SaaS Platform Wars

Chris Keene (CEO of our portfolio company WaveMaker) pointed me to a recent McKinsey report on the SaaS Platform Wars.

The reference, and link to the McKinsey report are on Chris' blog entry called SaaS Platforms For ISVs - Who Wins? from May 21st.

It was very thought provoking and gave our firm a basis for examining our work in SaaS. We have been very active SaaS investors with about 15 companies including Omniture, Employease and Aria Systems. The latter is a great example of the common services layer being delivered as a SaaS infrastructure layer as described as one of the core areas of the stack.

I think the internationalization piece related to SaaS is another core asset that platforms can provide worth noting. For instance Aria provides other SaaS companies with the ability to do business in many countries and currencies with one integration - to date they have done a billion transactions in over 150 countries. Without good SaaS platform components each vendor would have this complicated mess to untangle for each area that they want to do business - and it slows down the adoption.

The battlefront that I see as the one developing the most quickly in SaaS platforms is the one around cloud computing. We are seeing different approaches and different levels of the stack exposed by all the vendors…Amazon is a utility model (but proprietary queuing and other bits), Google forces Python and the persistent storage, Opsource wants to build lock-in through application peering, etc. We still don’t know where Microsoft, IBM and others will enter…it will be a dynamic market for a bit yet. We are investors in Elastra that provides a third party layer for working with cloud computing environments.