In the Business Apps Casino, change is afoot. For a long time, one table – software-as-a-service ERP – attracted a limited number of players and fans. However, over the past 12 months, an increasing number of ERP vendors have lined up to place sizeable SaaS bets, while more potential customers are paying close attention to the gambles those vendors are making.
In Forrester ERP inquiries, it’s now the norm for clients to ask us about SaaS ERP. In fact, it’s unusual to field a call where SaaS isn’t mentioned. Firms may be actively considering a future change in deployment model or simply wanting to kick the tires on SaaS ERP adoption, pros and cons, and comparisons with on-premises ERP. They also seek more information about SaaS ERP market players and likely future entrants. In general, what’s changed since a year ago is that companies want to include SaaS ERP options in their assessments.
Each ERP vendor’s SaaS bet differs somewhat from those of its peers, determined both by the type of customers it’s aiming at and architectural concerns. However, there are some shared themes:
Repurposing existing apps. Some ERP vendors began their SaaS endeavors with apps targeted at small and midsize businesses. They’re now working to deepen the functionality of those apps to appeal to a broader, more enterprise audience. There are two key approaches: 1) expand the scope of an existing SMB product and aim it up market; or 2) carve off functionality from a SaaS midmarket apps suite (while retaining that suite) and create a new enterprise app.
It’s been a long time coming; I’ve been having conversations around ServiceNow’s IPO or their acquisition by another vendor for as long as I have been an IT analyst (and that’s late 2008). Last night its initial public offering price was set at $18 (above the previously expected $15-17 range – yes, even after what happened to Facebook) and I assume trading will have commenced by the time you are reading this blog.
But I’m not a market analyst, I’m an IT industry analyst … so bar there being a major hiccup with the valuation post-trading the real meat for me is what it all means for ServiceNow, its customers, and the IT service management tool market. And let’s not forget other software markets that it no doubt has its eyes set on. Build a platform and then exploit it – why not?
So let’s get you up to speed with ServiceNow
ServiceNow was started by Fred Luddy, the ex-CTO of Peregrine Sytems, in 2004 with the intention of making a better IT service management (ITSM) tool: "The IT industry deserves a tool that just works. We're going to give it to them." So much has happened since then: rapid growth in customer numbers and revenues (and market share), in employee numbers, and in the solution’s capabilities. In capability terms, today’s offering is a radically different beast to the initial offering – SaaS (or more specifically its PaaS) has allowed ServiceNow to grow the offering at a spectacular pace.
Where is ServiceNow now? Some quick facts and opinions
Without boring you with a ten page overview of the current ITSM tool market and ServiceNow’s capabilities, ServiceNow sits with the two previous heavyweights of the ITSM tool space (BMC and HP). BUT ServiceNow is more than just a SaaS ITSM tool: