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2008 the year of INTRAnet-SaaS / INTRAnet-S+S

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In the next couple of days I might have fun again and offer my 10 or so 2008 predictions as I did in 2007. (many of which I think are still very valid) but in case I don't, I wanted to make sure that at least this one gets out.

- 2008 will be the year of the INTRAnet-SaaS (or INTRAnet-S+S)

Similarly to what happened about 10-12 years ago where the growth of the Intra-net was faster than the Inter-net (certainly in terms of $ if not in global terms), in 2008 SaaS (and its evolutionary successor S+S) will grow faster inside the corporate boundaries than outside.

Of course I have no data whatsoever to back this up J, but as an observer of the SaaS phenomenon and mainly through my very frequent interactions with enterprises and ISVs, it is what my senses are telling me. (Just to cover my back I will use the good old Gartner trick and add a 0.7 probability to it; so, if it does not happen, I was not wrong, it was just the 0.3 probability of this not happening that occurredJ)

More seriously, let me give you a few reasons why I am increasingly convinced of this:

- SaaS/S+S architectures are beneficial regardless of whether the service provider is “in the open cloud” or “in the corporate cloud”:
Metadata driven customization and other SaaS best practices as described in LitwareHR resulting in economies of scale are great solutions for multi-departments/multi-geographies deployments, frequent in large enterprises. An example I heard a few times is a bank investigating the deployment of a multi-tenant version of an e-banking system for the multiple geographies they do business in, rather than deploying multiple times a hard coded configuration of the same e-banking system. Another area where Intranet-SaaS best practices can be applied is around the ‘shared services’ initiatives that I have heard about many times, especially in the public sector space.
The benefit are not only technical or cost driven, Intra-net SaaS can enable a more mature monetization schemes for central IT delivered services. Under this model, “subscription” and/or “usage-based” monetizations can be introduced more easily and replace the somewhat unfair traditional “flat fee” taken as a % of revenue by IT.

- Data:
#1 concern of adopting SaaS is data control (protection, ownership, privacy, compliance…) all of this goes away if data remain within corporate boundaries. Enterprises get the benefits (albeit reduced) of SaaS without giving away control of their data.

- Kicking the tires:
Going to the cloud for IT capabilities is a big jump for many enterprises. Doing it internally first allows them to learn, at reduced risk, the ‘ropes’ of externalization of IT services. Of course, in this case the externalization stays within the enterprise so the benefit are reduced as the potential economy of scale is lower, but at the current level of maturity and trust, the reduced risks will win the trade off battle vs. reduce costs. Over time, intra-net delivered services could move to the Internet.

- Alignment to existing SOA initiatives:
SaaS / S+S initiatives within the corporation will be aligned (assimilated) with the current SOA initiatives (as multiple people have told me: S+S is “just” SOA done right). The fact that there is already mindshare and willingness to invest in SOA within the enterprise will facilitate investment in SaaS/S+S if kept within the enterprise.

To preempt comments from readers, 2 caveats:

1) Of course, the larger the company the bigger the benefit. I would argue that any company with more than 50’000 employees managing multiple thousands of servers with more than say 20 subsidiaries would benefit from it. This is a very very crude estimate. It is very likely than smaller companies could benefit from it. Larger ones (Global 1000 etc.) would absolutely benefit from it.

2) Over time, internet-saas will move to the cloud to a “purer” internet-saas. Economy of scale and optimization opportunities are even bigger when performed at Internet scale, but this will happen only when (among many things) service providers will have attained the level of trust required to take ownership of sensitive corporate data, and enterprises will have attained a level of internal maturity where “letting go” of IT capabilities will be seen as a form of strength and not weakness. Today for the general case, neither of these is true.

In conclusion, I argue that not only enterprises would benefit from building their own software following SaaS best practices, but maybe more interestingly ISVs would benefit from making their SaaS solutions re-hostable by large enterprises, regardless of what Credit Suisse analysts say about the higher multipliers they are willing to give to the pure play SaaS ISVs.

Firstly, because the enterprise (for the foreseeable future) is still where the money is, hence IMO a lower multiplier of a larger revenue base is better than a high multiplier of a non profitable company. Secondly, ISVs selling a intranet-saas deployment solution might be able to command “traditional licensing” models as opposed to “per user / per month” models which based on empirical evidence are, at least currently, not as attractive for the seller.

As usual, feedback very welcome.

Looking forward to seeing 1 year from now where this prediction held water or if was just another random thought of a dotcom refugee J

Happy New Year!

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