Could SaaS + PaaS Equal Cloud Computing Gold?

Microsoft this week rolled out its CampaignReady suite of services, which is anchored by the Windows Azure-hosted TownHall service. Designed for political campaigns, the suite works by letting candidates connect with constituents via TownHall, while Microsoft’s online collaboration and advertising tools help campaign workers communicate with each other and spread their messages.

Technology and online engagement helped set President Obama’s campaign apart from campaigns past, so it stands to reason that future campaigns will try to emulate his success. Especially for local or regional campaigns without the resources to build the specialized tools Obama utilized, Microsoft’s pitch — a prepackaged solution that can be set up, torn down and paid for on demand — should be appealing. But Microsoft’s SaaS-plus-PaaS business model has legs beyond politics, and beyond Redmond.

The combination of cloud services designed for and hosted on cloud platforms seems like a surefire strategy to secure PaaS (or even IaaS) adoption. Most cloud providers tout the promise of their respective offerings and point to standout case studies. But there is no guarantee that prospective customers will buy the sales pitch. If they do buy in, there is no guarantee that willing customers have the development skills to write applications that fully capture the benefits of cloud computing.

By creating targeted applications designed specifically for use on their platforms, cloud providers can increase the likelihood of bringing customers into the fold (and can increase their profit margins, as well) by letting applications help sell the platform instead of relying on the platform itself. According to some surveys, at least, businesses presently find SaaS significantly more palatable than straight-up cloud computing.

The possibilities are exemplified by the number of Salesforce.com customers using its Force.com platform. According to the company, it has more than 72,000 customers for its flagship CRM offering, which sits atop the Force.com platform. Presumably, it was positive experiences with the SaaS application that inspired more than 200,000 developers to build more than 135,000 custom applications that run on Force.com. It’s possible Force.com could have attracted such a large base as a standalone offering not intrinsically connected with Salesforce.com’s SaaS business, but it’s unlikely.

The issue for most cloud providers, however, is figuring out how to develop an application strategy to complement their infrastructural competencies. Microsoft, on the other hand, brought its decades of software experience with it when it launched Windows Azure. It developed its Pinpoint marketplace of third-party applications ready to run on the platform, it partnered with business-friendly ISVs like Intuit, and now it has gotten into the SaaS act itself with TownHall. Azure has garnered its fair share of praise, and if Microsoft continues down the SaaS path, Azure could garner more than its fair share of customers and dollars.

If it is indeed worth other cloud providers’ efforts to expand their SaaS presences beyond exchanges or marketplaces that rely on third parties, the question is which providers are best equipped to do it. IBM certainly could do when it rolls out its rumored production-ready cloud platform, and Oracle could have done the same had it not killed the Sun Grid. Perhaps Google will tie future business applications to its App Engine offering. Maybe Salesforce.com could expand its footprint beyond the CRM and collaboration markets and open up Force.com to broader development efforts. But can cloud-first providers like Amazon Web Services or Rackspace develop meaningful SaaS offerings? Do they have to?

Question of the week

Is SaaS-plus-PaaS a viable business model for cloud providers?
Relevant analyst in Microsoft Windows
You must be logged in to post a comment.
2 Comments Subscribers to comment
  1. Krishnan Subramanian Sunday, April 25, 2010

    Derrick,

    Not sure if I would call this app a SaaS app. Rather, it is a standalone app running on top of PaaS. ^^^By making the app run on top of Azure, Microsoft is taking the approach they had in the traditional desktop world (lack of portability). They may get some traction but I doubt such an approach will lead to big success.^^^ They also run a risk of turning off developers in Azure platform. Anyhow, I am just thinking out loud.

    1. Valid points, certainly. Of course, Microsoft didn’t do too poorly for itself in the desktop world. I think there is a large group of users for whom prepackaged apps would be a big draw to getting them on the cloud — cheap, fast and easy. And nothing done along these lines would necessarily have to affect open development efforts elsewhere, as we’re talking different offerings for different types of users.

Explore Related Topics

Latest Research

Latest Webinars

Want to conduct your own Webinar?
Learn More

Learn about our services or Contact us: Email / 800-906-8098