Keen on opening up a software-as-a-service (SaaS) business or blending it with your current model?
Although the on-demand software market is in its early stages of growth, Frost and Sullivan are forecasting explosive uptake across Asia-Pacific over the next three years. Much of this will result from increasing demand for hosted services from SMEs, with some large enterprise also expected to make a gradual shift. Last year, CRM was the dominant hosted solution, followed by collaboration and HP applications software.
But there are still challenges to be faced. Software vendors need to address concerns of infrastructure limitations, data security issues and ensure a level of confidence around reliability, availability and quality.
With 160 partners participating in its SaaS push worldwide and 13 locally, Progress Software is on a mission to educate the channel about opportunities in the emerging hosting market. About 2000 ISVs worldwide also use Progress software technology as a platform to develop their own applications.
Progress Software SaaS director, Colleen Smith, said resellers interested in getting into the hosted software game should brush up on market positioning and keep an eye on select verticals.
"SaaS is more than just a licensing or pricing change - it requires a fundamental shift in the business model," she said. "Think of new geographic regions, which may be adjacent or down market to your current business, when thinking of the target market. The sweet spot at the moment is in the SMB segment."
She warned resellers would need to ensure their business could also handle the different cost structure. "Make sure you can handle it operationally. You may get $100 a month in revenue versus $50,000 upfront, so can you rely on that cash flow, and compensate your sales team?" she said.
Smith's tips to partners: develop a business model that focuses on new market opportunities; apply innovative technology and services to differentiate applications from the competition - such as developing applications in a service-oriented architecture (SOA); and participate in an ecosystem that is valuable and profitable and shares the risk.
She also advised resellers to build relationships with other partners in order to offer multiple applications and an end-to-end integrated solution. According to Smith, some applications were better suited to the SaaS model. "Healthcare, financial services, legal, oil and gas, and education are the top ones to look at," she claimed. Other burgeoning markets include the automotive industry, waste management and consumer affairs,
Some ISVs are already proving their operational and product readiness. Sterland Computing general manager, Greg Thomas, said his company was finding success with its SaaS flavour: the ProStix software solution. Sterland specialises in business management software and services for the building supplies industry. The Progress ISV partner expects to fully transition to the SaaS model in the next 18-24 months. Although it's early days, Thomas expects to double its customer base in the next two years.
The company sees enormous opportunity with smaller organisations without dedicated IT staff that are unable to fork over big money for similar business apps. "We want to grow the small user base - the under 10- user segment - which is the corner hardware store and the small plumbing outlets," he said.
Thomas said price was still one of the biggest barriers to entry. ProStix was often perceived as software for the big boys and customers were worried about the technology knowledge required, as well as business disruption while solutions were implemented.
However, SMBs liked the fact that all costs, including licences, services, maintenance and hosting, are charged quarterly rather than upfront, he said.
Looking ahead, Sterland's Thomas said more work needed to be done on the applications, including offering a simple, intuitive interface as well as more function based menu systems.
Using a wider brush
Another SaaS player, and Progress ISV, is Wild Rose Information Services. The company's 12 applications include Web shop font, accounting, inventory management, CRM, help desk, content management and photo galleries.
Director, Mike Arnold, said the company was attracting a plethora of small business owners.
"We offer up a wide range of apps rather than having one application that's for a niche market, which narrows the customer scope," he said.
Wild Rose's top three apps are Web shop front, content management and photo galleries. "Many small companies have outgrown their MYOB or Quicken," Arnold said. For example, many are running into problems with inventory and accounting and need help.
Microsoft Business Solutions lead product manager, Ross Dembecki, said it expects to have 30 local partners involved in its technology adoption program (TAP), which coincides with the release of Dynamics CRM, code-named Titan, in Q2. TAP partners can offer three deployment options: on-premise, partner-hosted or Microsoft Dynamics Live CRM. "There's a call to action here for partners," he said. In the case of CRM, Microsoft partners can configure the application and offer onsite support. Dembecki also suggested resellers build an event management model or a vertically-focused property management tool.
Microsoft partner, Power Business Systems, is already offering hosted CRM and ERP applications. Business development manager, Saul Sabath, said take-up was driven by the advent of broadband at an SMB level and affordability of the physical infrastructure for broadband communications.
"The larger organisations, particularly government, are not sure whether SaaS is a real option given the issues with confidential info and privacy concerns," Sabath said.
Tailored applications are the way to go, he claimed, particularly in real estate, hospital or medical environments. These will crank up the monthly fee from $99 (for a traditional vanilla-flavoured app) to roughly $129 per month for the more specialised one.
But he said it was tough getting customers to move beyond in-house IT. "There's still the mindset that the IT manager wants to see the server and pat it on its head. They are comfortable that the data centre is living in the office," Sabath said. "But SaaS is making headway."