3. Transition to SaaS The Good the Bad Almost Great and the Ugly Interesting
Dani Shomron
October 2010

4. Agenda SaaS and the Cloud Stack SaaS Adoption – or Why Bother?
Benefits – provider & consumer
Challenges
Impact on the Organization
A path to success

5. The Cloud Stack Cloud is not only IaaS
SaaS has been around for over 10 years - Mature
Bridge the gap b/w SMB and enterprise
Mainstream – From IT avoidance to IT strategy

6. The High-speed Growth of SaaS
76% of US companies are using one or more SaaS applications (IDC). 86% adoption rate in SMBs (Microsoft).
65% of U.S. companies with > $100M in yearly revenue are forecasted to be using SaaS (Saugatuck)
50% of all new software - SaaS by 2014 (Saugatuck)
SaaS market will grow by 17.7% between , where as perpetual license companies are only growing at 3.6% (Gartner).
SaaS market will grow at a CAGR of 22.1% through 2011, 2X the rate of the enterprise SW market (IDC).
Gartner expects enterprise SaaS to more than double by % increase in SaaS revenue this year, up to $7.5 billion.
Apps.gov – SaaS marketplace
Microsoft, Google, SAP, Oracle trying to become major players in the SaaS market.
“I’m all about the cloud computing notion. I look at my lifestyle, and I want access to information wherever I am. I am killing projects that don’t investigate SaaS first.” Obama’s CIO, Vivek Kundra (WSJ)

7. SaaS - Definition What’s in a name: Principles:
Utility computing, On-demand, Hosted, Managed, ASP, Cloud application services
Principles:
Software owned and operated by the provider
Accessed over the net (browser)
No SW license - Subscription based - flexible pricing

8. Benefits – Vendor’s Perspective
Access to untapped market – SMB, SOHO, long tail
Shorter Sales Cycle
Simpler development – one platform
Simpler Testing and problem resolution
Recurring Revenue - Predictability
Reduce implementation costs
Immediate feedback
Intimate knowledge of how app is used – leverage domain knowledge

9. Benefits – Consumer’s Perspective
Costs – TCO, OpEx vs. CapEx
Time to value
Managed risk of SW deployment
Small steps – little upfront commitment
Anytime / Anywhere
Continuous improvement
Avoiding the upgrade nightmare
Shifting from fire-fighting to strategy
Focusing on the business, not on IT

10. Generation Y –Digital Natives
Consumerization of IT
Today’s employees, next year’s CIOs
“We’ll get it when!?” …
“It’s gonna cost what!?”…
Access it from work only!?
You gotta be kidding me!!”

11. Total Upheaval Not another delivery mechanism
Transition to SaaS is a paradigm shift
Selling a Service not a Product
SaaS companies don’t get it!
Will affect every silo in the organization
Introduce new functions and entities
Success is not guaranteed
SAP
MMS
Mercado
Service Mgmt

12. The SaaS Organization R&D Quality Ops Support Sales Marketing Finance
Legal

13. Engineering Modify (rewrite?) architecture
R&D
Quality
Ops
Support
Sales
Marketing
Finance PS
Legal
Modify (rewrite?) architecture
Simpler development – single platform
Support ‘service readiness’
Support scalability & high availability
Release cycles reduced to weeks
Adopt agile S/W development (e.g. SCRUM)
Engineers interact more closely with end-users

14. Customer Support
R&D
Quality
Ops
Support
Sales
Marketing
Finance PS
Legal
User experience, customer sat and success are paramount
Therefore support has important role, higher skills, higher pay
All IT communications at your doorsteps
Customer services will switch to a 24X7 mode
Knowledge upgraded from installation / maintenance to app/domain knowledge
Develop problem resolution skills

15. Sales Substantial changes
R&D
Quality
Ops
Support
Sales
Marketing
Finance PS
Legal
Substantial changes
From Elephant hunting to cyber sales
From selling a product to selling a service
From perpetual to subscription
From hunters to farmers
From flying around the globe, wining and dining to closing deals over the phone
Compensation up-front to spread over a year or more
Sales cycles shorten dramatically
Partners, channels, resellers, SaaS aggregators play a more important role for maximum exposure

16. Success is Not Guaranteed
The more successful the ISV, the more entrenched in the old paradigm (SAP)
Not in company’s DNA.
Switch from product to service.
Shift of focus to operations and customer service.
Change pace of dev and delivery.
Expect push back - Internal resistance to change: R&D, QA, Services, Sales. (MMS)
Fear of cannibalization of existing sales

17. The Path to Success Vision Leadership Plan
Expand your customer base, face the competition
Pay attention to customers’ needs
Leadership
Paradigm shift – need C&V level commitment to switch to SaaS model
Ensure a buy-in at all levels – make it a company goal - get Sales involved early
Plan
Hybrid phase - offer a sub-system as a POC – phase out
If possible – spin out company, whether as a separate entity or conceptually.
Acquire SaaS company with complimentary product.
Integrate existing solutions – rich eco-system.
Get help. Work with Partner not Vendor

18. Generation Y –Digital Natives

20. Success is Not Guaranteed

22. Success is Not Guaranteed

23. Success is Not Guaranteed

25. Success is Not Guaranteed

28. Success is Not Guaranteed

29. Success is Not Guaranteed

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36. Success is Not Guaranteed