When SaaS first became the rage after the debut of salesforce.com in 1999, system integrators (SIs) and solution providers were confronted with intrigue (e.g. a new way of service delivery) and fear (e.g. what’s our role gonna be?). SaaS’ twin mantra of ease of deployment and ease of management which could conceivably minimize the role of service providers had plagued SIs and solution providers for years. Even salesforce.com was challenged in convincing SIs to recommend their “no software” CRM in its early days.
At Dreamforce in December, 2010, I noted a more pronounced presence of system integrators exhibiting than prior years. Besides established salesforce.com partners such as Accenture, Bluewolf and Deloitte Consulting, other large and boutique SIs were also present: Appirio, Cognizant, Fujitsu, Mahindra Satyam, Tata Consultancy Services and Wipro. Was this an indication of the widespread adoption of salesforce.com (and SaaS) thereby enticing SIs to finally jump in or has X-as-a-Service (SaaS/PaaS/IaaS) platforms increased to a level of complexity whereby SI expertise is crucial to customer acceptance? A more awakening thought: Has the elixir of cloud computing and XaaS grown to be like its ‘enterprise software’ older sister, thereby requiring lengthy and expensive engagements in consulting, deployment and management?
As customer adoption ramps up, XaaS and cloud vendors clearly recognize the value of SIs and solution providers and their ability to hold sway over customers, regardless of technology or IT delivery model. System integrators in particular have leveraged their expertise in grid computing, IT consolidation, service automation, business process engineering, hosting coupled with industry knowledge to extend their services into SaaS/PaaS/IaaS and cloud computing. While these new offerings do require fresh and specific skills set (e.g. business transformation vs. technical implementation), know-how, IP development, as well as new or incremental infrastructure investment, many of the offerings look like traditional SI services couched in a new skin.
- Cloud/XaaS Enablement (End-Users) Global systems integrators (GSIs) such as Accenture, Deloitte, Siemens and Wipro provide strategy consulting and systems integration to help customers design and deploy private, public and hybrid clouds. The newer breed of SIs whose business has been built primarily on XaaS and cloud computing (e.g. Appirio, Astadia Consulting, Bluewolf), specialize in transforming business processes (e.g. marketing or HR automation) vs. infrastructure implementation.
Common SI offerings include implementation of packaged SaaS offerings such as Eloqua, salesforce.com, Microsoft Dynamics and BPOS, Oracle On Demand, NetSuite and Workday. Others offer migration to PaaS platforms such as Windows Azure and Force.com, custom application and integration (i.e. with data sources, legacy applications and systems).
- SaaS Application Hosting and Managed Service Hosting and managed services are natural extensions for SIs and outsourcers. In August, 2010 CSC announced an expanded alliance with VCE (Virtual Computing Environment), a joint venture of Cisco, EMC and VMware to accelerate the adoption of VCE’s Vblock infrastructure solutions. Besides announcing its intent to create a new global solutions unit and centers of excellence based on Vblock, it also indicated that CSC Trusted Managed Services would be using Vblock as its basis for new IaaS/PaaS/SaaS offerings.
By contrast Accenture partners with Avanade Online Services, a JV of Microsoft and Accenture, to deliver Microsoft Dynamics CRM. Others such as Bluewolf offer function-specific capabilities through its Beyond Managed Services including cloud application management, migration and managed services for Amazon Web Services, remote database administration (e.g. Oracle, MySQL) and system administration.
- SaaS Hosting for Channel Partners Cloud-based Symantec Hosted Services secure information on endpoints, e-mail, instant messages and the Web. To extend its hosted services reach through channel partners, Symantec offers a multi-tiered program (i.e. referral, resell and OEM), which looks very much like traditional channel programs. Regardless, the 4,800 partners who reportedly have joined this program is a healthy indication of its traction with channel partners.
In less travelled territory, SIs are helping traditional ISVs transform to SaaS and developing their own SaaS and cloud services.
- SaaS Enablement (ISVs) As traditional ISVs (on-premise software) expand into as-a-Service business model, SIs have begun to help ISVs re-engineer their applications for on-demand delivery and to host ISVs’ SaaS offerings. Fujitsu Business Enablement Services for example provide ISVs with cloud-enabling services such as service provisioning, billing and payment, subscription management and reporting.
- SI-Developed SaaS Offering Developing IP solutions based on third party software, have long been coveted by SIs due to its ‘proprietary lock’ on customers and high profit margin. Tata Communications’ selection of Jaspersoft Business Intelligence Suite to provide robust analytics for Mosaic, Tata’s cloud-based digital media management and workflow platform, is a prime example of how SIs and SaaS providers are combining forces to build new solutions.
- OEM of Cloud Services Wipro took the lead in pioneering an OEM-style of cloud services to enable other providers to build and deliver cloud services in 2010. As such Wipro owns the intellectual property or software used in delivering cloud services white labeled by an ISV or service provider. By far this appears to be the most innovative of new breed of SaaS/cloud-related service offerings. If this catches on, more are likely to follow.
As customers push the envelope on transitioning to cloud infrastructures and consumption of packaged and custom XaaS applications, SIs will continue to provide a critical role in all stages of adoption. Watch for new SI XaaS and cloud services to enable mobility (e.g. mobile front end of SaaS application), enhanced business analytics, and hybrid clouds.
 Gartner predicts that by 2013 the worldwide SaaS market will reach $14B at an annual growth rate of 18% (CAGR).