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Cloud Talk

Andre Yee

Cracking the Code on SaaS: What On-Premise Vendors Need to Know

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Brian Sommer has written an insightful and cleverly titled article- Saas-querade: When On-Premise Vendors Try to Pass as SaaS Vendors. It speaks to the mad rush of many on-premise software vendors attempting to avoid irrelevancy by moving to the cloud. But you cannot really blame these on-premise vendors - SaaS is mainstream now and they're desperately trying to catch up.

As Sommer points out, these vendors are often mistaken about what it takes to "go SaaS" and they make grave errors along the way, sometimes to the detriment of unsuspecting customers. He particularly criticizes vendors who downplay the importance of multi-tenancy - thinking of SaaS as merely hosting the application in the cloud. Multi-tenancy may be software architecture but it has business implications. If you cannot update & manage multiple (thousands?) customers through a single multi-tenant framework, you will incur significant costs in terms of deployment, maintenance and even customer support. These are costs that are initially borne by the vendor but will inevitably find its way to the customer in some fashion.

But the difference between on-premise and cloud applications extends well beyond multi-tenancy. When on-premise vendors try to traverse the bridge into the world of SaaS, they fail to realize that there are fundamental shifts in paradigm that must be taken into account. If you're an on-premise vendor or even an in-house IT shop moving to the cloud, here are four basic mindshifts you need to consider -

1. Quality of Software vs Quality of Service Delivery
Software vendors think about designing, coding, testing and shipping. What they don't think about is how to deliver and deploy this because traditionally, that is the realm of IT. However, when you move to the cloud, you immediately become responsible not only for the quality of the software but also the quality of the service

2. Scalability and Performance is Your (the vendor's) Problem.
This is not to imply that traditional software vendors don't care at all about scalability or performance but in truth, they don't bear the responsibility in the same way a SaaS vendor does. If performance suffers, the SaaS vendor is unequivocally on the hook". Trust me - I know. The on-premise vendor always has the option to blame the customer's network or suggest that they need to run it on a "bigger box".

3. Sun Never Sets
As a vendor, if you get to be successful and deploy across the globe, rest assured that the sun never sets on the use of your application.. At Eloqua, just when someone in the Bay area is finally logging off, someone in Australia has already started her day using our application. This has profound implications on how you deploy code and perform maintenance updates. Most on-premise vendors are unaware of these challenges or how to tackle them.

4. Earning Your Customer's Business Everyday
Unlike selling software, selling software as a service means earning the right to your customer's business everyday. In traditional software, when a vendor sells an enterprise license, they tend to disappear until they're back to sell an upgrade or an add-on. In the SaaS world, you are inextricably linked to your customer from the moment of purchase. It makes for a partnership mentality that many vendors talk about but never live up to. In SaaS, if you don't get that paradigm shift, you won't be around for long.

To all the on-premise vendors out there who are trying to go SaaS - welcome to the party but for the sake of your customers, remember to pay your dues and do it right.


Andre Yee blogs about cloud computing, SaaS, Web 2.0 and other emerging technologies that matter to businesses.

Andre Yee

Andre Yee is an entrepreneur and technologist with nearly 20 years of experience in the business of technology.

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