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In it to win it: Should AWS consider building out its SaaS play?

Amazon Web Services is the undisputed leader of the public cloud market, but could its relatively small software-as-a-service portfolio be its undoing in years to come?

As the provider with the biggest market share in the infrastructure-as-a-service (IaaS) sector, it is inevitable that Amazon Web Services (AWS) will cop some flak from various competitors claiming their platforms are a better choice for CIOs.

One of those digs, from the likes of Oracle, Microsoft and Google, could be that AWS does not have its own slate of software-as-a-service (SaaS) offerings, whereas the three companies just mentioned do.

The inference being that not having a SaaS play means AWS does not have a fully integrated cloud stack that would, in the minds of its competitors at least, be easier to use as well as more effective.  

Oracle’s senior vice-president for cloud, Steve Daheb, believes, in the long term, the database giant has the edge over AWS because it provides the SaaS layer that Amazon has shied away from offering.

“It doesn’t have applications to speak of, and applications drive a lot of the rest of decision-making,” he tells Computer Weekly.

Meanwhile, Andrew Moore, vice-president and head of Google Cloud AI, sees the SaaS layer as one Google’s strong points.

“We are a consumer company that’s built many consumer-level, high-performance systems, so rather than just providing that low-level infrastructure, we are able to help with things involving computer vision, speech understanding, super-advanced networking and very highly optimised database queries, for instance,” says Moore.

“What we and the rest of the industry have learnt is that rather than just providing APIs [application programming interfaces] to these systems for innovative solutions for companies to adopt, we’re able to give more use to customers by putting it all together ourselves and then integrating that into customers’ businesses processes,” he adds.

Weighing up the differences

AWS has repeatedly dodged questions about whether it would step up its SaaS game, but do users really care about a company having its own SaaS, IaaS and platform-as-a-service (PaaS) offerings, or is it more a case of suppliers squabbling about nothing?

John Lewis Partnership’s chief technology officer (CTO), Andrew MacInnes, says having a presence and offerings in all three layers of the cloud helps, and suggests this played a part in the retailer’s decision to use the Google Cloud Platform (GCP).

“It absolutely helps. We’re not exclusive to Google, so we’ll move where we move, but what matters is the value in the proposition above all,” he says.

MacInnes says a large part of cloud computing can be considered a commodity now, with managed databases, managed SQL databases, queuing systems, message passing and so on. So there is little point in taking a best-of-breed approach if the differences are minute.

“You can argue that you prefer one to the other, but for us the value is stronger in our relationship and in the help and assistance we get, rather than arguing that one might be two milliseconds faster than the other,” he says.

“For us, the value is in our relationship and the help and assistance we get, rather than arguing that one might be two milliseconds faster than the other”
Andrew MacInnes, John Lewis Partnership

In other words, having SaaS, PaaS and IaaS with one cloud provider makes more sense because it means the company can rely on one partner for support.

For others, however, the thought process is quite different.

“I guess I don’t look at it that way [that AWS has less of a presence in SaaS]. I look at the fact that we’re using tools that work for us, meaning we have less people worrying about provisioning hardware, supporting hardware and innovating,” says Just Eat’s director of data platforms, Matthew Cresswell.

“I think from a neutral point of view, I know AWS has some SaaS offerings and I know it has a lot of different products that overlap as well, so I think there’s some element of customer fatigue, whereas with Google, perhaps, because it’s a bit younger in this space, in terms of the tools, it seems a lot cleaner and packaged up in such a way that we want to use it,” he adds.

Furthermore, Google’s Moore suggests customers have switched from being sole AWS customers to using Google Cloud because of its SaaS layer.

“There have been hundreds of customers who have said, ‘We thought we would only use another cloud infrastructure, but what you’re able to do with BigQuery and AI has intrigued us’, and they will then start to build systems on GCP to access that level of performance,” he says.

The AWS SaaS play

AWS does have some SaaS applications of its own. Amazon Kendra, the company’s enterprise search offering, is an interesting addition to this small portfolio, particularly as it doesn’t have a wide range of its own SaaS applications for its machine learning algorithm to improve its search capabilities.

But aside from that, the company has steered away from SaaS, instead opting to enable partners to build SaaS on top of AWS infrastructure, and integrating key partner SaaS offerings with its IaaS. For many customers, this is all they need.

“Arguably, a lot of what AWS does is similar to SaaS-based products – it’s taking Postgres and scaling that out and innovating on top and contributing, for example. I don’t think Amazon necessarily needs to provide these products,” says Suhail Patel, senior software engineer at Monzo Bank.

Indeed, this is the view from AWS too. 

“If our customers are telling us that they want us to purely come into [SaaS] and not just rely on a set of really great partners, but they want us to deliver those services, you’re going to see us innovate and do so,” says Darren Mowry, managing director of business development for AWS in Europe, the Middle East and Africa (EMEA).

But nevertheless, it has been a surprise that the company did not announce more when it came to SaaS at Re:Invent, its showcase event in Las Vegas this year.

“In some ways it is surprising that AWS’s business applications portfolio has been very low key at the past two events. Granted Re:Invent is primarily an IT developer and educational event, so the buyers of applications and, in particular, the business audiences who use them, are not the focus, but I think the market is starting to look at this area in AWS’s strategy to see whether it will play more strongly here in the future,” says Nicholas McQuire, vice-president of enterprise research at CCS Insight.

Mowry adds that with the introduction of Amazon Chime and Workspaces, the company is beginning to touch on services that are closer to SaaS.

“In time, you’ll see our capabilities across the stack continue to grow, but I don’t think I can say we have a specific strategy to enter a specific type of SaaS market,” he says.

“Right now, the strategy is doing some interesting things that are close to SaaS, but enabling partners to build great technology, and that will continue to be a part of the strategy, but I can’t say that there’s never a possibility that we wouldn’t get into [SaaS] full-scale,” he adds.

McQuire says Workspaces, Alexa for Business, Amazon Connect and Chime are foundations for SaaS, but these products “feel like second-class citizens to the IaaS business, as AWS has been investing more heavily in areas lower down the cloud stack”.

What customers want

Although AWS’s Mowry alludes to the company reacting to what customers are after, perhaps the reason AWS has lost out on certain clients is because Microsoft and Google have already had a presence in the enterprise through Office 365 or G Suite.

“Microsoft and Google have been winning big cloud deals with customers that nominate them as their preferred cloud partners – AT&T and Microsoft, Airbus and Google Cloud. These customers are focusing on both IT transformation and workplace transformation, so their SaaS applications have been critical alongside cloud infrastructure to winning those deals,” says McQuire.

McQuire adds that while AWS focused on business transformation throughout Re:Invent in December 2019, many companies think of this in its entirety, particularly the C-suite.

“This means they don’t just focus on their developers, they focus on all their employees and the tools they need to drive competitive advantage as well,” he says.

So could AWS not stand to have another entry point into enterprises like this?

Mowry isn’t sure that this type of strategy always works.

“Companies like Microsoft do tend to come in through Office 365 and attach Azure to an enterprise agreement. We’re seeing that this may work sometimes, but we’re also hearing from a lot of customers that it’s not the behaviour they want,” he says.

AWS is not struggling to attract large enterprises, and many of its existing customers see it as a main partner, including BP, F1, Monzo Bank and Vodafone

“I don’t think we’d do it to mirror what Google and Microsoft are doing to just give us an entry point. I think we’ll only do it if the customer says it’s a capability they really need because I’m sensing a bit of a backlash if we’re going to attach these things together. It could be an additional unintended consequence of us doing that, but I don’t think that would be the leading reason for us to do that,” he adds.

It must be noted that AWS is not struggling to attract large enterprises, and many of its existing customers see it as a main partner, including BP, F1, Monzo Bank and Vodafone.

However, in the long run, AWS may need a much deeper strategy to fill certain gaps it has in comparison to Microsoft and Google, particularly as an increasing number of cloud deals are incorporating the integration of SaaS.

“Doing so will enable AWS to support more business processes on its platform, as well as create opportunities to disrupt this area. Of course, AWS will have to tread carefully as many SaaS providers run on AWS and its partner ecosystem and marketplace are essential to its cloud offerings,” says McQuire.

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