Hurray!!! The fully rejuvenated XML services marketplace soatrader.com is available! Anyway, what is different compared to its predecessor and why should you care of this?

When soatrader.com went public in May 2007 our aim at SOA Trader, Ltd. was to deliver to service providers a web-based XML services marketplace for selling licenses to their services and help service requesters in purchasing such licenses online by serving as a license sales and service delivery broker. The latter was supposed to enable on-demand delivery of services as promoted with technologies and business models such as ASP (Application Service Provision), SaaS (Software as a Service) and SOA (Service-Oriented Architecture). In fact, SOA Trader, Ltd. did not serve as a mere reseller of service licenses, but also provided an XML services mediation infrastructure, which hid direct connection to service providers’ XML services and facilitated additional security layer to service providers’ servers while allowing provision of adequate third-party QoS metrics to the service requesters.

Anyway, something went wrong on the way towards establishing ourselves at this market – neither did service providers storm to our site nor did it attract heavy crowds of service requesters. In this article we try to look back and analyze what were the main causes of this failure and what is now different. We would like to think that the previous failure was not related to the overall disappointment in SOA and was purely driven by our immature business experience in entering the emerging XML services (also called Web services) market, which is a part of SaaS market.

Gartner’s „User Survey Analysis: SaaS, Enterprise Application Markets, Worldwide, 2008“ from November 2008 identifies that nearly 90% of organizations expect to maintain or grow their SaaS usage, with more than one third transitioning from on-premises to SaaS. Moreover, the report estimates that one third of all new software will be delivered on-demand by 2010. Moreover, Phil Wainewright in his „SaaS is surging in the downturn, says IDC“  article emphasizes that „At a time when most industries and economies around the world are slashing their growth forecasts into single digits or even negative territory, IDC now expects SaaS growth to surge by more than 40 percent in the current year. That’s a significant move up from its previous forecast of 36% growth, published back in July when most economists were still trying to deny the onset of recession.“ This means that there was and still is potential for new technologies simplifying adoption of SaaS and supporting creation of new SaaS applications.

Customer benefits of SaaS are the following:

• reduced total cost of ownership (TCO),
• minimum up-front expenditure,
• minimized time to value,
• access to the latest technology,
• scalability and high availability,
• access to provider’s know-how.

Adoption of SaaS has been so far driven mainly by the following deficiencies in acquiring software by the traditional perpetual license purchase method:

• large up-front costs are not feasible in difficult economic conditions,
• implementation costs and timeframes are difficult to predict,
• implementation failure rates are over 50%.

Therefore many customers (service requesters) are attracted to the SaaS delivery model because it minimizes initial implementation costs, risks and timeframes. At the same time SaaS is attractive to vendors (service providers) because challenging economic conditions increase demand for more predictable software costs and recurring annuities provide a stable revenue stream. More specifically, Smartfundit.com survey of 128 UK-based ISVs identified that the main benefits of subscription licensing as percieved by ISVs are:

• reccurring guaranteed revenue,
• stronger relationship between buyers and sellers due to ongoing purchases,
• better customer retention, followed by
• increased sales.

Meanwhile I have been in contact with service providers in governments, academia and industry. As a result I have learned that while governmental agencies and academic institutions are looking for environments to systematically publish reliable and usable informations on their services, industry is looking for ways to organically increase and stabilize their sales and reduce costs associated with support, marketing and sales. My personal interviews with industrial partners have revealed that especially larger corporations, see brokers as an attribute to delegate responsibility of ensuring high quality of their value-added services services. Furthermore, some companies stated that they need brokers to hide their direct connections with unreliable service requesters. Larger companies also see brokers as a tool to optimize sales to smaller clients, which do not leverage as high sales as expected and make their personal involvement in the sales and support process too costly. Thus there is a definite value which XML services brokers can leverage to service providers.

To summarise, the major mistakes were the following:

• service requesters were looking for complete solutions and were not interested in individual XML services, while we provided the latter,
• service providers were looking for developers who would incorporate providers’ XML services into new innovative products, while we were hoping that developers would discover and use the published services auto-magically,
• developer involvement as a binding activity was completely missing,
• ignorance in adopting modern e-marketing technologies and expecting that technology and idea would sell themselves alone.

As a result we decided to rejuvenate soatrader.com marketplace with special focus on fostering software developer involvement and engaging modern e-marketing techniques. In the current global economic meltdown service providers need additional channels, such as strong developer networks, to deliver additional value to their customers. Developers at the same time have finally an opportunity to share their ideas, form collaboration teams, use their creativity to create novel SaaS applications, and finally start earning their fair share of license sales of services used in their SaaS applications. Service requesters in turn would have the opportunity to choose between a variety of alternative SaaS solutions, which combine providers’ services to leverage the value what service requesters need. Moreover, since the same XML service is used in different SaaS implementations, once the service provider has purchased a license to a core service, it can use any SaaS implementations where particular service is in use.