Fear and enterprise in the PaaS channel

Traditional solution providers are understandably nervous about the potential impact on their business of software-as-a-service (SaaS) and its close relative platform-as-a-service (PaaS). For some — especially those who now face competition from Microsoft's own hosted Exchange and Sharepoint offerings — these developments seem like threats to their very existence. But most prefer to see them as opportunities, and are actively exploring how they can embrace SaaS before others do.

One such example is Synergration, a seven-year-old company based in the Philadelphia area, which specializes in developing and marketing applications that integrate with Intuit QuickBooks accounting software. An early member of Intuit's developer network, the company has a sizeable installed base among QuickBooks users but recently decided the time was ripe to introduce a hosted offering that would integrate with QuickBooks data. As luck would have it, Intuit shortly afterwards introduced the QuickBase Developer Program, which provides development tools and an application infrastructure based on Intuit's hosted database platform. It also includes integration to QuickBooks data stored on local client machines.

This platform-as-a-service offering allows Synergration to bring a SaaS offering to market without having to build and maintain its own hosted infrastructure, said Synergration's president, Tom Crawford, when we spoke about the project last month. "It gives an easy way to get into SaaS so that we get this recurring revenue stream," he told me.

As a result, Synergration is now gearing up for a wholesale shift from its historical licensed software business to a SaaS model:

"I see it being a mainline focus not only for our development but also a big chunk of our revenue stream," said Crawford. "Up until six months ago, all our development and sales efforts focused on our desktop product set. We see this as a transition stage for our company to move towards a SaaS organization."

Synergration's new contact management and prospecting application is designed to appeal to QuickBooks users who want to add these capabilities to work alongside the financials package. Delivering this as a SaaS package may ruffle a few feathers with customers uncomfortable about transmitting data into the cloud, said Crawford, but on the flipside it is much easier to support remote workers using SaaS than with an on-premise package.

"The stereotypical QuickBooks user is not very tech-savvy," said Crawford. "They know how to run QuickBooks, browse the Web and send emails. We know there is a real hole in the market for CRM and prospecting tools that really integrate with QuickBooks. We really see that as an opportunity, and it happened to coincide with the release of the new platform from Intuit."

A low monthly recurring subscription is also very attractive for these customers when compared to an upfront spend of several thousand dollars on licenses to roll out a package like ACT! to every member of a sales team. Synergration sees several advantages from the vendor point of view too. It expects support costs to be lower because there's no local installation of software. It is looking forward to watching the revenue come in month after month instead of facing the recurring pressure of having to market and sell version upgrades every few years.

Most of all, though, its marketing costs will remain low because Intuit itself will be promoting partners' QuickBase-built offerings to its massive user base — with integration to the QuickBooks data being a unique selling point for vendors that take advantage of it.

"That's what differentiates this from other PaaS offerings," Crawford told me. "QuickBooks has several million users and they're making that data available in the platform. You have a [huge] prospect base."