The Dual-Purpose Aggregator Platform

I learned a few interesting things about SaaS hosters and aggregators during a recent trip to Europe.

One discovery is that the way current SaaS hosting business operates is joint at the hip with the SaaS aggregator business. In fact, it is hard to separate the two. More often than not, application providers are relying on the SaaS aggregators to provide the hosting and delivery platform for their applications. In some cases, aggregators are charging the application providers consulting fees to integrate and host the application within the aggregator’s environment.

Although largely perceived to be in the same category of SaaS aggregator business, the hosters and telcos that I have spoken to have slightly different business model, at least for now:

· Telco’s are more likely to white-label their service providers, whom they see as providing building blocks for composing the telco’s own service offerings.

· Hosters on the other hand, are more like resellers for the service providers, which means that service providers get to retain their branding even when their applications are sold as a bundled offering.

In the longer term, it is likely that there will be blurring of these two preferred business models between telcos and hosters and a SaaS aggregator will embrace both models. Future aggregator business models also call for more mature technology that will allow the aggregator and third parties to compose and create new services from existing ones in order to create the kind of network effects that is crucial to a SaaS offering’s success.

In the mean time, the approaches are more tactical and aggregators are looking for ways to push and license existing desktop and line-of-business applications to the client. Allowing third party to develop and compose new services with the aggregator platform is not yet a key business objective. To meet the current goals, aggregators frequently rely on an aggregator platform that looks something like the following:

Application streaming and terminal services solutions are two key pieces of enabling technology in this platform. Application streaming technology like SoftGrid can be used to package, stream and execute existing desktop applications within a client-side sandboxed environment. Terminal services technology is used to re-deliver applications within a virtual desktop session that gets instantiated on the server side. Both kinds of technologies provide different virtual environment for controlling the distribution and licensing of software.

One interesting observation is: an aggregator can lower the licensing overhead of the terminal service technology by bundling and selling more applications through a terminal service session. This is because the aggregator is paying the same amount of licensing fee for each terminal session regardless of whether he is selling one application or ten applications through one terminal server session. Therefore, it is always in the aggregator’s interest to bundle more applications if he is heavily dependent on terminal services as the SaaS delivery channel.

In some cases, aggregators may create and deliver new Web-based applications that serve as launching point/portal to various other bundled applications. As the aggregator market and technology matures, such Web applications can be enhanced to include the development or application composition environment that allows third parties to create and offer new services.

An interesting twist to the aggregator story is that the same application delivery platform can be useful to enterprises who are trying to simplify application management within their corporate desktop environment. Enterprise IT functions as the “internal aggregator” by being the central agency that delivers software services to the rest of the enterprise. With such an application delivery platform, it is also possible for enterprises to enable work-from-home scenarios by allowing employees to access corporate applications from home PCs (AKA Bring Your Own PC).

By consolidating application deployment and configuration into a central delivery environment that uses streaming, virtualization and Web channels, it frees IT from having to deal with managing distributed desktops that may also be running on heterogeneous OS versions and platforms. To further reduce the application management complexity and overhead, enterprises may also choose to outsource application infrastructure hosting to external hosters.

All these recent findings have put in me some positive thoughts about today’s SaaS aggregator’s platform.

So while much industry attention has been paid to the development of future SaaS platforms that will definitely enhance the aggregator’s business models, we should not ignore the useful aggregator solutions we can cobble together today from existing technologies.

Comments

  • Anonymous
    November 26, 2006
    This is the continuation of my previous post: SaaS, CIOs and the Mongolian Steppes . (If you have not