In January of 2007, we published an article, Services 2.0, which highlighted the shifting sands in deploying SaaS solutions such as Salesforce.com, Google Enterprise and Amazon Web Services. Two years later, Global SIs such as Accenture, Cap Gemini, TCS and others are still shackled by their dependence on old-school, on-premise partnerships with SAP, Oracle & Microsoft. While they may be paying lip service to cloud computing, most offer SaaS-based solutions at 2-3X the total cost necessary, are nowhere to be found in the relevant communities and developer ecosystems, and have few true SaaS enterprise reference customers to speak of.
In this down economy, we have seen a dramatic shift of enterprise customers looking to accelerate their SaaS & cloud computing initiatives--they have seen results from prior efforts and are eager to expand efforts to "do more for a lot less." Having served over 100 enterprise customers including Dolby Laboratories, Qualcomm, Harrah’s, Starbucks, Genentech, Plantronics, Japan Post and others, Appirio has seen a continued movement from simply replacing one or two on-premise apps with their SaaS alternatives, to enterprise-wide, C-level mandates. Here's some of the things we're hearing customers demand:
- "Eliminate 15% of our IT spend with SaaS"
- "Cut $100M in expenses by moving to the cloud"
- "Help us define a path to the server-less enterprise within 3-5 years"
When confronted with these mandates, the Global SIs that we see and hear competing for these deals seem flat-footed and ill-equipped, trying to meet these new challenges with dated on-premise technology and techniques. In the past 60 days alone we have witnessed 3 examples of this:
- Global SI #1: Quoted a basic SFA, Call Center and Partner Portal implementation for a $1B manufacturer @ nearly 3X the necessary amount. To justify its high cost of sales and hamstrung delivery model, the bid "added" unnecessary roles and services. They could not adapt to new rapid and iterative development methods - now a standard in SaaS development and deployment.
- Global SI #2: Quoted a global SFA requirements phase at 1.5X the necessary cost EVEN WITH A LOWER AVERAGE HOURLY RATE. Again, a dramatic misunderstanding of how to define requirements in a SaaS world, compounded by a lack of repeatable assets, IP and methodologies for SaaS deployments.
- Global SI #3: Quoted a PaaS initiative for an existing customer @ 2X its necessary amount. In this case, the quote was driven by a combination of exorbitant rates, a comfort level with an established client, an army of under-utilized resources already on-site, and a blatant misunderstanding of how to define, develop, deploy and support a PaaS initiative.
We see this list of examples growing every day, and it does not even include the dozens of customer relationships where enterprise executives are simply bypassing the Global SIs because of their bloated costs models, old school methods, multi-billion dollar partnerships with legacy vendors, or systemic lack of knowledge of cloud computing products and services. The discussion around "private clouds" is a perfect example-- Global SIs trying to teach an old data center new tricks.
More evidence? Search the discussion groups and forums for relevant case studies and success stories from these companies. While Accenture, Cap Gemini, TCS and others claim strategic partnerships and deep SaaS practices and expertise in cloud computing, the facts and relevant case studies prove otherwise. A few examples:
- A quick search in the Salesforce.com developer discussion forum for "Accenture" yields a grand total of 49 hits, "Cap Gemini" 30 hits and "TCS", 25 hits – for a total of 104 hits. The equivalent search for Appirio and our competitors yields well over 1,000 entries.
- The number of solutions offered by the Global SI community on Google Enterprise Solutions Marketplace – ZERO. When the TCO of the Google Enterprise solution is 1/10th the TCO of Microsoft and/or Lotus Notes, is this any surprise?
- The number of enterprise SaaS success stories and testimonials on the Global SI’s websites – less than 10 based on our review. Appirio and our competitors have well over 200 true enterprise success stories.
When we launched Appirio just over 2 years ago, we suspected that the Global SIs would "get it" in 2-3 years, have significant assets, teams and relationships in the world of SaaS -- luckily, we are being proven wrong. Our new forecast, we have at least 2 more years. Or, perhaps Global SIs won’t ever be able to disrupt their traditional business, and the new Services 2.0 players will continue to outbid, out-deploy and out-innovate. If we are missing something and there is evidence of real SaaS growth at the Global SIs – we’d love to hear from you.
UPDATE, 3/11/09: We were flattered to receive a request from Accenture to remove their copyrighted image of Tiger Woods from this post. We are more than happy to comply-- we replaced it with this creative commons image.
UPDATE 2, 3/11/09: After the above, we received another request to remove Tiger's image altogether (from his people). We certainly never mean to cause the commotion, just to point out that Global SIs are focused on the wrong things, and they are lacking in getting behind something that genuinely is better for the customer.