SaaS as a Platform

Sitting in the audience at the Office 2.0 conference last week (you can read my musings on that at my Amy Wohl's Opinions blog), I was struck by the thought that SaaS is going to move in a new direction.

In fact, it's moving in that direction already.

There is no possibiity that customers, particularly enterprise customers, are going to agree to buy dozens of individual SaaS applications from individual very small vendors and then try to deal with their different user interfaces and APIs to say nothing of how to provide any level of interoperability.  We doubt that standards will ever provide a satisfying level of interoperabiity and integration across all applications -- there are just too many ways to make improvements and not be standard.

So we think you should look at SalesForce.com and realize that it isn't really an application vendor any more (although it does, indeed, sell a popular SaaS CRM application), but rather a platform vendor, providing a SaaS platform on top of the web.  In SalesForce.com's case theiy have chosen Model A -- they provide a platform and APIs and make the rules and build an ecosystem on top of that platform where partners gather.  They then make substantial revenue from the success of these partners.

But there's a Model B coming.  That will be vendors who provide not just the platform but a large portfolio of applications.  It might be a horizontal portfolio (perhaps with partners providing vertical market specialization) or it might be a vertical portfolio, aimed at a specific market.  In this case, the platform vendor will also own the appications, probably buying most of them from the hundreds of applications now available in the Web 2.0 marketplace.  This platform vendor could choose to provide any level of integration and interoperability he choose to support, such as a single user interface, single sign-on, and application integation.  He could still offer APIs for further refinement of his applications by business partners -- or by the customers themselves.

We don't expect too many platform vendors.  It's a role that calls for deep pockets and the ability to do significant technical work and systems operations and management.  We wouldn't be surprised to see such vendors as Google (some might argue that they're already at work), IBM (they have the SaaS infrastructure complete with rich middleware, which they offer to SaaS ISVs), and perhaps Microsoft and Oracle.  Of course, there's always the chance that one or two next generation Googles might appear.

Eventually, we might begin to see interoperability across the major SaaS platforms, but never the same level of integration as you'd see within a single platfrm vendor's portfolio. 

Comments

[Simon Wardley]

Hi Amy,

I totally agree with you, it's what I talked about at O'Reilly Emerging Tech and OSCON and was one of the principal driving forces behind Zimki (a Framework as a Service) provider which was started back in 2005.

The key issue involved here is always portability and choice between providers. The ideal way of achieving this is through open standards, and the most effective way of making a standard spread is by providing an operational means of achieving it - e.g. open source. This also opens up the door for competitive utility markets.

So SaaS as a platform? Absolutely it will happen, but its future is firmly intertwined with open source.

Good blog.

[Bob Warfield]

The platform is the cloud. SaaS will force more and more companies to do more than pay lip service to SOA in order to integrate SaaS apps into their computing ecosystem.

SAP will hasten this process with A1S. For more, see my post:

http://smoothspan.wordpress.com/2007/09/15/saps-a1s-brings-competition-to-saas-for-the-first-time/

[Abraham Sultan]

Amy, we've been working on an Enterprise SaaS platform that will be ready for beta release soon. If you are interested to learn a little more or check out an early preview let me know.

Abe

[Zoli Erdos]

Rob, I'd love to hear about it:-)

[Rob]

Amy, please contact me if you are interested in inside info on an upcoming small platform startup. It's a bit out of your league (small biz instead of enterprise), but the software is user friendly and innovative.