Alex Barnett blog : predictions

8 Trends in Software as a Service Platforms

alexbarnett — Sun, 13 Jan 2008 17:40:00 GMT

To kick off the new year, I presented to around 40 or 50 members of Utah Technology Council (UTC) last week. The title of the topic they asked me to speak about was "Trends in Software as a Service Platforms". I searched around for some ideas and came across two recent posts predicting trends in SaaS for 2008, one by Phil Wainewright "Eight Reasons SaaS Will Surge in 2008" and Jeff Kaplan's post "Top Ten Reasons Why On-Demand Services in 2008". I decided to borrow liberally from these (thanks Phil and Jeff) and mash these two together (along with a couple of thoughts of my own) and present "8 Trends in Software as a Service Platforms" to an audience made up of CTOs and VPs of engineering and development for software companies in the Utah area.

In preparation for the presentation, my boss (Martin Plaehn) at Bungee Labs suggested I write up my presentation as notes blog them afterward, so here they are.

8 Trends in Software as a Service Platforms

SaaS is just part of the web mega-trend
Mainstream opinion says “Yes” to SaaS
Software vendors stampede into SaaS
All is being virtualized
Explosion of Web APIs
Economic factors favor SaaS
Enterprise and SMB IT embraces SaaS
SaaS platforms proliferate (PaaS)

1. SaaS is just part of the web mega-trend

Most of us have witnessed and many of us have been a part of the transformation in the way goods and services have been digitized, virtualized, delivered and consumed. Software, the data behind that software and the functionality that software provides is no different - software is subject to the very same transformational forces.

Just think about how even a class of product that is natively digital - such as software - has been transformed in the way it is delivered and consumed. For prosperity's sake, I've still got a few of those ZX81 software cassettes stashed away somewhere, gathering dust, looking ever more antiquated with each passing year. How will today's mode of software delivery and use look to us in a few years from now?

The web wants to connect things, and that's interesting. But connecting and interacting with "live" data, information and remote functionality make things more interesting.

At the fundamental level, the web connects things. It connects people to people, businesses to businesses, and people to businesses. Since the early 90's, the web has enabled the connection of so many things to so many other things at an ever accelerating rate, and yet we crave even more connectivity. But we increasingly also want the ability to interact with those things.

And it is the nature of these connected things that have changed since the early internet. The early web was good at connecting to static views of information and accessing limited and rigid functional services, very much a read-only mode. Then, as we learned a) the ability to read more dynamic-type information - at least regularly updated, and b) access richer remote functionality, we created whole new opportunities for ourselves. Next, we grew our ability read and write against dynamic, near real-time data and information and to program against remote functionality to create a new class of web applications leveraging those capabilities - and hence a new order of business and experiential opportunities have emerged. Some label this as "Web 2.0".

At its essence, it is the "liveness" of these real-time read-write data, information and functional sources available as "always on" services and the increasing ease to connect to, interact with - specifically change those resources available as live, programmable services that allows us to create new value out of those resources, opening up brand new market opportunities for businesses and the compelling, rich "live" end-user experiences of tomorrow.

2. Mainstream opinion says “Yes” to SaaS

Not surprisingly, Wall Street loves the the predictability of subscription services. It's good for cash flow, forecasting and business planning.

The venture firms also relish the opportunities that are opening up in a software as services-oriented economy. The ability to circumnavigate the incumbent software players with new disruptive technologies and propositions that are significantly easier to try and access for prospective customers compared to traditional software evaluation, along with usage and subscription-based business models verses the old licensing model makes investing in services-based software companies very compelling propositions from the venture firms' point of view. We should also see healthy M&A activity based on these similar opportunities in the coming year.

And then there's the trend for offshore / IT business process outsourcing. These providers will surely get in the game and make their plays through investments in and acquisitions of SaaS vendors that align well with their current core businesses.

Add to that the excitement we're reading about the SaaS space from the IT Analysts, journalists and bloggers, plus the new book by Nick Carr (author of “IT Doesn’t Matter”) - delivered by Amazon to me last week: “The Big Switch: Rewiring the World, from Edison to Google”. I think there's little doubt Carr's excellent analysis of the computing industry as an analogy to the electricity industry's shift to a utility model will be on business bestseller list for much of 2008. His messages resonates with corporate executives and end-users agree with him:

IT is a needless hassle,
it should be as easy as electricity and
be as reliable as a utility

3. Software vendors stampede into SaaS

The Big Software Players are following the early SaaS successes

CRM as a case in point. If you've been following the CRM software market, you'll know about the noises Oracle-Siebel, SAP and Microsoft started to make in the 2007 about what they are are lining up for the 2008 in terms of CRM as a service. Their efforts to emulate Salesforce.com's success delivering CRM as SaaS will be key strategic bets from the incumbents' point of view - and loud, price and functionally competitive propositions from the point of view of their existing and prospective customers.

CRM is just one of the multiple horizontal solution categories to transform from on-premise with traditional licensing model to a service-based delivery and subscription-based revenue model. ERP, supply chain, e-commerce, HR and many more...the horizontal solution list goes on. And then there are the vertical solution players...

Here's another data point to consider regarding the move by traditional software vendors to a SaaS model:

“15-20% of application ISVs have already either begun new skunk works initiatives or gained access to SaaS assets and development experience through M&A activity”
(Source: Key Trends in SaaS: 2008 and Beyond, Saugatuck Technology)

4. All is being virtualized

Virtualization is a technology trend.

Virtualization enables hardware as a service. The demand for virtual machines met by hypervisor software (VMWare, Xen, Hyper-V) and the success of Amazon's Elastic Compute Cloud (EC2) in the last couple of years point to a continuation of further virtualization of applications and hardware. Virtualization is accelerating the move from traditional on-premise software to services.

Virtualization is a business trend.

We continue to become a mobile workforce. The younger entrants into the workforce in service-oriented economies expect and want to be always connected. It's very hard work, if not impossible to get your traditional on-premise applications and centralized servers sitting behind a firewall to serve today's mobile workers. SaaS and managed services meet the needs square on.

5. The explosion of Web APIs is upon us

According to ProgrammableWeb.com, there are 559 commercial and public APIs available today, most of these are new and there are plenty more to come. How many will we see go live this year? And how many private web APIs are there and will be developed and consumed in the coming year?

Data from ProgrammableWeb.com

6. Economic factors favor SaaS

On-premise software requires upfront capital investments
To lower costs, many companies hold back on their capital investments to mitigate their risks, especially in recessions
Adopting on-demand services on a pay-as-you-go basis will be a perfect sourcing strategy for businesses seeking greater cost-controls and flexibility – the utility model

All well and good, but the real economic value of SaaS is that fact that it unleashes new value of previously isolated data silos and functionality.

7. Enterprise and SMB embraces SaaS

When it comes to IT, who doesn't like

Low-maintenance?
Low cost?
Low-resource profile?

IT and business folk like these things, and externally delivered SaaS applications deliver these benefits.

8. SaaS platforms proliferate (PaaS)

The more mainstream SaaS becomes the more the large vendors will be forced to offer effective platforms for ISVs, enterprises and SMBs.

If the move by the software vendors from traditional on-premise software to a services model is to be successful, they will need to provide programmable interfaces - not just end-user interfaces - to their services for their customers. Customers need and want the ability to access, intergrate and create new value out of live, programmable data, information and functionality living in the cloud. And in turn these same customers will want their custom-developed composite applications and integrated data available as programmable services - yet more APIs.

Customers want to unleash new value of previously isolated data silos and functionality through the development of their own applications programmed against those resources. And in turn these same customers will want their own custom-developed composite applications and newly integrated data available as end-user interfaces and as programmable services - yet more APIs. These customer needs will drive the software market to provide platforms to provide businesses and developers with with end-to-end:

programmable services and data integration
application development, testing and collaboration tools
deployment and scalable delivery

...all as a service with a utility model.

(hey...I needed to mentioned Bungee Connect just the once ;-).

2008 will mark a the proliferation of such offerings as "platforms as services" (or PaaS) through 2009, where then the consolidation will begin. Interesting SaaS and PaaS times ahead.

Update 2/20/2008: see "Time to Define "Platform as as Service" (PaaS)

The presentation seemed to go down pretty well and we had lots of interesting discussion throughtout. One of the topics we discussed was data security in a SaaS world. Don Kleinschnitz (VP, Development at Symantec) followed up with a mail linking to his blog covering Security 2.0 topics.

Again - thanks to Phil Wainewright and Jeff Kaplan for their post and to Martin for suggesting I blog this.

On Web Dev Trends in 2007

alexbarnett — Wed, 20 Dec 2006 17:22:00 GMT

Richard MacManus et al have published their web predictions for 2007 (prompting me to update the list I've been collating).

Great post and lots covered, so I'd like to comment on some of Read/Write Web's crystal ball gazing relating to web development.

"RSS will go mainstream in a big way"

It's funny, but we've been saying this for years now. However, with the integration of RSS in IE7, Vista and Office 2007 and other mass-use consumer products, it might actually happen (even if users don't realize they are using RSS). Arguably, it has already gone mainstream in the online publishing world and web development space - almost every commercial site I've visit these days provides RSS feeds.

"structured data will be a big trend next year"

Beyond the reasons given (such as microformats), a key driver to a more structured web of data is the increasing availability of web APIs into the content and data sitting on the network. Many of the APIs are not just exposing functionality...These web Content and Data Programming Interfaces will continue to be key feature of the modern commmercial internet. By the way, I don't think Google's recent decision to deprecate their API is a sign of things to come (what an opportunity for Yahoo! and Live Search! ) - this is counter to the megatrend.

So, more APIs = more structured data on the web. And the more structure there is to the data on the web, the more semantic the web will become, another trend R/WW sees for 2007. But it is still early days...I agree with Dan Farber's take on the Semantic Web for 2007:

"the Semantic Web is going to be an important element in the evolution of the Web, but next year will still be about planting seeds, not harvesting crops."

"The consumerization of the enterprise trend will start to infiltrate corporate IT"

Dion Hinchcliffe's review of Enterprise 2.0 in 2006 sums up the progress made this year and highlights some of the cultural issues inloved here. I agree with R/WW and Dion that we'll continue to see the technologies and trends of the consumer web bleed into the behind-the-firewall space. Specifically, more lightweight development and web orientated design patterns (such as REST) will rise in popularity amongst the professional developer community in the coming year. Devs are lazy - they really do want to do more with less and do it quicker.

"Rich Internet Apps will be a major force in 2007"

Yup, but still early days here. As I understand it, the RIA meme has the Occasionally Connected Computing (OCC) theme running through it - think of this as hybrid of desktop / web apps. I think the buzz will certainly be there for RIA in 2007 but it will take time (years) for development tools that enable these scenarios to become even close to mainstream for the developer communities. Lots of experimentation, no doubt, but the number of implementations will be few and far between compared to the progress in the delivery of rich experiences delivered purely via the web. Ajax for 2007 - my bet here is that pure play brower-based app development will be the winner of 2007, 2008 and 2009 :-)

Web 2.0, Tech and Online Media - Predictions for 2007

alexbarnett — Tue, 14 Nov 2006 04:28:00 GMT

It's only mid November and I've found plenty of opinions already predicting 2007 trends for the web (2.0) / tech / online media markets. I've listed some of my finds below. No doubt I'll come across few more before the end of the year and so as per last year, I'll update this page from time to time as I find more (updated December 20 2007, see the end of this post)

My own predictions coming soon, in the meantime feel free to share your 2007 predictions here too!

Web 2.0, Tech and Online Media - Predictions for 2007

Web 2.0 Predictions, by dtelepathy: "You should iterate, not pontificate."

Web 2.0 Summit Predictions, by Ian Kennedy: "My prediction is that next year's Web 2.0 Summit will be much more a deal-making platform for the VCs and tickets will be in the neighborhood of $5k - $10k and will feature a select group of startups and executives invited in by the organizers to talk about the latest trends."

Hype Cycle for Emerging Technologies, 2006, by Gartner: "Ajax is also rated as high impact and capable of reaching maturity in less than two years. Mashup is rated as moderate on the Hype Cycle (definition: provides incremental improvements to established processes that will result in increased revenue or cost savings for an enterprise), but is expected to hit mainstream adoption in less than two years. Location-aware technologies should hit maturity in less than two years."

Web Development in 2007, by Read/WriteWeb, Sitepoint and Ektron: "Most web technologies will apparently be used more - in particular Ajax, which next year is predicted to surpass Flash for the first time."

Online media predictions for 2007, by Cory Treffiletti: "Google’s technology will be applied to UGC and we’ll find ways to ensure brands are being shepherded through this type of content. Archive television catalogues will go online with burn-to-order biz models. Social networks will embrace the long tail. Personal start pages will rise in importance again (with behavioral targeting)."

Video Ad Spending in 2007, by Jimmy Lim: "Online video advertising spending in the US will nearly triple to $640 million in 2007, surging way past this year’s $225 million mark, according to a report by market research firm, eMarketer."

Media Predictions in 2007, by enigma_foundry: "the use of DRM will still fail to stop widespread copyright infringement."

Top ten alternative marketing trends for 2007, by Drew Neisser, CEO of Renegade Marketing: "In 2007 marketers will enhance their ability to defend against potentially ruinous blog attacks by dedicating resources to blog monitoring and blog response. The role of Blog Monitor will finally become a full time position in the communications department, as opposed to the occasional activity of a lone blog enthusiast."

Small Business Technology Trends for 2007, by Hoovers: "Beyond maintaining a perfunctory website, the biggest must have for a modern small business is a search engine results maximization strategy."

RSS in 2007, by Elie Ashery: "Toward the end of 2007, traditional batch and blasters will BEGIN to consider RSS on a mass scale for marketing purposes in addition to using email."

More RSS in 2007, by Read/WriteWeb: "Any way you look at it, 2007 is shaping up to be a BIG year for RSS!"

Microformats in 2007, by Alex Barnett :-) : "2006 will be a hot year for microformats, but 2007 will be even hotter."

Web Analytics Spending Trends 2007 by Forrester's Megan Burns: "We expect spending to continue to grow next year, although more modestly than in the past, with A/B testing seeing a bigger lift than other categories and licensed software starting to slow. The most interesting change came in plans to increase analytics headcount."

Memory Trends 2007, by DocMemory: "Looks like the mainstream will be DDR2 and DDR3 memory...Overall, we predict that 2007 will be a good year for memory vendors and consumers."

PC sales in 2007, by Eric Cheshier: I believe that analysts are underestimating the number of customers waiting for the release of Windows Vista, and margins won't be as low as they have been in the recent past thanks to high demand. We should see some huge numbers coming from PC makers in Q1 2007."

Top Enterprise Security Trends for 2007, by Burton Group: "Another tipping point in the industry is application security. SOA heralds a sea-change in software deployment and efforts are underway to secure web services."

Data Storage Predictions in 2007, by 300 storage industry professionals: "De-duplication will be a customer requirement in more than 50% of new deployments sometime between now and the end of 2007."

7 Predictions about Macworld 2007, by Michael at applegazette: "I think Macworld 2007’s “One More Thing” will be the long rumored Apple iPhone."

Bonus Predictions for 2007

US growth in 2007 , by First Berlin: "analysts expect households to opt for savings rather than spend in 2007 on account of declining house prices and a weaker labour market."

2007 NFL Super Bowl Predictions by Mike Hayes: "Based on odds from Pinnacle Sportsbook, the Colts at 5/1 and Patriots at 8/1 are the favorites to emerge from the AFC while the Seahawks and Panthers share the NFC honors as co-favorites at 9/1."

Hair Trends Predictions for 2007, by Hairfinder: For Women: "Color trends will feature a general shift to lighter and warmer hair colors." For Men: "Men’s hair styles will act nearly opposite the way women’s hair trends go."

Fashion Trends 2007, by AsahiKASEI Group: "Allure, class, elegance and style are keywords for 2007!"

Fidel Castro in 2007, by the US Government: "U.S. officials believe Castro may not last through 2007, and would live up to 18 months if he undergoes chemotherapy, and three to eight months without it."

Weather in 2007, by Climate Prediction Center: "El Niño conditions are likely to continue into early 2007"

The Middle East in 2007, by Syria (the country): "We hope to have in 2007 a peace process to settle the (Arab-Israeli) issue"

TV Predictions for 2007, by Bob Sassone: "Paris Hilton will be either arrested, get into a car accident, or say something something really stupid. Probably all three, at the same time."

US Housing Market in 2007, by Harold Deonarine: "Thousands of agents will disappear from the business all together, because it will be a tough market. We have entered into the end of the 10 yr cycle, prices of real estate will drop significantly, and will be a market for Investors."

Bonus Bonus Predictions for 2007

Levi's Predictions 2007, by a Psychic Tarot Reader: "2007 will see more simultaneous volcano eruption than ever recorded."

Annual spa trends 2007 unveiled, by Spa Travel News: “Social spa-ing” will emerge as an exciting new term, describing the emphasis on opportunities to connect, converse, and play in the spa environment."

Update: December 20 2007:

Global IT Spending in 2007, by Forrester Research: "global purchases of IT goods and services will slow to five percent growth in 2007, reaching $1.55 trillion in sales"

5 Top Business Ideas for 2007, by Matt McAlister: "Pay-as-you-go storage, computing, whatever"

Geek Predictions for 2007, by Channel 9 users: "On10.net wins a Vloggie."

2007 Programming Predictions, by Jason Kolb: "AJAX will be fleshed out and new development models will emerge that make the division between browser and server more seamless"

Big in 2007, by 'Dennis' in NYC: "Mainstream acceptance of design"

Content in 2007, by trendwatching.com: "GENERATION C(ONTENT) is joining GENERATION C(ASH). If consumers produce the content, if they are the content, and that content brings in money for aggregating brands, then revenue and profit-sharing is going to be one of 2007’s main themes in the online space.

Browser War in 2007, by Alex Iskold and edited by Richard MacManus: "the innovative Semantic Web, Smart Browsing and Attention technologies that are in the spotlight for 2007 - are paving the road for Microsoft to control the browser"

Blogging in 2007, by Gartner: "the number of bloggers will level off in the first half of next year at roughly 100 million worldwide."

Gartner in 2007, by Jason Wood: "My prediction for 2007...Gartner will dramatically re-assess its understanding of blogging and social media (0.99 probability)."

Our Media in 2007, by Jeremy Wagstaff: "The iPod will decline in importance as the music-phone takes center stage."

Influence in 2007, by Steve Rubel: "if you read the tea leaves behind some key statistics, the intensity of blogging may be plateauing."

Yahoo in 2007, by Paul Kedrosky: "Yahoo will outperform Google (and the market) in 2007"

Open Source in 2007, by Robert Mullins: "The pace of change in the open source software business is likely to accelerate in 2007 as developers climb up the software stack from the operating system and databases to applications"

Web Trends in 2007, by Read Write Web team: "the Semantic web is coming...We think companies like that will come up with the plumbing to help generate RDF based on HTML."

Web and Software in 2007, by Don Dodge: "Browser based applications - JotSpot, SocialText, WikiCalc, Zoho, ThinkFree, and others released first versions of Office like productivity applications. Expect to see these apps get better and the competition to heat up.

Semantic Web on 2007, by Dan Farber: "the Semantic Web is going to be an important element in the evolution of the Web, but next year will still be about planting seeds, not harvesting crops"

Alex Barnett in 2007, by Danny Ayers: "Alex himself will predict that 2008 will be a foo year for bar."

RIA in 2007, by Ryan Stewart: "Alex Barnett says, 2007 is going to be a big year for Rich Internet Applications. Hopefully we'll even be able to say it without quotes Alex .;)"