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Software as a Service: An old name for rehashed offerings?

You often hear that SaaS is just another name for an older technology – but such critics are missing the point.

I often hear two criticisms of SaaS. The first is that it isn’t a new idea: it’s the same as bureau services or those provided by an ASP – application service provider. The second criticism is that it might be fine for other organisations but it isn’t secure, cheaper, better or smarter.

Of course these are contradictory criticisms so lets explore what SaaS really is.

In some respects it\’s true that SaaS is the latest evolution of software delivery that can be traced back to bureau services and ASPs. But modern SaaS offerings should be, and are, very different. While the debate about what defines a SaaS product, or any other cloud offering, can get rather sterile I feel they should tick most of these points:

Browser based, Internet delivered applications are widely accepted in businesses – think Worldcheck, payroll systems or banking services.

While most of these aren’t strictly speaking SaaS, they demonstrate that businesses are not afraid of the concept and will embrace it. Or should that read – users aren’t afraid of the concept?

In my experience users are blissfully ignorant of where an application is hosted, who wrote it or where it is supported. They’ve got a job to do and if they can find a tool to help them do it they’ll use it. That’s why I believe that SaaS applications are proliferating even in organisations that profess not to use them.

Application software providers, and the myriad consultancies that provide implementation, customisation and training services, are also challenged by the new SaaS model. ASPs cannot re‑engineer their applications overnight. A successful SaaS product needs to be properly architected to be multi-tenanted, accessible from a plethora of devices (think web app, smart phone, tablet and Internet TV), with a rich API set for integration, easy to customise and easy to implement. And the list could go on and on. It’s taken Microsoft several attempts and very deep pockets to make Office 365 even a half-decent product.

The ASPs and traditional software houses are trying hard to catch up but there are also some very smart new guys that are continually raising the bar – for example, Xero for accounting, AffinityLive for Professional Services and NetDocuments for DMS.

The traditional vendors have major challenges as they re-engineer their applications and learn to live without their substantial up front licence fees.

That said, there does seem to be a trend starting to appear of the traditional software players who are purporting to be offering their products via a SaaS mechanism but, when you dig deeper they don’t have the flexibility you would expect from a true SaaS product. Instead most require the full cost up front at a price point very similar to their old perpetual models and what seems to be individual instances of their products being deployed on a client-by-client basis. This is not SaaS and it\’s doing us all a disservice to call it so.

This is both frustrating and disappointing as it undermines the true SaaS idea and model. I do think that over time though this will change and some will make the full change, but for many this will be a Kodak moment – they might know the world is changing but they’re not sure how to respond.

By Julian Box, Posted 15th April 2012.