October 24th, 2006
Business services powered by SaaS
One of the unspoken convergences of current times is the joining together of business service providers with on-demand application vendors. ADP's recent acquisitions of on-demand vendors Employease and VirtualEdge is a notable example, but it's far from being an isolated case. Last week I noted CRM provider RightNow's work with BPO companies. I discovered some fascinating examples too when I spoke with Colleen Smith, who as director of strategy and business development at Progress Software heads up the vendor's SaaS enablement program, which I described last week as A bigger SaaS ecosystem.
One of the most interesting features of Progress Software's SaaS partner base isSoftware is ceasing to be a product that not all of them nowadays are conventional ISVs. "Some of our reseller companies are now being bought by companies you wouldn't think of as conventional software providers," she told me. Larger business service providers have been coming in and buying Progress partners in order to add extra on-demand functionality to their business service offerings.
One striking example is US Bank, which at the turn of the year bought a Progress ISV called Advent Business Systems. The ISV had made the transition from conventional client-server to on-demand a year earlier, serving a specialist need in the oil and gas industry to track fuel being distributed from refineries out to retail providers. US Bank's fleet card payment division bought the software company to increase its reach into small and middle market fleet operators.
Another example is legal and business information provider LexisNexis, which acquired UK-based Progress partner Visualfiles in July this year. Visualfiles specializes in providing workflow solutions for the legal profession.
These providers are not getting into the software business so much as acquiring software that extends their own automated service offerings. That dovetails well with Progress Software's emphasis on what Smith calls "business empowerment" as a core part of its SaaS philosophy: "Thinking in terms of business service provisioning rather than thinking, 'I build software'," she explained.
It's a theme I've touched on before. Commenting on the Employease acquisition in the summer, I wrote:
"No one ought to start calling ADP a software-as-a-service vendor as a result of this acquisition. It hasn't become a software vendor, it's merely extending into new areas of automated business services — and that's what the on-demand revolution is really about — using software to do a better job of operating automated business services."
Last October, I described a couple of companies that use on-demand services to deliver business stationery and web-based marketing. I titled the post Customers want results, not applications, and that I think is the fundamental driver behind this convergence of business services with on-demand software. Software is ceasing to be a product and is instead becoming a behind-the-scenes engine that powers delivery of a business service.
Phil Wainewright is a commentator and strategist on emerging software industry trends. See his full profile and disclosure of his industry affiliations.
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