IBM's Secret SaaS

Saturday Nov 10th 2007 by Larry Barrett
Share:

IBM's been very busy the past few weeks telling everyone about a lot of new products and services. It's what they aren't talking about (yet) that's really interesting.

IBM has been running us media types ragged of late with release after release announcing big plans for unified communications, mashup application platforms and its third-quarter earnings report.

That's all well and good, but none of this "news" address a much bigger issue. IBM, like so many of its competitors already have, needs to adapt to the SaaS model that's changing the way customers buy, access and share communications software.

When I ask analysts, system integrators, developers, customers and consultants why IBM hasn't provided even the slightest hint of a substantive software-as-a-service (SaaS) strategy, they all say the same thing: "IBM isn't stupid."

An ocean of SaaS

Yet, in the past couple of months, SAP, the on-premise, take-it-or-leave-it bully, rolled out its first SaaS (define) offering, Business ByDesign. And Salesforce.com, the little engine that might, announced it has eclipsed the 900,000-subscriber threshold and unveiled Force.com, an on-demand application development platform that it believes will forever change the way companies develop, design and access business applications.

Meanwhile, Microsoft is getting ready to launch Dynamics CRM Live in the first quarter of 2008, a SaaS offering that will be managed within the company's data centers and use the same code base as its on-premise application. In October, it launched Office Communications Server (OCS) 2007, its unified communications platform for VoIP, instant messaging, conferencing and presence.

And at Oracle, frankly, there's not a lot of news to report from Siebel OnDemand. We know that CEO Larry Ellison, by virtue of the Siebel acquisition and his investment in NetSuite, understands the appeal of the SaaS model but it's also clear he's more than happy with the traditional on-premise, license-based model that butters Oracle's bread.

Who knows? Maybe Oracle will soon have something new to say on the SaaS front, possibly during next week's OpenWorld conference in San Francisco.

And don't forget about Google, which is talking more and more about the growing popularity of its Google Apps and Google Docs offerings, as well as its intention to bring even more tools and Web 2.0 features to the cloud-computing space.

Where art though, IBM?

Conspicuous by its absence from the big-picture SaaS discussion is IBM. And while the company does provide some hosted offerings for the enterprise, it's yet to deliver anything resembling a full-scale, multi-tenant, on-demand platform for the small- and mid-sized business (SMB) market.

But it's surely not from a lack of effort.

One of the worst-kept secrets in Silicon Valley -- and an especially sensitive topic within the executive ranks at IBM -- is the shocking turn of events that transpired in March when Cisco Systems, in the span of eight days, swooped in at the 11th hour to steal WebEx out from under IBM.

Though IBM won't comment on the WebEx drama, multiple sources confirmed that it was all but a done deal, which even included a press release announcing the union.

IBM had spent more than eight months kicking the tires and having informal discussions about how WebEx's industry-leading (87 percent) Web conferencing technology and, more important, its pending WebEx Connect SaaS platform for unified communications and collaboration would fit into Big Blue's ecosystem.

But Cisco CEO John Chambers moved in with a level of alacrity and chutzpah that IBM was either unable or unwilling to match. And that was that. IBM headed back to the drawing board.

Next page: The rest get going

Page 2 of 2

Moving on SaaS

While IBM sorts it all out, Cisco, Microsoft, Google and a handful of other companies are busy executing.

According to Infonetics Research, companies spent more than $363 million on unified communications applications in 2006. The market is expected to grow between 25 percent and 30 percent each year through 2010, making it a $700 million market opportunity within three years.

"IBM unfortunately always seems to be a little slow and one step behind to some of these market opportunities," Mike Gotta, analyst at Burton Group, said in an interview with InternetNews.com. "Right now, IBM is still missing any kind of consumer and hosted SaaS offering for SMBs and larger enterprise customers."

But even though Cisco continues to talk up the virtues of its network-as-a-platform mantra, it still doesn't really know what it has with WebEx Connect. But at least it has it.

Connect probably won't be ready for primetime for at least another 18 months to two years. Right now, a beta version is in the initial testing-and-tinkering phase inside Cisco and may be ready for external consumption early next year. To be sure, it's still a work in progress.

"For now Cisco has an empty plate, but IBM doesn't even have a plate," Gotta said.

IBM: We're not out

In a move to, perhaps, make itself feel better, IBM last month tried its best to upstage Microsoft's OCS launch by announcing the integration of Sametime, its on-premise Web conferencing app, or Lotus Sametime Unyte (the product of its acquisition of WebDialogs) with its free Lotus Symphony productivity suite.

But to some, that's missing the point.

"It's good functionality and makes sense, but I wouldn't consider it to be the cornerstone of a UC strategy," said Matthias Machowinski, an analyst at Infonetics Research. "What really matters is how to combine the core communications processes like mobility, phone, video and messaging."

Sources close to IBM, as well as IBM executives to a smaller extent, acknowledge that Big Blue is busy developing its answer to the master SaaS platform that Cisco is attempting to build. But what it's supposed to be and how it will be built -- through acquisitions, partnerships, internal development or some combination of all three -- is unknown.

For now, IBM's not talking.

"I really can't say much about it at all," Dave Mitchell, program director for IBM's SaaS group, said in an interview with InternetNews.com. "We'll be at a point where we're ready to make some announcements in the next few months."

Perhaps a clue to IBM's behind-the-scenes activities can be found from comments made by Drew Clark, director of strategy for IBM Venture Capital Group.

Last year, Clark said that as IBM held discussions with a variety of SaaS companies, both net-native and traditional independent software vendors, "we are starting to see some common threads.

One that struck a particular chord with us is this: What if IBM were to facilitate or create a SaaS ecosystem to help dozens or hundreds of SaaS companies increase their sales while reducing their costs of sales? Could IBM provide an open, Web-based framework for aggregating their Web-as-a-platform services into a loosely coupled marketplace offering?"

Acquiring WebEx would have been a great first step toward making this vision a reality. But perhaps the bigger issue for IBM is whether it has the leadership, corporate culture and courage to pull the trigger on any project that would address the gaping hole in its SaaS/UC strategy.

The word is that IBM won't be ready to make any announcements in this vein until well into 2008.

Unfortunately for IBM it was this same half-hearted, paralysis-by-analysis mindset that let WebEx slip through its fingers and allowed Cisco to make a quantum leap up the value chain that resulted in its foothold in the SaaS market and establishing it as a serious player in the next generation of enterprise software applications.

This article was first published on InternetNews.com.

Share:
Home
Mobile Site | Full Site
Copyright 2017 © QuinStreet Inc. All Rights Reserved