Cloud Computing and SaaS Vendors

Cloud Computing and SaaS Vendors

by Christophe Primault
Published on 7 June 2010

A very interesting perspective on how Cloud Computing should (and will) influence SaaS vendors in their go to market strategic decisions.

Hey SaaS Experts - What's Your Cloud Computing IQ?

Original post from Chaotic Flow by Joel York - May 28th 2010

l say it again: SaaS is NOT cloud computing. As the industry rushes to embrace cloud computing, too many SaaS experts and vendors are simply updating their marketing messages with cloud buzzwords. This is not enough.

When I started this blog, the biggest challenge faced by SaaS vendors was getting our heads around the new lightweight paradigm for marketing and selling an on-demand Web application versus the heavy-handed direct sales approach of traditional enterprise software.

SaaS vendors with high cloud computing IQ's recognize the cloud as the new channel.

Today, a new challenge is arising. But this time the threat comes not from the past, but from the future. Just as SaaS vendors have found their Internet footing, cloud computing is destabilizing the very ground beneath our feet. Depending on your SaaS business, cloud computing could impact everything from application architecture to channel strategy. Or, it may not affect you at all. Either way you should know. What is your cloud computing IQ?

The Cloud is the Computer

John Gage's prophetic remark "The Network is the Computer" beautifully highlights the difference between SaaS and cloud computing. While SaaS applications provide on-demand services to millions of users across the Internet, cloud applications provide on-demand services to millions of other applications across the Internet. The network really is the computer.

Why should this matter to SaaS experts and vendors? Two reasons. First, because most SaaS applications today exist as silos that only solve a piece of a customer's puzzle. Second, because cloud computing enables new economies of scale through shared infrastructure that properly designed SaaS applications can leverage to further drive down total cost of service.

SaaS Model Economics 101 states that SaaS competitive advantage comes in two Internet-enabled flavors: network-based differentiation and lower cost from economies of scale. Cloud computing creates new opportunities for SaaS vendors to extend their competitive advantage by opening their applications to the cloud through Web services and further driving down costs by running on shared cloud infrastructure.

SaaS Silos vs. Cloud Platforms

SaaS Do #9 - Open Up to The Cloud encourages SaaS vendors to reach out to complementary applications on the Web through open, standards-based APIs. But, opening up to the cloud is not just about easy integration. Comprehensive Web service access will transform your SaaS application into a cloud computing platform. Virtually everyone today knows about Facebook. But, what not everyone in the SaaS community knows is that the fundamental reason Facebook kicked the crap out of Myspace and all the other wannabees vying for social network dominance was the introduction of the Facebook platform that allowed independent developers to create Facebook applications. Platform-as-a-service (Paas) opportunities are not limited to pure play PaaS companies making cloud development and deployment toolkits, PaaS opportunities are open to every SaaS vendor that thinks beyond the browser and is willing to expand its definition of "user" to include not only people, but other applications as well.

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