Podcast - Common SaaS Misconceptions - SaaS Week

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June 04, 2008
Podcast - Common SaaS Misconceptions

Everyone says different things about SaaS, with disagreements going down to the basic definition of what qualifies software as a service. I recently spoke with Christopher Cabrera, the CEO of Xactly, about common SaaS misconceptions. Listen to the podcast below, or read the transcript.

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KD: Hi! I'm Krissi Danielsson. Take one look at the technology press and it's pretty clear that many companies still have a lot of confusion about SaaS. Here today to talk to us about common SaaS misconceptions is Chris Cabrera, the CEO of Xactly. Let's start by talking about what those common misconceptions actually are. Chris, what do you think are the major reasons why some enterprises are wary of SaaS, and which of those do you think are valid?

CC: First of all, I would tell you that I think the number of enterprises that are wary of SAS is diminishing rapidly as the number of proof points of successful SAS deployments within the enterprise rise. That said, of course, there are concerns and they generally fall into the areas of, you know, security, integration and even some legacy and so I’m going to just touch on those briefly.

First of all, on the security point, this was certainly the largest concern in the early days of SAS and today, most of the big enterprise companies are coming to terms with the fact that this is a little more of a red herring so this would be one of those areas that I think is more of a misconception. In many cases, some of the CIOs that we work with have indicated to us that where we house their data is even more secure than where they had it previously because in many cases even though they might have a very big data center with security, the actual data that’s being pulled of there is on individual employee’s laptops and floating around all over the place. So, this is one of those areas where, you know, I think the smart CIOs are realizing that with all the good technologies out there and, you know, certainly, we use Oracle at the database level that helps insure a lot of the security that, you know, let’s face it, when was the last time you logged in to your online bank account and saw your neighbor’s balance? And so, CIOs are realizing this and I think that’s one of those areas that’s a little bit more of a red herring.

The second area that I mentioned is integration and a lot of the large enterprises have this belief that they are doing something that is never been done before or couldn’t be accomplished in the SAS world and this is another area which I would put in the category of a misconception because the reality is that part of the power of SAS and specifically multi-tenancy within SAS allows SAS providers to work in conjunction with each other and provide best of class solutions so, you know, in our case, in one example, we have a 4-way mashup you may have heard Mark Binian talk about mashups. This is simply the ability for four different companies and in our case exactly Sales Force.com and Amazon and PayPal to work together so that the user gets this great experience of the four different, the best of the four different companies without ever having to sign on to different areas.

The final point I’d make on this question is the legacy and what I mean by that is, you know, a lot of companies, certainly big enterprises watched how, you know, the advent of hosted on-premise apps and companies like Koreo (???) and this was kind of a failed strategy because it wasn’t a true SAS from the ground up, you know, multi-tenant app and so there’s some worriness around that and, here again, I think that that’s more of a red herring because good SAS companies aren’t hosting on-premise apps they’re building from the ground up true multi-tenant apps.

KD: OK so when companies have these kinds of concerns what can SAS providers do to make enterprises feel more at ease about choosing a SAS solution?

CC: That’s a great question. There’s a lot of things that SAS providers can do and certainly providing, you know, information on up-time and performance metrics is important usage data so that customers can understand, you know, how often it is up and how well it works. There’s way to diminish a lot of the security concerns with standards, there’s, you know, all kinds of different compliance standards, things like SAS 70 Type 2 security on the data, there’s ways for, a lot of times we’ll let our customers come and tour the data center or we’ll let them talk with our engineers and understand, you know, what it is that we’re doing at the security level, the datamart level to, you know, make sure that their data is safe. Certainly, providing references, talking to companies that are of like size and complexity and have been doing the same types of things and making sure that what kind of experiences they’ve had. I think also, one of the things, I keep talking about multi-tenancy, which really just means a one-to-many kind of approach, many people will so, “Oh, the customer shouldn’t care” well they really should care and one of the reasons they should care is by doing multi-tenancy and only supporting a single version of our product, we can provide for the first time APIs and so this is another area where companies can mitigate their risk by getting their hands on those APIs and doing their own, you know, integration works. And then finally, I think that the RLI metrics are so powerful in the SAS model because the hurdle to get into these systems is so low that the return can be measured in weeks often, certainly not years but not even in months, it can be measured in weeks. And this is another area that can put enterprises at ease so that they don’t feel like they’re throwing a lot of money away, if they are nervous.

KD: OK. That sounds like good advice. What are some key points do you think companies looking at SAS solutions should keep in mind? Was there evaluating possible solutions?

CC: That’s a good question and I think that, you know, the downsideof SAS and the publicity and how hot the market is for SAS is that it’s a moniker that does carry with it some weight and so, you know, caveat emptor, the buyer has to beware that, you know, just because a company says they’re SAS or they’re on demand, they may not be and so, you know, companies can get burned pretty bad on that and this is where to look at the architecture and understand, “Are you a SAS company that has been built from the ground up to be a SAS company, meaning you are multi-tenant, meaning you only support a single data set source and line of code and you can provide an API?” If you’re talking to a vendor who’s claiming SAS and they aren’t able to do those things, you are potentially going to put yourself at risk and run down this path of the old Koreo (???) model that we know doesn’t work. Part of these new SAS companies that are true SAS companies, they use all the Web 2.0 that’s a service-oriented architecture, they’re doing these kind of mashups between multiple companies that I talked about. So, I would advise companies that are looking at these solutions to not only look at the company they want to, you know, may be interested in or the service they may be interested in but who are the partners that that company is partnered with and what are the kinds of mashups that they’re doing because if they aren’t doing the kinds of things that I talked about with Amazon and PayPal and Sales Force.com, then, you know, there’s probably a reason for that and it’s probably because they don’t have this single line of code and these APIs that are built to be able to do that.

And the last point I would make is, you know, clearly proven success is really important. You have to go to these SAS companies and understand who all are their customers and if they don’t have customers who are like, you know, the enterprise that’s looking that should potentially be a red flag and you should talk to these references and do blind references. One of the best things our customers do is, you know, field calls that we haven’t set up and only in the SAS model where you’re earning this company every month, I think that the service quality, you know, is high enough to make sure that you get good references all the time.

KD: Thanks! We've been talking with Christopher Cabrera, CEO of Xactly. Thanks for listening and have a great day!