Every "new" technology really does go through the same set of stages, as reported by Gartner: initial excitement, then hype, followed by the burst bubble, a period of deep despondency, and then, if the technology was real, a period of sustained productivity.
Software as a service (SaaS) is no exception. A simple Google search will reveal around 18 million pages, which means this is a very hot and very current topic.
That`s not surprising, given that customers are looking for a new way to buy software, and vendors are looking for new ways in which to sell, repackage and in various ways deliver software; often, in a way that seems to confer competitive advantage, opens up a new space in the market; or that locks customers in for a long time.
The fact, though, is there`s a great deal of disinformation being passed around regarding SaaS.
Here are the five greatest myths:
Myth number one: SaaS is a new way of delivering software. Really? At heart, SaaS is simply a modified way of delivering business logic in such a way that a customer does not pay large capital sums. Rather, payment is amortised and smoothed by many customers over many months. Remember bureaus, which sprang up in the 60s in significant numbers around the world in response to the punitive costs of a company running its own hardware and software? These bureaus, which operated on the basis of time-sharing, provided much the same service as application service providers (ASPs), which died out early in this century, and then resurfaced as SaaS. If one were to be bloody-minded, one could say that the only difference with the bureau/ASP model is that SaaS is today typically provided over the Internet. But that doesn`t make SaaS a revolutionary new paradigm: it just means the delivery channel has changed.
Myth number two: SaaS must be browser-based. The fact that much of SaaS is delivered via the Web does not mean it has to be browser-based. As an example, TradeStream, an RMB initiative, has an application that is SaaS in every sense of the term, and it is indeed delivered over the Internet, but it is a fully client/server-based application. This proves to us that SaaS does not have to be delivered through a browser.
Myth number three: SaaS is always cheaper. SaaS often does work out lower in the short-term, due to the absence of capital costs, but this can be neutralised by high subscription fees. Some SaaS providers also charge low fees at the outset, and then ramp them up on a pay-per-use model. Within a short while a company is locked into the SaaS delivery mechanism, and then it has to pay each month for the application, no matter what the cost.
Myth number four: All software will ultimately be delivered as a service. This is palpably and demonstrably not true. It`s the same as folk who predicted in the 90s that client-server would replace all host-based applications. There is plenty of room in the market for host-based, client/server and SaaS... and while there are certainly times when SaaS is indicated, at other times, it will not make business sense.
Myth number five: Companies are moving fast and furiously towards this new paradigm. Well, that`s just nonsense. By far the bulk of software delivered today is on the client/server model. Many companies have indeed adopted SaaS in pockets of their business, but we have seen few, if any, examples of companies of substance that have committed their core business logic to SaaS. Reasons would include slow, costly bandwidth; the untested nature of SaaS today; and the fact that most large organisations have already invested extensively in core systems, which they are not going to rip out and replace with something that may or may not work for their business. As with all "new" approaches, they`re going to kick the tyres, test the water, carefully see if it is appropriate for their needs.
As a company, we`re not opposed to software as a service; we will use it and embrace it with our clients. But fair is fair, and it`s time to blow the whistle on the hype, and restore some sanity to the discussion.
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