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June 30, 2008

Comments

Landon Hoover

Tony,

You're right! SaaS is a rapidly growing alternative to on-site software that is facing many challenges. I know, however, that there are many resources that can help solve the first challenge you presented. For example, eVapt. eVapt is a company that helps SaaS providers monetize their ideas by providing billing and contract mediation services. As for the other two challenges, do you know how SaaS players are trying to overcome these challenges. I would love to hear if you know of any resources, like eVapt, SaaS providers are using to overcome the challenges you identified. Thanks!

Rebecca

Hi Tony,
SaaS is a revolution in terms of accessibility, cost and software maintenance. Companies may be wary of it because of security or unfamiliarity. However, this really is the way of the future. You should take a look at this revolutionary retail SaaS solution that we use by MTI (http://www.mtiretail.com/SaaS_Info.cfm).
They also have a great webinar that may be of interest to you. http://www.mtiretail.com/BrickNClick.cfm?PgID=1

Tony Bain

I am not really debating if SAAS is a good idea, or something that will gain significant future acceptance. Just highlighting right now SAAS has barriers to entry in the enterprise that need to be addressed before widespread acceptance occurs. But these barriers are already coming down, as we have a lot of customers using our SAAS service.

James Blake

Hi Tony

Nice article, I work for a SaaS vendor who have been in the market for a good few years now and I would have to totally agree with your observations.

The good news is that customer concerns tend to be very predictable, here at Mimecast we've produced a wealth of supporting evidence to reassure our potential customers.

For all three of the observations you have made we have a compelling story to tell and I believe most SaaS vendors with a good solution can do the same:

When looking at the true TCO/ROI costs of a SaaS solution, we have to remember that the on-premise solutions the customers buy need to be replaced when they end-of-life every three to five years - so even the capex is actually renewable cost. Having a known fixed cost, even if it is a opex, with minimal management overhead actually appeals to most customers over the unknown costs of integration and management of a series of point solutions.

Security of information is a big one, it costs our organisation well into double figure millions to build each of our data centres (we're built on a parallel grid). We have 24 x 7 x 365 physical security, proactive monitoring and incident response. Each customers data is fragmented across thousands of individual processing/storage appliances via a custom built distributed grid filing system. We have no access to the customer data and the customer's keys are also distributed across the grid utilising a dead-man's switch - if a machine is stolen the data on it is rendered useless. Just like ourselves, most SaaS vendors who have built a secure infrastructure should be able to quite easily convince a customer their data is way more secure in the cloud than in their own data centre.

Finally, getting customers used to SaaS. If the vendor has built a solution that offers granular functionality that matches the on-premise solutions they are replacing, the customer should feel at ease. The issue is that many 'SaaS' vendors are actually more accurately described as managed service offerings based on OEMing several point solutions. The level of granularity that can be offered because of the need to provide a unified provisioning, management and reporting interface for different products is low.

Customers should look for SaaS vendors who have specifically built a service from the ground up to satisfy the business requirement, not one that is simply moving the problem of unintegrated on-premise solutions into the cloud.

Erin Maccabe

This post is dated back in 2008 and yet here I am commenting from 2016. Well, you were right about those three challenges SaaS has BUT the first and third challenges you listed were actually not so much of a problem this generation. SaaS is actually very common now in the corporate world given that computers, internet and social media are pretty much a big part of the offices. Security/privacy though is still an issue but matters are taken cared of by the SaaS providers. Try Lirik (http://lirik.io/) as your SaaS provider. They work wonders!

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