My favorite SaaS blogger, Phil Wainewright, has a great post from last week about the real benefit of SaaS: It lets everyone focus on results.
He puts it better than I could:
Now, for the first time since that wrong turn the software vendors made all those years ago, on-demand applications are putting business results back into focus. The vendor has already done the implementation before even meeting the customer. The technology is already sorted, and the vendor guarantees to keep it working. What matters is whether the application meets the customer’s business need. The whole conversation revolves around what the customer is trying to achieve, and whether the application can help with that.
Well, isn’t that really what software is meant for in the first place? To get results? It seems quite obvious, but most of our experiences tell us it’s all too rare.
The point he doesn’t make is that we can get to results way faster with SaaS than any traditional software implementation. We don’t need to spend a ton of time or money or effort on the software itself, so we’re free to spend all of our resources pursuing our goals.
It’s kind of like if we had to build a car every time we wanted to go somewhere new. That would clearly be a lot of work. SaaS is like having a car delivered to your door. You still have to drive it to your destination, but don’t have to worry about whether or not (or even how) the car itself works.
June 27th, 2006 at 2:37 pm
You’re missing a key factor: TRUST. With the SaaS model, you are completely trusting the vendor. An inherent business need that is often unspoken is “do we trust the application and the service provider to maintain the confidentially, integrity, and availability of the data.” Once that trust is broken, it’s almost impossible to get back.
Using your car analogy: Today, it’s easy to trust Car Manufacturers; they publically announce recalls, they have local representatives, you have recourse should you encounter a problem, etc.
With SaaS vendors, that’s not always true. (Note: this is not a reflection of SuccessFactors, but SaaS vendors in general.) The vendor may have no track record of announcing and fixing vulnerabilties. They may not have been in business very long. There may be no one who will listen to or address problems. There’s no one local that you can talk to.
Now I’m not saying that you shouldn’t use SaaS vendors. If the tool fits, use it. You need to look at the whole picture, the business’ needs, and the capabilities of IT. Understand the risks of the approach and choose the best tool to fit the need.
July 4th, 2006 at 4:53 am
Given the fact that service models out of cost-effective offshore locations (like India) are thriving, and with my fair share of experience in selling web-based IT products, I believe that the pay-as-you-proceed SaaS is here to stay.
It works well when customers don’t have to commit long-term and service provision becomes mere needs-based.
Packaged versions come with its own drawbacks – scalability, fexibility, customization and so and so forth.
For instance, a company like ours provides everything ‘custom’. Our skills assessment content for various job roles and verticals are custom-and-needs-based written plus our web-hosted SaaS offerings comes with fexible on-demand customizations – all at a fraction of the cost of conventional onshore offerings.
As a typical B-school text book might say… “It’s all about money!”