Oh, and SaaS gets transformed, too

An acquisition today illustrates how SaaS itself is being transformed by the cloud's ability as a platform to deliver other components alongside software, such as content, on-demand labor and professional services.
Written by Phil Wainewright, Contributor

I blogged earlier this week about industries being transformed by the cloud — and I'd like to thank those readers who have already got in touch with examples, I'll be reporting back on those shortly. But a blog post that caught my eye today drove home the message that the cloud industry is not itself immune to the effects of the cloud. SaaS in particular is undergoing a largely unnoticed transformation because using the cloud as a platform makes it possible to deliver other components alongside software, such as content, on-demand labor and professional services.

The blog post that reminded me of this trend was from the blog of London-based VC Max Bleyleben, whose firm Kennet Partners today celebrated the acquisition of its portfolio company FRSGlobal by Wolters Kluwer, a risk management specialist. Bleyleben discusses the trend towards convergence of content and software, exemplified by this transaction, as one of the motivations behind Kennet's investment in FRS:

"The first wave of SaaS companies moved traditional enterprise applications (eg CRM) onto a hosted platform. The next generation combines delivery of software functions with proprietary content — eg domain databases, analytics, benchmarking data. Without unique content, most SaaS businesses will be commoditised away. FRS had worked out how to codify statutory regulations in 40+ countries into useable, actionable templates that banks could use to manage compliance. Most important, however, FRSs domain experts around the world continually maintain this content, effectively providing ongoing 'compliance insurance' to customers."

The observation I think is especially pertinent when you think that Salesforce.com, the archetypal first-wave CRM vendor, this year acquired Jigsaw, thus bringing crowdsourced content (albeit probably in need of some additional curation) right inside its core application.

As I said the other day, "if you don't yet know how your industry is going to be transformed by the cloud, then beware." That warning applies to SaaS and cloud vendors as much as it applies to anyone else.

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