in Adhikari’s article by Lisa Lambert, managing director of the software & solutions group at Intel Capital:

Intel's Lambert thinks the notion of selling to the enterprise is a red herring.  "I don't think it's a question of enterprises not being ready to buy SaaS, it's that it makes more sense for small businesses to buy SaaS.  The value proposition of SaaS really appeals to small businesses, which were excluded from being able to buy legitimate software infrastructure that's enterprise ready because they couldn't afford it, it was too expensive and complex, and had long implementation cycles."

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Business Objects, an SAP Company, continues its strategy of partnering with innovative companies offering Business Intelligence (“BI”) in a SaaS approach with the blessing of its parent, SAP. Its latest association is with Oco. Although both companies are players in the SMB space and both offer BI in the SaaS mode, Oco is a much smaller company. Oco’s competitive advantage comes from its development of templates for various vertical niche markets such as analytical tools and reports in the retail, industrial manufacturing, and consumer packaged goods industries. This collaboration suits both companies. SAP furthers its desire to make its products work with other vendors’ products and Oco gains an entrée to the larger SMB customer that was not previously available to them.

The BI marketplace has become extremely competitive. The main distinguishing factor for vendors in this market is to provide the products that give the enterprise the ability to make decisions faster. Business Objects’ SaaS offering, Business OnDemand, provides a fast and accurate solution. Now with the added advantage of Oco’s data discovery and mapping tool, the solutions for the SMB will come faster and at a lower cost. These partners recognize that the much larger enterprises who want their intelligence customized might not be so receptive to the Oco data model. Richard Adhikari explains in his article Business Objects Teams Up With Oco the customer first accepts Oco’s data model and this data model then finds all the data in the enterprise and produces the BI in a low cost manner.

Adhikari cites Business Objects Vice President Mani Gill, who explains the enhanced OnDemand offering this way:

Oco will let us deliver hosted multi-source data warehouses in multiple industries and functional areas.

We use our enterprise information management tools to pull data from customers, host it ourselves and provide business intelligence on top.

For a fuller explanation see Adhikari’s article. He points out that the combination of these two vendors additionally benefits both by allowing Oco to become a reseller of Business Objects products and permitting Business Objects yet another opportunity to differentiate itself and gain a foothold in this market space.

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First I would like to define what we mean by Unified Communications (“UC”).  Unified Communications encompasses email, instant messaging, texting, phones, and other networking and mobility applications.  In short Unified Communications “ … lets users access people and resources, no matter the location or communication channel, spurring productivity and boosting business processes at an economical cost.”  For an in-depth discussion on this topic see UC Will Prove Challenging to Buyers And Sellers by Judy Mottl.

Initially SMB’s have found it a daunting task to try and pull all these various applications together into one cohesive platform.  The lack of funds and the lack of familiarity with these tools have hindered their move to UC.  The familiarity issue is evaporating as more people are using these communication tools in their non-work life and begin to demand these tools in the workplace.  For further discussion on the capabilities and uses of the newest wireless devices and the coming of the Mobile Web see the following posts in this blog:

• Blackberry Bold RIMs Next 3G High Speed Wireless Handset

• 4G and The Mobile Web: WiMAX v LTE

SaaS may be the way that SMB’s can overcome the budgetary constraints as well as the integration problems that have acted as a barrier for these enterprises.  SaaS provides a faster deployment and the right provider can pull all the telephony tools and applications together into one unified and interconnected unit.  Judy Mottl has written an excellent article that details in the ins and outs for those SMB’s considering this next step into UC.  In her article SaaS Best Path for SMB Unified Communications: Service strategy lets small companies enjoy technology benefits without the headaches she interviews Simon Edwards, UC project director, British Telecom (“BT”), who cautions not to get locked into one particular platform:

"SMBs have to make sure they stick to an agnostic platform," said Edwards, adding that the best approach is an open standards platform that allows emerging technologies from different tool makers

Mottl concludes her article with a quote from Mat Taylor, a senior software architect with BT:

"The ability to get things done faster, get workers more engaged in business scenario, provide better customer service, are all big productivity wins that benefit the bottom line"

For more on the coming of age of handheld devices for the UC revolution see the following posts in this blog:

• Future of Wireless Devices

• SAP Sapphire 2008

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I must confess that I just don’t get it. I am not a person that has to be the first to have the newest gadget, especially when it comes to the latest technology.  Give it time.  Let them work out the kinks.

Long lines were the order of the day for those wanting to be the first to get their iPhones.

Some people even got creative in their quest to be first in line.

One consequence that should have been anticipated was that iPhone buyers were unable to activate their phones as Apples online iTunes store was swamped.

Customers were told to go home and activate their phones by connecting them to their own home computers. The media is loaded with horror stories on this information meltdown.

Here are some links to articles just to give you a flavor of what happened today:

iPhone goes on sale, problems arise

Software problems bug Apple's launch of new iPhone

My other nightmare -- first the -4 and then AT&T activation

Rough Launch for iPhone 3G

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This post is aimed specifically at the SMB enterprise and those consulting such enterprises. Recently in a post to this blog on February 3, 2008, I posted an article detailing a checklist for those enterprises that have already faced the questions on whether to outsource or not entitled Checklist Before Outsourcing Your IT.  That article has attracted a large number of readers.  In the article that follows I hope to aid those SMB’s that are still grappling with the decision on whether such a move is in their best interest.  In my research I have found an article written by Rojo Sunsen entitled 10 Ways Outsourcing Can Help Grow Your Business.  Sunsen succinctly defines outsourcing and then follows this definition with a rather direct and to the point list on the benefits to the enterprise.  I have paraphrased Sunsen’s list below; however I highly recommend the complete article in order to gain the fuller picture and what such a move can do to grow your business.

1. Employee training is reduced and allows such time to be directed to the company’s core competencies.

2. Capital outlays for equipment and software are reduced and can be placed into more revenue generating endeavors.

3. Save on the expenditure of employee recruitment to fill positions for intra-company administrative functions.

4. Hand-in hand with point #3 above is the time that is saved performing certain administrative tasks that are ancillary to the enterprises core functions.

5. Yet another savings to points #3 and #4 above are the employee benefits costs that are no longer required such as “taxes, medical, vacation time, holidays, worker’s comp., unemployment costs, etc.”

6. Office space opens up which could be better used performing the tasks required on the revenue side of the business; or alternatively, space could be sublet or a company’s leasing requirements can be reduced.

7. Order processing and delivery of products or services can be enhanced thus creating better customer satisfaction which can result in future return business.

8. More emphasis can be placed on increasing market share with the abovementioned improvements and savings.

9. In line with point #8 above is the ability to accept larger orders or take on more orders due to the economies of scale which should come about due to the outsourcing.

10. Lastly, your outsourcer can become a valuable ally in your marketing efforts and provide an additional outlet and/or network of customers.

Implicit in the above savings tips is the ability to redirect funds usually budgeted for the administrative side of the business and put these monies to better use on the revenue generating side of the P&L.

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