How to package up the SaaS platform
When I agreed to deliver the keynote at Oracle's Industry Summit on SaaS this Friday [disclosure: this is a paid engagement] I obviously had no idea that it would come on the heels of two acquisition announcements of great import for anyone interested in Oracle's role as a SaaS enabler.
The event itself signals Oracle's increasing awareness of its opportunity to become a leading supplier of the building-blocks for Saas infrastructure. There's been a big turnaround in Oracle's public pronouncements on SaaS in the past year, culminating at Oracle OpenWorld with the announcement of its new CRM On Demand products and a restatement of its commitment to the on-demand model. Meanwhile, the company has been drawing together the ingredients of what it now calls the Oracle SaaS Platform, which aims to package up a range of Oracle products into a coherent platform that ISVs can build their SaaS offerings on. As I mentioned when I wrote about Eight reasons SaaS will surge in 2008, the proliferation of SaaS platforms from major vendors will be a big factor in bringing more and more SaaS offerings to market in the coming years, and it's a theme I'll be discussing in my presentation on Friday.
Now there are two further acquisitions in the works that will impact the future shape of those platforms, both from Oracle and its competitors. SOA is of course a vital element in enabling SaaS and the not-entirely unexpected acquisition of BEA further strengthens Oracle's SOA capabilities. BEA recently announced its own SaaS application platform, called Project Genesis. ISVs who use or are considering the Oracle products will be looking at what additional capabilities BEA may bring to the party.
But I feel it's Sun's acquisition of MySQL that is the most interesting of the two acquisitions, because it throws into sharp relief the debate between open source and proprietary code. Among SaaS application vendors, Oracle appears to be the most widely used database, but my impression is that MySQL runs it a close second, and is probably in the lead among startup vendors. Other database platforms with market share include Microsoft SQL Server, the (now) open-source Ingres SQL and IBM's DB2, but all of these are present in much smaller numbers.
Sun's CEO Jonathan Schwarz today highlighted the tension between open source and proprietary. Startups, he wrote, choose open source because they "need and want access to source code to enable optimization and rapid problem resolution." Enterprises prefer the robustness of a proprietary commercial product: "... CIOs disallow the usage of products that aren't backed by commercial support relationships — they're more comfortable relying on vendors like Sun to manage global, mission critical infrastructure."
One way to interpret this tension is to say that pioneers want the flexibility to fine-tune their infrastructure because what they're doing hasn't been done before, so they need the visibility into source code that an open source platform gives them. Enterprises need to err on the side of certainty rather than experimentation, and they need the assurance they get from a commercial vendor that the software has already been primed for issues they care about such as security, accountability and compliance.
Any SaaS vendor that wants to market applications in the enterprise market finds itself on the cusp of this dilemma. On the one hand, it needs the flexibility to optimize and experiment until it arrives at the best configuration of its software infrastructure. On the other hand, it has to assure its customers that its infrastructure is enterprise-class. This applies not only to database products, but also to the full gamut of middleware products as offered by Oracle and BEA, pretty much all of which have open source competitors.
Perhaps the tension goes away as SaaS becomes more mainstream and the early innovation starts being distilled into established best practice. Certainly it's the distillation that gets implemented into packaged turnkey products, at which point predictability and productivity often become more important considerations than pure innovation. But Sun's intervention gives MySQL's open source database an aura of greater enterprise readiness than it previously had, backed up by fully accountable support offered on a traditional commercial basis. Commercial proprietary vendors like Oracle have to respond by being open and responsive enough to give the confidence that they can match the innovative flexibility of open source solutions, while maintaining the highest standards of enterprise readiness.