Dissecting SaaS

I sometimes think I am living in a parallel universe when I get into conversations about Software as a Service (SaaS). People keep talking to me as if there is some kind of seismic shift taking place in the way organisations are acquiring and running software. Then I look around me and down at the results of study after study of buying patterns and investment plans that we carry out here at Freeform Dynamics and all I can see is the continued gradual creep of the price per user per month hosted model that has been taking place in a steady but non-dramatic manner for the best part of a decade now.

When I ask what it is that people are basing their evidence on, they point to solutions such as salesforce.com and Google Office, then at the number of column inches and marketing dollars being spent telling us that SaaS is the future. And yet, beyond salesforce.com finding an opening for a hosted service around a niche application that is largely stand alone and sold into green field environments (at least from a sales force automation perspective), the evidence for the revolution is pretty elusive.

Now before any of you SaaS evangelists write me off as a grumpy old sceptic, I must point out that I am a big SaaS fan, provided you approach it sensibly. Indeed, I have championed SaaS for internal use in both of the companies I have had a hand in building – bet my businesses on it, if you like. It is my firm opinion that there can be little justification for any small business to run email servers and the like in house.

But, I am also a realist, and the evidence I can actually have confidence in tells me that I am unusual in my acceptance of the SaaS model in a business context. For every organisation that says it has SaaS on the agenda, there’s about 7 saying they don’t. And those that are going down the SaaS route are mostly doing so very selectively – they are not looking at a complete shift in philosophy or approach as some would have us believe.

So, SaaS is definitely a trend and this way of delivering solutions will increasingly find its place in the mix, but, in keeping with the title of this blog, let’s keep it grounded and be realistic about the rate of change that is taking place. Just because vendors say it is exploding, doesn’t make it true.

Putting all of the SaaS mania to one side, though, the individual elements of the typical SaaS proposition are actually quite appealing to many. Paying for software on a subscription basis rather than forking out up front for a perpetual licence can help with both cash flow and the optimisation of accounts (subscriptions can be conveniently categorised as an operational cost). Having your applications hosted on someone else’s servers can be beneficial too, especially if this allows you take advantage of robust and scalable platform technology that you would otherwise not have access to. Finally, of course, having someone manage your environment for you means not having to worry about the distraction, cost and risk of maintaining the necessary resources and practices in house – IT is, after all, a non-core activity to most businesses.

The point is, though, that you don’t need to do all of these things at once. If it is the subscription approach that appeals, you can take advantage of this without having another party manage and/or host your applications. If it is getting rid of the hassle and overhead of looking after systems then there are lots of firms willing to provide a managed service, regardless of where your software and hardware resides and who owns them. Such services, just like traditional hosting models, have been around for years and are nothing new.

So, my advice to anyone trying to figure out where SaaS fits into their IT strategy is to look at the components of the proposition individually in the context of a specific requirement. If all three elements, the subscription approach, hosting model and managed services, seem relevant and attractive then SaaS is worth looking at, but if only one or two out of the three appeals, then look for the products, services and/or commercial terms that fit your requirement. The bottom line is you don’t have to drink the Kool Aid and commit your soul to the church of SaaS in order to benefit from any of these things.