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Cloud Talk

Andre Yee

Is SaaS Dead?

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Neil McAllister, Infoworld does his best Anne Thomas Manes impersonation (SOA is dead, long live services) in an article entitled "Is the SaaS experiment finally over?" In it, he calls into question the ongoing viability of the SaaS model.

McAllister arrives at his position aided by Gartner research indicating that some customers are not deriving the expected ROI value from SaaS, especially over a longer period of time. Bad patterns from the world of enterprise on-premise software such as shelfware is starting to become a problem in the SaaS world as well Additionally, McAllister highlights challenges with uptime and performance, citing service outage incidents by Salesforce and Google.

His counsel to software developers? Reconsider... no, in fact, retreat from the cloud model, at least when it comes to building enterprise applications. After all, why take on the challenge of being responsible for uptime & performance response times when there is so little benefit?

The problem with McAllister's position is that it's rooted in fear and examples of poor execution. The question shouldn't be whether software "as a service" is more difficult and requires more of vendors than the on-premise variety. The right question is whether it's an effective model for delivering better business value.

To this point, I believe the SaaS model is unquestionably effective as long as we remember the following:

1. Bad applications are bad, no matter how you deliver it. It doesn't matter if software is shrink-wrapped/delivered to your doorstep or accessed via a browser... if it's poorly designed or buggy, it's still frustrating to use. The SaaS model isn't an antidote to poorly designed products. In the mad rush to adopt the SaaS model, many vendors have retrofitted long-in-the-tooth on-premise applications for the cloud with diminishing results.

2. Reliability & performance are not optional - choose your vendor wisely. Uptime and performance are like offensive linemen in football (not futbol) - they don't get noticed until a mistake happens. Unfortunately, many buyers of SaaS will fail to properly validate the service record of a vendor, sometimes opting for the lower cost, new entrant who has yet to cut their teeth on enterprise scale and reliability. You get what you pay for.

3. SaaS mitigates but doesn't eliminate problem of shelfware. Is anyone really surprised that some buyers of SaaS don't effectively use the application... whatever the reasons? No, SaaS doesn't cure the shelfware problem but it provides an effective model for mitigating it. Unlike on-premise enterprise software vendors who can't tell if users have even installed the application, SaaS vendors can get insight into how many users are engaging with the application, spot low usage trends and find out which features of the application are most frequently used. This is powerful insight... for the vendor that cares to make their product and customer experience better. Unfortunately, not all do.

In general, the cloud application model still delivers faster time to value, and assuming you have the right vendor, better security, reliability and performance than most IT organizations will deliver. Since the SaaS vendor assumes responsibility for the delivery of the service and not simply the quality and features of the application, t assumes tighter partnership between client and vendor -

So, is the SaaS experiment over? Hardly so.

7 Comments

Could these criticisms be associated with the marketing approach rather than the Technology being marketed? God bless the free software foundation!

This seemingly has little to do with software, and lots to do with rhetoric.

Choose your software provider or vendor carefully, big company does not equal to good service. It's not easy, it's like choosing an employee or business partners. Try out less critical service with new vendor, reward those who serve you well. Don't focus on just pricing alone.

SaaS will be around for a long time!

Asher, Malakai - fair comment. To some extent these criticisms are a natural outcome of the hype ... we're seeing a little disillusionment but that doesn't mean that it isn't a lot better than by enterprise on-premise software that takes months or years to deploy.

Andy's point is right on - if you focus exclusively or primarily on price as a differentiator in SaaS, I think you miss the point. It's time to value, lower upfront cost, variable capacity, scale.


Andre,
I've been following these past few blog posts with interest - especially a bad app is a bad app, etc. I'd like to direct you to Nati Shalom's blog, http://natishalom.typepad.com/. He often explains the more technical details of this discussion.

Andre, I agree the issue is one of poor execution, and not that the SaaS "experiment" was a failure. It is interesting to speculate on why we see many of the examples of poor execution in the market.

I believe that many of the issues result from ISVs not fully embracing the change required to move from the COTS marketplace to the SaaS marketplace. The market will continue to move towards delivering more SaaS solutions. ISV Model: Evolution at Play? explores the question of whether it will be the traditional ISVs or the pure-play SaaS start-ups that will become the SaaS vendors of the future marketplace?

Do you have an opinion?

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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