Independent Distributors push for Quality

Independent Distributors "Quality Issue"

Saturday, April 26, 2008 Update: Internet exchange offers hope, challenge for OEMs By Jennifer Baljko Shah and Mark Hachman EBN (05/05/2000 4:57 PM EST) The High-Tech Exchange, an e-commerce initiative launched earlier this week by a dozen industry players, is likely to be one of many online trading hubs that connect component suppliers, distributors, and OEMs, supply-chain management experts said. But just how these exchanges will work, and which will create enough buzz and substance to be the dominant site, remains to be seen, they added. "These are brand-new business models," said Jim Forquer, a director at the consulting firm Pittiglio Rabin Todd and McGrath. While there have been many announcements about these marketplaces in all industries, "the number of transactions per press release is pretty low," he said. "We have to take note that this is something very new and still being developed." Despite the potential for infighting within the e-commerce space, PC makers and OEMs in other industry segments share the same goal: to implement common Web-based supply-chain management practices across different companies, and to increase supply and demand visibility. At the same time, supply-chain managers and purchasers will face the unenviable task of figuring how the dynamics of this emerging model will affect their existing practices. They will also have to determine how these exchanges will affect component pricing strategies, information-sharing processes, and strategic relationships with preferred suppliers. "There are lots of questions," said Mike Doyle, chairman and chief executive of the National Initiative for Supply Chain Integration. "One of the serious problems in any exchange is that there needs to be a clarification of what types of items are running through the exchange. Another major issue is if a few companies own the highway and are charging a toll to use it, how can they ensure competitors that they can't see sensitive and important information such as pricing." The e-marketplace phenomenon that is sweeping through various industries has even piqued the curiosity of the Federal Trade Commission. In an effort to understand how e-marketplaces and online exchanges work and affect competition, the government agency will hold a public workshop on June 29. Taking the first stab at a multiparty open exchange in the PC sector, AMD, Compaq, Gateway, Hitachi, HP, Infineon, NEC, Quantum, Samsung, SCI Systems, Solectron, and Western Digital said they will be the 12 initial founding members of an independent company that will operate High-Tech Exchange (www.ehitex.com). Eight additional founding members are expected to be added to the roster. "Suppliers, customers, and competitors, in many cases, were able to come together at lightning speed to put together a very exciting opportunity and probably one of the most meaningful events in the industry in many years," said Matt Massengill, president and chief executive of Western Digital Corp., during a news conference. "This is a great opportunity for us to truly get the kinds of efficiencies out of the supply chain that we need to have." Initially, the High-Tech Exchange, slated to be up and running within 90 days, will offer auctions, catalog management, and value-added services such as a news ticker. Down the road, demand forecasting, inventory visibility, capacity utilization, online supply commits, reverse logistics, trading agents, and collaborative product-design- service capabilities are likely to be added. Reducing redundancies and getting partners to speak a common language are other areas the exchange hopes to tackle. "It helps everyone in the supply chain do things more efficiently," said Phil Fok, director of corporate operations at Solectron Corp., Milpitas, Calif. "For example, orders are usually e-mailed or faxed, and someone has to receive and review them, then fax or e-mail them back. E-commerce done correctly can eliminate redundant entry stuff. You get improved performance." Leveraging existing technology is one way to achieve that, according to Curt Francis, vice president of corporate development at Quantum Corp. in San Jose. "Internet-based commerce has been a substantial force in a number of areas, in autos and steel. Why would it not happen here?" he said. One of the most challenging hurdles the new group faces is getting everyone to speak the same language. Though many companies have joined standards boards like RosettaNet -- a consortium developing e-business process standards that will allow supply-chain partners to more effectively interact via the Internet -- putting the right technology in place could be a bear of a job, according to Fadi Chehade, chief executive of ViaCore Inc. and former head of RosettaNet. "Building RosettaNet-ready PIPs isn't simple," he said. "If you thought EDI was hard, this is harder. "What concerns me is that you can't announce something that is meaningful that will be available in a matter of days [as the Internet Exchange will be]. That worries me because it's not simple stuff," Chehade said. "Can you integrate companies' systems simply? The answer is no." E-commerce Competition While the High-Tech Exchange has some heavy-hitters on its roster, other big names, such as IBM Corp., Dell Computer Corp., Intel Corp., and the major distribution players, are not on the list. Though it's still too early to speculate whether some of them will join at a later date, the possibility of having competing exchanges is already emerging. Later this month, Big Blue is expected to announce that it will form a separate exchange with at least nine other companies, said Jerry Latta, IBM's global general manager for aerospace and electronics in Southbury, Conn. "We started down this path several weeks ago," Latta said. "There's room for all kinds of exchanges in the industry. They can take on all different forms, shapes, and characteristics." Latta declined to discuss what companies will be founding members, what technology will be used to connect the players, or other details about how the exchange will operate. A formal announcement outlining their strategy is expected to be released by the end of the month. Dell, which has optimized the PC industry's shift toward a build-to-order sales strategy, has forged its own independent supply-chain model. A spokesman for the Round Rock, Texas, company characterized Dell's supply-chain management model as "quite advanced," but declined to give specifics beyond acknowledging that several of the processes are patented. He stopped short of saying that Dell might risk exposing or sharing these processes should it decide to participate in the exchange. "We're aware of [the exchange], but it's not clear what it is, or what its benefit to Dell would be," the spokesman said. "Dell is generally regarded as a leader in supply-chain management. We have developed our own Internet-based tools for supply-chain management and in the management of finished goods." Intel, the world's leading chip maker and a key enabler of Dell's direct-sales efforts, declined to comment whether it was considering joining the supply-chain program. Internally, Intel has been setting up e-commerce initiatives to manage its customer and supply base. "We have ongoing technical innovations in software and services and continue to be vigilant in regard to these things," a spokesman said. Where Distributors Fit In Top-tier distributors Arrow Electronics Inc. and Avnet Inc., which have been aggressive in pursing e-commerce efforts, could not be reached for comment. Both Arrow and Avnet are investors in eConnections, a Web-based supply-chain management company that may offer some of the services being offered by the High-Tech Exchange. But Rob Rodin, chief executive of eConnections, declined to comment on last week's announcement, saying that there are "unanswered questions" about the group's plans. Others in the channel see the OEM-led exchange as complementary to their models. "Here are the largest computer OEMs telling people that they can't support their supply chains through a direct model," said Ron Pugh, vice president of sales at Wyle Systems, the computer-products unit of VEBA Electronics LLC. "So they're pooling their resources to, effectively, create a distributor." The volume of computer products and components sold through the indirect channel practically assures that Wyle and other distributors will be major suppliers to this and similar exchanges, Pugh said. Another approach is to create a separate exchange that may eventually plug into the broader OEM entity. ProcurePoint.com, Walpole, Mass., is trying to do just that. ProcurePoint, a software company, is creating tools that will enable franchised distributors to connect with small and midsize contract electronics manufacturers, said chairman Timothy X. Cronin. Other companies, particularly dot-coms that have been beating the online procurement drum for the last several months-NECX.com and PartMiner, for example-also said the model lends credibility to their offerings and will help drive the transition to an online procurement environment. "We welcome the validation from big-name buyers like HP and Compaq," said William Barron, chief marketing officer at PartMiner Inc., New York. "We appreciate that they will be a catalyst to bring about change." What's At Stake Despite all the noise about which companies are doing what, those that are successful with the e-marketplace model have much to gain. Nearly $3 trillion in transactions will be conducted electronically by 2004 in the United States, and e-marketplace transactions will represent about $850 billion of that amount, according to The Yankee Group, Boston. And AMR Research Inc., Boston, estimates that the cost reductions generated from Internet commerce on sales, general, and administrative line items could exceed $50 billion by 2004.

An e-marketplace for buyers and sellers of electronic components began its launch process recently. ProcurePoint.com management describes the site as a secure, Web-based marketplace designed for professional purchasers buying for multiple, future deliveries. They say the site will be launched in several phases over the next few months, and that it targets small and midsize contract electronic manufacturers who purchase electronic components from franchised distributors. "Buyers like the fact that we use only authorized distributors and preserve the manufacturers warranty, unlike distressed inventory sold by auction-based exchanges," says Timothy X. Cronin, ProcurePoint's chairman of the board.

The news for high-tech and industrial manufacturers is SaaS solutions are now available for applications that are complex, or requiring integration with master data. As SaaS becomes more established, with the success of applications such as Salesforce.com, the usability of the on-demand model is being extended into applications that offer manufacturers robust end-to-end solutions. These include applications for complex product configurations and quoting, demand forecasting, inventory control and lean manufacturing, human resource management and compensation planning.

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Historically, these applications were only available as traditional on-premise software, but now software vendors are introducing the same applications in on-demand environments. The suppliers find the applications are easier to maintain and upgrade, faster and easier to install, and offers their customers more flexibility. These solutions can be integrated to ERP systems to the extent needed, and concerns on ERP integration or data exchange, is no longer an issue.

Furthermore, a number of companies are introducing ERP in on-demand models. Notable among these is Workday, started up by the founders of Peoplesoft. In a short time, on-demand ERP has been successful in the mid level market, with pilots being conducted by numerous Fortune 150 firms. SAP has also recognized this trend and has introduced on-demand ERP for mid-level markets.

The advantages for high tech and industrial manufacturers can be significant. There is no investment in software, hardware, or network support. Upgrades are automatic and free, with no costly patches and associated downtime. Traditional on-premise software maintenance fees are frequently equal, or greater than, the annual license costs of on-demand applications.

On-demand applications are noted for their responsiveness to changing user needs, and ease of set-up and configuration. An important note for capital intensive high tech and industrial manufacturers is the fact that SaaS applications can be treated as a maintenance expense, not requiring capital outlays. Furthermore, SaaS implementations can occur very rapidly, reducing up-front costs.

The success of a range of SaaS applications working well together can benefit from capable consulting and implementation companies who build seamless integration between the applications. This is much less difficult in an on-demand environment, as many of the vendors are cooperating to make sure their offering integrates well with others. SaaS applications can provide the robust, complete solutions that high tech and industrial manufacturers are seeking -- extending from the back office to the front office and into the customers-facing applications.


About the Author
Douglas Timmel (DougT@Bluewolf.com) has over 30 years in a manufacturing environment having experience in ERP and CRM implementations. He currently works for Bluewolf (www.bluewolf.com), a leading consulting firm specializing in software-as-a-service implementation and integration solutions. Bluewolf is based in New York and San Francisco with regional offices throughout the U.S. and Europe.

BusinessWeek on SaaS

Wednesday, April 23, 2008

BusinessWeek on SaaS

Someone forwarded the recent BusinessWeek article on SaaS Myths found here. I wanted to include it below as a time capule of the market adoption of SaaS - something for us to look back on in a few years and laugh at the market FUD that is being generated to combat the SaaS wave that is pushing through the market.

A few other notes on the space that support the viewpoint for SaaS growth:

1) OnDemand market is currently 6B and growing at a 32% CAGR. The combined market cap of the ondemand vendors that are public is over 17B.

2) It is a fragmented market...the top 10 vendors still are less than 50% of the market. And these are big players like Cisco/WebEx, Microsoft, Salesforce, Citrix and Omniture.

3) This is a broad trend:
HR - Authoria, Taleo, SuccessFactors, Salary.com, HireRight
Finance/Accounting - Netsuite, DealerTrack, Concur, Intacct
Marketing - DemandTec, Vocus, RightNow, Omniture, ConstantContact
CRM - SalesForce, Aria, Genius, Entellium,
Content/Collaboration - Arena, WebEx, Citrix
Supply Chain - Ariba, TradeBeam, ClickCommerce
Just to name a few categories that are working...


Software-as-a-Service Myths [text from BusinessWeek article]

A consultant explains why this new breed of Web-based software has staying powerFor years, organizations of all sizes have suffered the hassles and unexpected costs that accompany deploying and maintaining a variety of traditional software applications that, ironically, were intended to make them more productive. Now a new breed of Web-based services are pushing legacy applications aside and finally giving users the business benefits they've been seeking. This new form of software-as-a-service, or SaaS, has been spearheaded by Salesforce.com's (CRM) customer relationship management and salesforce automation applications, and NetSuite's "net-native" enterprise resource planning applications. These companies have recognized the inherent inefficiencies of the traditional software market, including the tremendous time, effort, and cost that organizations -- especially large-scale midsize businesses -- have to expend to install applications and keep them up and running. Despite the success of these companies, many people are still skeptical about the long-term success of SaaS. Others are concerned that recent Salesforce.com outages represent a fundamental fault line in the SaaS landscape. As someone who has consulted with a variety of SaaS users and vendors and manages a rapidly growing directory of SaaS players, which can be seen at saas-showplace.com, here's my response to some of the most common myths associated with SaaS.

Myth #1: SaaS is still relatively new and untested.Salesforce.com has been in business over five years, has more than 399,000 subscribers at 20,500 companies worldwide, and is growing at about 80% a year. NetSuite has been in business eight years, and company officials say it has thousands of customers globally using its online applications. The oldest and biggest SaaS purveyor? ADP (ADP) -- the world's largest payroll application outfit -- has been in business for nearly 60 years, generated $8.5 billion in revenues last year, and served about 590,000 clients worldwide.

Myth #2: SaaS is just another version of the failed application service provider, or ASP, and hosting models of the past, and will suffer the same fate as its predecessors.While SaaS isn't a new idea, the economic climate and rapid advancements in application development tools have combined to make today's SaaS providers more successful than their predecessors. The ASPs and hosting companies of the dot-com era failed for two reasons. First, they did not fundamentally change the architecture of their software applications, but simply resold legacy applications to organizations that didn't want to house them on their own systems. The up-front and ongoing costs of hosting legacy applications proved to be too much for the ASPs to withstand. The second reason the ASPs and hosting companies failed: Only a small segment of the market was willing to outsource their application needs to relatively untested outfits because most companies during the dot-com era felt that their IT operations and business applications were a strategic asset. Times have changed. Today's economic and competitive pressures make nearly any form of outsourcing fair game. Many companies now consider various IT functions and business applications commodities and not core competencies. This has made SaaS, essentially an outsourced application management business, more attractive today than ASPs and hosting services of the past.

Myth #3: SaaS only relieves companies of the up-front costs of traditional software licenses.SaaS not only alleviates the costs of traditional perpetual licensing fees but also eliminates the need for additional IT infrastructure investments to support new applications. A variety of enabling technologies, such as service-oriented architecture and Web services, permit SaaS to be more easily provisioned and metered based on actual usage levels. This means companies no longer have to pay for excess capacity. The bottom line? Lower total cost of ownership and quicker time-to-value.

Myth #4: SaaS is only for small- and midsize businesses and will not be accepted by large-scale organizations.Companies of all sizes are taking advantage of SaaS. The scalability of the new generation of SaaS solutions enables users to test the reliability and performance of on-demand applications in limited deployments, and expand their adoption incrementally. Many SaaS vendors have emulated Salesforce.com's market penetration strategy of appealing to individual users with free trials or low-cost single-user subscription fees with the intent of permeating the market, and then winning business unit and enterprise-level adoption in major corporations. Today, Salesforce.com counts a growing number of Global 2000 and other brand-name companies as its customers, including AOL (TWX), Avery Dennison (AVY), Nokia (NOK), Perkin-Elmer (PKI) and SunTrust (STI). Myth #5: SaaS only applies to applications such as customer relationship management and salesforce automation.While SaaS certainly makes sense for many front-office functions and team-oriented collaboration purposes, SaaS solutions are emerging to address nearly every business application need. These range from accounting and financial applications to supply chain and channel management solutions. For example, Aramark (RMK), Dow Chemical (DOW) , HP (HPQ), Honeywell (HON), Hyatt Hotels, Roche, and Wachovia (WB) rely on Taleo's (TLEO) SaaS talent management solution. On-demand supply chain management vendor Click Commerce (CKCM) boasts Arrow Electronics (ARW), Delta, Tyco (TYC) and Volvo (VOLVY) as customers. Myth #6: SaaS will only have a minor impact on the software industry and will fade over time.A third of the respondents to THINKstrategies' recent survey said they are already using SaaS, and another third said they are planning to adopt SaaS in 2006. Other research firms have generated even higher ratios. As SaaS gains mainstream acceptance, it is becoming an important disruptive force in the software industry. And as long as the quality and reliability of SaaS solutions continues to improve, the appeal of SaaS isn't going to go away. In response to these numbers and other industry trends, Microsoft Chairman Bill Gates stated in an internal memo that became public last fall: "This coming 'services wave' will be very disruptive....Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses."

Myth #7: It will be easy for the established software vendors to offer SaaS and dominate this market.Nearly every established software vendor is being forced to determine how to revamp their legacy application business models to join the SaaS movement. This isn't a small challenge. Legacy software companies have to re-architect their applications to make them work on the Web. They also have to redesign their sales and financial models to accommodate the pay-as-you-go SaaS fee structures. And they have to rebuild their corporate cultures to make them more service-oriented rather than product-centric. It could be argued that Siebel was acquired by Oracle (ORCL) last year because it wasn't up to the task of fighting off Salesforce.com. Now Oracle, Microsoft (MSFT), and SAP (SAP) must respond to the SaaS movement while trying to avoid cannibalizing their existing software business in the process.

Myth #8: SaaS is only for corporate users.Anyone who uses McAfee (MFE) or Symantec (SYMC) antivirus software to protect their home PCs likely uses their subscription and 'live update' features, which represent another example of SaaS. Microsoft's new "Live" version of its popular Office productivity applications is aimed at small and midsize businesses and the home user. And don't look now, but online gaming and video-on-demand also can be considered forms of SaaS.

SaaS, Web Services Top Software Priorities For Businesses

A new research report also shows signs of SaaS's maturity, with fewer businesses reporting they adopted SaaS for the first time last year.

By Mary Hayes Weier
InformationWeek
April 23, 2008 04:41 PM

Business and IT managers have ranked software-as-a-service and Web services as the most important trends in the software industry for the third year in a row, according to an annual survey by McKinsey & Co. and Sand Hill Group, to be presented next week at the Interop/Software 2008 conference in Las Vegas.

In a survey of 857 managers, 23% ranked SaaS as the most important item for their businesses in 2008, up slightly from 21% last year, but down from 30% in 2006. One in four respondents ranked Web services/SOA as the most important, up from 18% in 2007 and 24% in 2006. Trailing those issues were open source software, offshore outsourcing, and software industry consolidation.

Yet SaaS continues to appeal to small businesses. Among companies with between 1,000 and 25,000 employees, an average of 11% of software budgets were spent on SaaS, with 70% or more of budgets going to traditional software licenses and maintenance. In contrast, respondents with fewer than 100 employees spent 26% of their budgets on SaaS, while those with 100-1,000 employees spent 17%. Among companies with under $1 billion in annual revenues, 46% had purchased at least one SaaS application.

The McKinsey's research also revealed some maturation of SaaS among small businesses. Thirty-six percent of small and midsize businesses all respondents had adopted are using multiple SaaS applications, and eight out of ten of those had bought multiple SaaS applications. Only 12% of respondents said they had adopted their first SaaS application in 2007 the last year, compared with one-third of respondents who adopted their first SaaS app in 2007 2006 who had adopted their first SaaS app the previous year.

"Peak adoption happened in 2006, and now it's a question of deeper penetration of SaaS," said Junaid Mohiuddin, a software consultant at McKinsey & Co.

Yet not all of those SaaS purchases were software served up through a service.

McKinsey and Sand Hill took a broad view of SaaS in their research, including such things as online storage and security services. Respondents ranked online storage, in fact, as their most commonly used SaaS application, followed by online backup, security services, system and network management, customer-relationship management, and collaboration software, respectively.

The No. 1 ranked criteria for vendor selection of SaaS was deployment speed and ease of integration, followed by the vendor's track record in SaaS, and costs.

Click Electronics demonstrates a fully functional 24/7 BUSINESS™ e-Catalog. 24/7 Business™ provides Guided Selling and Order Management Solutions Delivered as a Hosted Service for the Sales-Chain Partners at your web site.

Engineers and Buyers visit your website everyday. For them, your website is their first choice for information about your company's franchised products. For you, they're your highest quality leads. Giving them access to 24/7 BUSINESS™ gives buyers everything they need to find the right product and place an order or RFQ.

24/7 BUSINESS™ Product Selector / Configurator enables engineers and designers to easily search and select the right product for their requirements. Users intuitively drill-down, quickly refine their search and gain immediate access to all the technical information they need to easily make specifying / buying decisions.

	Filtered parametric search by product attributes - A valuable tool for knowledgeable customers who can choose or input values to find the products that best meet their needs.
	Side-by-side comparison - Eases the task of comparing similar products.
	Cross-sell / Up-sell - Allows you to suggest add-ons or accessories to include in the purchase or RFQ.
	Keyword / Part number search - Allows your customers to find the exact products they are looking for.
	Competitor part number interchange - Enables your competitor's customers to cross-reference to your part number from your competitor's part numbers.
	RFQ / shopping cart - Offer your customers and prospects a method for receiving quotations and placing orders.
	Customize Part Request - Allow your customers the ability to request customization to your standard products within the range of your product's limits.
	CAD viewing / downloading - Give your customers the ability to view, pan, zoom, download and print 2-D and 3-D CAD files. 24/7 BUSINESS™ lead manager prioritizes sales inquiries based on your rules and delivers straight to your sales force to ensure they are pursuing high-quality sales opportunities.

i-MARK's 24/7 BUSINESS™ is a high-value Enhanced Product Catalog and Lead System that positions your company as a leader on the Internet and tells you exactly what electronic component Buyers want to purchase, all at a cost comparable to a website and delivered in just 60-90 days.

AT&T First Service Provider to Deliver Intercompany Cisco TelePresence for Businesses Around the World

AT&T First Service Provider to Deliver Intercompany Cisco TelePresence for Businesses Around the World

Fully Managed AT&T Telepresence Solution Enables New Way to Collaborate and Drive Business Productivity SAN ANTONIO, April 21 /PRNewswire-FirstCall/ -- AT&T Inc. (NYSE: T) today announced global plans to deliver the industry's first, fully managed Cisco TelePresence solution that allows companies to connect to their customers, suppliers and partners worldwide.

Building a Sustainable Supply Chain in an Instant Gratification World Over of third of SaaS users report a return on investment within six months and 65% see ROI within a year. By David Fox, CEO, Agistix

April 21, 2008 -- Supply chain managers working in an ever more globalized, "I want it now" world too often opt for quick fixes over sustainable solutions to make operations more efficient. Rather than looking to trim costs here and there, their first order of business ought to be increasing visibility into company-wide supply chain expenses in order to find out where money is going, and adopt more lasting improvements. And because the typical company's supply chain covers multiple countries, carriers and modes of transportation, this task really requires a Software-as-a-Service (SaaS) solution to create a central repository for the total supply chain costs. The solution should be easily updated in real time. SaaS is not the only approach, high or low-tech, to making supply chains more efficient, but it is a far superior one. Many companies, for example, have opted to trim costs by reducing the number of carriers with whom they work: a seemingly logical solution that can actually make the supply chain less nimble. Others have shifted manufacturing operations overseas to save money on materials, failing to measure how those upfront savings may be largely offset by higher transportation costs, import duties, taxes and carrying costs. And some still record many of their supply chain costs on paper, never integrating them into a central database. The folly of all these approaches points to the mistakes that are inevitably made when the logistics team looks at one piece of the supply chain in isolation. As a solution that shows the big picture, SaaS is far more comprehensive than any other approach, and promises more lasting benefits. "Despite heightened attention in recent years," a study from the Aberdeen Group concluded, "many companies still do not have timely visibility into the critical processes involved in global supply chain management." That study found that a small minority of companies that had managed to reduce their freight costs did so by using software to better analyze how they were spending their money. SaaS offers a way for companies to easily store and integrate a lot of data from disparate sources in a single place, so they can access it when they need to expand their carrier networks, or make other adjustment to their shipping practices. With a SaaS system, a company can create an optimized, global transportation plan, and then transform it into an enforceable, company-wide policy against which all shipping decisions can be executed. Using the SaaS approach, suppliers around the globe and around the clock can log onto your system with a secure ID and password. The system automatically identifies the appropriate carrier and service level for a specific shipment, then notifies the carrier and generates an email and a tracking number confirming the transaction. SaaS provides a significant improvement over Transportation Management Systems, or TMS, an older approach to managing supply chain logistics which produces routing guides and optimized operating plans but is largely paper-based and very difficult to enforce. The automation provided by SaaS solutions makes it easier to follow consistently, over time. SaaS can automate logistics activities across all carriers, and help you refine and update your practices in real time, rather than the two to three weeks it might take to implement a change with older enterprise software solutions. If a new corporate policy is adopted banning expensive late night priority shipments, this change can quickly be incorporated into the software. If a company decides to add new carriers or drop some existing ones, the software can be updated as soon as the change is made, and enforced around the world. Because SaaS solutions are paid for by subscription, they enable companies to make a limited commitment rather than investing in complex and pricey enterprise solutions. And, because maintenance and upgrades are integral to SaaS, return on investment is faster. According to the Aberdeen Group, 35% of SaaS users report a return on investment within six months and 65% see ROI within a year. Maxim Integrated Products, a global maker of integrated circuits, was one of many manufacturing companies that found itself struggling to maintain consistency in vendor quality and pricing when it decided to adopt a SaaS shipping and freight management solution. The company has more than 8,000 employees in the U.S., the Philippines and Thailand, and found that diverse geographic locations made it challenging to control shipping and distribution. Maxim's goal was to establish centralized decision making and reduce overall shipping costs, while enforcing strict parameters on shipping methods and vendor selection. Upon switching to SaaS, it started to get results almost instantly. By the end of the first full quarter of implementing the SaaS solution, it had cut its shipping costs by more than 20%. Manufacturers of all sizes striving to remain competitive in a global environment can now take advantage of these same logistics processes, to automate their shipping processing, identify the best rates from dozens of carriers, and enforce regulations to prevent costly abuses, such as those pesky unauthorized, late-night priority shipments. Technology that can assemble such vast volumes of shipping data and offer companies the means to change their practices in real time is the key to maintaining a flexible and efficient supply chain that supports manufacturers and their customers over the long term. For companies serious about running that proverbial tight ship, this software really is a must-have. Today's supply chains are so complex that supply chain managers who can't get the data they need easily, or analyze it meaningfully, will find it nearly impossible to consistently deliver measurable gains. It's really quite simple: You can't improve something that you can't measure or benchmark in the first place.

Premier Farnell sales stay ahead of the game

LONDON — Premier Farnell plc has increase revenue of its continuing operations in its latest financial year to february 3 by 5 percent to £744.7 million. This excludes the figures for BuckHickman (a U.K. distributor of industrial tools and supplies) which was sold on April 10, 2007. Operating profit was up 9 percent to £88.0 million.


Results for the final quarter of the year were even more impressive with revenue up 7 percent to £197.7 million with operating profit up 16 percent at £20.3 million.

Premier Farnell Q4 Results

fetch Solutions Pay as You Go Program

fetch Solutions will offer 2 payment Options for the Electronic Components Strategic Partners. They are:

• A fixed payment per seat for all Supply-Chain Partners to link to the Robust fetch Data Bank giving 24/7 access to the Enterprise private Data-Base.
• Fetch Solutions will not charge a fee per seat allowing a free hook up, providing the partner signs an agreement that 10% of the Virtual sales-activities is transacted via their
  Virtual Sales Division. fetch Solutions will receive a 5% commission fee on Internet Transactions only which will include the SaaS Bundle. (Hosting, Private Data Base, e-Catalog, B2B transaction) during Stage 1.

ATT Global Hosting Service

http://www.att.com/Common/merger/files/pdf/acceleration/hosting_snapshot.pdf

Global Hosting Service

fetch Solutions SaaS Benefiits to the Strategic Partners

Benefits of 'Software as a Service'

Software as a Service (SaaS) is an emergent mechanism of delivering software applications to customers over the Internet. Software as a Service or On Demand software can be implemented rapidly and eliminates the infrastructure and ongoing costs that traditional applications require. cyn.in offers all the following advantages of Software as a Service.

Low cost of entry

As opposed to on premise software, SaaS is delivered to organizations as a subscription model, usually billed on a per user per month basis. This means that the costs are granular in nature and are incurred only as long as benefits are achieved. This does away with the enormously large up front payments and massive annual license fees. cyn.in offers a simple pay as you go pricing with no long term contractual requirements.

Zero Infrastructure - Reduced Overheads

Since the application is hosted by the service provider, investing in expensive infrastructure is no longer required. All large initial investments on hardware, licenses, databases, ongoing overheads of employing and training IT staff, software and hardware maintenance and upgrades are managed by cyn.in. Customers can access and use the application on the Internet through any browser. No local infrastructure meaning; no headache of upgrading aging technology, and a complete protection from unforeseen expense spikes.

Single Instance, Multi-Tenant Efficiency

cyn.in is implements a multi-tenant architecture. This means that the cost of all software, infrastructure and expertise is shared by a large number of customers. This drastically improves implementation speed and cost effectiveness over a standard ASP model.

Cost-effective Infinite Scalability

The pay as you go model of SaaS, gives the customer the freedom to adapt to the changing usage of the software, on demand. For example: You can buy the application for two employees to start with and then after a few months decide to adapt it for a department of 10 people, and on achieving measurable benefits, the software can be provided to the entire organization of say 5,000 users. Software delivered as services provide all of this scalability, without requiring customers to plan for it.

Increased Accessibility and Productivity

Web based applications enable you to save your information on the Internet, hence making it easily accessible from anywhere. Your business knowledge is made accessible to all your knowledge workers increasing collaborative productivity. Geographically separated teams function better with better information availability.

Higher quality offerings at lower costs

SaaS applications that are built to scale pass on potential savings to the customer. As more and more customers are added, the operating cost for each customer continues to drop. This gives the SaaS provider the ability to constantly better the offering while lowering costs.

Easy to implement

Since, the solution is delivered via the Internet; Software as a Service completely eliminates installation and setup at the customer’s end. Users can be up and running very quickly.

Improved Security

Software as a Service providers are in the business of providing uninterrupted reliable services. Vendors understand that data must be backed up religiously, and information security is of fanatic priority. Skilled resources, network redundancies, stand-by power, up-to-date security and intrusion detection are mandatory infrastructure required to provide an enterprise class service. Such level infrastructural investment is usually an overkill for a single organization or team.

Freedom of Choice

The Software as a Service model gives the customer the freedom to easily make the switch from one solution provider to another. This is possible as there has been no locked in investments towards the IT infrastructure of servers, software or security systems. This freedom to easily walk away from a provider, works as a motivator to introduce better features and ensure optimum performance.

Defined Predictable Spends

Service based software operates on agreed pre-defined fixed charges. This enables you to predict the costs and helps you budget for your yearly financial expenses. The low-cost of the package does not drastically affect the figures for unplanned usage of the service.

Platform Independence

SaaS based solutions are hosted centrally with the service provider. No software to be installed at the customer’s premises. The software can be accessed on the Internet via a browser only. On Demand applications can be used by Windows, Linux or Mac users, providing true platform independence.

Focus internal IT initiatives only on direct, line of business technology

SaaS strategy not only eliminates the need for additional IT infrastructure spends, it substantially takes the burden off your internal IT staff. With the SaaS advantage, your staff does not have to manage upgrades, troubleshoot problems for generic software applications. This helps the company to direct limited in-house IT resources towards more business oriented initiatives. These business oriented initiatives are the ones that are usually un-out-source-able and require the focus of internal IT teams.

SaaS 101: The Benefits

• Posted by Matt Ammerman
• May 2, 2007

In my previous post, I made mention that the true sign of SaaS’s arrival is that it has garnered the sincere interest, and better yet dollars, of the investment community. More people in a greater array of business roles are giving SaaS the ol’ thumbs up.

We’ve established that the pursuit of SaaS is on the minds of *almost* everyone, but what is it about SaaS that gives us all the warm and fuzzies? For the most part, SaaS is still a nascent industry. It wasn’t long ago the purveyors of SaaS applications or enablement technologies were referred to as the tech industry’s “lunatic fringe”. Strangely, the benefits of SaaS have emerged and shown a bright light on the future of all those involved in delivering software functionality to businesses. So, what are these benefits? This may read like a SaaS 101 laundry list… but to see where SaaS is going, it might be best to take another look at the fundamentals.

For the Consumer:

• No client/server software installation or maintenance - that’s right, no more 800-page planning and implementation guides.
• Shorter deployment time - potentially minutes as opposed to a phased implementation that could take months (see item #1)
• Global availability - sure the technology exists to make on-premise software available outside of the premises, but we’re talking about functionality that is available from anywhere on the internet natively.
• Service Level Agreement (SLA) adherence - reported bugs can be fixed minus any rollout overhead. Sure the provider actually has to fix the issue, but assuming they’ve deployed a moderately efficient SaaS application the rollout of a patch or fix should happen in the blink of an eye.
• Constant, Smaller, Upgrades - when you use a SaaS application, it is in the best interest of the provider to keep you happy and they can do so by constantly improving the application experience. With SaaS this can come in the form of consistent miniscule changes that add up over time instead of monster patch and upgrades that cost you time and money to implement.
• Ease Your Internal IT Pains - This is a big one. Most of the last several points here highlight that SaaS offloads a great deal of IT pains incurred by software consumers in the traditional client/server model. This leaves IT personnel to focus on improving the day-to-day technical operations of your company instead of being called upon to troubleshoot 3rd party software or maintain aging infrastructure. Which leads to…
• Redistribute IT Budget - by outsourcing software functionality to a provider, the enterprise realizes a cost savings in infrastructure requirements and IT personnel knowledge requirements. This allows the enterprise to focus on core competencies. It also means that the cost savings from using SaaS applications can be flat out saved, or reallocated to boost productivity through other services.

For the Provider:

• Aggregate operating environment - as a provider, you own your domain. No longer are you sending technicians to fix or customize your software because it doesn’t fit into a customer’s highly-specialized (or horribly outdated) infrastructure. You have complete control to optimize an infrastructure to your SaaS application’s specific requirements. This is synergy at its best, and leads to financial savings as well as less headaches.
• Predictable Revenue Stream - the subscription model associated with SaaS means that your customers will pay you on a recurring schedule. If you make this cycle flexible enough, you can get a real handle on forecasting revenues. The payment may be tied to your product (think cell phone plans) where everybody pays according to the same term, or tied to your individual subscribers where some may pay monthly, some yearly, and some quarterly. In my opinion, the more flexible you are with this piece of the offering the better. Either way, because of the scheduled nature of cash inflow, revenue modeling becomes more reliable.
• Predictable Growth - Same as above, but here we’re talking about sheer volume of subscribership. The fact that users hit your site to access the application means that with the right tools you can monitor their usage pretty closely - something that’s not so easy with all your customers running the application on premise.
• Focus On Smaller Upgrades Instead of Monster Patch Rollouts - and while you’re at it, don’t worry about rollout logistics across all of your customer sites either. Your development teams can focus on fixing core application functionality, tackling bugs and enhancing features in smaller incremental rollouts because it’s just easier to do so.
• Sales Becomes Customer Relationship Management - When you are selling a subscribable service, the game of gaining subscribership becomes one of balancing user retention vs. attrition more than a game of landing the ‘big deals’. Sure, it’s important to have a team out there pounding the pavement to sell your application - i.e. getting subscribers in the door - but the real thrust of the new sales and marketing in SaaS is customer relationship management. The equation becomes quite simple - keep retention rates higher than attrition rates and focus on bringing in new customers.

Adoption of the model has been growing at well over 20% year over year, Nick Carr says (paraphrased) that SaaS adoption is set to explode and reports that McKinsey & Co. will release a survey showing that 61 percent of CIOs at North American companies with sales over $1 billion are already planning to adopt one or more SaaS application. Additionally he says that Deutsche Bank projected that the SaaS market will account for half of the application software spend by 2013, Gartner predicts that SaaS will triple in size by 2011 from 2006, Jeff Kaplan thinks SaaS adoption is underrated and the success of companies like SalesForce.com should be enough to convince even the most skeptical, but if all of this is still not enough and you are having trouble convincing your customers, your boss or yourself into adopting SaaS, here is a list of benefits to consider.

What do you think? Have you experienced other benefits already? On the contrary, have you experienced major drawbacks? We would love to know what’s holding you back or what has pushed you forward!

fetch Solution's e-Catalog will provide to our partners the following!

	Electronic Components Electronic components companies are faced with an array of challenges, not the least of them being marketing a huge number of products, often on a global scale, across multiple channels. On the one hand, this activity demands that consistent product information be created, managed and distributed across printed and e-catalogs, multiple websites, and eProcurement systems, often in multiple languages. On the other hand, meeting the needs of the small-order, time-critical sector of the electronic component and industrial product distribution market is equally as challenging. fetch Solution's e-Catalog meet these two competing demands by providing you with a way to:
	Manage product information in an enterprise application, which stores data in a "media neutral" format and allows for easy content delivery Sophisticated language management tools to support single and double byte requirements Enable trading partners to deliver product marketing content electronically Deliver high volume and frequency e-catalogs to e-procurement sites The ability to generate product on-demand marketing content to support sales Give browser-based access to product content to users to allow regional experts to market centrally-managed products Accept manufacturer and supplier product information in "their" format and verify the accuracy and normalize the data in a straightforward process Manage data augmentation activities via a "workflow process" and know that products are not slipping through the cracks Create new fields of information from existing fields automatically, "derived attributes" allow you to generate new product attributes automatically and with precision without having a human touch the data Deliver enriched marketing content through multiple channels, including print, web, e-procurement, call centers, and others

Manufacturer's Require an e-Catalog to identify their 2.6M RoHS Component Offering!

RoHS has cost the electronics industry more than $32 billion

The average cost for a company to meet RoHS requirements was $2.6 million.

By James Carbone -- Purchasing, 4/18/2008 8:41:00 AM

A survey of OEMs, electronics manufacturing services (EMS) providers and component manufacturers finds that initial compliance to the Restriction of Hazardous Substances (RoHS) initiative cost the electronics industry $32 billion.
The study by Technology Forecasters for the Consumer Electronics Association (CEA) says the average cost per company was $2,640,000 to achieve initial compliance and another $482,000 for annual maintenance. Total compliance cost for the industry totals 1.1% of industry revenue, according to the study.
RoHS went into effect July 1, 2006. It restricts the use of lead and five other substances from being used in electronics equipment sold into the European Union.
TFI, based in Alameda, Calif., sent the online survey to more than 1,000 companies including OEMs, EMS providers and component manufacturers. More than 200 companies completed the survey.
The survey also finds that RoHS resulted in higher inventory and product costs.
Fifty-seven percent of the companies surveyed reported a rise in inventory. The average increase in inventory was 21% and the average reported cost for carrying the inventory was $688,000, according to the TFI study.
Seventy-seven percent reported an increased component, module costs and manufacturing costs because of RoHS. The average cost increase was 11.6%.
To comply with RoHS, companies dedicated 5-10 full-time equivalent employees. Those employees were drawn from existing internal resources. Few companies hired addition employees for RoHS compliance, says TFI.
About 29% of companies surveyed reported lost sales due to RoHS with the average loss being $1.84 million. Sales losses were due to delay in new product sales and discontinued business in the EU. The cost of compliance was higher for large companies than small ones. The average cost of compliance for companies with greater than $1 billion in sales was $6.5 million. For companies with annual revenue of between $100 million and $1 billion, the initial cost of compliance averaged $2.9 million, according to the study.
Almost half of companies surveyed said there was at least one advantage to RoHS. Nearly 25% said an advantage was the company improved its supply chain process. About 20% said an advantage was that the company reduced its number of products. About 15% said an advantage was the company gained market share because of RoHS.

fetch e-Catalog will provide suppliers with increased design work and customers get their products to market sooner using a theirr SupplyChain

Avnet, Arrow top the charts

No. 1 Avnet last year implemented a six-part strategy aimed at improving customer service and promoting growth.

Laurie Sullivan EBN (05/12/2003 10:00 AM EST)

Despite a tough year in which virtually every company in the electronics supply chain suffered sales declines, Avnet Inc. retained its distinction as the No. 1 global distributor of electronic components--with global revenue in calendar 2002 of $8.9 billion.

In part, the achievement was the result of a two-year-old program led by chairman and chief executive Roy Vallee, in which the Phoenix distributor from 2001 through 2002 shed $300 million in operating expenses and $1.6 billion in net debt as part of a plan to improve return on working capital. As the largest components distributor two years running, however, maintaining Avnet's position at the zenith of the industry could prove to be Vallee's biggest challenge yet.

To keep in step, Avnet last year implemented a six-part strategy aimed at improving customer service and promoting growth. That included a sharper focus on the global technology supply chain, the development of services to differentiate Avnet's products business and better serve companies that procure directly from suppliers, and an emphasis on the company's return on capital model.

"There are only two reasons why customers would increase business with us," Vallee told EBN, following a recent investors' conference at the New York Stock Exchange. "For suppliers, that means increased design work and reaching deeper into the supply chain and across more market segments. For customers, it means helping them get their product to market faster. And if we can save them money it's even better."

Indeed, the guiding mantra for Avnet in the year ahead may well be the pursuit of greater supply chain efficiencies that lower cost and increase profitability--both for itself and its customers. "If we can't accomplish this, we're wasting their time and ours," Vallee said.

Arrow leads the preference pack

Though Avnet may have captured the revenue title in 2002, Arrow Electronics Inc. ranked No. 1 in nearly every area of the EBN 2003 Distributor Customer Evaluation Survey. When participants were asked from which distributor they procure parts, Arrow garnered 68% of the vote. Avnet came in at No. 2 with 56.6%, while No. 3 Future Electronics Inc. grabbed 43.4% of the tally. The fourth position went to TTI Inc., with 35.8%, and the fifth to Digi-Key Corp., with 25.2%.

Arrow's top ranking came despite midyear concerns expressed by Wall Street that the company suffered from a lack of long-term revenue guidance, stock volatility, and uncertainties surrounding its corporate leadership following the retirement in September 2002 of chairman Stephen Kaufman and the departure earlier last year of chief executive Francis Scricco.

In fact, OEMs and EMS providers appeared to slough off the concerns of the financial community, some of which were addressed when the Melville, N.Y., distributor early this year appointed longtime board member Dan Duval as chairman and former Solectron Corp. executive William Mitchell president and chief executive.

"Avnet and Arrow probably have more than 50% of the distributor total available market in North America, and I would have been surprised if they didn't rank No. 1 and No. 2," said Matthew Sheerin, an analyst with Thomas Weisel Partners LLC, New York.

"Despite the problems with the macro environment and a severe downturn, both Avnet and Arrow continue to execute reasonably well and it doesn't appear that they have lost market share," Sheerin said.

Arrow, Avnet, and Future were also favorites when it came to "ease of doing business" in all product categories. Arrow led the ranking with 20.1% of the votes cast. Avnet followed with 15.3%, while Montreal-based Future again held the No. 3 position with 9.2% of the votes cast.

Despite their overall market dominance, the Big Three were not the only preferred source for parts and services, according to the EBN survey. Passives and interconnect specialty distributor TTI, Fort Worth, Texas, took the No. 3 spot as the most preferred distributor for the overall product category, displacing Future, which moved to No. 4.

The category of most preferred semiconductor distributors was unchanged from last year, with Arrow, Avnet, and Future claiming the Nos. 1, 2, and 3 positions, respectively.

When seeking the best price for components, availability of material, and on-time deliveries in all product categories, Arrow, Avnet, Future, TTI, and Digi-Key took the top five spots, according to the survey.

In the category for preferred passive components distributor, TTI won top honors. Arrow climbed to No. 2, edging out catalog distributor Digi-Key, which fell to the No. 3 spot ahead of Avnet at No 4.

Traditional services valued

Among the roster of distribution services, traditional programs such as auto replenishment, in-plant stores, inventory and demand forecasting, and just-in-time delivery played an important role for OEMs and EMS providers last year when deciding from which distributor to procure products and services.

And perhaps equally as important were the customer relationships that distributors forged and are expected to maintain.

Kentrox/Timeplex LLC, Hackensack, N.J., is a $65 million OEM that relies heavily on distribution for just-in-time and bonded inventory services to supply it with the parts to manufacture its channel and digital servers. Don Ciardi, Kentrox's senior buyer for semiconductors, said the company procures about 80% of its electronic components through its preferred distributors, All American, Arrow, Avnet, Future, and Sager Electronics.

"This morning I bought some 7406s, an old Fairchild semiconductor dating back to the '70s or '80s," Ciardi said. "Many of the products we make are older designs and the distributors have these parts readily available through their relationships with suppliers."

Ciardi said the ability of distributors to provide his company with a rapid response is a key measure of his partners' value.

"It's 3 o'clock on a Tuesday afternoon, a manufacturing line just went down, and I need a part here tomorrow morning at 9 o'clock," he said. "If you order that part through a distributor's 800 number and you don't know the person on the other end of the phone, the chance you will receive that part on time is slim to none."

Indeed, while price and delivery are always important, OEMs and EMS providers continue to search for the kinds of close relationships that give them a competitive edge.

"The definition for value-add has changed in the past year," said Michael Hawks, purchasing manager at Ameritron Inc., Rancho Cucamonga, Calif., an EMS provider that generates about $8 million in annual revenue and buys between 60% and 70% of its electronic components through distributors like Arrow, Avnet, Master, and Sager.

"The distributors that deserve that title are those offering a one-on-one relationship with the customer much more so than what we had seen in the past," Hawks said.

Building momentum

Distributors looking to parlay close customer relationships to build new business may also profit from the shift to inventory management and other services such as product information availability, delivery and logistics, design-in functions, and e-commerce capabilities.

"Avnet and Arrow are extremely well positioned to provide services based on their IT systems, and that is key to helping customers execute demand forecasting and inventory management and auto replenishment," said Thomas Weisel's Sheerin. "Both companies have done a good job of quickly integrating IT systems belonging to companies they have acquired.

"Arrow did this with Pioneer-Standard in February practically overnight. This is where some of the distributors have an edge."

In the past year, for example, Kentrox bought three licenses to use Arrow Alert, a Web-based system that notifies users via e-mail when a part becomes obsolete. "The e-mails that alert me when specific parts I need will go obsolete arrive approximately two weeks before I see notifications from other distributors," Ciardi said.

In all, 26.6% of respondents to the EBN survey named Arrow as offering the best suite of electronic commerce services, up from 12.4% last year, which moved Arrow into the top spot in that category--ahead of last year's No. 1 pick, Digi-Key, which slipped from 26.4% to 23.4%, to the No. 2 position.

VMI slowly catching on

Arrow, Avnet, Future, Sager, and All American took the top five slots, respectively, when participants were asked which one distributor best fulfills their VMI needs. However, the percentage of companies indicating they are turning to distributors for VMI remained low, with 79% of survey participants replying that they do not use a distributor for such services.

In spite of this, 69.9% of the respondents that do use distributors to manage inventory said their companies have increased their use of these services during the past year, while only 5.5% reported a decrease in the use of such programs.

Additionally, 70.8% of those respondents that use distributor-sponsored VMI services said they expect to increase their use of the programs in the next 12 months, compared with 6.9% who said they would use the services less frequently.

Survey participants also found value in their use of independent distributors as an outlet for running a more efficient supply chain.

When asked under what circumstances they procure parts from an independent distributor, 89% of survey participants said they use independents to buy hard-to-find parts, while 44.2% said they use them for spot sales and purchases.

Overall, America II Electronics Inc. ranked No. 1 in the preferred independent distributor category, followed by Rand Technology Inc. and Classic Components Corp.

Methodology

On April 11, 2003, EBN e-mailed questionnaires to procurement professionals in the United States, with a followup e-mail sent April 16. EBN received back 390 completed surveys by April 18. The sample includes large, medium, and small companies from all regions of the United States and reflects the population with a plus or minus standard deviation of 4.8 percentage points.

The respondents were selected because they are procurement professionals or business managers at OEMs (70% of the sample) and EMS providers (30%) who buy or approve the purchase of electronic components, equipment, or services via distribution. The purpose of the study was to analyze which distributors are used and preferred by OEM procurement professionals and business managers for semiconductors, connectors and interconnects, passive components, and electromechanical devices; examine distributor brand strength and reputation; and highlight the effects of geography, industry type, and company size on distribution brand preference.

The measures presented in the charts accompanying this article are: patronage, which refers to the proportion of respondents who bought components from a particular distributor; preference, which refers to the proportion of respondents who said they "prefer to buy or specify" components from a particular distributor; and usage rate, which refers to the type and frequency of value-added distribution services used by respondents.

Portrait of a Best-in-Class Supply Chain Aberdeen research identifies how companies identify supply-chain problems and proceed to solutions. By David Blanchard

May 1, 2008 -- What role does supply chain management play in your organization? When analyst firm Aberdeen Group asked that question of 800 supply chain executives worldwide, most (56%) regard SCM as a market strategy differentiator, a customer service differentiator or a profit center, rather than simply a cost of doing business. Nearly half (49%) indicate that escalating customer service demands are driving their supply chain transformations, which prompted Aberdeen Group to develop the following PACE (pressures, actions, capabilities and enablers) scenario to explain how companies progress from identifying a problem to focusing on a solution. Pressures Escalating customer service demands Actions Improving supply chain visibility Improving sales and operations planning Improving inventory optimization Improving order fulfillment Capabilities Formalized supply chain risk management Centralized supply chain organization Executive position with end-to-end supply chain responsibility Closed loop integration of supply chain planning and execution Cross-functional metrics Enablers Supply chain visibility tools Sales and operations planning tools Transportation management tools Inventory optimization tools Order fulfillment tools

On-Demand/SaaS Reality

Industry leaders discuss the potential and practicalities of software-as-a-service (SaaS) and on-demand models.

---

POSTS IN THIS
BLOG TOPIC

• SaaS + Sales Performance Management = Recession Resilience
  by Christopher W. Cabrera


• Why Enterprise SaaS Is No Slam Dunk
  by Ken Bender, Software Equity Group, LLC


• Excelling in the Evolution of SaaS
  by Gary McAuliffe


• Top Ten Reasons Why On-Demand Services Will Soar in 2008
  by Jeff Kaplan


• A Reality Check on NetSuite
  by Kris Tuttle


• Should the SaaS Customer Beware and Be Educated?
  by Judith Hurwitz


• SaaS 2.0: Welcome to the Evolution
  by Anthony Nemelka


• Enterprising SaaS
  by Guy Smith


• More Companies Capitalizing on Channel Opportunities in the SaaS Market
  by Jeff Kaplan


• Software is Now SaaSy
  by Guy Smith


• SaaS IPO Tipping Point?
  by Christopher W. Cabrera


• Bridging the Gap Between the On-Demand and On-Premise Software Worlds
  by Jeff Kaplan


• SaaS Version 3.0
  by Rick Sklarin


• Multi Tenant Architecture: Marketing or Material?
  by Peter Goldmacher


• Business Objects Acquisition Validates Need for SaaS BI
  by Ken Rudin


• Follow the Leader? How to Differentiate Between On-Demand Leaders and Pretenders
  by Christopher W. Cabrera


• The On-Demand Cult
  by Robert Youngjohns


• SaaS Progress in Asia
  by Chris Perrine


• SaaS in Supply Chain: What Users Really Want
  by Beth Enslow


• SAP Joins SaaS Movement
  by Jeff Kaplan


• SaaS - A View From the Trenches
  by Chris Miranda


• Software as a Service in Asia: Moving Ahead in Bits and Starts
  by By Chris Traub


• Software-as-a-Service is Now Mainstream
  by By K.B. Chandrasekhar


• The SaaS Business Model: Overwhelming Issues Impacting Adoption
  by By S. Sadagopan

Top Ten Reasons Why On-Demand Services Will Soar in 2008

Jeff Kaplan

Jan. 07, 2008

Since the holidays are traditionally a time for people to take stock of the year past and offer their new year forecasts, here are my top ten predictions why the shift from packaged products to Software-as-a-Service (SaaS), utility computing and managed services will accelerate in 2008:

1. Services are Recession Proof: Escalating oil prices, the uncertain political landscape and faltering financial institutions beset with the aftereffects of the sub-prime lending debacle could mean a tough year for the economy. In this tenuous climate, consumer and executive confidence could decline, leading to an economic slowdown. As a result, many companies could hold back on their capital investments to mitigate their risks. The ability to adopt on-demand services on a pay-as-you-go basis will be a perfect sourcing strategy for businesses seeking greater cost-controls and flexibility.

2. Everyone’s Going Virtual: Most industry pundits and participants view virtualization as a technology trend, but it is also a business trend. Employees are increasingly working outside the four walls of a traditional office. Gen Y workers are always on the move and online. Traditional, on-premise applications and centralized servers sitting behind a firewall can’t effectively serve today’s mobile workers. SaaS and managed services are perfectly suited for these new, virtual business requirements.

3. Amazon, IBM and Google Bet on Utility Computing. After experimenting with its Elastic Compute Cloud (EC2) for the past year, Amazon has found plenty of demand for its computing power on-demand platform from startups, as well as established companies seeking a ‘sandbox’ for their new initiatives. Amazon is now confident it can deliver its computing power in a reliable and cost-effective fashion to a broader market of business users. So, expect more aggressive PR and marketing efforts to promote and sell this powerful utility computing service.

IBM Blue Tune: IBM originated the term on-demand and then walked away from the utility computing market seeking new opportunities among the avatars. When Amazon proved that the utility computing concept could become a reality, IBM repackaged its autonomous computing ideas in the form of a new ‘blue cloud’ initiative. Big Blue will push the idea hard in 2008.

The GooglePlex Makes It Move. Google is tired of sitting on the sidelines while Amazon’s success and IBM’s new ‘blue cloud’ initiative, Google has initiated a PR campaign to promote its ‘cloud’ computing capabilities and strategies. The GooglePlex has long been considered the prototype for a new large-scale computing architecture. Now Google’s incredibly scalable and economical computing engine is getting the attention of business pubs like BusinessWeek, the Wall Street Journal and other mainstream pubs.

4. Nick Carr Returns: In truth, he never left us. It was Carr who gave utility computing a major push with his seminal article in the Harvard Business Review and follow-on book questioning whether IT mattered. Despite venomous criticisms from many IT pubs and professionals, Carr became a popular speaker at corporate events because his message resonated with business executives and end-users. Now, he is putting the finishing touches on his second book, The Big Switch: Rewiring the World, from Edison to Google, which will be published on January 7, 2008. Although IT folks love to hate him, Carr has never lost his luster among corporate executives and end-users who agree with his basic premise that IT is a needless hassle and should be as easy as electricity and as reliable as a utility.

5. SaaS Solves SOX: A year ago, most publicly traded companies and other large-scale enterprises rejected the idea of SaaS because they thought they needed to take greater responsibility for their own compliance requirements. Now, they view the process controls, auditability and offsite hosting features common in most SaaS applications as a perfect solution for their Sarbanes-Oxley (SOX) needs. As a result, enterprise adoption of SaaS will accelerate.

6. Managed Services 3.0, Unified Communications Services and Service Automation: In the 80s, managed services were really outsourcing agreements offered by carriers to their largest corporate customers. In the 90s, a new generation of standalone MSPs promised managed services for SMBs. Neither model succeeded.

Today, we are entering a new age of managed services. Managed Services 3.0 combines the experience of the past with powerful new technologies to respond to growing customer demand. Cisco Systems will be pushing its IP communications and WebEx capabilities hard, while Microsoft promotes the virtues of its various “software plus services” solutions. The two are on a collision course in the unified messaging and communications market, but that will mean that they will each spend plenty on market education and channel sales programs.

At the same time, Dell will be leveraging its SilverBack Technologies and Everdream acquisitions to deliver a new set of automated, remote desktop and server management capabilities through channel partners and direct support services. Expect to hear more from HP and others.

7. Carriers and Channel Companies Find Success With New Services: Carriers have been perplexed about how to package, price and promote profitable managed services. VARs have been afraid that SaaS would ‘dis-intermediate’ them by eliminating their consulting and custom application development business. Carriers now see an opportunity to deliver an integrated package of IT managed services and SaaS business solutions to add value to their commoditized dial-tone services. Channel companies are also discovering that there are still consulting and customization opportunities in the SaaS market. As a result, carriers and channel companies will lend their marketing and sales support to managed services and SaaS.

8. Failure Doesn’t Matter: NaviSite suffered an extended outage in November and the on-demand services movement didn’t miss a beat. The trade press is now looking for horror stories rather than success stories regarding SaaS and managed services, but the vast majority of stories have been positive. In fact, my third annual SaaS survey in conjunction with Cutter Consortium found 100% satisfaction among the companies currently using on-demand software services. The upcoming SaaScon conference will highlight some of these customer success stories. THINKstrategies will also spotlight these stories throughout 2008.

9. IT Discovers Services are the Solution: In the past, the IT department was the biggest barrier to managed services and SaaS adoption. Many IT professionals were afraid these on-demand solutions would eliminate their jobs. Now, a growing proportion of IT people see managed services and SaaS as a way to out-task mundane work or overcome complex application/technology deployment and maintenance responsibilities. As they learn to take advantage of these on-demand solutions, IT departments will finally be able to put their daily firefights aside and focus on addressing the strategic needs of their business users.

10. Wall Street Buys Into Services: Some of the most successful IPOs of 2007 were in the SaaS market. Wall Street loves the predictability of subscription services and now that it has a solid set of market ‘comps’ to measure business success in the services market, it will be encouraging more privately held companies to go through the IPO door. At the same time, private equity funds will be encouraging publicly traded software companies to go private to enable them to shift to a SaaS model without the public market pressures. And, the investment bankers will be pushing a wide array of M&A activity. Expect the offshore IT/business process outsourcers (IT/BPO) and business services companies to buy SaaS vendors. Look for more consolidation in the managed services market.

Bonus Driver of Services Growth in 2008: THINKstrategies will be expanding its consulting and marketing programs aimed at educating IT/business decision-makers about the benefits of on-demand services, and continuing to help software and technology providers develop and deliver successful service solutions. Stay tuned to the SaaS and Managed Services Showplaces for more information and insight about these new programs and features.


Jeff Kaplan is managing director of THINKstrategies, a Wellesley, MA based strategic consulting firm. He can be reached at jkaplan@thinkstrategies.com.