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Saturday, December 20, 2008

IT players vs Telecoms Players in the SaaS (software as a service) World. What're their business models?


I am not sure how many SaaS aggregators / platform providers today are ready for the ICT world where telecom services and technologies converge.  

On the IT world, traditional software players such as Microsoft is also now taking a serious review of their web strategy (http://www.wired.com/techbiz/people/magazine/16-12/ff_ozzie). Microsoft however believes that in the Web2.0 world, the winning formula is software+services where a client software will be combined with cloud services. There are also purist web-based providers such as Zoho (www.zoho.com) or Google (www.google.com). However, even then, we can't deny the importance of having access to your data or documents even when internet is not available. That's why Google provided Google Gears to allow off-line access. Just like we have seen in the mobile world where the game is no longer just about the phone hardware, but also the applications. We have seen increasingly web-based applications providers developing their own marketplace. 

Broadsoft, a leading VoIP platform provider, has launched its own marketplace of applications (http://marketplace.broadsoft.com/). Salesforce.com for example has a marketplace called AppExchange ( http://www.salesforce.com/appexchange/ ) that allows salesforce.com users to find and test drive and subscribe to third party applications that can be integrated into salesforce.com application. The benefit to a Salesforce.com customer is that he can enjoy a single sign-on (meaning using the same set of username and password for salesforce.com application, he can run access the other third party apps onboarded onto the AppExchange). System Integrators such as NEC also has its own SaaS solutions (http://www.applicationsnet.com/Solutions/SoftwareNet/FeaturedApplications__65.aspx). The benefit of a SaaS provider having its own marketplace of third party apps is that the SaaS provider can integrate the third party apps into its own application to offer mashups or data collaboration. 

On the telecoms world, we see that telecoms providers are also making an attempt to be a PaaS (Platform-as-a-service) provider, targeting at the SMB segment. Unlike SaaS provider, PaaS provider does not develop the applications. PaaS provider works more like a SaaS aggregator, collaborating with different applications providers to provide the services through a unified platform. 

Swisscom (http://labs.swisscom-mobile.ch/welcome.jsf) has a beta labs to offer web-based applications on a beta basis (the last time I checked, they collaborated with Zoho as well. Seems that this did not work out). Telstra has recently announced the launch of T-suite SaaS platform in November. ZDNet.com.au had done some testing and their first impression was that while the platform shows great promise (which probably is a nice way to say that T-suite is not exactly ready yet), there were many bugs that yet to be resolved (and I quote MANY). But then again, since Telstra T-suite is in beta mode, users should not complain (smart move by Telstra) and since it's in beta mode, users should not expect the same level of customer support, if provided. BT is probably more matured in the PaaS space than the other telecoms provider but too bad it seems a little hard to find the online SaaS portal on its website (http://www.productsandservices.bt.com/btbusinessProducts/displayCategory.do?categoryId=BTB-HOSTED-SOFTWARE-I). To give BT the credit, it has done alot more than just be an aggregator of services. BT also offers BT Tradespace, an online business directory and community site primarily for SMBs.  

As a PaaS provider, a telco player needs to work with different partners to onboard the service. The value proposition that a telecoms player brings is the single sign-on, single billing, single point of contact (at least for the first level support and the telco providers need to have a back to back arrangement with the various applications providers on the level 2 and 3 support), and an integrated bundle (telecoms + software). In addition, customers do not need to provide credit card details as the payment will be in a post-paid mode that can be included in the existing bills. 

Telecoms players have the advantage of knowing their customers as many of them have existing billing relationships with the service provider in one form or another. In addition, telecoms players are able to offer 'mass-customisation' of a bundle service to meet different requirements. For example, for a $200/month package, customer is able to choose his preferred combination in terms of its broadband speed and application that best meets its needs. 

SMBs generally have a deeper trust with their telecoms services providers than the smaller, independent web-based vendors. This gives an edge to the telecoms players. But if that's so great, why aren't the telecoms players jumping onto the bandwagon? My take is that they eventually will. We have to realise that telecoms providers have complex billing systems and order management and provisioning systems. Providing the front end (shop front) is probably the least of the challenge compared to integrating PaaS with the exsiting customer database and the order/billing systems sitting at the backend and to know when customers subscribe/terminate or renew/upgrade. The challenge is compounded if you include the traditional telecoms services onto the platform to be offered on-demand basis. To date, no telecoms player has proven the capability to offer traditional telecoms services such as broadband and software as a service on demand basis.

Another challenge is the onboarding process. Most of the web-based players are offering the SaaS directly from their website. APIs may be provided but tweaking and adaptation is required to ensure excellent customer experience. For example, a telecoms provider will develop its own e-shop that shows its own catalogue of services and applications. The telecoms provider decides on the end user subscription bundles to be offered to the market. The customer is likely to find it confusing if the apps provider which is onboarded onto the telecoms provider's platform does not mask out its own support helpdesk or subscription packages (which may very likely be in credit card payment mode and may vary from the telecoms provider as the telecoms provider may package it differently or bundled it with its own telecoms services). Beyond the initial onboarding phase, as a PaaS provider, it will help to increase customer stickiness if you are able to facilitate ease of data export/import across multiple applications. However, if the telecoms player manages to crack this part of the equation, it will be a strong contender and my take is that they will win the war in the ICT era.   

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More about T-Suite

http://www.telstrabusiness.com/business/portal/online/site/productsservices/tsuiteapplications.52025

T-suite launched in beta mode in early November with hosted versions of Microsoft's Outlook/Exchange (messaging), Dynamics (CRM) and Sharepoint (collaboration tools) McAfee's desktop security, MessageLabs network security products and Telstra's own PC and server back-up products.

ZDNet Australia has done a very good review.

http://www.zdnet.com.au/insight/software/soa/Telstra-s-T-Suite-First-look/0,139023769,3392935500.htm


More about NEC Aggregated SaaS Solution-in-a-Box

Globally organisations are shifting to rent applications, instead of outright purchase. A simple integrated model to purchase, manage and maintain SaaS ISVs (Independent Software Vendors) is essential to manage the ever growing SaaS landscape. The NEC Software Net platform uses an efficient, collaborative, user-centric and context aware Service platform to provide a simple and flexible network based application framework to achieve this. In addition, NEC has licensed leading application solution providers in the on-demand or SaaS space; this means that Software Net end users gain access to multiple best in class software application solutions all through one collaborative portal environment.


More about Broadsoft Xtended Marketplace

BroadSoft Xtended Marketplace is where you will find the latest Web 2.0 applications integrated with the world's leading voice over IP platform. Explore the Xtended Marketplace to find mashups with popular business solutions and social networking websites.

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