The Decompossion of SaaS

Software as a service (SaaS) has been creating a buzz for some time in all aspects of the IT industry. With all the differing delivery models, definitions, marketing messages and hype what is the value at the end of the day.

To understand the value it is my perspective that we need to look at how we got here. There is much debate on the history of SaaS and how it was derived. From what we have seen in our industry over the years, the Application Service Provider (ASP) industry paved the way for businesses to explore the concept of off premise software, accessed through the Internet or some sort of secure mechanism connecting their enterprise to their provider. Unfortunately the SaaS acronym is not new and was actually one of the original tag lines for a small company in Annapolis, MD. called USinternetworking who was one of the first pure play ASP providers. The concept has actually been around for about a decade now so what has changed?

Having grown up in the ASP / Outsourcing area of our industry the answer to that question is not complex; its the software that has changed. The move to web based technologies, applications migrating to web architectures and new deployment strategies made it easier than ever to support a SaaS model.

Years ago the strategy was to buy one software package that did it all and we saw the rise of Enterprise Resource Planning (ERP) applications. The strategy was solid in the theory that as a CIO I could standardize my processes, platforms and infrastructure to reduce inefficiencies, how bad could that be? What we found is that unless we truly partnered with the business, identified the right project charter or mission statement, the right business objectives and correct stakeholders these projects were sometimes not successful or ran over budget with ROI models that had diminishing returns.

Taking these high level factors into consideration brings the conversation to SaaS. Web based software, coupled with services and the value proposition is clear when it comes to ROI so what are the drawbacks?

Companies and organizations need to evaluate their application portfolios and contrast them against their security strategies and policies. This analysis will drive the SaaS or not to SaaS decision. Having corporate data off premise in a shared environment, which is how most of the SaaS providers are able to gain economies of scale, is a concern for some customers. Not having data on site, business continuity of the provider and some integration challenges need to be considered when looking at SaaS delivery models. In the end IT and all technologist have to remember it is about the business not technology, unless your business is technology.

SaaS has it's place as do all tools in the technology sector. Is it the end of packaged software? I think it may be to early to tell. In the end I think it is a good strategy for some and has a purpose. The companies that are currently providing software as a service have compelling business cases and drive value but we have to always remember in the big picture it is about the right tool for the job.