Software, Interrupted

Over the last 10 years, IT has moved further and further outside the firewall. Starting with ASP (application service providers) and moving to multitenant SaaS (software as a service) on-demand applications, and now into cloud-computing environments, the status of on-premise IT has shifted from being a necessity to an option.

An interesting factor in this shift is the customer assumption that SaaS, like open source, has an assumed value, but ultimately, the fact that it's cheaper to run and manage is what will continue to drive adoption.

I had a good conversation at the SaaS Summit on Thursday with Treb Ryan and John Rowell, respectively CEO and CTO of OpSource, a provider of SaaS and Web applications for companies offering on-demand services.

The big question for me was, what is SaaS when cloud is all the rage? Is it a subset or just another classification for the same thing?

Ryan told me that "SaaS is the business version of cloud computing," meaning that cloud services such as Amazon.com's EC2 (Elastic Compute Cloud) offer great value but lack features required in the enterprise. Service-level agreements and compliance are simple examples.

The 2009 SaaS Summit kicks off tomorrow at the Westin St. Francis in San Francisco. It's always one of my favorite events of the year, filled with information that you can actually use in your daily business life.

This year's agenda, focuses on the opportunities emerging from the depths of the current economic downturn for software-as-a-service (SaaS) and Cloud computing companies. The content will also address how businesses can take advantage of SaaS and cloud services to lower costs and increase productivity as IT spending remains questionable for the rest of the year.

I'll be there tomorrow to meet with the OpSource team and check out the Selling SaaS to the Enterprise panel. For more information visit the website.

You can follow me on Twitter @daveofdoom

In the early days of software as a service applications like those of Salesforce.com, you were required to stick with the company's approach to processes. Users realized what the the issues were early on, but many SaaS providers still don't offer much in the way of customization.

But the lack of customization is starting to be addressed with the advent of platforms like Force.com. Through the adoption of platform-as-a-service options, businesses can customize SaaS applications much the same way one can develop software or modify an open-source product.

In outlining "7 Questions to Evaluate SaaS," Alistair Croll at GigaOm writes, "typically, the software with the most features won. Feature-itis ruled."

No more. With software as a service, the focus has become whether the tool is good enough on day 1 and how well it will adapt over time. Take, for example, the Family Service Agency of San Francisco, which replaced its ailing paper-based system with SaaS donated by the Salesforce.com Foundation, improving productivity and accountability along the way.

Speaking (on Wednesday) at the SIIA's eGov event in Washington, D.C., Bob Bennett, the agency's CEO, explained how the agency turned a sales force automation tool into a social-services management tool.

Illustrating the point are a set of seven critical topics to be addressed:

• Adaptability
• Reliability
• Task productivity
• Price
• Back-end integration
• Longevity
• Ecosystem

All of these elements are important to consider in addressing the SaaS-imposed challenge of modifying business processes to meet software design versus building software to match processes.

Massively multiplayer online, or MMO, games are generating serious dollars these days and doing so in a way that suggests that revenue opportunities are still nascent.

Counter to what we see with console games, the bulk of the revenue appears to be coming from subscriptions. Generally speaking, subscription revenue for MMOs and MMPORGs (massively multiplayer online role-playing games) is better than license revenue for console games because it has a longer life span. Call it support, maintenance, or whatever you like, but a recurring revenue stream is what drives every software-as-a-service and open-source company.

GigaOm has reported on the Top 10 money-making MMOs of 2008 and the ways in which they all make money.

A few interesting points it makes:

• The top MMOs all require a piece of software to be installed to the local machine
• Subscriptions and prepaid cards are clearly working well
• Microtransactions are picking up

One of the most common questions about the cloud is what should you use it for? The easy answers tend to be things that you don't want to maintain yourself or that you can get cost advantage from not doing yourself.

Redmonk's Michael Cote suggests you start by asking yourself why use the cloud, before you get too far down the path.

In looking across your portfolio for things to move to the cloud, you still need to ask why you should do it. Top of the list tends to be cost (both up-front and ongoing, especially when it comes to upgrading and maintenance) but also flexibility and new functionality that come with cloud-based applications.

And while I agree with Cote, I made a different case in a recent InfoWorld article, "Cloud computing to the max", where I outline how my last company moved everything we possibly could into the well-trained hands of cloud and hosting providers.

In the end, our jump to the cloud was based on a desire to avoid expensive, cumbersome infrastructure. While using cloud services was not without its challenges, I can absolutely say that I would do it again.

The more time I spend with start-ups the fewer companies I see obsessing about IT and instead taking advantage of the available services. If IT is a strategic element of your business (and it always is) it's well worth the time to experiment with new solutions to the same old problems.

I'm doing a session on "The Borderless Enterprise" today as part of InfoWorld's Reinventing Enterprise Architecture: How to hit the Reset Button.

I'm joined byEugene Ciurana, director of systems infrastructure at Leapfrog. We'll talk about how enterprises bring SOA outside the firewall and how the Cloud comes into play. It's a good time for all.

We're on today September 30, 2008 at Noon PST/3pm EST. Yes, I should have posted this sooner.

Software-as-a-Service is so common it's actually boring at this point, but there are still only a few very large SaaS companies. As SaaS companies grow, both in market and technical scale, the need to refine and mature processes becomes more important.

We really have no idea how the Operations are done in the Cloud, with the exception that we have a bit of visibility into the uptime/downtime. We still lack even the most basic release management visibility and we have no idea how Cloud providers deal with service interruptions, or how they do upgrades.

For example, there were recent issues with VMware ESX 3.5 Update 2, in enterprise configurations where the hypervisor wouldn't power on after being turned off. What would have happened if an entire Cloud system was shut down at that moment? Would customers even have been aware?

One of the big issues that I wonder about is just how well versed the operations teams are as the systems need to scale up with a very high SLA level.

If you too have wondered what your typical SaaS company looks like (YTSC), check out this new post from Dani Shonrom.

Join me and John Rowell from Opsource, Wednesday, July 9, 2008 9:00am PDT on a webinar discussing how the Cloud affects the Enterprise and vice-versa.

Learn about common concerns organizations face when incorporating SaaS applications into their growing enterprise architecture and how to make the transition from on-site to internet based applications.

Click here to register

At lunch with Michael Coté from RedMonk on Wednesday, we talked a lot about how open source has really split into "free" and "open source," with the former typically associated with basement developers and Apache licenses, and the latter generally associated with the General Public License and some set of enhanced features.

As I was following Coté's Twitter feedearlier, I started to wonder whether everything really will go to the cloud and all of our open-source musing will go away, as software becomes consumed versus installed.

Realistically, there is a vast array of software that really can't move outside the enterprise in the foreseeable future. Consider, for example, banking and stock-trading systems, or telecommunications infrastructure. On the other hand, consider pretty much everything else. Even when you take into account the complexities of back-office systems, odds are that in a green-field situation, you could find a software-as-a-service application to solve your problems.

So here's the paradox that I think about: Let's consider a company like Google, which writes, buys, and installs a lot of software. Some is unique to its business and isn't available as an online service. Other products are packaged applications. Yet it wants the rest of the world to stop buying software, instead just consuming it from Google.

I'm not seeing a way that on-premise software disappears forever...