If you didn’t sit up and take notice when Dell bought privately held Everdream two weeks ago, you’ll be forgiven for overlooking an interesting but, on surface, less than earth-shattering deal that slipped by everyone’s noses in the week before Thanksgiving.
But if you’re tracking software as a service, and in particular Salesforce.com’s attempts at building a third party platform for SaaS applications, you might want to take a closer look at the Dell/Everdream deal. Because hiding in plain site in the Everdream business model is a successful SaaS platform that has become a place to do real business – as in revenue-generating sales – for third party software companies.
We’re not just talking about the SaaS and CRM start-ups that seem to be the norm inside the Saleforce.com SaaS partner ecosystem, or their largely revenue-free efforts thus far: Everdream has attracted the likes of Symantec, MacAfee, Iron Mountain, WebEx, and a little company called Computer Associates, among others. And just to be clear, while Everdream wouldn’t give me any numbers, “our CFO writes a check to these companies every month”, the folks at Everdream told me.
Everdream’s success as a SaaS platform company is based on three major components of its business model, independent of the technological capabilities of its platform. The first is that Everdream’s core market – providing SMB customers with SaaS-based asset and security management for PCs and other mobile IT assets – is perfectly suited for a SaaS (and along with it, a business process outsourcing) play. SMB’s have limited IT resources and lots of PCs, laptops, PDAs and the like that need to be provisioned with legally licensed software, protected from viruses, backed up, and otherwise professionally managed without a large management staff.
Everdream has taken a need that permeates the entire SMB market and basically created a service that didn’t exist before, at SaaS prices and with SaaS’ low-cost implementation and maintenance model. With so many good reasons to do this kind of centralized asset management – legal, regulatory, protection of IP, efficiency, loss prevention, etc. – the Everdream solution became a natural platform for providing additional services beyond the core services that Everdream started with. Everdream became an on-ramp for providing lots of other services to underserved SMBs looking to efficiently manage an often out-of-control IT asset problem.
The second reason Everdream has a successful platform is that it recognizes that there are industry leaders in areas such as virus protection, archiving, and systems management that could use a SaaS-based platform as a channel to reach the SMB market. As such, Everdream’s model is to effectively leave that level of functionality to the partners, as opposed to trying to cover a large portion of it through their own product development efforts. This makes Everdream is a real platform play for these partners, without complicating their efforts by building product that would eventually encroach on these partners’ efforts.
Finally, I believe that Everdream is successful, in a way that Salesforce.com so far is not, because Everdream has eschewed a hype-driven and very expensive partner model, with splashy conferences and high fees, for a more workman-like platform/partnership model that is basically all about finding the best way to get real partner product in front of real customers. It probably helped that Everdream, as a start-up, is actually much smaller than partners such as Symantec and McAfee (and WebEx, which has a business-process outsourcing partnership with Everdream): this forced Everdream to design a platform and business model that was obviously in the partners’ interest, as opposed to the ego-system that Salesforce.com has built, which is so far largely about aggrandizing Salesforce.com, with little left on the table for its partners.
Dell has wisely bought Everdream to help dramatically improve the service it provides to its customers, and as a Dell customer I can assure you I can’t wait until Everdream is made available to individual Dell owners, and not just small businesses. But Dell was even more wise than it may be getting credit for: Everdream has proven the viability of the SaaS platform, and Dell is now the owner of the best SaaS platform in the business. Without hardly trying, and with a whole lot less expense, Dell just leapfrogged the SaaS market leader. SaaS market leadership has always been Salesforce.com’s to lose, this is the best indication to date that its leadership credentials are starting to wear thin.