Tag Archives: SEAP

More action in the Cloud with VMWare+SpringSource – and ISV’s getting encouraging results

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The proliferation of “everything-as-a-service” acronyms is often confusing, and merits an explanation and simplification. The VMware acquisition of SpringSource is an excellent illustration of the architecture. At the infrastructure level we find Operating System resources, which VMware encapsulates and virtualizes, offering shared hardware multitenancy but very limited elasticity. In order to increase the resource elasticity – which is the key factor of cost savings – virtualization needs to extend to the application level. That is the next layer, and I would expect that a tight integration of SpringSource with VMware would in fact provide this for Java based applications.

 This evolution has a lot of similarities to Microsoft’s move with Azure. Whereas Azure offers Cloud enablement for .NET applications, VMware+SpringSource would do the same for Java applications. However, in both cases this applies rather to newly developed applications – existing applications need to be redesigned in order to take advantage of the virtualization and resource abstraction features.

As I have noted in other posts, ISV’s who want to extend their portfolio and take advantage of the growing demand for SaaS need to work across multiple deployment models, where development and maintenance costs can double if they need to create the same application in more than one format.

 So the main challenge for most ISV’s is to manage an extended solution portfolio, continuing to service their current customer base with current deployment models while driving growth through Cloud Based deployment. VMware+SpringSource will facilitate this for Java oriented ISV’s, as the announcement states support for both traditional JEE deployments as well as Cloud based deployments.

 An alternative to the bottom-up approach of system infrastructure vendors such as VMware or Microsoft, comes from some Application Infrastructure vendors such as SalesForce.com or Magic Software. These vendors provide for some time already PaaS and SaaS/Cloud Enabled Application Platforms (SEAP), which deal with virtualization and elasticity by abstracting system resources from the applications, so that XaaS can be achieved at conventional data centres.

 Today I came across an account of a UK based ISV whose been there and done that – successfully, even in the present economy climate. Take a look at the story of FactoryMaster and how they manage take advantage of the new platforms.

The widening gap between SaaS demand and supply

The growing customer demand for SaaS solutions and the shift from perpetual license models bears mostly bad news to the traditional software industry. The high margins of applications vendors cannot be sustained in a SaaS model, nor the extensive and expensive on-site consulting and services of large SI’s. Worse, the switch to the new models is very costly. In order to develop and deliver a SaaS solution, a vendor needs twice the capital – and it takes at least twice as long to break even. Vendors who already service a customer base have thus to more than double their costs by maintaining virtually two businesses – one to continue and serve their on-premise customers, and one to develop and later deliver the SaaS version. Once this is achieved, they have to maintain two code bases on two different platform and technologies.

In the current business and investment climate, it is almost impossible for vendors to engage in such transitions and investments – they are more busy with survival.

So at present we have a growing demand for SaaS, and a stagnant supply of some 40 successful SaaS solutions that has little chance to grow and match the demand for more variety, due to the technical and financial barriers mentioned above. Consequently, we could expect some M&A activity as successful SaaS vendors would acquire failing traditional vendors with good IP, and then start porting that IP to their platforms. But that would take a few years – until new solutions become available in quantity.

Which means that we have a growing vacuum – on one hand stagnant supply, and on the other growing demand. Hence the increasing recognition of hybrid models and the appearance of application platforms such as Longjump and Magic Software’s uniPaaS, positioned to can take advantage of that vacuum and grow on it.

SaaS Enabled Application Platform (SEAP) vendors who already have an ISV ecosystem, like Magic Software, might alleviate this situation. I’m familiar with Magic Software’s ecosystem, so I’ll use it as an example. It consists of quite a lot of ISV’s (about 2500) with a broad variety of vertical solutions. Many of them are small, but their continuing existence over the years means that they have good competence in their line of business and loyal customers. Some of them are more professional and have compelling and leading solutions, such as Intelys (French market leader in Real Estate ERP), Creativ (Swiss market leader in NGO ERP) or Dove Tree Canyon (US leading provider of Warehousing and Distribution solutions). Many of these ISV’s see the expansion of their offering to SaaS as their growth path. To do so, they’ll have to migrate to uniPaaS and RIA they will have to improve their User Experience and processes to match current best practices. Yet all this effort would require a fraction of the cost and time compared to traditional vendors, and be much more sustainable. They would be able to pursue a more balanced business model with both short-term on-premise revenues and longer term SaaS based revenue, and fill up the growing vacuum in SaaS solutions.

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