Time is relative. We know that, we’ve known that since before Einstein though his Theory of Relativity did a lot for modern physics and tied that concept to Space, creating to what a layman like me sounds almost as magic based on numbers. Loved it.
The Future is relative to what happens in the present and stocks our past so basically what you are doing right now has two functions: to stock and set the foundation for your next step, and to give direction for that step.
The SaaS world is no longer a picture of future to come but that of a very clear present. When thinking on the concept of present as a state of time, I guess we could say there’s still a lot of SaaS in the near-immediate future as there is in the present. We know there are services that still not consumed through a 3rd party platform, but how long will that last? Just think of the Internet of Things and how that changed our perception of devices.
Have you noticed for instance that we no longer discuss “The Internet?” but rather apps, services, sites, social networks and devices? The new concepts are Big Data and the IoT. Nobody talks about “The Internet” per se anymore. There is a reason for that and we’re usually short to see those. It’s not really a big thing, but it’s made me wonder a bit.
Let us go back in time something like 18-19 years and to what is almost the really close past to the SaaS concept. I was working in the Product Development department of a .Com Company equivalent to AOL but in Latin America. We were still living in a world where users didn’t produce any content, they just read what we told them to read. Shockingly similar to Orwell’s 1984, I know. Back then you searched for things using Yahoo! or Altavista and Netscape was Internet Explorer’s rival.
I remember that we didn’t have developers, we used to call them programmers still, and they struggled with something they called “web services”, which was basically the way Portals (or applications / applets in a specific website) communicated to and with each other. It wasn’t easy mostly because there were not a lot of strong standards (other than those the W3 published), but the general idea behind consuming a web service from another portal was to take advantage of 3rd party content. All of that aimed to one thing: make business more agile, bring more and more revenue to the .Com bubble that as you know, exploded a few years after that.
The promise of web services was to take web applications to a net new level. A quick example: a certain company that produced weather forecast information used to share weather reports every hour with their customers. They did this by emailing those reports and also giving users and passwords to protected sites for those users to log-in and get the latest info. Seemed a lot of work, specially when you could just build an app that would post the information to the webpage, and then extend the reach of that app by creating a “service” that would let other apps take that information. The web service allowed other sites to consume that information and post it as they saw fit.
We thought that was it so naturally everyone on the development team was working around that, creating new web services, re-vamping apps, trying them out in our staging frameworks and such. I believe we were blindsided though as the Internet was blooming beautifully down here so naturally we wanted to produce more and more of those services. Oh, that and the whole SOA (software oriented architecture) concept that basically implied using more and more infrastructure to build those apps, present the web services and consume from others.
Around the same time, one Marc Benioff was about to rent an apartment in San Francisco and thus give life to Salesforce.Com, the biggest SaaS Company in the world right now. He was coming from Oracle, a giant that casted a shadow so big in the IT Infrastructure world back then, than stepping out of it costed Marc more than a few stares. Yet his vision of the future was not compatible with Ellison’s Oracle back then: the world was going to change to the point nobody would care about buying software licenses as if they were assets. The world needed a change so they could consume software in a different way.
That’s him in the picture by the way, and that’s the first office Salesforce.com had. See the cable hanging around the doorframe? Is that the most typical picture of a start-up back in the 90’s or what?
A few years later, the world did change: Y2K never happened and Communication’s manufacturer Ericcson released what is now considered to be the very first smartphone, the R380. Look at the picture please. Nothing like your Apple or Samsung phone, right?
Mobile apps become a reality, which basically means that information was starting to become accessible in a different way, through a different platform and consumed through devices we had not expected to achieve that grade of complexity so fast.
It only took 5 years for Salesforce.com to become a Public Company, with around 9,000 customers and forecasting a growth of around 30% for the next 2 years. Their actual growth was around 35% and by the end of 2006 they had around 20,500 customers and were still growing strong.
I believe Marc saw what most Internet based companies didn’t see back then but later copied: web services were not going to make the next big jump. Applications needed to talk between themselves and web services were good for that, but that was it. The whole SOA approach was making that happen but then companies starting hitting a wall: buying more infrastructure so they could build more websites and service others through them was not cost efficient, or cost friendly by the way.
So the SaaS picture became brighter and more elegant: pay for what you use, don’t own the infrastructure or the software license eternally, just as long as you need it. Software stopped mattering as an asset and something extraordinary happened: Companies saw that they could re-invest money typically destined to buy more infrastructure assets. The destination of that money? Innovation.
Apple understood this too, though they preferred taking the end user approach: they created the iTunes Store. Google launched Gmail back then and people using Hotmail (like I was) wondered what was the point on just having one more email service. Look at us now: who of you reading this hasn’t have or doesn’t currently own at least one Gmail address? Who hasn’t even seen the iTunes or who’s not using a similar “iTunes” inspired services such as Spotify or SoundCloud? Not the same as SaaS of course, but you get the point.
Software is now being consumed as a Service mostly because paying for the use of something still means spending less money than actually building that something, and it just makes sense. What changed in my mind is that Companies no longer think that the only way to find the best possible software solution is to build it from scratch, specially when you can actually even make a difference in your spend and re-invest that money in whatever you want.
The SaaS world is our present and near future. I’ve learnt something in 20 years though: never take anything for granted, so I am now wondering: what will SaaS bring to life? What will it spawn from the multi-million industry that is has generated? How will be use software in the next decade? How will that shape business all around the world?
And how will we sell it? 🙂