How Cloud Computing Will Drive SaaS in 2010

Michael Vizard

When we think about software-as-a-service (SaaS), we tend to envision large-scale services such as Salesforce.com. After all, the conventional wisdom is that for providers to make money, they need scale. But much of that conventional wisdom will be turned on its head in 2010.

 

More targeted SaaS application environments will evolve with the availability of ready-made platforms such as Force.com from Salesforce.com, Azure from Microsoft and SaaSGrid from Apprenda.


The least known of the three, but perhaps with the most impact, is Apprenda, which not only provides a platform for hosting the applications but also the software to manage a SaaS business. That means lots of potential vendors that previously lacked the capital to set up a SaaS business could leverage Apprenda. And more importantly, company CEO Sinclair Schuller says he expects his service to especially appeal to startup software companies that want to target vertical industries. The result of all this expansion should be a much richer SaaS ecosystem.


But with the expansion comes challenges, namely in integration. This is why IT organizations will need to pay more attention to companies such as Boomi, which provides a service for integrating SaaS applications. Ultimately, IT organizations will need to stitch together multiple SaaS application environments to support a business process. Unfortunately, the degree to which various SaaS vendors open up their services to support that kind of integration varies widely. And trying to sort that out is, if anything, time-consuming, so many IT organizations should find it more convenient to rely on services such as Boomi to do it for them.


Many IT organizations also hope the middleware software providers they use to integrate their internal applications will get better at supporting SaaS vendors. So far, there has been little progress in that area. That may get better in 2010, but there are few standards so far for SaaS application integration. Hopefully, various cloud computing initiatives will one day help solve this problem. But in the meantime, IT organizations will have to come up with their own answers.


Like Apprenda's Schuller, Boomi CTO Richard Nucci expects the SaaS ecosystem to greatly expand in 2010 as well, which Nucci expects will create a fair amount of demand for the company's AtomSphere SaaS integration service. The proliferation of SaaS applications will create all kinds of governance issues for IT organizations that can only be managed, adds Nucci, if the IT organization is part of the SaaS application-procurement process and has a strategy for integrating multiple SaaS environments.

 

Given the amount of influence that business users exercise over SaaS procurement, though, many IT departments don't have the political clout to enforce a SaaS strategy. Yet without a strategy, most IT organizations will be dealing with an untenable amount of data silos by the end of 2010 that will ultimately prove to be ungovernable.



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Dec 22, 2009 11:48 AM Phil Simon Phil Simon  says:

Michael-

Good post.

The following section in particular resonated with me:

Given the amount of influence that business users exercise over SaaS procurement, though, many IT departments don't have the political clout to enforce a SaaS strategy. Yet without a strategy, most IT organizations will be dealing with an untenable amount of data silos by the end of 2010 that will ultimately prove to be ungovernable.

I am skeptical about whether many executives know this. Will vendors' pronouncements of omnipotent tools make them ignore the daily realities and challenges of their data? If they don't have a cohesive strategy, as you suggest, then how can the different technology options help them achieve their goals?

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