Symantec enters SaaS market with an eye on SMBs

Symantec's forthcoming Symantec Protection Network will offer SaaS products to small and medium-sized businesses.

Software security vendor Symantec Corp. recently announced its foray into the Software as a Service (SaaS) market, the latest in a long line of vendors to enter the rapidly growing market.

SaaS lets companies subscribe to software through a Web portal rather than buy it through traditional means. Such an approach can save thousands of dollars on licensing fees, thus, the basis of its appeal to small and medium-sized businesses (SMBs) and the vendors who want their business.

The initial thrust of this is the SMB market space.
John Webster
principal IT advisorIlluminata Inc.
The Cupertino, Calif.-based vendor will launch the Symantec Protection Network (SPN) this summer as a portal for a suite of software products. The first will be Online Backup Service. Other products are expected to arrive later and will include security and archiving solutions.

Chris Schin, the SPN director of product management, said Symantec will add three or four applications to SPN annually. The beta of the second application will likely be announced this summer, he said.

With Online Backup Service, SMBs will be able to back up the data on individual desktops via an Internet connection. A software agent will send data designated for backup to multiple, redundant Symantec data centers.

Schin said this product is aimed directly at SMBs. His company hopes to reach "greenfield" customers, those who have no real backup or disaster recovery plans.

"SMBs don't have the resources to deal with this problem," Schin said. "They tend to have minimal disaster recovery solutions, if not none at all."

"I think it could appeal to larger organizations with remote branch offices as well, but the initial thrust of this is the SMB market space," said John Webster, principal IT advisor at Illuminata Inc. in Nashua, N.H.

Although customers can sign up for the service directly from Symantec, the company will push SPN through its channel partners, allowing them to re-brand Symantec's portal as their own and to sell additional services around the product.

Jeff Kaplan, managing director of consultancy THINKstrategies Inc. in Wellesley, Mass., said Symantec's announcement indicated demand for SaaS products is growing.

"Not only are they doing it to gain greater recognition in the industry, but they also recognize that the world is moving more toward a Software as a Service orientation," Kaplan said.

Kaplan said most major IT vendors have been slow to truly commit to the SaaS delivery model.

"A year ago, SAP said it would provide a meaningful CRM on-demand solution and Oracle made some pronouncements this week about on-demand capabilities," Kaplan said. "But the question is how many of them can cross the chasm?"

The SaaS market is filled with startups because major vendors have found entry into the market challenging. Kaplan said the first challenge is converting packaged applications that traditionally reside in on-premise environments into fully robust applications that leverage the Web. He said this involves re-architecting the software.

"The second is the financial challenge," Kaplan said. He said many vendors are troubled by switching from an approach where customers pay large up-front license fees to one where customer subscribe to a product and pay as they go. This means less cash up front, he said.

Kaplan said major vendors also face a cultural challenge with SaaS.

More on SaaS offerings
Offline SaaS applications on the rise

Vendors to crank up SaaS offerings to SMBs next year
"Traditional application salespeople are used to selling million-dollar deals and living off that big commission," Kaplan said. "SaaS is a high-transaction but low-price point business."

"I think it's a validation of the SaaS business model and the managed services business," said Geoff Sinn, director of managed services at Strategic Technologies Inc., a Symantec partner in Cary, N.C. "And it's a validation that the midmarket has traditionally been a little bit underserved. Now companies are putting together solutions for the midmarket."

Webster said Symantec sees a chance to score additional recurring revenue from customers it doesn't currently reach with its on-premise products.

"I think Symantec is taking an approach that's going to work for them," Webster said. "I think they've been -- and this is my personal impression -- they've been watching this market develop, and for whatever reason they believe now is the right time."

Let us know what you think about the story; email: Shamus McGillicuddy, News Writer

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