Feb 20, 2013

Can we talk about SaaS for just a sec?

Don't know about you, but I've been inundated by emails, banner ads, sponsored links, LinkedIn group updates, tweets, and Facebook ads all announcing that some product is now available in a SaaS format. Yes, even by word-of-mouth. It occurred to me that many of these companies may not even know what the as-a-service moniker even means.

I recently sat in on a cloud-101 type presentation by Dan Koffler and, in his presentation, he discussed the interrelationship between IaaS, PaaS, and SaaS. To sum it up, IaaS supports both PaaS and SaaS implementations, and PaaS supports SaaS implementations. This brings up an interesting point: does SaaS conform to the NIST standard definition of cloud computing? Here's an excerpt of the NIST definition:
Software as a Service (SaaS). The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure 2.
 The footnote at the end of that sentence reads:
2 A cloud infrastructure is the collection of hardware and software that enables the five essential characteristics of cloud computing.
And, as we all know, one of the essential characteristics is "Rapid elasticity". The fact that the upper service model(s) are served by the lower one(s) indicates that any true SaaS implementation would necessarily be elastic. This is the true test of whether a product is SaaS or an ASP (application service provider) implementation where the software is simply hosted on a server.

So, the next time a vendor pitches you on a SaaS product, ask them this question: "Does the product's resources (i.e., compute power, RAM, storage) scale automatically as my organization reaches predetermined usage thresholds (e.g., % utilization of resources or number of users)? Or do I have to call you to increase these resources?" If the answer is "Yes," and "No," in that order, it's a true SaaS implementation. If the answer is "No," and "Yes," it's ASP and you should definitely ask what the SLA is on the vendor completing the request.

Whatever the answer, I assure you that the answer to this question will be telling. Whether the sales rep knows the answer or not will interesting in and of itself.

Feb 12, 2013

How to Win in Cloud Computing

And the winner is... 

OK, we're not there yet. But, it's becoming obvious that the cloud computing market is heating up: there's been some downward pressure on IaaS pricing because of the number of competitors and, more importantly, because of the competition between Amazon and Google. Of course, this is to be expected because Google is trying to steal market share and AWS is trying to protect its share. Can we expect the same in the SaaS market? Probably, given that there has been a proliferation of SaaS companies (cloudwashing aside, see my previous post) in the last couple of years,. But then, there doesn't seem to be an enormous amount of overlap in the types services offered (yet?) because of the variety of solutions that are available for conversion to SaaS so we may not see the same price pressure as in the IaaS market.

That said, I don't think that the winner will be decided by its implementation of IaaS: the winner will be decided by PaaS. The reason for this is that every successful business model has had a strong developer community. Consider that the same thing happened with browsers and operating systems, and is currently happening with smartphones: smartphone leaders have stronger developer communities while weaker/less popular smartphones have fewer; such is the difference between iPhone and Blackberry. Granted, the gap between iOS devices and BB devices has other reasons as well, the point is that if BB had a stronger developer community than the iPhone, it would have won out earlier and not have to jump through hoops like it's doing right now.

Mobile providers should really take the hint here. Telcos are fighting for mobile market share but haven't really clued in that what attracts customers is not the phones themselves because every carrier has roughly the same phones for sale. What's really attracting them is the cool factor of what they can do with those phones. If the carriers really wanted to attract customers, they'd open up development platforms/PaaS environments for developers to create apps for free and then, when the app goes live, charge the developers to host their apps or collect ad revenue in exchange for free hosting. Like AT&T has done. Instead, most telcos and mobile carriers, are ignoring the PaaS possibility and looking to commoditized services with slowly eroding margins, like cabled connectivity, or to be me-toos in an almost saturated IaaS market to help grow their business.

There is no doubt that AWS is leading the way with $3.8B revenues projected for 2013. This definitely defines a leader in the market and AWS is certainly running away with the IaaS market. But Amazon did not stop at IaaS. It created a constellation of products built around EC2 to facilitate developer adoption. And that is why AWS is way ahead in the market.

It remains to be seen whether competitors in the PaaS market can steal away market share from AWS:
There are many more questions that we can list here, and certainly more than there are answers. Give it a year or two. Then we'll start to see some clear(er) patterns in the PaaS market.