January 30, 2006 -- (WEB HOST INDUSTRY REVIEW) -- The application service provider model, now commonly referred to as "software as a service," has a made a comeback in recent years, presenting Web hosts with an opportunity to expand their revenues and attract new business.
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K.B. Chandrasekhar, chief executive officer of software firm and partner to Web hosts Jamcracker (jamcracker.com), says hosting customers have been looking more to their Web hosting companies as an IT partner rather than their internal IT departments, making SaaS an attractive means of operating internal applications. Web hosting has evolved to the point where SaaS is the logical next step, he says. As Web hosts continue to expand the scope of value-added services on top of their raw power, ping and pipe offerings, they have in effect become ASPs or SaaS vendors.
"I think the SaaS model is a perfect match for the hosting company at the end of the day," says Chandrasekhar.
The key benefit of SaaS is how it enables hosts to drive revenue and maximize customer retention. Jamcracker's Brent Arslaner, vice president of marketing and business development, explains that when a host can offer a customer multiple services, the chance of that client leaving drops anywhere from 80 to 90 percent.
Some of the more popular software services being offered by hosts include SugarCRM, an open source customer relationship management solution, and trouble ticketing, email and communication and collaboration solutions, says Chandrasekhar. And there has also been a move to more "verticalized" solutions, Arslaner says, with service providers looking to cater their SaaS offerings to the government, health care and education sectors.
Web hosts, however, have not flocked to SaaS in large numbers for a variety of reasons. For example, integrating a different set of new services into a host's automation, billing and provisioning platform can be an extremely complex task and just deciding on what software to sell is itself a challenge. Arslaner also says many hosts don't have the right personnel in place. When it comes to more complex applications like customer relationship management and enterprise resource planning, hosts must have a sales staff that is comfortable selling those products to customers.
Jamcracker was formed to help solve these problems. Its Pivot Path product enables hosts to bundle multiple services into an integrated platform, automating everything from back-end administration through to billing, support, access and provisioning and delivering those services on an on-demand basis.
The automation of all these processes enables hosts to streamline their costs significantly. If undertaken manually in the data center, the processes simply cannot be conducted profitably, says Arslaner.
Jamcracker also offers hosts and software vendors a suite of tools, support and a catalogue of software through the Jamcracker Service Delivery Network. Launched last November, the JSDN is designed to help service providers' transition to the SaaS delivery model.
The JSDN and Pivot Path gives hosts everything they need to make the move into SaaS.
"So if you are a hosting company," says Arslaner, "we can help you pick services, put those services into our catalogue, bundle those services for your market, and then get the customers into our system. We can take the technological hurdles out of the mix, so that it's a matter of how they want to go to market. You can just pick off this menu and decide what services you want to sell and go with it."
Getting in now is crucial, says Chandrasekhar. He believes Web hosts that don't move into SaaS will soon be passed by a new generation of hosts that have made full use of the opportunity to offer a segment of value-added services that are growing in demand.
"This is a golden opportunity for hosters who are constantly under the margin pressure, to raise their head above, and become value-added hosters instead of just ping and pipe hosters," says Chandrasekhar.
