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8 Myths of Software-as-a-Service
abb_road writes "BusinessWeek looks at the current state of software-as-a-service, arguing that the model is well established and is distinct from failed ASP/Hosting models of the dot-com era. Far from a passing fad, the model is starting to see large-scale adoption, and traditional vendors are having trouble revamping their applications and financials to get in on the action. From the article, 'As SaaS gains mainstream acceptance, it is becoming an important disruptive force in the software industry. And as long as the quality and reliability of SaaS solutions continues to improve, the appeal of SaaS isn't going to go away.'"
If you look at the fact that no code is ever flawless, and always has bugs, so there's always patches and upgrades. Most people in the regular software industry are passing off intermediate versions of flawed software as a product, and then giving the service away for free. This is just the opposite of that model and it makes more sense. Continuing to support, and making bug fixes to past versions of software is part of the service, clients have a real voice in the future of the software package by communicating what their future needs are. As they pay per period versus per version, software development companies don't have to guess anymore what their clients want to get them to "buy the new version" instead, the clients can have a real voice in what features are important to them in the future, without the need for pushing stuff off to a higher version versus an incremental update. It's a better model because instead of selling "why you have to ditch this old one and buy this new one" you are instead saying, "we have an established relationship in the past, and if you enjoy this, we can continue." Resulting in less useless bells and whistles in new versions, and more of the actual needed functionality. Instead of inventing things you dream they will want, you take care of their changing needs instead. That's why I think it's a winning model (if companies followed it correctly).
Judges and senates have been bought for gold; Esteem and love were never to be sold.
This is crap. It's not even well-written crap, which makes it pure bullshit. There's more nonsense "terminology" in this article than I've seen in a long time. The belief that the "legacy applications" are the reason that the dot-com boom failed is unjustified. Business don't fail because of software, good, bad, or indifferent. And they're sure as hell not going to succeed because of it, either. From the article, "Now Oracle, Microsoft (MSFT), and SAP (SAP) must respond to the SaaS movement while trying to avoid cannibalizing their existing software business in the process." This is a bald-faced attempt at spreading fear, uncertainty, and doubt. Microsoft produces the operating system that most home/business clients use, and Oracle produces one of the most common commercial databases, both of which are staple products, and are required for this "software-as-a-service" to function. They won't be "cannibalizing their existing software business[es]" any time soon. So, I feel it is necessary to add another "myth" to this page: Myth #9: This article is a reliable source of information
Software as a service is great if you have some way to export your data. My company has (not my choice) bought into an online ERP system which looks good from afar, but is apparently far from good.
Now that all our data is in the system and we are running our operations off of their system we are pretty much screwed...they can jump the price at any point and we just have to pay it. The sales people lie (no surprises there) about having ways to export your data, but there aren't any really there.
Just be sure before you jump into something like this that you have a way to get your data back AND get it in writing that said tools will always remain and be current.
(and, yes, since we bought into their system they have moved to only allowing Internet Explorer....D'oh!)
The article declares that ASP is totally different from SaaS and then completely fails to justify this statement.
Why can't they just say "it's the same thing, but the business climate is more ready for it now?"
+++ATH0
I know you're being facetious but the statements are somewhat on-point. I'll translate and hopefully not offend anyone's intelligence by doing so.
Basically they mean to say that businesses are becoming more and more open to externalizing anything that is not the core part of the business.* So, a company selling cooking grills no longer has an employee or department who handles email. They simply contacted 'Turnkey Enterprise e-Solutions Ltd.' and had them handle everything about email for the cost of $5 per address**, per month. After all, this company is in the grill business (core competency) not in the email business. Why worry about maintaining a server, or setting up users, or doing backups, or handling spam? The executive just wants to make better grills and sell them to more people.
So, let's say something like that (email) is proposed. Let's say our grill company (GrillCo) needs about 400 email accounts. Since they are not buying email servers or hiring spam gurus, there's no large initial investment for them. They can test it out with one department (accounting) and if the ten people there like it, they can expand to doing everyone's email that way. It eliminates risk for the buyer.
Now, is this a better way to go? The truth is anyone that will provide a definitive answer either way is off their rocker. It may work for some things, it may not work for others.
But the reason things like these are discussed, and possibly becoming more and more popular, is simple; for better or for worse, cost-cutting is being highly rewarded at the executive level. If you run a publicly-traded company and do not appear to be "cost oriented" then you raise suspicions among boards, shareholders and Wall Street.^ There's a whole crop of companies whose only goal is to cut costs for their clients (for example, ICG Commerce). Of course, sometimes these pressures come other sources.
So, by performing a buzzword-ectomy on the above, we result with something like this, "It has become fashionable to look at costs above other parts of a company's overall performance. Software-as-a-Service can sometimes help cut costs, so it is being considered more widely as an option."
Unfortunately for the tech crowd, it has less to do with AJAX and new whiz-bang applications and more to do with the business side (shudder) of things.
* Whether or not this is true I don't know, but that's what they are proposing.
** I'm picking a number out of thin air.
^ I'm not saying it's good, that's just largely how it is.
Small potatoes make the steak look bigger.
At IBM we called this (with much skepticism) "Maintaining an on *grunt* going *grunt* customer *grunt* relationship".
Being able to charge a subscription fee for your software and continue to get paid, rather than have to make money by continuing to get unit sales, is the holy grail of any software company.
Microsoft tried to force all their customers to this model without a heck of a lot of success. In my opinion, it's not because they couldn't have had this model, it's just that they tried too late - and found out that once something is "good enough", people simply don't spend the money to "upgrade" to something that's the software equivalent of road bed materials: an OS exists only to permit people to run applications, and once they run, you're done buying OS's.
Frankly, I think the best thing that has happened to Microsoft upgrade sales in a couple of years has been that iTunes doesn't run on Windows 98.
-- Terry
The big problem with these services is not that they are crappy applications, but that you get into "All Your Data are belong to us" situations. It makes migrating to and from a service Very difficult, expensive, and timeconsuming - if you can do it at all.