Thursday, December 10, 2009

Notes from Cloud Futures Software Vendors SaaS Migration Conference

On my way back home to NZ now, time to collate some thoughts on the last couple of days here at the Cloud Futures SaaS migration conference.

There were some really great speakers here - including the first time in a long while when Amazon and Salesforce have spoken together in the same room. In particular, my main takeaways from the speakers were:

Keynote from Bill McNee, Saugatuck Technology: Valuable fact-based market research:

- Despite current economic crisis, purchasing for Cloud IaaS and SaaS remain strong through 2011
- However, financial benefits around cloud IaaS potentially illusory? (=> position around other business benefits than price).
- A new ecosystem is forming around Cloud Computing, will transform IT sector
- Sweet-spot: 100-499 employee count, then 500-1000. But there is significant demand from Enterprise.
- Highly interwoven: hybrid app architectures emerge
- Cloud dev via PaaS providers has begun to open up
- A new SaaS based business services delivery model is emerging
- While roughly 35% of ISVs have begun transition to SaaS, will be long and rocky road for most (expect around 70% eventually.) Totally new model for traditional ISVs - many not prepared financially or operationally for the changes needed.

Mark Trang from Salesforce:
- 7 secrets of SaaS success, a small set of moves from Benioff's playbook

Allan Leinwand from Panorama Capital giving the VC perspective:
- Enablers of Cloud Computing such as networking are continually getting cheaper: run CC on the "Taiwan Inc" model - eg Vyatta, a firm that Allan is invested in can provide networking equipment equivalent to an $6000 router for $10! The landscape changes. Expect costs to keep coming down.
- Cloud Services Market: Gartner : Cloud Services market triples from $56.87 -> $150.5 2009 -> 2013 (mainly SaaS)
- Obstacles: Security, Management,Performance,Economics
- VCs are looking for Cloud startups who understand how to measure performance / SLAs
- Q: What will drive exits for Cloud startups? A: Monetization of customer growth.
- Being "cloud" is sexy and doubles your valuation multiple. (Eg Rackspace cheap acquisition of Slicehost (<$10m?) made them a "Cloud" company overnight, their multiple went up to 4x compared to 1.2-2.7 for their competition.

Rick Nucci from Boomi

- "API is not optional" - all SaaS must come with API AS STANDARD. (There is NO DATABASE!)
- All SaaS-to-SaaS integration can now be done in the Cloud
- SaaS API Blueprint recommends Object.Operation naming convention

Sumatrar Sarkar from TechStrategyLabs: The Economics of Cloud Migration
- Demand side economics: NO MORE CAPEX
- Supply side economics split between Supplier and VAR
- Very impressive (if slightly incomprehensible!) TCO model which models optimum allocation of costs between Customer, Supplier and VAR.

Doug Harr, CIO of Ingres:
- Ingres decided to run with totally SaaS-based IT (except desktop productivity and directory services from Microsoft)
- Successful implementations, rapid agile delivery
- Have implemented SSO across their SaaS apps using MyOneLogin
- Leading frontrunner in "IT Free Business" model
- Enables the role of CIO to be more involved in enabling business strategy, not day to day operations.
- CIO is more involved in understanding risk model: auditors still learning how to audit control objectives for security and management when it's consumed via SaaS.

Erik Novikoff, Enki (previously director of software dev, Netsuite)

- Enki provide "people on demand" ;-)
- Enki have done 50-60 customer deployments from on-premise to the Cloud.
- Enki customers enjoy increased revenue, new opportunities,delight their customers. (He says).
- With SaaS, can calculate costs as fraction of total revenue
- Retrain some traditional sys admins to be cloud admins
- Charging for service:
Model - Enki charges based on "cost plus"
Pricing
- Start with equal 2-year NPV (ie equal to boxed software) and upsell

- Gotchas / one time costs/tasks:
-Moving to Cloud
- Web presentation platform
- Single to multitenant conversion
- Redesign for scaling
- Adding API / mashup
- Monitoring (SLA) - internal and external
- Billing system
- Upgrading support offering (24x7)
- Financing your move: Covering delayed time-to-value
- Marketing: whole new world with different competitors/comms channels

Ramon Chen, Rainstor
Rainstor is a vendor of Cloud-based archiving solution. Useful for the following use cases:
- Storage of archived data for compliance purposes
- Escrow of data held in 3rd party SaaS services
- Log and security event data retention

Interesting product (service!), launched in US today.

Richard Reiner @ Enomaly
Richard woke up the room with more specialized detail on the security question than I've seen to date. Cloud IaaS is potentially compromisable because software is the *only* security control - a compromised virtualization layer therefore means that your data and applications are not secure. He characterizes all current cloud IaaS vendors as saying "Trust me" based on their quality people and processes. (The "Trust Me" cloud). Enomaly is (about to?) launch a product which provides the "Verified" cloud, and provides a direct channel from a browser plugin to the underlying hardware layer to verify that the software installed (eg virtualization / hypervisor layer) has not been tampered with. Good communication of the issues, but does the cost outweigh the risk?

Nolan M. Goldberg, Proskauer: Legal Issues of Cloud Computing- Case law is behind the technology
- Make sure legal issues are covered off in service agreement (which is a contract!). In particular, make sure that responsibility for paying costs to comply with legal requests is assigned.
- Went through the standard legal risks of privacy, data security, geographical location / jurisdiction

Gowri Subranium, Aspire Systems:
- Aspire are a Chennai-based SI / development partner specialising in building SaaS. (Bit like us!)
- Gowri introduced three main strategies to build SaaS:
1. Ground up build
2. Build on top of PaaS
3. "Solution Accelerator" - effectively a set of code libraries which enable delivery of the platform out of the box.


You can see the Twitter stream for the conference at http://twitter.com/#search?q=%23cfsj09 (mostly me, natch...)

From my side, the conference was worth it in that it:
- Validated my thinking that the industry is at the same early stages of development across the globe, and ISVs / IT Services Vendors are still unclear as to which business models will work and which ones won't. "How do you make money out of SaaS / Cloud?" - there's only one data point so far and that's Salesforce. The costs and risks for traditional ISVs to make the move are substantial, and maybe better strategy is to "enhance" an existing on-premise offering with SaaS rather than "migrate". (Begs the question what do you do when a SaaS competitor for your core offering takes your customers a couple of years down the road....)
- Enabled networking with a (surprisingly small) number of key players in the industry in the US (particularly enjoyed catching up with @MichaelDunham of Scio - who are an agile outsourced SaaS vendor much as ourselves - and trading war stories, and the other guys from outside the border Luc and Stephan from C3Wave from Belgium).
- Overall, the trip has provided some solid new insights into the risks, opportunities, strategies and challenges with moving from on-premise to SaaS and Cloud. Useful, all in all.

4 comments:

MiguelD said...

Thanks for putting this together Ben - you saved me a lot of time! heh.

Actually I have some "contarian" thoughts (that won't surprise anyone I'm sure) about the theme of the conference. I hope to write about them next week while I'm in Mexico but all in all - as you said, it was worthwhile to meet you and others in the field.

All the best - hope your (looong) trip home was at least uneventful if not fun!

Mike

Sri said...

Sounds Informative. Attending the Cloud Conferences are a great privileges. I feel proud to being a part of that.

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