The Open Innovation Group is chartered to source partnerships and strategic investments with enterprise startups for Samsung SDS. Our approach to partnerships has very much been driven by internal needs. We tease out pain points and roadmaps from our business units. Then we play matchmaker. We survey the landscape, form and convey our opinion of potential partners, and conduct bakeoffs of different vendor solutions.
Strategic investments on the other hand require a longer-term outlook. We look at a specific area for strategic fit, and cross-reference it against the attractiveness of the segment as an investment. We develop an investment thesis.
Why Enterprise SaaS as an area of interest?
As the IT solutions and services arm of Samsung, one of the main pillars of our business model has been to provide system integration and datacenter infrastructure for enterprise software. But as the enterprise shifts from on-premise applications to SaaS apps, the role of SDS has to change.
SaaS apps usually require little help from a traditional System Integrator (SI). They’re either self-service, or support is provided directly by the vendor. They’re designed to have fast time-to-value with the army of “customer success” managers provided by the SaaS vendor to onboard enterprise users. They’re engineered to have pre-built API integrations with other SaaS apps. They run on a public cloud and not a data center. They’re created to sell directly and not through a channel.
The channel sales and service opportunity for SaaS is not as strong as a traditional on-premise solution.
Service Integration is the New System Integration
But it’s not all bad news for system integrators. Complex mission-critical apps like CRM’s and ERP’s do require a lot of integration, training, and support. And channel sales is very much a large part of the strategy for established SaaS vendors like Salesforce, Workday, and Coupa.
Most SaaS startups begin with SMB’s, then move mid-market, and eventually position themselves for enterprise. As they move upstream, they begin to create channel programs to find VAR’s and SI’s to help with service integration into existing systems and processes. We want to catch the SaaS startup as they’re on this inflection point.
The explosion of SaaS apps penetrating the enterprise causes a new challenge for the CIO. Orchestrating the administration of all these SaaS services becomes the new system integration.
Evolution of SaaS
The first SaaS companies aimed to simply replace on-prem software and become the system of record for things like CRM’s and ERP’s. 10 years later, a 2nd generation of SaaS companies emerged to digitize other workflows like customer support and file-sharing. Within this era, vertical SaaS companies found success in digitizing workflows in specific industries like life sciences and insurance.
We’re now entering a 3rd generation of SaaS where intelligent analytics get packaged with digitized workflows. The eventual outcome of this era is software that augments and then replaces rote human roles. One example is iCertis. They digitized the contract lifecycle management process. And now they’re using AI to write contracts and enforce terms.
As enterprise SaaS evolves to become workflow + analytics, more service integration work is required to enable this sort of intelligence. And as dozens of heterogeneous SaaS apps replace legacy homogenous one-stop-shop vendors, tying them together becomes the new system integration problem and opportunity.
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Sr. Manager, Open Innovation Team at Samsung SDS Research in America