Friday, March 02, 2007
Startups signal trends that end up impacting the technology of more established companies. Turned off by the high upfront cost and slow innovation of on-premise software, startups were among the first to embrace companies like salesforce.com.
Appirio as a Case Study
Our own infrastructure at Appirio reflects the trend – the serverless enterprise. Let’s look at our lineup of “software”:
• Salesforce.com out-of-the-box – sales automation, tech support cases, contact management
• Salesforce.com as a custom development platform - recruiting management, professional services automation, IT asset management
• Google Apps – email, calendar, advertising, blog, website analytics, Jotspot wiki
• Quickbooks Online – financials
• Meebo/Skype/LiveOffice –instant messaging and telephony
• KTBS Online, BlueCross BlueShield Portal – integrated payroll and benefits
Our hardware, network, and software cost is essentially zero. We pay nothing for our collaboration infrastructure, and reasonable costs for the services our transactional systems provide. Our costs ramp smoothly - we pay for additional capabilities as we use them. We never invest upfront, hoping for some future value. Benefits come in real time.
Our core infrastructure is built to scale. Nothing will need to be swapped out as we grow except perhaps financials (would love to see Quickbooks use SaaS to finally move up market). We do not deploy a single server, our IT costs are tiny, and we spend relatively more on cutting edge solutions that directly improve our business.
Implications for the Enterprise CIO
Appirio’s approach offers lessons to even a large enterprise. Even if you use a standard software selection matrix for each category, weighing pros versus cons and costs versus value for each choice, in almost every category, the SaaS solution is far superior. This is especially true when collaboration is a requirement. Consider two extremes - if you had to provide an email solution for 10 million people, would you trust Google or try to build it yourself on an Exchange instance? At the other end of the spectrum, can you imagine implementing and rolling out Siebel on-premise for a salesforce of one?
At either end of the spectrum, software-as-a-service is a clear winner. We believe the models make sense for almost any company. The real challenge is not in deciding if SaaS is the right approach, but in figuring out where should you start, and how to reduce the switching costs.
Keep on the lookout for how small, successful companies are scaling up their IT. The future of the serverless enterprise is already here - its just not evenly distributed (with apologies to William Gibson).