My recent participation in the Hosting Con exhibition in Las Vegas proved there are two things that are really topical in US right now: Software as a Service (SaaS) and the rise of New Zealand IT companies in the global arena.
SaaS is really happening in the U.S. Having recovered from .COM boom and crash the internet community is now seeking new ways to generate revenue out of the cheaper connectivity and booming online awareness. Salesforce.com, Google nSite are two examples of what impact innovative companies have on the way the business is done.
The USA is the leading market for both SaaS vendors and consumers. This process is accelerated by major vendors, such as Microsoft, implementing programs which allow ISVs to deliver their own software as a service.
The idea of partnering is always attractive for software start-ups. Implementing a SaaS version guarantees that a start-up company will at least get a new channel and an extended reach to the new market. However, as anything these days, implementing a SaaS strategy is a business decision rather than a technology one. How to market, sell, support and charge are the first questions an ISV should ask before partnering with a hosting company.
Another aspect of a growing acceptance of the SaaS concept is the way it affects traditional channel business. It’s important to determine what is and isn’t true SaaS.
• The impact of a hosting company offering a full desktop outsourcing with the full office suite on the sales of the same office suite through the traditional partner channel.
• The impact of an internet service provider offering a security suite on a monthly payments basis on the sales of the same software suite via electronics chain-stores.
These examples might be extreme but the question is whether the second situation is a finance/leasing arrangement rather than true SaaS. Although SaaS doesn’t necessarily assume that all data and infrastructure related to an application must reside on the services provider’s premises, the scaling-up and, more importantly, scaling down of the applications’ capacity are the prevalent themes when the topic is discussed. In order to provide a truly on demand capacity and to sustain reasonable margins, the economies of scale must exist which is an exclusive domain of the specialised service providers with large and expensive-to-build data centres.
SaaS is definitely a concept to watch as it has a truly established presence in the USA thus opening a lot of long term opportunities for both ISVs and service providers. All major vendors support it, albeit with caution. Defining the boundaries of SaaS will help resolve the concerns of software sales executives who tend to be more conservative.
The second trend is a growing awareness of New Zealand as an ICT innovations country. Apart from its geographic location and scenery, New Zealand is also discussed in the U.S. in terms of what software products and solutions U.S. companies have purchased from New Zealand firms.
I recently overheard a conversation at Auckland airport about the Aftermail success story and realised that more and more US investors are looking for innovative solutions developed by New Zealand ICT companies to complement their product portfolio. Breaking into the U.S. market is the ultimate goal for any non-US software firm - the sheer size and degree of the market makes the potential opportunities very attractive for any non-U.S. firms.
Different models of entry exist. EMS-Cortex opted to establish a marketing presence by participating in various trade-shows and contributing to U.S. industry publications and newsletters, supplemented by our professional sales agency developing new business opportunities. This approach has been very successful and we’ll be focused on developing it further in the future. Merging with Enprise enabled us to leverage the SAP partner network in the US and allowed us to further push ERP as a service vision in the global markets.
New Zealand is perceived as an incubator for innovative technologies and the receptiveness of the U.S. customers to ideas developed outside the U.S. is growing. I believe the enthusiasm and innovation demonstrated by New Zealand software companies will help them realise the endless opportunities the U.S. market has to offer.