Information Technology without Technology?

I wrote quite a bid about the disruption, the growth and the strategic values of Software as a Service. I shared with many of you my vision about this industry and where it can go. In an earlier post I stated that we may run a business with nothing but SaaS. Today I’d like to take you out into a near future office environment (a few calendar quarters from now).

OK – So our new office needs some basic communication with internal and external people. We need something for our bookkeeping and write invoices. We need to do some HR work, payroll and expense management. Our sales team need to manage customer contacts, our marketing team needs to manage campaigns and initiatives as well as partners and alliances. We also want something to manage our service teams’ requests and cases. And finally will need to manage our products, projects and entire logistics and warehouse.
So let’s put up our sleeves and start:

Communication: We may start with Yahoo email and calendar. It is free and allows us to work in a team and see each others calendar. We may then select Webex to communicate with our customers and partners in a more communicative way.
Office: While checking out Webex we find their office products and actually find the necessary office software to run our day to day documents, lists and data tables. And in the future we may consider Office Live from Microsoft.
Customers & Marketing: The obvious first name is But there are others like RightNow and Sugar CRM and already many more. Let’s pick SFDC for the fun of it and take RightNow to mange service requests. To write optimal proposals, we may consider Offermatica. If we now want to better plan out marketing campaigns we may come across Eloqua and take them to do the campaigns – may be we also choose ResultsMail to do the sending and tracking of email blasts and manage the ones who want to opt out. And if we want to integrate our partners we go with BlueRoads for channels and Loyalty Lab for retail customer loyalty management. Our call center may be entirely distributed across the nation using Five9.
People: To mange HR related activities we may see EmployEase and may be Expenseit to do the expense reports. To better manage personnel development we may use Successfactors. Additional hiring may be supported by LinkedIn.
Bookkeeping, Orders & Logistics: Now when we get orders we want to choose a complete ERP solution and may stumble over Intacct or NetSuite. We may track all our contracts with Encover. We may also choose one of the project management systems, SCM tools and other products out there for our specific needs.

As you can see we pretty quickly are able to replace every single software today with SaaS solutions. And guess what, all of the above can be done already today. I found over 300 vendors in some 30 categories who all can make this a reality. There is not a piece of software that I need to put on my computer other than a Browser and an OS of course.

But walking through this new office environment I discovered some totally new challenges: My SaaS applications are sometimes so cheap that I may need to connect with other users to find out the best usage – hard to call the Yahoo hotline and ask for somebody to come in and help us optimize the use of yahoo mail in a team environment. Another issue I’m facing in that office is that I don’t just start the software – I need to login and provide a password and do so for 20 different applications. Also I may need some tool – at least an online spread sheet – to track all the licenses and keep up with expiration dates. And when I begin to put this all together I would welcome some knowledgeable person to help me find the best solutions for me TODAY (since I don’t worry about tomorrow – because I simply switch if I need to).

The advantage how ever are big enough to go forward: We don’t need to mess with servers, with backup, with software upgrade and updates. We don’t need an engineer who puts this all together for us. We don’t need to allocate $250,000 capital expense for software and hardware. We don’t need to worry about service and maintenance contracts and we don’t need to plan amortization and think about what software is right for us today and how this decision may affect us in a year or two from now.

Tanooma will soon be a showcase for a completely SaaS based business – we have no software that runs on our servers (hence no servers). Tanooma is running a completely “Technology Free IT” environment. Simply because it is less expensive, requires no investment, requires no staff and allows us to pick and choose what is best for us TODAY and end of the year we may switch to what ever makes sense then.

Competitive advantage: We have the most flexible office IT infrastructure and can afford to pick the best possible solutions that fit our most current needs. While others may be limited by the investments they already made – we will have the best solutions for us when ever they are available.

P.S. Ismael Ghalimi, another fellow blogger said it this way:

From 1 Million to 100 Million SaaS users in 5 years

I guess we all pretty much agree: The SaaS Industry will grow fast. How fast – we will see in 5 years from now. But a few interesting indicators show where this all goes:

1) Investors
On conferences publicly and in individual conversations privately we hear it over and over again: “We will invest in SaaS but we will probably do no more investments in traditional license software”. For investors it is the recurring revenue model but also more and more the underlying technology. I may be totally off – but I can see more investments into SaaS in the next few years than into Internet in the crazy days. Why? When the railroad boom slowed down with it’s crazyness in the old days – the real investment started in building the transportation infrastructure.

2) Technology
When it comes to Rapid Software Development, SaaS certainly outperforms any other software model. Deploy it now – get feedback – fix it on the fly – mature to a product that is not build for an audience but actually with an audience. SOA, Web Services, open source are just a few key ingredients to build a software so fast that no other technology can compete on a time to market scale. With the speed comes more variety and more diversity.

3) Economy
SaaS is cheap – period. Even so we all hear from the legacy software maker that SaaS is more expensive in the long run – I just hope that who ever says that has a calculator handy. We all agree that the actual software and hardware cost is less than 40% of the overall IT spend. And we also agree that a SaaS vendor is able to split their operations cost amongst 1,000 and more companies versus only one IT organization. Enough said.

4) Popularity
SaaS is simple in the first place and vendors have an unparalleled interest to keep it that way. This will motivate less computer savvy users or industries to investigate software and IT solutions. SaaS will go way beyond application software. Any kind of Tools, Games, Hobby and Entertainment Solutions will get into the market. Manage your wine cellar online, keep your library online and get additional information about the author, play games online and develp your identity and earn points in a new gaming world, begin not only filing your TAX online but actually interact and communicate with your insurance and everybody else in an online home office infrastructure where you find all your documents even if your home burned down.

500 Million PCs (our todays installed base) will use SaaS partly or entirely one way or the other. It may be 100 Million already within the next 5 years.