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What Do You Need to Know About Software as a Service (Saas)?
Every now and again I get questions about my companies position on SaaS, or for opinions regarding how it relates to our clients needs and how we will deliver services. I have long held that SaaS will not bring about a fundamental shift in services rendered by IT service companies, and won’t be a market dominating concept for some time.
First of all, from a services standpoint, SaaS moves software from on premise to off premise, but, it does not remove the need to administer that software and to support the users of that software. Many SaaS providers will try to capture those services by bundling them with their offering, but to be honest, that model is likely to involve a lot of off shore labor, and it is my belief that few companies will manage to deliver quality support services, and really will end up focusing on running their hosted applications and data centers. So, when folks ask how our business will be impacted by SaaS, the answer is, we will still do much of what we do today.
Beyond this, however, is the deeper question, and the more interesting side of this conversation: Is SaaS right for me?
Well, I have argued for some time, and wrote a white paper on this over two years ago, that SaaS has limited utility at this point. For very small companies with very simplistic computing needs, SaaS may provide a low cost of entry method to deliver basic applications to your employees. Very large enterprises are also seemingly fascinated with the thought of reducing hardware ownership costs and increasing flexibility by using SaaS for certain applications. However, at the end of the day, there are challenges with SaaS that limit adoption, and they are real, and significant.
And they are the same issues people were talking about when SaaS was just coming to gain visibility a few years back.
- Security
- Application Integration
- Data Migration
From a security standpoint (and more broadly a compliance standpoint), there are unresolved issues around everything from physical security of data centers to a lack of industry standards that companies can develop internal controls and security plans around. Data security is a hot button for most companies, and of course for the clients of those companies. As applications and the data they use is moved off premise and the control of physical security is lost, as is the ability to control the methods by which data is protected from a logical security standpoint, risks increase and business owners are faced with uncertainty regarding their ability to protect their intellectual property, as well as their client data.
Integration is perhaps one of the most troubling issues in my opinion. Many applications provide the most value when they integrate to other applications. When you log into your CRM, you expect it to be integrated with your Outlook Calendar. Microsoft Office software is integrated into many other applications, and many companies even have customizations that integrate with key applications to provide competitive advantage. All of these integrations become highly complex when dealing with SaaS, and expensive. When we consider that the entire purpose of our applications and data are so that we can execute our jobs effectively and efficiently, the thought of reducing our ability to integrate key applications and reduce efficiency and productivity seems pointless, and the savings associated with moving to a SaaS model may not be as robust as originally thought.
Finally comes data migration issues. This is a similar issue to application integration. If you are attempting to move to SaaS solutions for your financial applications and back office functionality (ERP) or your client and sales management software (CRM) you may find that cost and complexity of a SaaS implementation goes way up due to the complexity of migrating data. Additionally, data may be coming from data wharehouses served by multiple applications, and this adds another integration and data migration issue that is far more complex in a SaaS environment.
The pitch sounds so simple: don’t buy hardware, just pay a simple low monthly fee per user to get the applications you need delivered. It is a great idea, and it may indeed become part of the normal operating fabric of businesses in the next decade. However, there is much to be resolved before this comes true. Keep in mind also that hardware and storage manufacturers are always working to drive down costs and as those costs come down, the argument for savings by ‘renting computing space’ will be reduced.
At the end of the day, it is a balance between cost, control, and required functionality. Today, with relatively cheap storage and computing costs, coupled with unresolved issues regarding some pretty common issues around security, integration, and data migration, I’m of the mind that SaaS is not yet a viable solution for the majority of SMB’s. Perhaps if you simply recieve email and want your folks to be able to do simple spreadsheeting and simple use of word processing, then it makes sense, but even then, if these applications are delivered through the cloud, what happens when you can’t access the internet? Can any of us say we have 100% uptime with our local internet provider, or that we are confident that if there were downtime, we would be able to function and be fully productive without our key applications available? Just another thing to ponder.
Observe and educate would be my two key thoughts in regards to SaaS. There is value there, but today, there are also a lot of unanswered questions, and when it comes to our businesses and ensuring that we can run them, unanswered questions are not good.
I am optomistic that SaaS will bring value to the market as these issues are resolved, but not convinced that it will replace on premise computing in the majority of businesses any time soon.
Happy Computing!
Richard Brunke
