Peter Ellis: Tell us how you see the SaaS market?
William Haney: Firstly, it’s very important to distinguish SaaS from the Cloud, because they are not the same. Most of us understand and use Cloud applications on our mobile devices. The essence of SaaS is web-based, scalable capabilities where the content is partially or wholly managed by a third party. Whether you refer to SaaS or Cloud, the reality is that a significant portion of the asset management industry today is not yet convinced that the Cloud is their future mainstream architecture. Why? Many reasons – security, control, scalability, ability to deeply integrate, influence over vendor roadmaps, and variable costs. No question that some vendors will adequately address these concerns by making their applications available via Cloud-based infrastructure; and some will offer web-based applications via privately managed infrastructure. The important point about SaaS and Cloud is not the infrastructure technology that is employed but rather the comfort level of adoption and the impact the platform has on meeting the business objectives of the asset management firms.
PE: Aren’t most of the SaaS applications operating in the consumer world, such as on-line retailing, social media, and information sharing? How relevant is SaaS for enterprise applications in the business world?
WH: Well it’s certainly true that a lot of the historic growth in the use of the web-based technology underpinning SaaS has been in areas such as the ones you mentioned. But there has been significant growth in recent years in the use of SaaS and Cloud in the business world. Look at CRM and ERP (Enterprise Resource Planning) for example – Salesforce evolved from SaaS to Cloud, and most of the major ERP vendors like Oracle and SAP offer various deployment options including SaaS. But I think the most important point here is that when we talk about enterprise-wide applications, we aren’t necessarily talking about large-scale organizations, we’re talking about an application being used throughout an organization regardless of its size. Larger organizations with more sophisticated needs will want to retain more direct control over application software. But there are elements of SaaS that appeal to all organizations regardless of scale.
PE: I can see how the growth in the use of web-based applications in the B2C market was driven by changes in consumer preferences and behaviors, but what’s driving the growth in the enterprise SaaS market?
WH: In some ways, whether you are looking at individual consumers or businesses, SaaS essentially delivers something similar: easy access to complex processing. Everyone wants to start using new applications sooner. In some ways SaaS is the right technical solution appearing at the right time to solve the right business problem. Many app users in the B2B also want fast and mobile access via the web. Business applications have to be in front of this long-term trend. And businesses need faster implementation and smaller technology and operational footprints for their applications. We’re seeing this trend in the market for our SaaS offering - BI-SAM GO - but we are also seeing it in the market for our non-SaaS app, B-One which is increasingly managed by us and shifting its usage to web views.
PE: So do you think that on-premise, licensed applications will disappear completely? Will all business applications be SaaS-based in the future?
WH: I think that would be a very bold prediction and perhaps we are asking the wrong question. SaaS and Cloud apps are on a growth trajectory to become at least as if not more important as the on-premise model. But on-premise software remains in the medium-term the preferred model for many firms in the financial services market. SaaS and on-premise will co-exist and more importantly, the technical architectures will converge over time so that the question of on-premise versus Cloud may no longer be a relevant distinction. This convergence is happening today. Database and operating system providers are already embedding Cloud features in their core capabilities, allowing clients to configure the systems for SaaS or on-premise. Let me give you a specific example. Two years ago, if we had wanted to implement multi-tenancy in B-One we would have had to build it into the application. But now it’s possible to implement it outside the application, to make multi-tenancy a feature of the operating environment rather than the application code. I would be more comfortable predicting that future application code will be agnostic as to whether it is operating on a SaaS model or an on-premise model.
PE: And what are the implications for system vendors?
WH: Vendors that deliver business applications need to stay focused on solving business problems and stay focused on the needs of their market. The main differentiators for application providers are the richness of the business benefits in their offerings and their ability to solve increasingly complex business problems as their clients’ requirements become more sophisticated. When vendors of business applications get too focused on technology, they miss the bigger picture of how the needs of their customers and of the market as a whole are changing. Technology is an enabler, not the other way around.PE: That’s been very interesting, Bill. Many thanks for sharing this insight with me.