The 3 Horsemen for ISVs

May 20, 2008 at 2:10 am 1 comment

If you ever watch Mad Money on CNBC, you might recognize the title of my post. In that show, Jim Cramer often talks about his horsemen, whether it be his tech horsemen, his pharma horsemen or his retail horsemen. I thought I’d dedicate a topic to the 3 horsemen that an ISV needs to be riding in today’s age to reduce their time to market and increase their competitive edge.

So who/what are my 3 horsemen for ISVs?

  • Software as a Service (SaaS)
  • Cloud Computing
  • Virtualization

The advantages of the Long Tail for pursuing a SaaS strategy are well documented Traditional ISVs who currently have an on-premise model where they charge hefty licenses to their customers for their products are missing out on a number of small and medium sized businesses who would also benefit from their products if only they could somehow not have to pay this hefty upfront licensing fee. Thus, an ISV that adopts SaaS can bypass this problem by making their product available over the Internet and charge smaller customers a modest monthly fee to use their product.

However, what an ISV gains in new customers by pursuing a SaaS strategy, they sometimes take on more than they can chew in terms of infrastructure. The same benefit that applies to the ISV’s customers when the ISV chooses to pursue a SaaS strategy (the customer does not have to worry about infrastructure) becomes a problem sometimes for the ISV. The ISV now has to deal with handling all the infrastructure issues, the data centers, the servers, the uptime, the monitoring and maintenance, the additional staff, etc. Many ISVs are not able to rapidly bring on the needed infrastructure and people for different reasons – budget, shortage of skilled staff, etc. However, if they wish to pursue a SaaS strategy, this infrastructure and monitoring/maintenance is a must since their customers will now depend on this infrastructure to access their products via the Web. Often times, ISVs take on this additional burden because they have to, yet there is no real competitive differentiation for doing this heavy lifting. Servers, CPU, memory, storage and hiring people to manage all of this is not really a competitive differentiation for companies these days. Enter Cloud Computing (CC).

I will not delve in to the details of CC in this post, but I will just offer a short introduction. CC is the ability to harness the power of hundreds of servers, databases and other related infrastructure on demand, as and when you need it, yet not have to own the infrastructure yourself. In other words, you are leveraging massive computing power on demand. If you go from 100 customers/minute accessing your product to 1000 or even 5000, CC allows you to start up new servers or access additional storage at the drop of a hat. Similarly, when you don’t need that extra computing power anymore, CC can bring down those extra servers, thereby reducing your CPU and memory consumption immediately. Some people also refer to CC as applications that are hosted on the Web like Google Apps, but in a true sense, that is a SaaS product that leverages CC. In today’s age, where people are focusing on going green, CC allows startup ISVs a great way to reduce their costs, not have to worry about the undifferentiated heavy lifting and simply focus on their core business of product development.

Couple CC with virtualization and you really start to get creative. Whereas CC literally virtualizes your data center (in the sense that you no longer need to deal with servers, storage, etc), virtualization is the layer that sits on top of your server or network or JVM and allows you to seamlessly run your product on many different machines and operating systems.

As a startup ISV product company focused on cutting costs, reducing time to market, and building a scalable, highly available product, developing a solid business and IT strategy around CC, SaaS and Virtualization can truly make a difference. However, there are many things to consider in each segment – whether it is building out a multi-tenant, secure SaaS solution, or figuring out how your business and customer retention and acquisition model is affected using SaaS, or building on a truly integrated cloud computing infrastructure that allows for complete integration at the data and application level.

At Patni, aside from helping our customers navigate these challenging waters and helping them with the next generation of product engineering services, I am working on using these emerging trends and technologies to leverage our offshore teams to build vertical and horizontal focused products that will further demonstrate our thought leadership in this space, provide our customers with innovative and immensely time saving features to reduce their time to market and create new revenue streams for Patni.

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Entry filed under: cloud computing, SaaS. Tags: , , , , .

Friend of a Friend (FOAF) SaaS Ecosystem

1 Comment Add your own

  • 1. SaaS Ecosystem « Business and Technology Whiteboard  |  May 29, 2008 at 9:24 pm

    […] where there is no real competitive differentiation for an ISV to do all this heavy lifting. In a previous post, I talk about this in more detail. An ISV can choose to host their own product, but there are […]

    Reply

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