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Slide 1: Consulting in the Cloud: The Emerging SaaS Consulting, Product Development, and Outsourcing Ecosystem (Excerpt) by Dana Stiffler and Rob Bois SaaS is an opportunity, not a threat, for consultants and other third-party service providers. The Bottom Line Since 2005, AMR Research surveys have shown that interest in software-as-a-service (SaaS) and subscription-based software models is distributed equally among small, midsize, and large enterprises. However, the SaaS vendors built their early businesses on a steady diet of small and midsize business that left third-party consulting firms out in the cold. Over the past year or two, several SaaS providers have matured their products and sales models to sell into large global companies. Executive Summary As a result, the incumbent consulting firms serving these companies are being pulled into the SaaS world whether they like it or not. Simultaneously, traditional on-premise independent software vendors (ISVs) have been working hard to SaaS-enable their products, realizing that their traditional software business model and technical architecture require a major overhaul that will mean much more reliance on thirdparty service providers. Software development companies and outsourcers are rising to the occasion with brand-new consulting, development, testing, and support services targeted at traditional ISVs and fledgling SaaS vendors. Report excerpt This is an excerpt from the Application Consulting and Outsourcing Services Report “Consulting in the Cloud: The Emerging SaaS Consulting, Product Development, and Outsourcing Ecosystem,” originally published in June 2008. The original Report includes additional market analysis and profiles of 15 service providers actively addressing the SaaS opportunity. This excerpt and the original Report are not an endorsement of any particular vendor or product. To learn more about this Report and the Application Consulting and Outsourcing Services Market Service, please visit www.amrresearch.com or call 617.542.6600. Application Consulting and Outsourcing Services Report Excerpt | 2008 Landscape Series © 2008 AMR Research, Inc. 1
Slide 2: Snapshot Major questions addressed by the Report SaaS is on a roll, even for large enterprises, raising concerns among service providers that the ERP gravy train may be nearing its final destination. Our latest research indicates, however, that SaaS actually gives rise to new service revenue opportunities in product development, support, and hosting. This Report will provide insight into the following questions: • For ISVs looking to move to a SaaS model, what are the difficult business and financial decisions that must be made? • Which service providers are actively addressing the SaaS opportunity? • In what ways can ISVs and SaaS vendors work with these service providers? • What are the recommendations for both users and vendors? Findings • The core SaaS services ecosystem includes consulting and implementation, product development, and delivery-related managed services. • As SaaS continues to gain more popularity with large enterprises. IT consulting and systems integration firms that don’t address it will be relegated to IT body shops. • Traditional licensed, on-premise software vendors have never developed software that addresses the unique requirements of SaaS. There is a far greater focus on infrastructure, security, and perpetual testing. • Traditional ISVs have little or no experience with ongoing application administration, infrastructure, or service desks. Report excerpt This is an excerpt from the Application Consulting and Outsourcing Services Report “Consulting in the Cloud: The Emerging SaaS Consulting, Product Development, and Outsourcing Ecosystem,” originally published in June 2008. The original Report includes additional market analysis and profiles of 15 service providers actively addressing the SaaS opportunity. This excerpt and the original Report are not an endorsement of any particular vendor or product. To learn more about this Report and the Application Consulting and Outsourcing Services Market Service, please visit www.amrresearch.com or call 617.542.6600. 2 © 2008 AMR Research, Inc. Application Consulting and Outsourcing Services Report Excerpt | 2008 Landscape Series
Slide 3: Vendor profile: Accenture Accenture was one of the earliest consulting firms to put a stake in the ground on a SaaS strategy, dating all the way back to 2005. At a salesforce.com conference in New York, the two companies announced a partnership for implementation services. Both recognized that for salesforce.com to move into larger enterprise deployments, they needed to publicize the fact that SaaS did not mean all the challenges with traditional CRM implementations ceased to exist. This event marked some of the earliest recognition that SaaS was not only here to stay, but also moving upstream. Accenture already had established practices for other leading on-premises CRM vendors like Oracle and SAP, so as salesforce.com expanded and began competing in some of the same enterprise deals, it made perfect sense for Accenture to move with customer demand. Within its broader initiatives around cloud computing, Accenture provides strategy and planning, implementation, and post-implementation services for salesforce. com (and potentially other SaaS providers). To date, the company has worked on over 45 salesforce.com deployments, largely for existing customers. Accenture also targets conversion projects for vendors, where it provides scope, strategy and planning, custom development, and architecture resources as well as postimplementation application and service management. Accenture is also considering SaaS strategies such as offering its own applications, or assisting enterprises that want to build SaaS applications for internal use or resale. Report excerpt This is an excerpt from the Application Consulting and Outsourcing Services Report “Consulting in the Cloud: The Emerging SaaS Consulting, Product Development, and Outsourcing Ecosystem,” originally published in June 2008. The original Report includes additional market analysis and profiles of 15 service providers actively addressing the SaaS opportunity. This excerpt and the original Report are not an endorsement of any particular vendor or product. To learn more about this Report and the Application Consulting and Outsourcing Services Market Service, please visit www.amrresearch.com or call 617.542.6600. Application Consulting and Outsourcing Services Report Excerpt | 2008 Landscape Series © 2008 AMR Research, Inc. 3
Slide 4: Recommendations For users of enterprise software Users already have some great choices for enterprise salesforce.com implementations, and we expect to see more proof points for Oracle CRM On Demand, Microsoft Dynamics, and BI and performance management tools. There are also consultants that have gone one step further to help users understand how SaaS applications can be integrated into traditional environments. Additionally, they help users build a roadmap for understanding, as they move ahead, which software and business service delivery scenarios make the most sense for them. For ISVs seeking SaaS product development and support assistance Product development and support providers we interviewed (again see Table 1) all have the necessary skills to take an on-premise product, advise on the technical feasibility of moving it to a SaaS platform, and then execute the design, coding, and testing necessary to support the migration. Many also provide the security, billing, monitoring, and customer support necessary to support the vendor on an ongoing basis. One potential fly in the ointment is that many service providers that pitch product development and support services also aspire to bring their own SaaS-like multitenant BPO offerings to market. This is particularly true with the Indian service providers. Ensure that your service provider has no designs on your domain, or, alternately, consider partnering with them to form the IP core of an enhanced multitenant service. One area where we failed to find a critical mass of skills was in the strategic or management consulting services that would presumably be necessary to see if it makes fundamental business sense for the ISV to replatform and move to a recurring revenue model. These complex math and modeling services are best sourced from management consultancies and specialists rather than the providers in this Report. Report excerpt This is an excerpt from the Application Consulting and Outsourcing Services Report “Consulting in the Cloud: The Emerging SaaS Consulting, Product Development, and Outsourcing Ecosystem,” originally published in June 2008. The original Report includes additional market analysis and profiles of 15 service providers actively addressing the SaaS opportunity. This excerpt and the original Report are not an endorsement of any particular vendor or product. To learn more about this Report and the Application Consulting and Outsourcing Services Market Service, please visit www.amrresearch.com or call 617.542.6600. 4 © 2008 AMR Research, Inc. Application Consulting and Outsourcing Services Report Excerpt | 2008 Landscape Series
Slide 5: For implementation, product development, and managed service providers SaaS and platform-based delivery models are big trains that today’s service providers can’t afford to miss. While there are still millions to be made on bread-and-butter systems integration and product development, sales forces, consultants, developers, support teams, and implementation and development methodologies will all need to be retooled to address the SaaS market’s different dynamics. There is opportunity and margin on the implementation side that as recently as one year ago was not recognized by mainstream consultants and integrators. Take into account the business and IT consulting and integration work necessary to gradually mainstream SaaS into enterprise environments, and there starts to be a pretty attractive silver lining in the shift from on-premise to SaaS. For services targeted at ISVs and native SaaS vendors, likewise, this market is just starting to gear up. All major traditional software vendors are hard at work making the shift. Furthermore, take a look at what types of vendors and applications are getting venture funding and generating market interest: 90% are service-based and delivered remotely. Report excerpt This is an excerpt from the Application Consulting and Outsourcing Services Report “Consulting in the Cloud: The Emerging SaaS Consulting, Product Development, and Outsourcing Ecosystem,” originally published in June 2008. The original Report includes additional market analysis and profiles of 15 service providers actively addressing the SaaS opportunity. This excerpt and the original Report are not an endorsement of any particular vendor or product. To learn more about this Report and the Application Consulting and Outsourcing Services Market Service, please visit www.amrresearch.com or call 617.542.6600. Application Consulting and Outsourcing Services Report Excerpt | 2008 Landscape Series © 2008 AMR Research, Inc. 5