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working girl

Great reminder that SaaS just means Software as a Service, with no mention of any particular architecture. I think marketing might be a challenge, though - for example, if your big claim to fame is your easy customizability, 'No more customization but we'll be happy to host you for just a bit more money than the multitenant SaaS guys,' sounds a bit weak. But I agree that discipline is the secret in most successful sauces.

Jim

Good points. There is certainly a marketing challenge. Perhaps, the vendor would set up a separate business unit (even brand). It would not necessarily be for existing customers, just new customers.

Peter Pada

Hi Jim,

interesting argument. I am always a fan of supporting an underdog if the fame of the dominant model seems to me more due to fashion trends than to real delivered value.

Furthering on your arguments, the following remarks come to my mind.

1. The virtualization of hosting hardware and software allows to recreate a hosting environment basically anywhere. So theoretically, if SaaS production environments are standard enough, and simple enough, the possibility exist to host the application anywhere, including in a hosting cloud belonging to the client. Multi-hosting or flex-hosting of a unique code is a trend that I would not be surprised to see soon in the SaaS industry.

In the end, the only thing that SaaS vendors are really selling remains their software. The brain juice of their developers and product managers, for the achievement of client benefits. So yes the wrapping is attractive, but of course, nobody will buy a bad software, just because it's a SaaS.

There already exist SaaS offering that are based on a single source code and hosted where the client sees fit

2. An added value of the SaaS model is that by construction the company cannot survive by enforcing the discipline you are referring to. This very strong incentive to do what seems at first glance to be contrary to client satisfaction is driving a number of company processes. A single tenant software editor doesn't have this incentive, and furthermore, has the contrary incentive to deliver client satisfaction by delivering customized code.

So I would go a bit further, and say that as far as SaaS is concerned, the discipline you are talking about is so difficult to implement, and comes with so many commitments in return, that companies can be constructed to deliver this discipline/commitment or not at all.

3. If a single tenant software is hosted by the vendor or by the client, if code unicity is protected by company discipline and if the pricing model is a subscription, then actually it is a SaaS. It is software delivered as a service.

What do you think?

Jim

Peter,

Thanks for the comments (and sorry for the long approval time - I just missed it). I think that most people think of SaaS as multi-tenant software. The point of the post was to show that multi-tenant software was not the only way to achieve many of the same benefits. What multi-tenant software has done is enforce a discipline around customization and upgrades that was not there previously and a lot of the benefits (though not all) can be attributed to this. However, it is not the only way to enforce that discipline.

John Martin

Jim: you're correct that upgrade discipline, along with building for/operating a single platform, are the key benefit drivers of SaaS, rather than multi-tenant per se (see http://buildingsaas.typepad.com/blog/2006/08/salesforcecom_i.html for more details). The real key is upgrade timing - requiring clients to upgrade allows supporting only one version and having only one upgrade path.

However, it's not as if on-premises providers simply lack the "discipline" to become SaaS -- their development progress is held back by the albatross of supporting years of old releases and porting/testing/supporting across a myriad of platforms. Beyond development, other significant hurdles have to be addressed such as sales compensation, revenue recognition, and acquiring the skills to successfully host sofwtare to world-class SLAs.

If it were as simple as becoming more disciplined, then we'd see lots of on-premise software vendors successfully moving to SaaS; instead, successful transitions are a rarity and every SaaS leader is a new player.

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