SAAS : A SaaS-y Proposition

Software-as-a-service (SaaS) has been around for a decade now and though it
seemingly started picking up in 2005, with IDC listing it in its top five
technologies for 2005, it took a bit longer to truly gain acceptance. According
to Ravi Shekhar Pandey, Manager-Syndicate Research, Springboard Research, SaaS
has started gaining considerable traction in India since the past one year.

Today as awareness about this technology spreads vendors and solution
providers claim that the demand is coming primarily from the customers' end and
there is less 'pushing' required as compared to a few years earlier. The fact
that an increasing number of vendors are entering this space is also adding to
the adoption level. A recent survey by of CIOs and IT decision makers in
enterprises across Asia Pacific by Springboard Research has revealed a
substantial pent-up demand for SaaS-based ERP solutions, with 35 percent of
potential SaaS buyers indicating interest in procuring SaaS-based ERP in the
next 12 months.

Explaining the concept of SaaS, Prasad Rai, Senior Director-CRM On Demand,
Asia, Oracle said that SaaS is a software application delivery model where
applications are developed to run over the Internet and are hosted and operated,
either by the company that develops the application or through a third party,
for use by its customers. Rai informed that the demand for SaaS is increasing
across different industry verticals. “Today, the software industry continues to
move towards SaaS as it provides flexibility that leads to agility besides
providing multiple options and quicker implementation at lower implementation
costs,” shared Rai.

Drivers of SaaS

The increasing adoption of SaaS can be attributed to the the intrinsic
nature of Indian companies that do not want to invest in hardware or
applications. Behind every purchase is the ultimate goal that it offer high
return on investment (RoI). With SaaS, suddenly companies were being given the
option of not having to invest in hardware and instead utilizing that fund for
some other aspect of operations.

SaaS is being considered by companies that are looking to accelerate business
results, reduce risks and lower costs.

Slowdowns are also drivers of technologies that help reduce costs. “With the
recent change in economic climate, enterprises are looking for innovative ways
to conserve capital and lower their opex, and this has has helped accelerate
SaaS adoption. The benefits of SaaS in lowering upfront costs, reducing risk of
deployment and quicker RoI are resonating with companies across all
geographies,” explained Vinita Ananth, Director-SaaS, Asia Pacific & Japan, HP
Software and Solutions.

The other factor driving SaaS adoption is broadband access. “The evolution of
Internet has opened up SaaS for more verticals and the SMB has shown predominant
growth in this along with the consumers,” said Venugopala Palakirti, Sales
Director-India & SAARC Region, F-Secure Corporation. The company has been
offering on-demand security for some time now. “Security-as-a-service has also
started to take off. We have a seen clear growth in terms of SME customers
coming on to the service mode,” stated Palakirti. One aspect of SaaS is data
security. Rather than expecting ISPs and mobile operators to maintain the
expertise and technology needed to stay protected, F-Secure delivers
security-as-a-service.

Addressing challenges

Customization and security were two major issues hounding the SaaS market.
“So far, SaaS ERP has been less popular in part because the SaaS mode does not
allow much flexibility for customization,” explained Michael Barnes,
VP-Software, Springboard Research. “As vendors continue to improve the
customization capabilities of their products, they have the opportunity to
improve adoption, especially with organizations implementing ERP for the first
time,” Barnes added.

Speaking about the efforts GlobalLogic has made in this direction, Manish
Rathi, AVP Services, GlobalLogic said, “We have developed a framework, called
Service Delivery Platform-SDP, that is available to all our customers. SDP
provides multi-tiered, multi-layered, and role-based security model. It also
provides the liberty of choosing shared database or separate database at tenant
level and provides Impersonation, which is a trusted hybrid approach to
implement the security at the database level.”

Addressing the issue of customization, Chandra Prabhakar, VP, Ramco OnDemand
Solutions said that Ramco OnDemand ERP can be customized. “It has all the
features required to run an organization; if customization is required, it is
feasible. Tools are available for custo­mization. With our decades of global
experience in development and implemen­tation of ERP, we have tried to
incorporate the best practices of verticals we operate in; hence most of the
cases customization is not required,” said Prabhakar.

For Moorthy Uppaluri, GM-DPE, Microsoft India, SaaS is at its infancy in
India. “More patience is required and solutions have to be made more
affordable,” said Uppaluri.

Dispelling doubts

It is important for an SP to be able to convince his customers that the
talks about security and customization are nothing but myths. But it is the job
of the vendor to provide that education and support to their partners. “Vendors
need to focus more on educating the end-users or partners on the benefits of the
SaaS model, so that they can understand how it can be favorable for their
company,” said Pandey of Springboard Research.

Throwing light on their experience with handling such queries of customers,
Prabhakar stated, “Over the past two years, we have invested heavily in working
very closely with our partners in displaying and demonstrating the value
proposition of the solution. Incidentally, security of data and multi-tenancy
architecture which supports customization is the value propositions of Ramco
OnDemand ERP.”

Like Ramco, there are several other vendors who invest in regular training
and certification of their partners, and this will go a long way in adding the
adoption of SaaS in India.

Partner role

SaaS vendors are currently working with large tier-1 partners for their
offerings. This can been seen as an area tier-2 SPs can work towards as the
opportunities in the SaaS market are huge. “The market is currently in the
making, it is not a ready opportunity. We are looking for system integrators,
small time hosts and value added resellers. They need to be clear about the
solutions they can offer and have a good understanding of SaaS-based solutions,”
shared Uppaluri.

Citrix is also looking at tying up with partners with a focus on data centers
and ISPs. Souma Das, AVP-India Subcontinent, Citrix mentioned the company would
be doing a formal launch of its partners who have data center and can host
Citrix's SaaS model. Explaining the skillsets of the partners that Citrix was
considering, Das said, “The partner needs to have adequate knowledge about our
product lines. Performance SLAs are important and they need to be adhered to.
They must also have a deep understanding of managing a business so that they are
able to report to us on various aspects such as billing and reporting. Most
importantly they must be an ethical organization that does not misuse the
environment for their personal benefit.”

In fact Citrix has tied the partners incentives to their certifications,
which is their way of encouraging and ensuring that a partner is well trained
and equipped to sell SaaS.

Ramco has a partner eco-system to help them reach metros and tier-2 cities
and are also seeking new partners based on the target organization, size, and
cluster. “Our partners range from large IT partners with nation-wide presence
having experience in successful ERP Implementation, partners having a wide sales
network to partners having industrial cluster focus. The idea is to penetrate
the market faster via focused approach,” elaborated Prabhakar.

F-Secure follows a revenue sharing model with their partners and claims it
has been a very good trend across the globe.

Partners join the fray

Net4India provides a range of Internet services, web access, VoIP, data
center services and runs a website hosting business (claimed to be the largest
in India). Speaking about his experience in the SaaS market, Jasjit Sawhney,
CEO, Net4India said that the most demand for SaaS was coming from SMBs. “Large
enterprises mostly invest in their own infrastructure. On the other hand, SaaS
is easily customizable for the SME segment. They would rather outsource the
service since the investments that go into security are huge,” stated Sawhney.
Net4India has been working closely with Microsoft and is seeing a huge demand
for on demand CRM, a space that they will be getting in to shortly.

For Vishal Bindra, CEO of New Delhi-based ACPL, business in the SaaS market
has been comparatively brisk this year. “Our primary reason for getting into
SaaS market was because customers were asking for it. They all wanted to reduce
costs but didn't have the capital expenditure (capex), so they wanted to shift
to the SaaS model,” shared Bindra. He added that for a 100-user business there
was a lot of value additions to look forward to.

Bindra who has been dabbling in the SaaS market since a year back, said that
according to his experience, three to five years down the line about 50-60
applications of clients would move to SaaS.

Seeing the kind of traction that SaaS-based solutions is getting in India, it
is definitely one area that SPs should explore. While earlier it was just a
buzzword today it is becoming mainstream and SPs should consider harnessing the
potential this technology has.

Ruth Samson

ruths@cybermedia.co.in