I wonder if back in the time of Gnaeus Flavius they had heated debates about the meaning of legal terms, and had bragging rights as to who came up with the catchy phrase: Cui testimonium defuerit, is tertiis diebus ob portum obvagulatum ito. (One who seeks the testimony from an absent person should wail before his doorway every third day) .
FaaS. Flight as a service.
Like many of my fellow SAP Walldorfites, I spend too much time in Terminal 1 at Frankfurt Airport. I used to think that queuing was something done in communist countries to get bread, but now I realize that queuing is what we in the western world now do to earn our bread.
I fly with Lufthansa a lot, and I’m a fan. They are mainly on time, and I collect the rock hard bread rolls one gets in economy class and I’m using them to build an ecofriendly house. Lufthansa works for me because they have more direct flights from Frankfurt than anyone else. I also get to read the FAZ and improve my German.
I have a German colleague, who, when he gets on the plane, can tell me what model of Airbus it is, its range and even who made the engines and their thrust. I try to avoid sitting next to him.
Most of us want to get from A to B as quickly and safely as possible. If the lounge is nice, that’s a bonus.
Software is pretty much the same most people just want to get something done for them. If software can do it quicker or better, great. As vendors, we are often a bit like my colleague in 13D. We talk about details that bore normal people.
Designing, building and delivering an aeroplane is damn difficult. Ask Airbus at the moment.
You need lots of clever aeronautical engineers (what a cool job that must be), Experts in composite materials and wiring (whoops), and project managers. It is a massive capital and intellectual undertaking to build a machine that can lift people into the air and whiz them around the planet.
Running an airline, on the other hand, is a service. It is also difficult, but it is a different kind of difficult. You need to focus on punctuality, service and cost. Customers demand the service at the lowest cost. The personnel are focused on serving the customer, at least in theory.
It is a service business, run on tight margins.
That is why Lufthansa and Ryanair just buy or if they are really clever lease planes, they don’t make them.
what has this got to do with BPO and SaaS?
The BPO sector has matured a lot over the last couple of years, and we have seen several trends emerge.
1. Standardization is king. BPO providers don’t want to take over messy bespoke processes and run them for you. They are pushing standardization.
2. BPO providers want a single platform to run. Like Ryanair, they want to fly one type of plane.
3. Many BPO providers have realized that they are in the business of selling a service, not building software. Building scalable, standard software to handle complex business processes is not easy.
4. Managing Risk is important. BPO sometimes fails.
5. Winning the deal is the easy bit.
6. Managing what isn’t outsourced is vital to outsourcing success
I’ve mentioned ADP alot here on Vendorprisey, but I’d like to point you to another BPO provider who is doing well too. Arinso. Business is good for them. They use SAP software to run HR services to a number of major global players, and they have an excellent relationship with SAP. I saw a demo at the SAP UK user group of some cool Ajaxy front end stuff they have done for their on-demand offering, which they call EuHReka- thanks Alex and Liz. Arinso has a new GM in Australia, a long lost friend, Caroline Duvoisin, she is ex-SAP and ADP.
(There was a webcast with SAP yesterday, but the recording isn’t online yet I’ll update this when it is. I’ve taken the slides below from the presentation that Rudy did)
I’m often asked why SAP doesn’t offer “BPO”, it is the same reason why Airbus don’t run airlines. ADP, Arinso, Convergys, ACS and others are thinking the same way. They are in the service business, not the software business.
There is some good stuff on SAP and BPO over on the SAP site Check out this webcast with Gianni Giacomelli from SAP, and Stephen Dunn from the Everest group discussing Risk in BPO, and technology’s role. I think I’ll ask Gianni to do a guest post or maybe even a podcast. He knows lots about BPO.
BPO is normally about outsourcing big multi-process operations like HR, or F&A, or bits of those. The customer buys a service, not the software. That doesn’t mean that the software isn’t important. Like the plane, it needs to be safe, and Singapore airlines use the newness of the fleet as a competitive edge. Ryanair standardized to cut cost. Airlines are looking to the planemakers for more fuel efficiency. There is a real partnership between the airlines and the planemakers, even though there are many more airlines than planemakers…
This is the model we want to achieve with BPO. We want to provide the software that powers the BPO industry, and we are on the way to succeeding. If you are planning to outsource your HR processing, odds are it will be onto an SAP platform. We have been investing in this for the last few years, and it is now starting to pay off handsomely.
Vinnie has come up with SACS. The concept is good, but I think this has been happening now for some time. In the comments on a recent post he asked why wasn’t SAP doing more to help the ecosystem. I’d suggest he have a look at what we are doing with folks like Arinso.
This is how Arinso read the customer demand, and their response.
And these are the delivery options.
As you can see the HR outsourcing model has moved on. The configuration is dramatically reduced through template, preconfiguration and serivce catalogues.
Recent wins for Arinso include Repsol and Bank of America’s European operations.
I’ll see if Rudy can send me a demo and I’ll link to it here.
I was going to extend this metaphor to SaaS, but I couldn’t face another visit from the Spanish Inquisition. I’ll pose a question instead.
What would happen if big software vendor was to build a fabulous platform, with 1000’s of preconfigured services ranging from HR to CRM, that met all the technical SaaS purity laws (SOA, MT and so on). Then it had several service vendors who really understand running a service profitably run them?
For ages I have been trying to figure out what SaaS is. I’m still no clearer, and I have read masses of posts, analyst reports, marketing materials and irregulars emails. It seems there are different forms of SaaS, including the highest forms of SaaSdom, “pure” and “true” SaaS.
Jason asks an important question.
How did McKinsey define SaaS? — Put 20 technologists in a room and ask them to define SaaS, and you’re going to get at least a dozen different answers. Is SaaS any software solution that’s provided in a hosted environment? Is multi-tenancy a necessity? Is subscription pricing requisite? If McKinsey doesn’t tightly define SaaS to the CIOs surveyed, the potency of this data loses much significance.
This is my problem with SaaS. What is or isn’t “allowed” to be called SaaS seems so arbitrary. Have a look at the wikipedia entry. A good bit of it is about what SaaS isn’t.
I’ve mentioned the Monty Python Spanish inquisition before when discussing the high priests of SOA, but it may be appropriate here too.
I never expected the SaaSquisition. Haaa! Nobody expects the SaaSquisition
The unique property of SaaS is that it is hosted and that is multitenant..
Haaa! the 2 unique properties of SaaS are that it is hosted, multitenant and subscription based..
Haaa! the 3 three unique properties of SaaS are that it is hosted, multitenant, subscription based and uses AJAX
Haaa! the many unique properties of pure and true SaaS are that it is hosted, multitenant, subscription based, uses AJAX , REST, RSS , is completely brand new, is bought by the lob, requires no training, isn’t tainted by the evil dark side of on-premise, sells virally without a salesforce, has a seasonal release cycle and knows the secret SaaS handshake.
Make no mistake, here in starship enterprisey we see the SaaS wave. There are some great solutions out there in the “cloud” I see some HR executives buying SaaS offerings instead of deploying in-house applications simply because the in-house IT is too busy doing “mission-critical” supply chain stuff to talk to the HR folks. Successfactors is vendor benefiting from this.
SAP’s approach to SaaS is cautious to date, but it would to foolish to imagine that we are ignoring it.
I find the talk about “hybrid”, “pure” Saas and “true” SaaS very Peoples Front of Judea. I’m tired of all this purity stuff.
David is uncomfortable with my assertion that SaaS is bureau rebranded,
Of course there are still some who question whether SaaS is just an old idea with new marketing spin. In recent dialogue another Irregular, Thomas Otter of SAP, believes that SaaS is simply bureau computing from the 60s and 70s, or ASP from 5 or 6 years ago rebranded. I’ll argue the case for the differences another time, but the key thing is that these sorts of multi-tenanted, hosted (true SaaS) solutions are set to become a much bigger component of the average company’s solutions portfolio in 2007.
Show me what is a) new AND b) unique and I’ll repent, kill a goat and join the cult. The technology has moved on since punchcards, but the business model has not changed. AJAX, SOA etc are not the sole preserve of the SaaS vendors.
SaaS is simply the latest evolution of the bureau. This is a fine thing. Using the term bureau in the 1990’s was uncool, so the term ASP was born. Many ASP’s slipped on the 2000 banana skin. New players needed a new name, something to distance itself from the ASP days, and something hip that would make hosted applications cool again. As much as I hate the 2.0, 3.0 game, SaaS is Bureau3.0. There is nothing wrong with running a bureau well -recently ADP marked the 32nd Consecutive Year of Dividend Increases.
ADP, not Salesforce.com is the largest SaaS provider.
In 1949, when one of Henry Taub’s two partners in their joint venture chose to leave because growth was simply too slow, Henry decided to buy out the remaining partner. Although he was only 21 years old at the time, he never made a bigger business decision in his life. So, for the sum of $6,000, he became the sole owner of the small enterprise that offered, for its day and age, an unprecedented service — but up to that point had only one client. The business was called Automatic Payrolls, Inc. It manually processed company payrolls —providing everything from doing the calculations to preparing the checks and the payroll register.
The idea for the service actually belonged to Henry. As the story goes, one day he was visiting a nearby company. A key employee had taken ill, the payroll wasn’t done, and the workers weren’t paid on time. Company managers, who knew nothing about doing payroll, abruptly put aside their other duties, and together
they finally got the payroll out. Henry was astonished at the disruption that was caused. Employees were angry. Managers were frustrated. Productivity suffered. All because a key person wasn’t available to prepare the payroll.
He wondered how many other companies faced similar crises, because a payroll wasn’t done on time. From that observation
came the unique idea that launched Automatic Payrolls. He would offer a payroll preparation service that any business could use. One that was not only accurate and dependable, but also affordable.
Sounds exactly like the SaaS promise to me.
Read the history of ADP here. You’ll see that they do a lot more than just payroll.
Workday is launching on 6th November (that is the same day I was launched 37 years ago) Auspicious choice indeed. I’m curious about Workday. They have a strong team of HR tech folks, and the SaaS play is certainly trendy.
I saw press coverage here in computing UK
Firstly the author has totally mangled the market statistics for the HR market.
AMR Research data on growth in the online applications sector suggests that HR is currently a slower-growth area than some others. It rose 13 percent between 2004 and 2005, compared to 300 percent for ERP generally, 60 percent for CRM and 125 percent for sourcing/procurement, the analyst said.
Gosh. I read lots of reports from AMR, but that one passed me by. I was bonused last year on ERP revenue, so either the report is wrong, or I got shafted.
Secondly, I was struck by the amount of friendly SaaS love. Salesforce and Netsuite all welcoming Workday to the party. I’m not sure the rest of the nascent HR SaaS crowd will be so welcoming.
Thirdly, the marketing to date is very traditional, press releases, static website….. No blog that I can find, no conversation, Where is the thingamy type marketing? Or the simplyhired youtube?
It is early days yet, and marketing innovation doesn’t correlate with application innovation, but I would have expected something cool by now. I’d read Dave Duffield’s blog, and so would most of the the HR technology world.