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Summary:

The cloud is a killer. Other than the microprocessor, OutSystems’ Mike Jones believes we would be hard-pressed to find another technological innovation that has so effectively killed off its predecessors. Though SaaS had once been the savior of businesses, XaaSes are rapidly stealing the spotlight.

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Let’s be honest: The cloud is a killer. Other than the microprocessor, I think we would be hard-pressed to find another technological innovation that has so effectively killed off its predecessors. For example — try to buy a piece of software packaged in an actual physical box. Sure, a handful of consumer-oriented PC applications are still sold in retail stores, but with enterprise applications — good luck. Even Microsoft is pushing customers, both business and consumer, to the cloud for their products.

But is the cloud upping the ante, from tech killer to cannibal?

One of the earliest innovations brought about by cloud computing’s rise was Software-as-a-Service (SaaS). From Salesforce.com to Google Apps, SaaS has been the savior of small businesses and cash-strapped enterprises…but this notion is changing. XaaS has taken the spotlight from SaaS – everything from Platform-as-a-Service (PaaS) to Infrastructure-as-a-Service (IaaS) is eating away at SaaS dominance, leading many businesses to reconsider whether investing in SaaS is the right choice.

Don’t get me wrong, SaaS certainly has its upside. It’s low-cost and effectively turnkey, requiring only an Internet connection for the solution to be up and running. This great strength of SaaS, however, is also its biggest weakness — the product doesn’t actually belong to the end users. A typical SaaS solution is also relatively inflexible, requiring lengthy and expensive customization — great for plugging an application gap, not so great for building a business around. Just a few years ago, the downsides to SaaS were rarely discussed, and the alternative — custom application development — was seen as absurdly expensive and time-consuming, putting even the customization costs of SaaS to shame.

But that mindset is changing as other XaaSes, particularly PaaS, gain traction in the enterprise. PaaS essentially gives IT teams access to world-class development environments and infrastructure for what amounts to pennies, turning the old argument against custom application development on its head. Specifically, rapid application development (RAD) PaaS platforms are turning up the heat on inflexible SaaS, by speeding up custom development and slowly pushing SaaS out the door.

Essentially, RAD PaaS is comprised of two pieces: an IDE coupled with all the tools to manage the entire application delivery cycle (PaaS), a model-driven development language (RAD).  For the former, the IDE must seamlessly integrate with back-end deployment and management tools, allowing IT teams to streamline the entire application development, delivery and maintenance processes.  This exposes a whole host of functions, from configuration management and application deployment to monitoring and access control, which are delivered as services.

For the RAD component, a model-driven development language is layered on top of the IDE, dramatically simplifying the development process and allowing the development team to focus on the business, not the technology, problem.  The result is a streamlined development process that empowers not only IT, but also business stakeholders, to build applications incredibly fast, delivering working functionality in hours rather than weeks or months.

But why is RAD PaaS eating away at SaaS?

There are really three issues at hand for why PaaS, and RAD PaaS in particular, are providing a compelling alternative to SaaS.

  • Speed. Thanks to a set of seamlessly integrated services addressing the entire application development lifecycle, RAD PaaS streamlines custom development. This dramatically improves the pace of all aspects of the process, from access to the development, test and production environments to actually building and delivering the working application.
  • Cost. RAD PaaS cuts costs in several ways.  First, overall team size tends to be smaller, as the environment automates tasks typically completed by specialists, improving the efficiency of the full lifecycle of application delivery.  Next, economies of scale come into play when using cloud infrastructure, saving precious dollars.  Finally, custom applications provide a differentiator to the business at-large, providing a distinct value that’s difficult to calculate.
  • Flexibility. Through RAD PaaS, businesses gain the ability to deliver application functionality to accurately meet business needs.  This means no more suffering from misfit packages or struggling to extend existing functionality (a costly effort to undertake and maintain). Instead, custom applications now evolve with the business and stay almost ‘evergreen,’ resulting in applications that age very little and are inexpensive to change.

PaaS cannibalizing SaaS should not be looked at as a bad thing for the cloud – SaaS solutions will remain in play for many commodity applications across both small-scale operations and for larger enterprises, but their promise of speed to delivery and ability to scale is no longer a key differentiator.

The future of the cloud, and its next round of innovation, lies with RAD PaaS providing the ability to build applications, anywhere, at any time as fast as you can procure and configure a SaaS package.

And if the cloud’s future is hungry, shouldn’t we feed it?

Mike Jones is a 20 year veteran of the IT industry and currently serves as vice president of marketing for OutSystems, a provider of application development and platform-as-a-service solutions.

  1. From what I understand, the cloud has been around for a while. It’s just a marketing term for a bunch of vps (or for large companies a bunch of dedicated servers) put together. Am I wrong? If I’m not, how is the could a “technological innovation?”

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    1. it’s not just a marketing term. it’s all about the ease of provisioning machines. think of the difference between putting in a purchase order for another server versus right click -> launch new instance. it’s outsourced virtualization.

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  2. Shock horror. VP of company selling something I’ve never heard of before (RAD PaaS), suggests this new thing is the future.
    Or in this case that is, so long as Windows/IIS/SQL Server or Oracle is suitable as complete solution. One of the big strength of SaaS is that infrastructure & technologies can change over time without any changes to end user. Seems like this has some plus, but adds a big vendor + technology lock in.

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    1. As I was reading the article I thought, “I wonder what horse this guy has in the race?” Then I get to the punchline. Not only is he not a technician (VP of Marketing), but it’s for a PaaS company. Yeah, totally objective article…

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    2. Filip Vuksanović Tuesday, October 18, 2011

      I read about this:
      “dramatically simplifying the development process and allowing the development team to focus on the business, not the technology, problem. The result …., but also business stakeholders, to build applications incredibly fast, delivering working functionality in hours rather than weeks or months.”

      for last 15 years. Every silver bullet wannabe RAD / Framework has that line in its marketing pamphlet. Still,
      what is really changed in this area since SaaS introduction?

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  3. The term ‘cloud’ is mis-used in many cases, for sure – however in the correct context, cloud does not relate to VPS system individually. Its the combination of multiple virtualised environments that provides a set of computing resources, distinct and independent (not tied to) of physical servers. Renting a VPS is not a server in the cloud per-se – however renting a VPS instance which has seamless mobility/failover on a virtualised platform could be regarded as a server in the cloud. IaaS is an extension of that concept (on-demand provisioning, wholesale rental and utility-model billing)

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    1. computing resources not tied to physical servers? So you can get more computing resources from the cloud than you can from the physical servers that made up the cloud? jk. What kind of “mobility” are you talking about?

      My point is that the resources have always been there. They recently became mainstream because businesses found new ways to make loads of money.

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      1. Geert Bellemans Tuesday, October 18, 2011

        What Tom Halphin is saying (I guess) is that your virtual server is not tied to a physical server so when you run out of resources, there’s no admin that needs to insert extra RAM (or some other resource) in some physical server, it’s just assigned to you dynamically (in a way that’s transparent to the end user). Thus, the other way around: when you’re not intensively using your cloud server (low load) the remaining resources can be assigned to another end user, this reduces the TCO of the physical servers.
        So when using IaaS, your server instance is ‘somewhere’ on ‘some server’, and it can be ‘jumping around’ across servers without the users needing to know about it –> it’s mobile.

        This way you can get a lot more out of your physical servers because much less resources are wasted, it’s true that this is a new lucrative business model but in the end it’s also more cost effective.

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  4. Andrew Karpie Sunday, October 16, 2011

    Some lexical/semantic issues here (as noted already): for one, SaaS has frequently been conceptualized into cloud stack layers (IaaS, PaaS, SaaS, BPaaS). See Hagel and Brown http://andrewkarpie.com/wordpress/?p=408 and Saugatuck Technology http://andrewkarpie.com/wordpress/?p=560. In this context, write is comparing PaaS to older, pre-Cloud generations of SaaS.

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  5. Is there any actual evidence that PaaS is slowing SaaS sales? Last time I checked the major SaaS players were growing very quickly…

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  6. Can you give examples of RAD PaaS implementations? I assume you mean Azure – are there any others?

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    1. Hi Paul, the PaaS market is rapidly evolving and new entries are showing up almost daily. Some of the well known vendors include Force.com, Google’s App Engine, Microsoft’s Azure. Then there are some emerging players like Longjump, Wavemaker, Mendix and of course (under full disclosure – I work for OutSystems) OutSystem’s Agile Platform. Note, in my opinion, RAD PaaS is striving to go beyond what many of the current PaaS vendors offer by providing a model driven approach to application development that insulates the development team from the underlying technology stack, provides all the tools to not only build the application but to deploy it, monitor it, scale it and change it all from a simple to use console that surfaces the needed services. Thus a true set of services tightly integrated into the PaaS offering.

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      1. You have missed Jelastic (http://jelastic.com), Java hosting platform which can run and scale any Java application with no code changes required. Jelastic is available both in the US and Europe, has Tomcat/GlassFish/Jetty, automated vertical scaling and many other advantages. In a few days the new version of this PaaS will be available.

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      2. Hello Mike! Don’t forget about Jelastic (http://jelastic.com), Java hosting platform which can run and scale any Java application with now code changes required. It is available both in US and Europe, has Tomcat/GlassFish/Jetty, automated vertical scaling and many other advantages.

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    2. Jimmi Andersen Monday, October 17, 2011

      AppFlower (http://appflower.com) is an open-source and web-based alternative (both IDE + Engine)

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  7. So you bring up salesforce.com and Google Apps as examples of Saas. Do you really think writing a CRM system or a productivity suite from scratch on a Paas platform is going to be cheaper, or have any other benefits??

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    1. Great question – the answer lies in the business need. I like to refer to Geoffrey Moore’s core / context model. If the application is truly serving a non competitive ‘context’ business process then SaaS is perfect. The issue is that in many cases the business need is not completely met by the SaaS package thus some form of customization is needed to the SaaS offer or the business must adjust its process to fit the package.

      I have seen the mis-alignment of the business need to the SaaS package so great that custom development is the only answer. A recent example was a customer who had a very specific need for supporting customer relationships – sounds like CRM. When the dust settled the SaaS CRM was completely replaced as the needed functionality was so small from the SaaS it only took 5 days of additional development to replace it using the RAD PaaS development solution. This customer turned off their monthly SaaS subscription and had an immediate ROI including both the cost of the RAD PaaS solution and the development expense.

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      1. Mahesh Paolini-Subramanya Wednesday, October 19, 2011

        Still think this is a bit of a strawman. You can call it core/context, or service/platform, but at the end of the day you are still talking about two fairly distinct things that happen to intersect in some areas. Your example could be turned around by quoting somebody else who built their own ‘CRM’ solution using a PaaS, when they could have used SF….

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    2. Microsoft has a CRM and a productivity suite built in…
      Microsoft CRM 2011 is great and cheaper than Sf…

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  8. VP of a RAD/PAAS company writes an article that reads like a sales pitch for RAD/PAAS…move along please, nothing to see here…

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    1. love your name.

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  9. Michael Bordash Sunday, October 16, 2011

    We offer a PaaS in the mobile space. If we were to create a pure SaaS offering we’d be dead in the water and we’d not be able to keep up with the daily trends happening in mobile application development. Our PaaS allows us to view how developers are taking our core IDE and platform to levels we haven’t begun to think about yet. In this way, we also get pretty good idea what our product roadmap should look like… common trends within our development community will be adopted into our core. Great article.

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  10. Sure we now have a platform for developing apps, but it was never the platform that cost money and time, it was the people doing the development. Unless we are talking about putting developers “in the cloud” (it was once called contracting), then nothing much has changed.

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    1. Simon , I think you are absolutely correct – the cost of development has always been a people issue. The opportunity before us is to change the way people build software. Don’t wait for operations to procure the development, test and production servers. Get started while the business has the problem. Don’t wait for the business to submit their full requirements. Get started building something based on the business ultimate goals and vision. Don’t be afraid to change direction if it furthers addressing the ultimate goal. Get a development platform that lets you change fast with minimal risk.

      This new wave of RAD PaaS solutions provide the tooling needed to address these goals. Thus reducing the people issues associated with development.

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      1. The answer to your “start now” approach is more about development methodology and culture than a technical limitation.Good Agile houses will have product out of the door in weeks whatever the technical environment.

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