To be fair, Graf says SAP has conquered the update problem.
“We have pioneered what we call isolated tenancy,” Graf explains. “There is a master copy of the application, which is continuously improved and updated. And we have a mechanism where we can push this new application into existing, running systems so that all the data and all the configurations are preserved and all the user experience is preserved, but we can add new capabilities and we can modify specific processes on the fly.”
Graf maintains, as does Oracle’s Hummel, that large enterprise customers balk at multitenancy. “The feedback from our customers and from our own research suggests that customers prefer the configurability and security of on-demand solutions that leverage a private (single-tenant) infrastructure,” Hummel says. “While multitenancy reduces the resource, cost, and management burden on the supplier … it really adds little value to the customer unless the cost savings for the supplier are passed on to the customer.”
But the scalability that multitenancy imparts is precisely the point, argues John Girard, CEO of Clickability, an SaaS content management provider.
“Hosting their installed apps in a managed server farm does not an SaaS offering make,” Girard says, referring to the recent efforts of conventional software vendors. “We throw a party whenever an installed competitor announces a hosted offering. It validates the SaaS model and spells operational disaster for the competitor.”
Whatever the merits of the architectural dogfight, one thing is clear: Without multitenancy, a SaaS offering can’t cultivate a Web 2.0-like community of developers who add functionality that all can share. Instead, you’d have an old-fashioned add-on market that lacked dynamic, instantaneous distribution.
If any one venture stands squarely at the intersection of wild Web 2.0 mash-ups and more conventional SaaS offerings, it’s Salesforce.com’s AppExchange. “It’s a brilliant model,” IBM’s Clark says. “Benioff has scored as close to a home run as you can with that platform.”
According to AppExchange vice president Lew Tucker, the idea grew out of Marc Benioff’s desire to let Salesforce
.com users share their customizations, which are developed with simple, hosted Web tools against Salesforce.com’s API.
Users were building project management tools and other kinds of applications for things such as recruiting and HR activities, Tucker says. “We figured out a way that we could package up these customizations that our customers were doing. Just having a [Web site] where customers could share applications was something pretty straightforward to do.”
Benioff emphasizes that Salesforce.com has built a platform, not just an application.
“That’s the change. That’s the shift,” Benioff says. “We’ve built the eBay of enterprise applications, a platform for heterogeneous application development and deployment. We were in the enterprise applications ball game; now we’re in the application development and deployment ball game.”
Independent software developers and developers inside departments and divisions or even IT departments of large corporations can not only build and deploy applications, Benioff adds, but also get high levels of reuse.
Rearden Commerce’s platform is evolving along similar lines.