SaaS Blogs

The key thing that OpSource have done in General, is they have aligned their business model to the SaaS delivery model. NOTE TO THE WORLD of HSP’s: There is no-one yet doing this in Europe I think!!!!!!

What I mean by “aligning the B-M” is that for SaaS application developers (existing ISV or new developer) can go to Opsource and say “our app does X, and we charge $49 per month per user”. Opsource then offer the developer / ISV all the hosting services - hardware, monitoring, network connectivity, storage, backup etc,(and now billing!!) for a defined cut of that $49 per month per user amount. Say for example $4.90 per month per user and THIS is purely a guesstimate……!!!

Sweet enough deal though - as there has to be a point, pretty much early on in the subscription cycle where Opsource begin to make a profit from a SaaS vendor (their customer), and this of course is exponential as the subscription model grows for that SaaS provider.

Yes, it is certainly a riskier business for Opsource (as the subs may never grow, or take a while) but with Fixed costs already in place as a HSP, and the capital already spent on facilities, they are banking on the success of those SaaS customer, and are probably the best positioned I believe of the hosting community to reap the benfits of the SaaS subsription model. Clever clogs I say….

The Opsource 2.0 version is essentially that they are moving into the “middleware” part of the “helping SaaS grow” market - by offering complete billing services bundled with their HSP services.

Why? Well the real context is Two big challenges for new SaaS entrants is the development of a robust billing system (a lot of fun, believe me)…and the ability to have a High Availability Enterprise Class hardware and network Infrastructure (think big redundancy & big connectivity and multiply it by a SAN), and thus Opsource will be an “easy” choice for many SaaS start-ups. Long-term Opsource will be the winner though…..

Ultan,

First of all let me start by saying “Great Comment!”. I agree with you that OpSource is probably one of the better HSPs aligned to support SaaS and they are doing a good job at it so far.

This however doesn’t address a sweet spot that is missing which is the need for a common platform that extracts all of the extra development efforts required to be able to support the model like you probably know (Tenant Isolation, Subscription Services, Billing, Etc…) which is what Apprenda among others are trying to provide.

Disclosure: I’m currently helping the guys at Apprenda develop their offering.

OpSource’s business has been on the hosting and consulting end but it is ultimately up to the ISVs to design and architect their applications as efficient as possible or else they will have to compensate by renting more hardware than they would have needed. Recently with their announcement of the Optimal On-demand 2.0 they are trying to move up the stack and provide a more comprehensive notion of a “platform”.

From OpSource’s point of view, they don’t care if an ISV designs an application correctly or not because they will get paid anyways whether the app scales right or not and they charge their consulting fees whether you take their advice or not.

For the ISVs the path down the SaaS lane is a little easier than it would have been without them since you don’t have to worry about the hosting and support but you are still responsible for the main task which is correctly architecting your application to be as efficient as possible.

Whether OpSource will be the winner or SalesForce will be the winner or new comers like Apprenda will be the winners is hard to say this early in the game but their new offering further validates the need for a SaaS Platform.

[…] As SaaSBlogs and pretty much the rest of the SaaS blogging community (SaaSWeek, Phil Wainewright, Jeff Kaplan, among many others) took note of last week, Opsource announced the Optimal OnDemand 2.0 SaaS Platform.  Opsource really caught our attention with this one because of the way Optimal OnDemand 2.0 seems to quell some of our contentions with Salesforce’s Apex platform concept and other ‘niche’ platform concepts to date.  Opsource’s core competencies have been in the hosting infrastructure and provisioning realm, but with OOD2.0 they are introducing value adds further up the stack that fulfill SaaS hosting requirements (read: vendor pain points).  It’s a tremendous boon to the notion that to build robust SaaS applications, vendors will rely on platforms that provide general purpose technological and business value rather than platforms with a bent towards a particular vertical market or spawned from an application codebase.  […]

Ultan, thanks for the note. One thing that really caught my eye in your comment was “…Two big challenges for new SaaS entrants is the development of a robust billing system (a lot of fun, believe me)…and the ability to have a High Availability Enterprise Class hardware and network Infrastructure…” I think you’re right on with this, although I think the problem og what new SaaS entrants need is an iceberg problem; there is much more that is unseen below the surface. As SaaS unfolds to be the model of choice, SaaS applications will become more competitive and more demanding in terms of what is considered “standard”, thereby putting pressure on companies such as OpSource and Apprenda to deliver more and more value.

Thank you Abraham, and Sinclair, for your complementary words.

When I referred to Opsource as “overall winners”, I was merely comparing them to the general HSP’s marketplace (as oppose to platform providors), and only from a business model perspective - from attracting SaaS application vendors in, moving up the value chain to provide value-added services such as billing services, and also commercially aligning themselves to the SaaS models themselves.

With the discusssion now moved to a “competing platform” discussion, I feel there is a good distance to travel before anyone can properly even see beyond Salesforce’s Apex and the appexchange.

I have attended the evangelistic salesforce “SaaS Conferences” and there is no doubt that a whole sway of development from current ISV’s are heading in this direction, racing to get their SaaS versions of their application connected into the Appexchange. Salesforce’s pitch is very polished indeed, they are spending 50-60% of revenue on marketing and sales, which is a lot of moola!!!.

They are now even providing incubation areas for start-ups (in the old Siebel building - what a sense of humour) to guide these startups down the Apex path. The message is very clear - Apex and the Appexchange is “The Only Platform for SaaS”. Dont waste your time thinking anything else.

A lot of SaaS vendors will succeed on the shirt tails of Salesforce, Apex and the Appexchange, without a doubt, And hey I say the best of luck to them!!!! Cool.

Most of the key protagonists of “SaaS as a concept” however, would like to get beyond Apex and AppExchange as soon as possible…..as the view point is that a singular application (CRM) driven marketplace might have a greater conflict of interest in offering “competing” applications, might be too front-office orientated, and might halt the overall natural progress in the SaaS movement. Who knows? You have already indicated that the Salesforce messaging is confusing from their Homepage.

I say a comprehensive SaaS ecosystem should really be focused around the very very easy development of “Portlet applications” which are completely SaaS vendor independent, and like a true Marketspace, allow customers to easily knit together completely personalised application solutions utilising each of the SaaS vendors’ application remote business services. Cherrypicking for backend functionality, and creating whatever front-end they like.

I think in the long run this would allow for better industry specific verticalisation of solutions using SaaS offerings, and might facilitate a much more generic focus on additional webservices, integration and productivity tools, composites of webapps and mash-ups, rather than the particular business functional orientation that exist currently.