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The Coming SaaS Storm and the Need for Nimble Partners

  
  
  

1893218547 1800204139 m"Software will never be the same again," IDC's Robert Mahowald is reported to have said during an IDC webinar publicizing findings initially published in June.

Mahowald bases his claim on the following: SaaS's 26% compounded annual growth rate (which is 6 times faster than the growth rate for "all software"); IDC's finding that established ISVs will ship less than a third of their new products as packaged CDs in 2010; and the continuing decline of perpetual license revenues.

SaaS has some obvious benefits for customers - ease of access and lower cost of implementation being chief among them - but it does put some unique pressures on software vendors, particularly those who find themselves in the position of switching from the licensed, shrink-wrapped, deployed-on-premise model.

Some of these pressures are operational. SaaS not only calls for an entirely different approach to sales, billing, and accounting for revenue but also frequently requires that the vendor assume responsibility for managing data centers and other technologies in order to maintain contractual SLAs.

Beyond these operational considerations, moreover, the SaaS model also brings with it an entirely different set of expectations with regard to release cycles and time-to-market more generally. Ensuring that an organization's existing development process is efficient and flexible enough to meet these expectations actually represents the greatest challenge posed by SaaS.

According to Networkworld, IDC's Darren Bibby believes that software partners, and ISVs specifically, are key to helping organizations move into the SaaS world, in part because they can react more quickly than large vendors. "ISVs are more nimble than the larger firms. They can watch what users are doing and anticipate problems," Bibby is quoted as saying. 

While there is little doubt that nimble partners can help, this statement begs the question of what makes firms nimble (in the sense of "fast, flexible, efficient") in the first place and how exactly organizations which don't fit that profile can best integrate their efforts with those that do.

The key here is not simply finding a partner that can do what you can't. In addition, you need to transform your own organization so that it can function in a way that responds to the rapidly changing market demands brought on by SaaS's inexorable rise.

Doing that calls for an honest assesment of the effectiveness of one's existing development process, which in turn means implementing metrics that allow you to meaningfully measure what is working and what isn't. Taking this step means:

  • Overcoming the belief that the software development process can't be meaningfully measured;
  • Selecting a standard of measurement, "quality," for example, and the relevant attributes associated with it (functional defects, security, performance, etc.) that can be measured;
  • And managing those activities that have the greatest impact on these attributes.

Of course, as Neil Fox has written, "Making the connection between the desired outcome (quality software) and the activities most likely to produce it is where the real work comes in."

If IDCs predictions are correct, however, that's exactly the "real work" that software companies need to do right now.

 

Image Source: Drab Makyo.

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