If you are considering becoming a 1M/1M premium member and would like to join our mailing list to receive ongoing information, please sign up here.

Subscribe to our Feed

SaaS Strategies Among IT Consultants and Outsourcers

Posted on Sunday, Nov 8th 2009

By Guest Author Sai Kiran Kumar

It’s not a secret that SaaS is a growing industry. According to a Gartner press release, Software as a Service (SaaS) is an $8 billion market in 2009 and is growing over 20% YoY. The market should show consistent growth through 2013, when worldwide SaaS revenue will total $16 billion for the enterprise application market.

The IT consulting/outsourcing industry is still taking baby steps in the SaaS industry, but across companies, a single coherent strategy is starting to take shape, as I found when I interviewed seven of the top IT outsourcing/consulting companies in the world to learn more about what they were doing in SaaS and what kind of strategies they were developing. There were some consistent messages that came through:

  • The predominant SaaS strategy for the major IT consulting/outsourcing firms is the move from ‘enabling apps’ to ‘enabling on-demand apps and cloud computing.’
  • The focus is on partnering with independent software vendors (ISVs) to help build applications that are delivered through the SaaS model.
  • Companies do not want to invest in acquiring companies (ISVs) that build SaaS-based products; rather, they want to help them to build products.

Before we discuss the specific points of the various approaches that the companies are taking, it’s worth noting that theIT consulting/outsourcing industry is offering services in four major areas:

  • Business Process as a Service
  • Software as a Service
  • Platform as a Service
  • Infrastructure as a Service

In the ‘Business Process as a Service’ offering, services are being offered to help create a marketplace in which the consulting/outsourcing company hosts market leading applications at its data center. Applications are made available through a flexible pricing model based on utilization (e.g., per member, per month), substantially reducing the capital required to implement new functionality while providing flexibility to adjust capacity as needed. These applications typically support a single business process.

In the ‘Software as a Service’ offering, the consulting/outsourcing companies help ISVs to build SaaS- based applications. This is the main area of emphasis currently and the focus is on helping ISVs migrate from on-premise to on-demand.

In the ‘Platform as a Service’ offering, this McKinsey consulting/outsourcing company offers services to help deploy applications without the cost and complexity of managing the hardware and software involved. Typically, services are being offered to support the application development cycle. One of the most popular is the on-demand testing platform, where customers can use a testing platform (consisting of various leading testing applications) that is hosted by a consulting/outsourcing company.

In the ‘Infrastructure as a Service’ offering, the consulting/outsourcing company offers services for which they leverage their investments in data centers and provide backup, storage, servers, desktop, grid, and network to customers.
Major Indian IT companies have focused their efforts on enabling ISVs to progress through the SaaS maturity cycle. A few years ago, when ISVs started showing interest in the SaaS model, the focus for the Indian IT companies was to help extend products and offer ASP versions of the product. The ISVs typically just wanted help in scaling down their on-premise product and offer a light version on-demand with a few key features. Once this was successful, more work in the last two years has focused on the migrating single-tenant application into a multi-tenant offering. In the past year, the focus has started shifting to modular SaaS offerings through which IT companies help ISVs break down applications into configurable modules.

Let’s now turn more specifically to what some of the major IT consulting/outsourcing companies are doing in the SaaS industry.

Computer Sciences Corporation (CSC), a provider of systems integration and technology services, believes very strongly in the concept of cloud computing and feels that it is the next wave of IT innovation. Specifically, the company is interested in the concept of cloud orchestration and offer services to companies that are either doing their own cloud services integration or those that take CSC’s help in setting up their cloud computing infrastructure (private, public, or hybrid). Services include monitoring, identity management, provisioning, integration, security, fault tolerance, authorization, federation, and optimization. The objective is to provide comprehensive services to those companies that are looking to set up a cloud computing infrastructure.

CSC is betting big on its ability to leverage its large infrastructure practice and its thought leadership in cloud computing to become a leader in this field. Their main competition comes from IBM, which is also very active in the cloud computing advisory industry and has been trying to position itself as a visionary in this industry. The major Indian IT outsourcing companies are not competition for CSC and IBM in this area and are focusing purely on an application layer play where they are enabling ISVs to create SaaS-based apps.

CSC helps to provide the cloud computing infrastructure and has come up with an offering called ‘Trusted Cloud Services.’ Here CSC provides a portfolio of desktop, computing, storage, and network infrastructure services available on a just-in-time, on-demand basis with full security, service-level guarantees, and industry-compliant services.

Another prominent Indian IT player, HCL Technologies, has been offering services along the lines of the SaaS model since 2004. Early work included ‘EZ ERP’ an out-of-box, pre-packaged solution for small and medium enterprises. HCL says that this package came with nine essential components including consulting & assessment, mySAP A1 License, hardware infrastructure, implementation services, and lifecycle support services which made it easier more affordable for SMEs to deploy SAP software. The package offering offered a complete system support and maintenance covering not just individual application or hardware, but the entire IT setup all bundled in one, at a single price point. Localization and pre-configured templates were also offered for faster enterprise resource planning (ERP) roll-out and lower implementation costs. Similar initiatives for the BMC Remedy helpdesk and Microsoft Exchange have also been rolled out under a pay-per-usage pricing model.

HCL plans to only focus on enabling ISVs in their SaaS readiness initiatives. In 2008, HCL launched AGORA, a SaaS service delivery platform (SDP). Using the AGORA platform, ISVs and service providers in any location can deliver high-quality, efficient, and cost-effective software services to customers. HCL says that AGORA is a collaborative platform that provides single sign-on, unified, and secure access to the services that are delivered through the platform, and integration with back-office applications such as customer relationship management (CRM) and ERP. The platform is an efficient automated infrastructure that provides functions such as customer lifecycle management, service management, metering of service usage, billing based on usage, and customer support.

Wipro Technologies in 2009 announced the ‘w-SaaS’, a platform for rapid SaaS enablement of business applications using Oracle Grid Computing and Oracle application grid middleware for ISVs. Wipro says that the platform will help ISVs to enable their ‘existing’ business applications to operate in SaaS model in a non-intrusive manner with minimal re-implementation, and enable the traditional single-tenant application to operate in an efficient multi-tenant mode.

MindTree Consulting offers a service called ‘Smart SaaS,’ which focuses on testing services for ISVs, specifically security, metering, audit/reliability, and transaction testing. MindTree is also directing a lot of efforts toward SaaS advisory services for ISVs.

We can see that most of India’s major IT service companies are focusing on enabling ISVs to build SaaS offerings and that U.S.-based IT consulting companies such as CSC and IBM are putting more of their energy into core cloud computing work because these companies have significant investments in data centers in North America. Next week’s post continues the investigation into what IT consulting and outsourcing companies are doing with SaaS.

Hacker News
() Comments

Featured Videos


We have combined open source xTuple ERP with Apple’s snow leopard and hosted the application in our data center. One target is the new business with a virtual office that needs a collaborative application for enterprise management.

Mitch Rushing Sunday, November 8, 2009 at 11:37 AM PT

[…] the rest here: SaaS Strategies Among IT Consultants and Outsourcers | Sramana … ???? ????? […]

SaaS Strategies Among IT Consultants and Outsourcers | Sramana … | By IT Sunday, November 8, 2009 at 4:34 PM PT

[…] reading here: SaaS Strategies Among IT Consultants and Outsourcers | Sramana … Share and […]

SaaS Strategies Among IT Consultants and Outsourcers | Sramana … | Help Desk Outsourcing Sunday, November 8, 2009 at 5:38 PM PT

Excellent post, clear and non-ambiguous. Thanks for sharing, keep posting.

Cost cutting on the grounds of economic slump, mushrooming small business in India (of course lucrative too), zero upfront investment, fast implementation, ROI from day1, pay per use etc. made SaaS applications, a preferred choice for small business folks across the world

Sreekumar J Monday, November 9, 2009 at 11:12 PM PT