Software as a Service. Sounds like it would be a pretty easy concept to understand. But when we look under the hood we find that there are three differing perspectives.
At a hundred thousand feet SaaS is a buzz word for Wall Street and investors to get excited over. It is the intersection of off premise hardware managed by others at a location (either virtual or physical) with dedicated resources which may also be a part of the larger Internet Cloud which combines Web Hosting with shared applications. Wow! That’s a mouthful. No wonder so many tech savvy analysts are so excited about it. There are enough “high hit” Google terms there to start a search engine frenzy.
The investment community represents the first of three perspectives for SaaS. Trying to predict what the future will hold and which companies have the technology to capture more customer wallet share in the ever growing information age. The view from this perspective is about the value of software. Specifically will software continue to hold its value and thus hold up the value of those Independent Software Vendors (ISVs) who produce it?
The second perspective is that of the software industry itself. The opportunity is with those software companies who are blessed with no legacy code and have built their product for a distribution that takes advantage of the open Internet. From this perspective the sky is the limit and exposure or awareness of the product is the key to attracting revenues from the mass market. On the other hand ISVs who have invested millions of dollars in their code base and it has evolved from dedicated operating systems are not so lucky. From their perspective SaaS could be the next crushing blow that renders their code obsolete.
Lastly we have to look at the guy who pays the bill. The end user and for the purpose of this article, I’m going to limit that to the small and medium business. After all, if the SMB actually makes up 80% of the total number of end points in the world, one would think that this is the most important segment to address, right? From their perspective, SaaS doesn’t matter. All they want to know is, “how am I going to get my software applications running without an IT staff or with limited IT capabilities”. In fact if Geek Squad could figure out a way to supply physical services to every small business in the universe and manage applications on-the-fly, this would be the definition an SMB would use for Software as a Service.
If we start from the guy who pays the bills, the world of SaaS looks something like this. A simple, secure and cost effective way to access applications and data from any device in any location. Some ISVs understand this definition and are becoming wildly successful, because they understand the first order of business is satisfying the end customer’s needs. After all, he is paying the bill. In the world of communication and collaboration we see products such as GoToMeeting and Microsoft Live. The hard truth is that these products sell the best by circumventing the current IT professionals. They are completely end user focused, have a specific use and are easily accessed from any device in any location. In the world of Customer Relationship Management, Salesforce.com is the 800 lb gorilla. Once again, simple to use and accessible.
But what of the thousands of applications that were built specifically for the desktop or dedicated server Operating Systems? Are these guys just out of luck? Will the millions of users who currently use these products suddenly stop and go to their web application cousin created by these new and emerging software vendors? Maybe. Eventually. But not tomorrow. Not in a year and maybe not for the next 5-10 years. There are a hundred reasons why this is true. The most compelling is risk and reliability. The mass market by definition is not a part of early adoption. In fact, according to Geoffrey Moore, we have an entire chasm to cross before there is mass market adoption of something as disruptive as a web app only business model. If this were not the case, Google would be the name on your phone bill today instead of AT&T, everyone would be driving a Prius and Cable TV would have been killed by IPTV. But these things take time and what is needed is a way to bridge the gap.
Most people in the IT industry don’t think of Citrix as a mass market product company. And since SaaS is typically associated with the mass market, don’t think of Citrix playing well in this space. That’s because we have spent the bulk of our sales expertise and adoption in the large enterprise market. Why? Because it has taken 20 years to cross the chasm of server based computing for the mass market. But what most people don’t realize is that Citrix started out by creating products designed for low bandwidth, high latency, and low power CPU environments. These are the basic tenants of the mass market. Our core product, XenApp has only been enhanced for these tenants over the past 20 years. That’s why we have deployments of up to 50,000 end points within our current customer base. No one else in the world has this type of delivery system to match the needs of the end user in the mass market for the thousands of applications that are not web based. So as ISVs continue to look at the mounting problem of servicing the end customer in the SMB segment, Citrix will provide a simple, elegant solution to the perspective of the guy who is paying the bill… A simple, secure and cost effective way to access applications and data from any device in any location.
I wouldn’t be surprised if Citrix is seen in a new light over the next couple of years. After all, we can bridge the gap that crosses the chasm.