Service-now.com SaaS vs. ASP vs. traditional software

Service-now.com All roads lead to SaaS. Are you ready?

discussion points

• SaaS is software evolution

• Software delivery variants

• Comparing ITSM ‘SaaS’ offerings

• Financial advantages of SaaS

mobile evolution

mobile evolution

Simplicity and Power Increasing

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19971997 2008200819921992

ITSM evolution

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Value & Organizatio

nal Reach

SaaS is software evolution

• Software ownership costs pushed to vendor - hardware, software, system security, disaster recovery, maintenance, monitoring

• Return to core competency - organizations shift resources to core competencies, vendors focus on managing their SaaS

• More efficient deployment – instant evaluation, more collaboration between vendor and IT organization, much faster deployments

• Modern, Web 2.0 interface - drive technician usage and better customer interaction with IT

• Eliminate shelfware & maintenance - pay for what you use

• Always on current version – version-free software means the latest for the customer

• SaaS homogeneity costs less – One version for the vendor to support means lower costs for everybody

20072007 20082008

SaaS adoption doubled in 12 months

* ThinkStrategies and Cutter Consortium, “SaaS Market Surging,” Jeff Kaplan, Nov. 13, 2008.

Why SaaS adoption doubled

* ThinkStrategies and Cutter Consortium, “SaaS Market Surging,” Jeff Kaplan

traditional on-premise deployment

Details

• Full ownership

• Significant implementation

• Customizable

• Difficult to upgrade / maintain

Examples

• HP Service Manager

• BMC Remedy

• CA Service Desk

• EMC Infra

Software publisher

Customer Data Center

ApplicationApplication

DatabaseDatabase

application service provider (ASP)

Details• Procures app and resells

service

• Broker between customer and publisher

• Focus on ‘out-of-box’

Examples• IBM GS

• HP Services

• BMC AAS

• CSC

CustomerCustomerCC

Software publisher

ASP Data Center

CustomerCustomerBB

CustomerCustomerAA

ApplicationApplicationApplicationApplicationApplicationApplication

DatabaseDatabase DatabaseDatabase DatabaseDatabase

the ASP meltdown

• The right idea with the wrong technology

• High-cost delivery model doomed ASPs

• Lengthy implementations

• Resource-intensive upgrades

• Version and feature lock down

• Higher cost than on-premise deployments

• Not compatible with client/server software

SaaS multi-tenant

Details

• Hosted by software publisher

• Many customers to one application set

• Thought to be inflexible

Examples

• Salesforce.com

• Workday

• Innotas

CustomerCustomerCC

Software publisher

CustomerCustomerBB

CustomerCustomerAA

ApplicationApplication

DatabaseDatabase

CustomerCustomerCC

Software publisher

CustomerCustomerBB

CustomerCustomerAA

ApplicationApplicationApplicationApplicationApplicationApplication

DatabaseDatabase DatabaseDatabase DatabaseDatabase

Managementautomation

SaaS single-tenant

Details

• Hosted by software publisher

• Customers receive their own app and database

• Auto-upgrades

• Extensive customization

Examples

• Service-now.com

• InteQ

• Eloqua

ASP vs. SaaS

ASP Attributes SaaS Attributes

Resold legacy applications New net-native applications

Retained perpetual licenses Subscription model

Difficult to upgradeNew functionality delivered regularly

Customized Configurable

* THINKstrategies, “CIO’s Guide to Software-as-a-Service,” Jeff Kaplan

• The Internet is the development and delivery platform

• Quick, flexible implementations

• Frequent, vendor-managed automatic upgrades

• Customer has direct control of application changes and customizations

• Extensive customer customization preserved through upgrades

• Simplified, predictable subscription license

• No infrastructure or application maintenance

why SaaS is different

application comparisonsQuestion SaaS ASP

Demo right now! ✓ ✖Proof of Concept within minutes ✓ ✖Implement in less than 30 days ✓ ✓Auto-upgrades within minutes ✓ ✖Users customize with little effort ✓ ✖Net-native, Web 2.0 ✓ ✖Predictable subscription licensing ✓ ✖Maintained by the app experts ✓ ?Hosted by vendor / partner ✓ ✓

ITSM vendors and delivery modelsClient/Server ASP SaaS

Vendor

License model PerpetualPerpetual,

SubscriptionSubscription

Hosting and administration

Customer3rd party or

vendorVendor

CustomizationCustomer, vendor

or partner

3rd party or vendor

(fee-based)

Customer

UpgradesCustomer, vendor

or partner

3rd party or vendor

(fee-based)

Vendor (included in subscription)

HP ‘SaaS’ for Service Manager

• NOT new technology - simply offering Service Manager 7 via ASP

• HP services or 3rd party partner provides bodies to administer the system

• Viewed by HP as a mid-market or enterprise solution

• Assumed licensed by subscription

• Stalling the market to retain customers

HP deployment

• Usually hosted in HP data center

• Minimal two week installation

• Includes HP Implementation Accelerator which requires:

• Predefined data – categories, codes, users, roles, CIs and ‘smart indicators’

• Process/procedure descriptions

• Required technical account manager

HP marketing

• Shorter time to market

• HP offers solution management expertise

• System to run in professionally managed data center, manned 24x7

• ‘SaaS’ mitigates customer risk

– “Transition to an on premise deployment when you are ready”

what HP is not telling you

• Scoped as a traditional implementation

• Lengthy implementation period with $25K conversion fee for legacy customers

• Customer locked into ‘out-of-the box’ functionality

• Highly disruptive upgrades remain – customer still pays for time and effort

• ASP must make system customizations resulting in lengthy change cycles

• Cost of technical account manager passed on to customer

• Highly complex licensing model with additional costs for integrations, employee self-service, reporting, knowledge…

• HP’s one ‘SaaS’ reference customer is…HP

BMC Remedy

• ASP or MSP– Managed and hosted by a partner

• Remedy Application Administration Service does not currently claim SaaS

– Software implementation

– Designated services team for system management

– Application monitoring

– Global support desk

– Application health Check

ca ‘SaaS’

• Not currently offering Service Desk Manager in ‘SaaS’ model

• CA announced Clarity Project Portfolio Management is offered via SaaS but competition calls it ASP

four magic questions

Questions to ask your ITSM vendor ASP response Service-now.com response

Can you set up a proof of concept or trial demo in minutes?

If offered, a dedicated demo instance will take a couple of weeks to implement.

Service-now.com can provide a dedicated demo instance in a matter of minutes.

How can I customize the offering? All customization requirements must be submitted to the ASP – you do not control when or how customizations will be implemented.

Customize to your heart’s content with the guarantee your changes will be preserved through all upgrades.

How often will the product be upgraded? Can you outline upgrade process for me?

Expect an 18 month delivery cycle with a highly disruptive upgrade.

Receive new functionality three times a year through our automated upgrade process.

How is a hosted version of your software more cost effective than an on-premise version of the software?

Your TCO will be much higher. ASPs use the same old client/server technologies with a Web front end. The only difference is that the ASP is managing the application. You will pay for the additional service.

SaaS delivers higher levels of automation, not more bodies. Economies of scale allow us to deliver one low price, while auto-upgrades and Web 2.0 functionality reduce your management costs and increase your effectiveness.

three follow-up questions

• How is the system administered and who is involved?

• How do I change or customize the application?

• Can I speak with one reference using your ‘SaaS’ product?

Highly complex, rigid ITSM applications• Require higher cost, specialized resources• No customer references• 18 month roadmap with little new functionality• Archaic and complex UIs and process flows reduce adoption• Very difficult to get information for reporting

Vendors pushing “OOB” best practices• Not possible to customize the application• No flexibility to map to customer processes - dependent on ASP to make changes• Technology impedes IT service and business success

High cost• Excessive licensing costs with multiple dependencies• High-cost consulting fees for implementation, customization and upgrades• High-dollar integration efforts that break during upgrades or system changes

ASP ain’t SaaS

Spend less money

Go with the visionary

Enjoy a truly integrated system Do business your way

Provide better service

the Service-now.com advantage

Be more efficient

Get promoted!

ability to executeAttribute Proof Points

Unprecedented implementation success

82% of our customers are in production. The rest just signed up.

Unprecedented upgrade success Every customer has the most recent version. 4,200 successful upgrades last year.

Global 24 x 7 customer support Live development support•24 x 365 for P1•20 x 5 for P2 and P3

Global coverage / local support Proven implementation and support capabilities•Solution used in more than 100 countries•Localized in English, French, German, Spanish, Italian, Chinese and Portuguese

99.97% Availability History of better than 99.97% availability.Application runs in a highly secure SAS-70 Type II certified data center.

financial advantages

financial differentiation

• Hosted model, low entry cost - nothing to own, monitor, manage or upgrade; fastest and lowest cost implementation in the business

• Subscription licensing, no maintenance fees - covers software, management and monitoring, upgrades, patch deployments

• Investment security - phased implementation, add licenses as needed, all customizations preserved, intuitive applications ensure the application is fully used

• Auto-upgrades - eliminates resource consumption and consulting costs

• Cost predictability - no need to budget for upgrades, patches, maintenance; predictable annual licensing costs

• Flexible deployment options - we can host or you can deploy in your data center; either way, it’s SaaS!

• Really simple licensing – one price per IT process user; reasonable subscription license means RBI (return before investment)

software costs

capital

no

15% - 35% of license MSRP

customer expenseand responsibility

hinders upgrades,forces processes

operational

yes

no fees

Redistributed backto the business

automatic

all customizations preserved

OpEx vs. CapEx

Predictable

Maintenance fees

Soft-costs

Upgrades

Customization

customer responsiblefor infrastructure

SaaS Legacy Software

six year TCO300-user environment

ITSM Software as a Service

SIX YEAR TCO: $1.3M

Annual subscription: $1.2M 300 process users

Software maintenance fees: $0 Included in subscription

Consulting: $45K Flat-fee implementation, auto-upgrades

Training: $2K No charge for Admin training

People resources: $67K Administration

Infrastructure: $0 Provided by software publisher

ITSM Software as a Service

SIX YEAR TCO: $1.3M

Annual subscription: $1.2M 300 process users

Software maintenance fees: $0 Included in subscription

Consulting: $45K Flat-fee implementation, auto-upgrades

Training: $2K No charge for Admin training

People resources: $67K Administration

Infrastructure: $0 Provided by software publisher

Legacy ITSM Software

SIX YEAR TCO: $5.7M

Initial software purchase: $1M 300 process users

Software maintenance fees: $1.8M 18 – 35% of purchase price annually

Consulting: $1.2M Implementation, upgrades, ongoing

Training: $52K $8,800 annually

People resources: $1.6M Implementation, admin, upgrades

Infrastructure: $100K Hardware, software, data center

predictability vs. volatility

$$

Year 1Year 1

Legacy toolsLegacy tools

Software as a ServiceSoftware as a ServiceYear 2Year 2 Year 3Year 3 Year 4Year 4 Year 5Year 5 Year 6Year 6

vendor evolution

WhoWho’’s next?s next? ??

wrap up

• Subscription models offer ultimate flexibility and low entry costs

• SaaS is software evolution that substantially reduces costs and increases productivity

• IT shops that have been successful with SaaS have altered culture and business mindset

questions and answers