The ASP model is NOT SaaS. Stop thinking that it is.
By Mike Jalonen, CEO, OnDemand Solutions, Inc.
I apologize in advance if this seems like a bashing rant but I need to get this off my chest. SaaS is many things but most importantly it is about SCALABILITY for the ISV. So many people think SaaS is only about the pricing of software or the fact that it can be delivered over the internet. Those are important concepts but if you are not thinking about SCALABILITY as the primary advantage you are missing the mark.
Customer on-boarding, provisioning, single instance, multi-tenant, a strong infrastructure, analytics and reporting, strategic pricing initiatives, free-trials, etc. are what SaaS companies need to be thinking of. This is what is going to set your company apart from your competition and help you achieve the economies of scale that you need to become rich.
Simply pricing or marketing your solution as SaaS when it is not (behind the scenes) will not help you hit the home run you are looking for. Each of these areas above (along with others) needs to be optimized for success and SCALABILITY. So many ISV’s say that they have a SaaS solution and when you ask – “So you don’t need to install new software for each customer?”, they say, “well we are working on that part”. If that’s your answer, you do not have a SaaS solution.
SaaS is more than pay as you go and delivering over the internet. It is about sharing and lowering all the costs incurred by the ISV with many clients so that you can offer it at a price as to enter new markets and get even more clients. You can do that best when your solution is a true SaaS solution. You need optimized application architecture, a rock solid and scalable infrastructure, and an understanding of SaaS principals to make that happen. There was a reason why dotcom happened. The ASP model is going out just as the client/server model is going out. Please understand the difference between ASP and SaaS and if you need help to get there, call us or call a competitor of ours to help.
Mike
2 comments:
All good points, Mike. I would argue that from a purists perspective, SaaS is in fact getting software *functionality* into your customer's hands in a service (read utility) fashion. I think what you've described is the most optimal implementation of SaaS.
At the end of the day, however, you're correct in the sense that the bottom line decides what SaaS truly is. Currently, the bottom line tells us that the implementation you've overviewed is the only long-term sustainable "definition" of SaaS.
I believe another distinguishing factor for true Saas applications is their more open architecture which allows for easier integration with their other non-SaaS or SaaS applications, whether back-office, front-office, etc. Web services technologies such as WSDL APIs and http communication protocols lend themselves more easily to playing nicely with other applications, as well as greatly facilitate the use of standard integration tools.
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