Had an excellent chat this week with Narinder Singh, founder of Appirio based in San Francisco. Singh and his colleagues started up Appirio to take advantage of the next wave in enterprise adoption of SaaS applications such as Salesforce.com and SuccessFactors. With backgrounds from SAP, Webmethods, Borland, and Accenture, Singh and his colleagues know the enterprise market cold.
His predictions for the disruption of the enterprise app ecosystem were particularly interesting to me. Singh feels today’s enterprise vendors are falling into the classic trap of the innovator’s dilemma— how do you serve two masters– move to embrace disruptive technology while preserving your existing base? Further, he feels traditional, large SIs are also hooked on the enterprise drug with revenues pushing toward $10B for Accenture and IBM alone in enterprise app implementation and support services. On-demand also affects ISVs in that changes Oracle or SAP make in their core products won’t affect an ISV until maybe a year or so because of the complexity of the cycle in upgrades, etc. “In the on-demand model, if Salesforce innovates in an area where you [the ISV] have previously created some value add, over night their entire customer base has access to that innovation,” says Singh. The model of on-demand forces everyone to stay on their toes, and Singh believes this is good for customers.
He also sees his firm and firms like his as playing a unique role in helping enterprises with the SaaS (r)evolution. He sees a wide open opportunity to “bring the customer back to the center of innovation.” For instance, he’s working with a client to mesh their HR data (SuccessFactors) with their sales data (Salesforce) to deliver a strategic view on how to manage sales performance by increasing quality and reducing ramp-up time. The opportunity to observe, assemble and rapidly deliver new solutions is unique to this era of systems integration. The role of the SaaS-savvy services provider is more of an emissary than vendor, too. The business units are rapidly adopting SaaS under the radar of the CIO. Singh feels his firm is a natural to rationalize the SaaS silos within an enterprise and to help the CIO embrace the new technology, rather than resist it. By the same token, he feels the more successful and comfortable CIOs become with leveraging SaaS and web 2.0 solutions in the enterprise, the greater the disruption will become for the enterprise eco-system.
The following is a chart from a paper from Appirio entitled Services 2.0. It’s a good read for IT Services fans and enterprise app stalwarts alike.