NitroSell President Tom Keane's S+S Views Published in Retailspeak Magazine
Posted 25th Jun, 2008
NitroSell President Tom Keane"s views on Microsoft"s new Software plus Services (S+S) initiative have been published in Retailspeak Magazine. In the article, Tom gives some insights from the retailer"s perspective. He explains that while S+S is related to Software-as-a-Service (SaaS), it has the potential to deliver even greater business benefits to retailers of all sizes and in a much shorter time frame than using a pure SaaS approach.
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The retail sector, like all sectors that make large investments in information systems to improve operational efficiencies and drive productivity, will be dramatically affected by the emergence of SaaS, which will drive down the cost of acquiring and running software.
SaaS is a model of software delivery where the software company provides maintenance, daily technical operation, and support for the software provided to the client. This is distinct from the traditional model of software distribution, in which software is purchased for and installed on personal computers, referred to as Software-as-a-Product (SaaP). The industry analyst IDC is predicting that worldwide SaaS spending will effectively double from just under $6 billion to around $11 billion in 2009 – a 20% compound growth that contrasts sharply with an 8% rate for “traditional” software sales. In an economic environment of increasing competition and where budgets must stretch further, retailers need to “clearly see the relationship between the total cost of software and the benefit that accrues”. SaaS achieves far more transparency in associating cost with benefit than the traditional SaaP go-to-market model.
Microsoft is not (yet) seen as a SaaS provider, but has been making significant moves in this direction – witness the recent release of Microsoft Dynamics CRM Live, which offers Dynamics CRM as a SaaS offering. However, in today’s not-quite-broadband world, SaaS can only really work for certain applications and industry types – sales force automation being a case in point. For SaaS to become the primary platform on which retail businesses can run all their operations, the Internet would have to operate universally at LAN speeds. In addition, retailers’ Internet connections would have to be resilient and fault-tolerant, because SaaS ceases to function if no connection to the Internet exists. Thus, it could be five to ten years before the Internet and retailers’ Internet connections reach speeds and the redundancy required to make pure SaaS as ubiquitous as SaaP (Software-as-a-Product) is today.
| With “Software plus Services” (S+S), Microsoft is doing something far more significant than just jumping on the SaaS bandwagon. Steve Ballmer has said that S+S "is all about using the Internet to remake the software business itself”. Unlike SaaS, Microsoft’s S+S model can work today and is different in that both on-premise software and hosted services are included, which delivers a seamless computing experience that retail businesses require. S+S is an additive model that goes beyond SaaS to give customers increased flexibility and choice in deployment options, including on-premise, delivered over the Internet (increasingly referred to as “in the cloud”), or most interestingly from the author’s company perspective, hybrid/integrated solutions that deliver the best of both worlds by combining hosted cloud services with capabilities that can only be achieved by (even intermittently) cloud-connected software running locally on the retailer’s LAN. Microsoft is only just beginning to roll out its S+S strategy and offerings. At this early stage, there is some confusion about what “Software plus Services” means. Many mistakenly think that “Services” refers to the services that the Microsoft partnering ecosystem has traditionally offered – consultancy, installation, training, etc. In fact, the second “s” in S+S, refers to “Web services”, or even more accurately, “SaaS”. | Allison Watson, Corporate VP, Worldwide Partner Group (who heads up a 5,000 strong team in Microsoft) and Tom Keane, President of NitroSell, meet during the Microsoft S+S PAC meeting in Redmond in March 2008. |
Choosing an acronym has been challenging for Microsoft – S+SaaS is accurate, but would be too unwieldy, Integrated SaaS (iSaaS) or Hybrid SaaS (hSaaS) might also have been options, but in the end, Microsoft rightly decided on S+S. The powerful Microsoft marketing engine will get the true message that “S+S is a superset of SaaS” across in a timely fashion.
For illustrative purposes, let’s focus on a specific but generalized example – a seamlessly integrated multi-channel retail solution. In today’s SaaP world, retailers running Microsoft systems such as Dynamics Retail Management System (RMS) for single stores and/or chains, have, at their heart, SQL Server databases that hold product, customer, supplier, and other configuration data that the retailer interacts with on a daily basis.
Because Dynamics RMS is a platform for ISVs as well as an out-of-the box solution, adding multi-channel functionality in an S+S-architected manner involves mirroring and synchronizing this data with SQL databases held on geo-redundant eCommerce clusters, which effectively Web-enables the in-store data to benefit suppliers, the retailer’s employees, and most importantly customers. In S+S terminology, the “Software” is Dynamics RMS and the “Services” are WebStores, payment gateways, customer account management, and so on, in the cloud.
Thus, a generalized S+S multi-channel retail solution is made up of a sophisticated collection of: n-tier local area network (LAN)-installed Dynamics software; highly secure, resilient geo-redundant server clusters in the cloud; SOA-style Web services, and advanced SQL synchronization technology operating ideally over SSL-encrypted Simple Object Access Protocols. This complexity can be entirely hidden from the end-user retailers, who experience a quick-to-install, highly customizable, easy-to-operate business system with zero downtime. From a business perspective, S+S can deliver a unique approach to mass-market eCommerce that uses the power, stability, and features of the in-store Microsoft Dynamics software and combines this with an advanced SaaS approach to system delivery, operation, and support.
Given that S+S is a superset of SaaS, the retailer will also benefit from the fact that the typical S+S vendor will have a SaaS-like infrastructure in place for provisioning, support, and billing. This further reduces the initial and ongoing costs of the system. To be a successful S+S vendor means delivering more sophisticated systems (not least in terms of hiding complexity) to a larger retailer user-base (typically global in nature) at a lower cost (typically charged monthly). Such vendors will implement and support a mass-market number of systems, and to do so, will by necessity have developed and deployed a state-of-the-art Web-based customer and partner portal and billing system. In the Microsoft partnering ecosystem, this portal will provide self-service facilities to its Microsoft Dynamics partners, who in turn can use it to service their retail customers.
In summary, Microsoft’s S+S approach holds the promise of being a breakthrough product and service delivery mechanism for the SMB retail market, delivering enterprise-level multi-channel functionality at an SMB price.