Is Software as a Service (SaaS) Really Dead?
Software as a Service (SaaS) is a model of software deployment where an application is licensed for use as a service provided to customers on subscription basis via the Internet. This alleviates the customer's burden of purchasing and managing servers as well as licensing the software upfront. It also reduces traditional software maintenance efforts, ongoing patches, and patch support complexity in an organization. On demand licensing enables software to become a variable expense, rather than a fixed cost at the time of purchase.
SaaS lets software vendors control and limit use, prohibits copies and distribution, and facilitates the control of all derivative versions of their software. SaaS centralized control often allows the vendor or supplier to establish an ongoing revenue stream with multiple businesses and users without loading software in each customer's server.
One of the best examples of SaaS offerings is salesforce.com, a prominent player in the CRM arena. Although more traditional software vendors like SAP and Oracle have created their own SaaS initiatives (like SAP Business ByDesign and Oracle CRM On Demand), many feel that they may have done so as an insurance policy just in case SaaS really picks up with customers. In fact many published articles quoted the CEO of Oracle saying that SaaS will be dead within two years.
Why do traditional software vendors take SaaS half heartedly? I believe there is a number of good reasons:
- First of all, if SaaS truly picks up and customers start paying a monthly or yearly subscription fees instead of upfront licensing of software the traditional software vendors' new license revenue streams will be badly hit at least in the short term. Revenue risk.
- Secondly, traditional software vendors will need to re architect some of their applications in order to make them more suitable for use as a service across the internet. This is necessary because old applications were designed to run inside your company on your fast in house network, they won't run as fast over the relatively slower internet. Need for new investments.
- And thirdly, why would traditional vendors really support SaaS knowing that internet age companies like salesforce.com are already ahead of them? Competitive Risk.
But SaaS means our corporate data will be stored by someone else, how can we trust that our data is safe?
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Hi,
I'd say that if your data is hosted by Oracle, SAP or salesforce.com it would be safe, I can say it would be safer than it is sitting in the computer room of 70% of the customers I have visited.
Remember that most SMEs can't afford more than 2-3 IT security specialists compared to hundreds of information security people at any of the large hosting or SaaS players.
Hope this helps.
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Apparently, it is not dead and is not going to be any time soon even according to Oracle whose CEO was quoted saying that SaaS will be dead within two years.
Oracle has just released an array of new SaaS based services and enhanced many of its already available ones.
Take a look here and watch their webcast:
http://www.oracle.com/webapps/dialogue/dlgpage.jsp?p_ext=Y&p_dlg_id=7350405&src=6677661&Act=44
Why is Oracle doing so? Because like I said earlier, if SaaS really picks up Oracle wants to be a key player in that market.
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It’s not essential Microsoft to lose the game for Apple to win. – Steve Jobs.
It’s never a superior technology that dictate who will win and who lose, but a number of factors that includes market needs, trends, availability, affordability and ease of use. The corporate vision and strategy is also plays a crucial factor; again not necessarily always to be right or executed in right manner.
SaaS is a comparatively a new service channel. It could be a revenue source for both new dedicated players and for traditional players. There’s no harm for Oracle to open a new revenue source. Specially keeping in mind its past record, I won’t be surprised if Oracle bids for Salesforce.com in near future.
At the end, business is there to grow, strategy is there to adapt and change and technology is there to make our life simpler. The greatest contribution of SaaS till date is it has penetrated the untapped market.
For a start-up of 10, SaaS could be the answer to showcase its expertise and mature in time, but for an established $ billion organization, it’s a laughable alternative. So, there’s a space for all.
I am not the owner of the truth. It’s just few quick thoughts. Any suggestions/feedback/critics are overtly welcome.
Sandipan Nath
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Thanks for your contribution Sandipan .. you might be surprised to learn that both Business Objects and Cognos were large users of salesforce.com before their acquisitions by SAP and IBM respectively .. in fact Cognos still uses salesforce.com today and their IBM counterparts seem to envy them because of how well sales and marketing are integrated in salesforce.com
Thanks Again
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