When SaaS was ASP, WAN Optimization

As most of you know, Microsoft is going through the pangs of change — some post-Vista angst, if you will — over how the company is moving to a service-based model. Ray Ozzie joining the team was a clear indication of where Gates and Ballmer see the industry headed, even though its going to take years and years.

So as I was sifting through the pile of articles torn out of the various industry magazines that pass over my desk, I noticed an article by Jim Rapoza at eWeek that caused me to reminisce over past companies, and my experience in the world of ‘Software As A Service’ or SaaS.

Back in the good old days of the 1990s, we used to refer to software companies that delivered applications over the Web as ASPs, or application service providers. Back then, there were many concerns about the viability of ASP products.

Business managers worried if browser-based products would be robust enough to provide the rich interfaces that users demanded. IT administrators worried that the applications provided in this way would not be fast or reliable enough. And CIOs and other C-level types worried that either the small start-up ASP companies would go out of business or that the bigger companies experimenting with an ASP model would give up on it-—in either case, leaving customers without a working application.

Aaron Ricadela at InformationWeek offers a great synopsis:

The practice of running software remotely for customers has been around for more than a decade. But a confluence of widespread wireless connections, low-cost servers, and the ability to host many customers’ data on a single set of computers has propelled the concept into big business. A wave of startups tried selling hosted software to companies in the late ’90s, but many of those apps weren’t tuned for the Web, and outsourcing to unknowns carried a stigma. But the dot-com collapse and wider economic downturn put pressure on CIOs to cut IT costs, which made it difficult for vendors to sell software packages with big up-front costs. Finally, PC users are more accustomed these days to working with Web software–after managing everything from their music collections to retirement funds online, it’s not a big leap to continue working that way at the office.

I waded through these same customer concerns over the hosted model when I worked for E2open, and its good to see that, just as we predicted back then, that it would just take time for companies to adjust to the model. Jim’s article goes on to focus more on vendor stability – which is definitely an important topic, but less important, in my opinion, than the issue of managing network latency in hosted apps.

How does a company handle the massive amounts of content and data streaming between multiple worldwide offices and a centralized, hosted platform? Enter the dawn of network acceleration. From InformationWeek:

Gartner predicts the WAN optimization market will explode in the next few years, from $475 million last year to $1.5 billion by 2008. WAN links are getting more crowded and less trustworthy for many reasons: data and server consolidation; rising remote backup demands; use of Web-based apps, VoIP, and videoconferencing; more employees working on the road and from home offices.

WAN optimization is one piece of what’s broadly defined as the application acceleration market–software and devices that speed up the network so that companies don’t have to buy more "brute-force bandwidth." Half of the market is application delivery, focused on techniques in the data center to move data faster and more efficiently. The other half is WAN optimization, focusing on how that data’s moving on the wide area network.

To offer an enterprise solution, companies must offer solutions that answer the latency problem, plain and simple. Companies have tried and died in the space (Warpspeed Networks, for example, looked promising before being swallowed up by Enron), but now a host of companies are stepping up with solutions, including Cisco, Microsoft/Citrix, Packateer, Certeon, Riverbed, and Juniper. It’ll be an interesting space these next few years to see who takes the leadership position.