Confessions of a Former SaaS Fundamentalist

Spend Matters welcomes back a former regular columnist, Paul Noel of Ivalua. This is a former fundamentalist's tale of way back when Ariba Buyer was transforming into a SaaS solution...

Crusaders, fanatics, jihadists, zealots... they all espouse a mission that justifies their methods based on some higher moral authority. Though now I'm quite moderate in nearly all I do, there was a time in my life when I was a fundamentalist.

About eight years ago, the executive team at Ariba decided to switch their product lines to Software-as-a-Service (SaaS). As the only product manager there with experience in SaaS, they asked me to lead the charge in transforming their core product, Buyer, into a SaaS solution.

In those early days of SaaS solutions, the only scalable architecture was "multi-tenant,” essentially one instance of the software running for all clients. As long as client data was well partitioned within the software, multi-tenant allows the provider to maintain and enhance the solution for everyone at a lower cost per client. As consumers, we use these all the time when we access eBay or Amazon or almost any other software over the Web. Businesses were slower to adopt this but eventually have accepted the use of these cloud solutions for certain business processes. Why they did is another story, however.

The big change I was part of involved persuading not only clients to accept SaaS, but also the various organizations within Ariba to provide SaaS. Finance and the executives saw the poster child for SaaS up the road at and wanted an equivalent PE ratio.

But SFDC started as SaaS; Ariba didn't. So, the entire organization needed to change. Engineering had to adapt and, in some cases, re-write the code. Marketing had to change all their messaging. Legal needed new language to cover subscriptions. Sales needed to re-do their commission structure to accommodate smaller deals but more of them. And, finally, Implementation Consulting had to drastically transform from customization consultants to business analysts, trainers, and change management consultants.

In order to rally everyone to the cause, certain fundamentalist principles needed to be established. Stop selling licenses. Stop offering the non-SaaS solution. All clients must upgrade when we say. No more customizations. Procure-to-Pay goes all the way to Invoice and cannot just be Requisition to PO....

Adherence to these tenets drove both success for us and pain for those who didn't like the new constraints. Is this analogous to the early expansionary periods of empires and religions led by fanatics, both leaving in their wake casualties on both sides because some groups couldn't get out of the way?

Looking back, I certainly would have liked to avoid the pain, but I really can't see how else we could have been successful. Giving in on any one of those principles would have carved out a place for dissent that very probably would have crippled the transformation.

These fires burn bright but not long. With the passage of time, a more moderate approach becomes possible. In SaaS it is now technically possible to preserve the scalability without being multi-tenant. Configurability within the software (on a "Platform-as-a-Service" model) is the key to this and also allows for 90% or more of what used to drive "customizations." This in turn allows for flexibility in the timing of upgrades and in who hosts the software. And it even makes it possible for phased approaches like Requisition to PO.

Given what we have today, it’s easy to look back with a certain amount of guilt at how we got here. But would we have even arrived at this place if it wasn't for our initial zeal and take-no-prisoners approach? Hard to know for sure.

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First Voice

  1. Michael Schmitt:

    Ariba faced competive pressure from ERP eProcurement on premise solutions, and CIO’s wanted a single vendor to support. The Ariba Executive team saw that offering a SaaS solution could ease friction in the sales cycle while delivering spend management value to the customer. SaaS was the future for Best-of-Breed solutions. Paul is spot on that the change effected every aspect of the company’s operations, and took longer than anticiapted, but at the end of the day was a critical and strategic move to ensure future growth, and deliver customer value. Hence the trend of ERP providers moving to acquire Cloud based Best of Breed solutions, like Ariba, that deliver businesss results for enterprises, both large and small..

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