{"id":277,"date":"2006-03-06T10:51:49","date_gmt":"2006-03-06T17:51:49","guid":{"rendered":"https:\/\/www.roughtype.com\/wp\/?p=277"},"modified":"2006-03-06T10:51:49","modified_gmt":"2006-03-06T17:51:49","slug":"the_saas_ramp","status":"publish","type":"post","link":"https:\/\/www.roughtype.com\/?p=277","title":{"rendered":"The SaaS ramp"},"content":{"rendered":"

Dan Farber reports<\/a> that Salesforce.com will today roll out an expanded version of its subscription service – called, a little ambitiously, Unlimited Edition – that will allow customers to use its software platform to fulfill more of their computing requirements:<\/p>\n

\n

George Hu, senior vice president of applications at Salesforce.com, told me that Unlimited Edition is a step along the path in which the company is broadening its platform beyond the CRM database core. \u201cOver time, we will see the nature of applications shift and we\u2019ll attack more of the packaged applications,\u201d Hu said. \u201cWe are evolving from data to content, process and transaction management\u2014giving customers the raw tools to go deeper.\u201d<\/p>\n

Hu wouldn\u2019t say when those raw tools would become available. But there is no doubt that Salesforce.com will develop engines for content management, business process management and transaction-based applications, and in combination with its software ecosystem build \u2018packaged\u2019 applications to further its vision of on demand everywhere. Microsoft, Oracle, SAP and others generating billions in revenue from enterprise software aren’t quaking in their boots. Salesforce.com has a lot of engineering ahead …<\/p><\/blockquote>\n

Farber’s probably right to say that the old-line enterprise-software giants aren’t yet “quaking in their boots” about the threat posed by pure-play SaaS providers, but it’s safe to say they’re not entirely sanguine, either. They know that the big question has yet to be answered: How large a role will the SaaS model end up playing in enterprise computing? Will SaaS thrive on the periphery, limited to either smaller companies or a few well-defined applications like salesforce automation or call-center management, or will it move into the mainstream, displacing the old on-premises model entirely? For the moment, SAP and Microsoft seem to be betting on the former (while Oracle seems more agnostic, happy to buy its way to dominance no matter what the future brings).<\/p>\n

SAP and Microsoft have both dipped their toes into the SaaS pool, but, to horribly mix metaphors, they appear to be taking the view that SaaS is basically an “on-ramp” to big, traditional software implementations. It’s a well-contained, manageable supplement to their traditional enterprise products, not a big, hairy cannibal that’s going to feed off those old products. Microsoft’s Live services are aimed squarely at very small businesses – the ones that can’t afford to buy their own servers or hire their own IT staffs. If those businesses stay small, they’ll stick with the subscription-based or ad-supported Live services. If they grow, Microsoft will be able, it hopes, to lead them to more traditional products. SAP, for its part, is introducing<\/a> a SaaS version of its own CRM system, but, as Business Week reported, “SAP says it believes most large corporations that buy CRM as a service will use it only temporarily and eventually move the applications on-premises.”<\/p>\n

So which way will the SaaS ramp go? Will it be just another on-ramp to traditional corporate software, as SAP hopes, or will it be an off-ramp to a purely on-demand future, as Salesforce.com assumes? We don’t know yet, but there are some tea leaves worth reading. Another CRM provider, RightNow Technologies, has long offered both an on-premises and a SaaS version of its application. I recently asked RightNow’s chief executive, Greg Gianforte, if he’d noticed any trends in which form of the application customers are opting for. He said that five years ago 50% of customers were using the SaaS version but that today the percentage using SaaS is up to 87% – and still rising. And an increasing percentage of the SaaS customers are big companies with more than a billion dollars in revenues. For RightNow, in other words, the ramp is leading away from on-premises installations.<\/p>\n

That makes intuitive sense. If you’re happy with a SaaS setup, what are the odds of waking up one day and saying, “Well, that worked well, but now it’s time to go out and buy a lot of hardware, expand our data center, hire a bunch of new IT specialists, and pay a lot of money to have the same software installed on our own machines”? Pretty low, I’d say. That doesn’t change the fact that, as Farber says, there’s “a lot of engineering ahead.” But if you assume that the engineering will get done, it’s hard to look into the future and see SaaS as being just an on-ramp to an old highway with high tolls.<\/p>\n","protected":false},"excerpt":{"rendered":"

Dan Farber reports that Salesforce.com will today roll out an expanded version of its subscription service – called, a little ambitiously, Unlimited Edition – that will allow customers to use its software platform to fulfill more of their computing requirements: George Hu, senior vice president of applications at Salesforce.com, told me that Unlimited Edition is […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-277","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts\/277","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=277"}],"version-history":[{"count":0,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts\/277\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}