Software as a Service

The future of our world is a combination of software and internet. Since software make services better and services make software better, why not bring the best of both worlds together. This process is described as Software as a Service also known as SaaS. It refers to delivering software over the internet. This means that customers to not need to install any software on their desktop. Instead, through a web browser, they can access it and use it. Instead of paying for owning software which can sometimes be very expensive and use it internally in an organization, customers pay to use it. It is the idea that you ought to be able to use the service you want and let somebody else manage it. The providers are responsible for the software maintenance and upgrades.

SaaS, most of the time, is associated with business software that is thought of as a low-cost way of obtaining the same benefits of commercially licensed and internally operated software, but without the complexities and high initial cost.

CRM, video conferencing, human resources, accounting and email are just a few of the application areas that show the success of software as a service.

The following image shows the simplicity and ease of Using SaaS.

Some advantages of using SaaS are that the service providers reduce the internal operating costs of a company and thus making the overall cost of doing business smaller. Also, the customers can easily enable or disable the features of the software as they wish. The ease of implementation of SaaS is remarkable. Also, SaaS is very affordable for corporations. By using SaaS, application development and implementation times are shorter. The SaaS model also reduces risk in the budget planning process, which is often just as important to decision-makers as total cost of ownership considerations. SaaS users also benefit from constant updates of the software.

But, there are certain disadvantages. First of all, SaaS is considered a potential security and operational risk. In fact, many businesses wish to keep their information technology operations under internal control. But, there is a counter-argument to this. In fact, the professionals operating SaaS applications may have much better security and redundancy tools available to them, and therefore the level of service may be superior in many cases. Second of all SaaS may be troublesome for businesses that need extensive customization because Saas is typically very standardized. However both customization and publication programming interfaces have progressed a lot. In addition, it requires that customers be connected to the internet at all time which can create problems is the internet service goes down.

The following diagram mentions different reason for the adoption of SaaS. Namely, we have greater ROI and cost-effectiveness, improved application reliability and performance, lower staff support requirements, systematic upgrades and updates and finally other reasons.

Porter's Five Forces Model

Threat of New Entrants

As a starting point, the barriers to entry in the market are very low and the market is wide open to new entrants. New entrants can put their product or service on internet and possibly offer free trials and low-cost-per-user models to easily capture new customers. So, the threat of new entrant is pretty big. The only difficult thing is to gain funds and develop the online application. But, once it is done, the barriers to entry become nonexistent. What really increases the threat from new entrants are the ease and low-cost of distribution.

Buyer Power

Right now, the buyer power for software as a service is not very high but as time goes by it will become higher and higher. In fact, since the market is easy to enter, it is sure that companies will offer similar services in the near future. Service providers have to create a competitive advantage for themselves by making it more attractive for customers to buy from them than from their competitors. One of the best ways to do so is through loyalty programs. Loyalty programs consist of rewarding customers based on the amount of business they do with a certain organization. For example, SaaS providers could offer a discount after customers use their service to some extent. This reduces the buyer power and firm want the buyer power to be as low as possible.

Sources:

http://en.wikipedia.org/wiki/Software_as_a_Service

http://msdn2.microsoft.com/en-us/architecture/aa699384.aspx

http://searchcrm.techtarget.com/sDefinition/0,,sid11_gci1170781,00.html

http://www.canadianbusiness.com/technology/trends/article.jsp?content=20070618_85498_85498

Microsoft Surface

Microsoft surface

Microsoft surface fundamentally changes the way we interact with digital content. Microsoft surface consists of a 30-inch tabletop display whose unique features allow one or more people to work independently or together. It turns an ordinary tabletop into a vibrant, interactive surface.

Surface computing actually features four key attributes:

Direct interaction: Users can actually grab the information with their hand and interact with content through their gestures. All of this is done without using a mouse or a keyboard.

Multi-touch contact: unlike a touch screen that can only have point of contact at a time, surface computing recognizes simultaneously many points of contact.

Multi-user experience: several people can gather around surface computers together. This provides a collaborative, face-to-face computing experience.

Object recognition: Users can place physical objects that have identification tags similar to bar codes on the surface to activate different types of digital responses, including the transfer of digital information. This process is done through the use of series of infra red cameras to see what is on the surface. We could for example take a picture. Then put the camera on the surface and the picture would appear on the surface screen. Then, by dragging the photo to a cell phone that is put on the screen, the file would be transferred instantaneously.

Here is a nice video that demonstrates everything: http://video.google.ca/videoplay?docid=-299208220151475401&q=microsoft+surface&total=825&start

The first potential business customers will be restaurants, hotels, retailers, and public entertainment venues. For example, consumers at restaurant could simply choose what they want to eat on a digital menu while strolling down the menu that would be projected on the surface. Once the choice is made, it could simply be dragged to an “order” box and the information would be sent directly to the kitchen. This makes the job a lot easier for waiters and we no longer have to worry about mistakes in our order. Also, fast-food restaurants could use it because customers could easily go to the counter and order via a digital menu. Since the surface recognizes objects, to pay, people could simply put the credit card on the bill that would appear on the surface and the exchange would be done.

Microsoft Surface can be shipped to business partners with a portfolio of basic applications, including photos, music, virtual concierge and games that can be customized to provide customers with unique experiences. It can also be very useful for marketing department of companies because it enable them to arrange pictures and to resize them. This way, they can create an amazing ad collectively since many people can work on it at the same time.

Porter’s five forces model

The Five Forces Model helps business people understand the relative attractiveness of an industry and includes the following 5 forces:

1) Buyer Power

2) Supplier Power

3) Threat of substitutes products or services

4) Threat of new entrants

5) Rivalry among existing competitors

I will inform you about the buyer power and the rivalry among existing competitors

Buyer Power

Right now, I can affirm that the buyer power is low because buyers do not have many choices from whom to buy. This is good for Microsoft who wishes to reduce buyer power as much as possible. There are some touch technologies like the Philips Entertainable, the iPhone, and the reacTable that enable touch technology, but nothing compares to what the Microsoft Surface is able to do. This is a competitive advantage for Microsoft because they make it more attractive for customers to buy from them than from their competition. Also, they are the first in their category and this is good because it places the Microsoft Surface ahead in consumers' minds.

If Microsoft Surface is able to create a good customer base, then it would be easy to offer loyalty programs which could offer free updates.

Rivalry among existing competitors

Right now, it is fair to assume that the rivalry among existing competitors is very low. As it has been said earlier, this is because Microsoft Surface does not have any competitors that compete in the same category. Other companies do have touch technologies but none which can be compared to the surface.

The overall trend is toward increased competition in just about every industry and this is very true for the Microsoft Surface. In fact, we can predict that in the near future many different companies will come up with similar products. This will make the rivalry between competitors very high. This will benefit the customers who will then have more power. Although it will take a lot of research to develop similar products, I can guaranty that other companies will come up with products that are similar or even better.

Sources:
http://en.wikipedia.org/wiki/Microsoft_Surface

http://www.microsoft.com/surface/

http://www.microsoft.com/presspass/presskits/surfacecomputing/default.mspx

http://www.popularmechanics.com/technology/industry/4217348.html