Date: July 22, 2010

Author: JT

Tags: , ,

1 Comment »

6 SaaS Myths

image We are still early in SaaS’ (Software as a Service) life cycle.  It is not uncommon to come across open discussions as to the value of SaaS verses desktop offerings.  Recently I happened across one such discussion from the perspective of a developer.  Should they build new product/service offerings in SaaS and abandon desktop, client-side installations?

There are a number of myths that often come up in these discussions.  Many are simply the result of people ‘wanting’ SaaS, the next new thing, to be more than it really is…too soon.


Myth:  “There are no up-front costs.”

Unless yours is a new business with no existing processes in place, you -will- have noticeable (direct and/or indirect) upfront costs when adopting new solutions, whether conventional or SaaS. At the most basic, there are real costs in converting your business (data migration, customization, staff training, …) from a legacy process to a new one. The larger your enterprise, the more integral your offering will be to the customer, the more likely there -will- be upfront costs.

Myth: “Scale your service usage up/down as your business needs change.”

Just how literally you take this statement depends on the agreement you have with your SaaS service provider.  Many agreements, particularly at the larger, enterprise level, assume a certain minimal rate of usage.  Penalties may apply if your actual usage falls below contractually obligated values.  Agreements likely offer ‘motivation’ for you to consume more, not less.  Assuming this myth is true may cause your business significant grief.

Myth: “Get up and running in a week or two…”

If you’re a small business, moving from using Outlook Business Contact Manager to, this may well be true.  But if you have larger concerns, large data volumes to consider, and need –any- customization or integration, or you’re adopting an entire AP solution, you may be happy to be up and running in a month or two.

Myth: “SaaS lets you realize an ROI in a few weeks, unlike desktop software that can be a year or two.”

Very few things if life are absolute, and this is one of them.  ROI all depends on your cost to adopt a new solution compared with the value it returns to you.  These sorts of statements, made without any sort of context, are simply unqualified.  I have seen examples of service implementations where I questioned whether there would ever be a real return on the investment. In contrast, I’ve seen conventional desktop based solutions that offered very real ROIs in just a few months.  Be careful with this one and make sure you understand the context.  Don’t just swallow the bait:).

Myth: “Everybody has an internet connection now.”

It is easy to assume that ‘everybody’ has a good internet connection available to them.  Just because ‘we’ may have good bandwidth doesn’t mean our customers do.  Depending on where you are in the world costs can vary dramatically even today–if broadband always-on connectivity even exists.

For the foreseeable future, I believe connectivity will remain SaaS’ Achilles’ heel.  Understanding the 3 underlying components, bandwidth, ubiquity, and availability, as they specifically apply to your intended offering and customers, will dictate which platform to choose (thick or thin).

A fourth dimension may also be the level of compute intensity required and where it may occur.  For instance, video gamers playing online may require a hybrid approach (hence consoles).  Connectivity lets them share data while high-quality graphics are generated in response and rendered locally.  Other solutions may allow for raw input data to be uploaded, processed on SaaS servers, and retrieved later.

Myth: “… vendors earn their revenue monthly—they will do everything to please and retain their customers.”

Whether conventional (increasingly relying on ‘subscription’) or SaaS, companies have a tendency to focus on the ‘new customer;’ winning their business; and, slowly paying less attention to ‘already won’ customers.  It is human nature.

Worse, it is not uncommon for companies to become somewhat neglectful of existing customers because they’re viewed as ‘locked in.’  Part of this is supported by multi-year contracts that, barring blatant negligence, are unlikely to be broken.

You can be just as locked-in to a SaaS provider, just as dependent on them, as you can an installed suite of software.  SaaS does not offer any special protection over this behavior.

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