ECM Cloud Futures – Why IAAS is more important that SAAS

Dave Giordano, President and Founder of TSG, presented last week at the Document Strategy form and is a frequent contributor to their content.  The following is a re-publish of his latest article covering the role of IAAS for ECM versus SAAS. Read the original post here.

Two months ago, I wrote about the future disruptors of ECM and, while the cloud played prominently, in the article focused on IAAS (Infrastructure as a Service), particularly Amazon Web Services and Microsoft Azure, versus the SAAS (Software as a Service) role of ECM.  Afterwards, I received a couple of calls and emails from readers that were convinced SAAS should will play a larger role in the future that IAAS.  For this article, I will go deeper into my reasons IAAS is more of an ECM disruptor than SAAS.

Why does SAAS get so much focus?

Software as a Service presents a great deal of simplicity and value to business users.  The common analogy seems to be comparative with SAAS being for systems what the power grid for electricity.  Users don’t need to know where the computing resources come from, they just have the ability to tap into the power grid and get charged based on the amount of resources they consume.  The big disruptor from a SAAS side was Salesforce.com.  With simply a credit card, a business user could sign up for Salesforce and their team could start using a new CRM (Customer Relationship Management) tool right away with little to no IT involvement.

Following the success of Salesforce, lots of file sharing tools emerged with a SAAS model that clients could begin to use right away to manage and collaborate on files.  Obvious success can be seen from Dropbox, Google Drive and Box.  But are these tools, grouped by Gartner as File Synch and Share, really ECM or just the next generation of collaboration tools?  A couple of months ago I blogged about 9 market reasons Box will never be a serious ECM alternative.  Feel free to read the article with reasons that included:

• Collaboration doesn’t lead to ECM
• ECM Integration Requirements
• Development Partners
• IBM Partnership
• Pricing
• ECM Competitors
• Collaboration Competitors
• Technology Pivot
• IAAS and On-Premise competition

In regards to that last point about IAAS, I felt that any SAAS vendor would have difficulty replacing existing on-premise solutions due to:

1. Certain industries (insurance for one), have requirements, PII concerns or other regulations (documents can’t leave the state for some insurance) that require on premise. I would agree that most companies are moving away from those requirements but on premise solutions will still exist.  As a cloud only solution, Box can never take the market-share (or revenue) from the ECM vendors with clients that continue to support their own data centers.
2. Cloud Alternatives – Box, by maintaining their own infrastructure, cannot offer (and competes with) Amazon, Azure or other cloud based alternatives to on-premise. Clients that have committed to Amazon for other infrastructure will look to extend that infrastructure with ECM that can run in their private Amazon cloud.
3. Multi-Tenancy – While Box is/will be able to offer more private clouds, Box’s DNA is all about leverage from a multi-tenancy approach in both hosting and software.

Serious ECM is sold to both business users and IT.  A SAAS model can end up with business users buying tools with minimal IT involvement.  When it comes to on premise or cloud with integration needs, IT needs to be involved and needs to embrace the solution.

I do think SAAS will have a significant play when it comes to ECM but more as additional tools to be added to the ECM rather than replace it.  Docusign is a great example of a common addon.  We have had great success with Claimwire in our insurance practice.

IAAS – the true cloud disruptor of ECM

Infrastructure as a Service represents a bridge between business and IT where both realize substantial advantages from the cloud without the all or nothing approach of SAAS.  Business users get the reduced pricing and some of the capabilities of the cloud while IT users get the reduction of data centers along with flexible and scalable infrastructure on demand.  In regards to ECM, the hype of SAAS compares well to other technologies that were over hyped to replace ECM have included:

• 2007 – Mobile – with the introduction of the iPhone and later iPad, just about every ECM vendor came out with a Mobile client.  Despite some vendors even giving their solutions away, serious ECM users like their PC’s, fast wired connections and multiple monitors.  Unless there is a compelling reason to access documents while away from my desk, most Mobile ECM applications (besides capture which isn’t necessarily all of ECM) never really took off.
• 2010 – SharePoint – SharePoint was going to replace many of the legacy ECM tools but, in the end, was just another collaboration tool. We still get some requests for migrating from a legacy tool to SharePoint but almost as many to migrate from SharePoint.

IAAS – catching the Rising Tide

To really understand the momentum of IAAS to SAAS, let’s compare the revenues of the leading SAAS ECM providers with that of the leading IAAS providers:

• 2016 – Revenues for Box – $303 million with net loss of $134.3 million
• 2016 – Revenues for DropBox – $750 million (estimate – private company)
• 2016 – Revenues for Amazon Web Services – 12.6 billion with 3 billion in profit

ECM vendors that can catch the wave of IAAS (rather than try to compete against it) are positioned well to succeed.