I’m deep into the Wave research (read my latest status update) for nine community platforms (big list here), in fact, this week and next, I’m in 5 and a half to 6 hour meetings with vendors getting to know them very well. Of course, that’s just one side of the story, I’m interviewing up to 27 of their customers (brands) to get the ‘other’ side of the story. You’ll see me pop up online for “Twitter breaks” here and there, surfacing for air, then submerging back again.
I wasn’t surprised to hear from a few brands that not everyone is a fan of Software as a Service (Saas), in fact, for some, on-premise software makes a whole lot more sense. What exactly was the pain point with Saas?
Of course, the most obvious points continue to come to mind: conservative companies, or those with truly critical data wanted to have the data on site, or wanted to self-support their own architecture, or wanted to modify the software at their choosing, yet I learned about something that I hadn’t even considered:
Some brands felt that being tied to SaaS meant they were at the mercy of the vendor when it came to the software architecture. While this is certainly the case not just for SaaS but all non-opensource software, when a vendor would upgrade a version, some brands were forced to accept the changes. In some cases, some brands were not aware/prepared of some upcoming upgrades to the SaaS software and were blindsided to the changes.
Furthermore, these brands felt that the larger customers who wanted specific feature upgrades were able to influence the vendor through direct pressure or even fueling the R&D work through feature requests. What’s wrong with that? Alot, if the feature requests of the larger customer don’t reflect the needs of a smaller SMB customer. Since the software is delivered over the web, there was little recourse for the smaller brand to deny the changes, they pretty much had to suck it up.
Now you may ask, isn’t this a problem with all software, SaaS or on-premise? Yes but vendors are more likely to allow customers to use multiple versions of on-premise software, of course there’s a date when they will no longer support it. Yet vendors who provide SaaS are far more likely to provide only one version, forcing clients to swallow the changes on demand.
Have you had a bad experience with Software as a Service? Leave a comment, let’s explore this further.
Related reading: Community Platforms: Here comes the CIO.
Update: As usual, the conversation has also splintered into FriendFeed.
I like Mark about am both a vendor and a user for Enterprise solutions. I say that the SaaS solution is so much better for both the vendor and the user. We use to be limited to one or maybe two releases (not new functionality, just fixes and minor upgrades) when we were a full licensed on-premise solution. But with SaaS there is not the same issue, we can roll out new functionality and enhancements on a weekly basis if we want. Sure a major release is still something that needs to be staged and coordinated, but the clients and the vendor will with incremental releases.
I also am a proponent of major companies have a large say into product direction. They are usually the ones who use the product most extensively and imho the SMBs benefit greatly from these best practices by getting this functionality in the core product. Back in the 90s we would do all of this through custom enhancements and they were protected as “trade secrets” but now they are shared and everyone benefits.
I also think you are going to start seeing some scripting languages coming out that will allow flexibility for SaaS solutions that does not change the underlying code. This will be a great step forward, think Greasemonkey on Salesforce.
Hi James,
Many thanks for your great blog. I only wish you spent a little less time on it so that you could finally finish the much expected Forrester research 🙂
I am currently looking at different white label social community platforms and am face with the SAAS vs non hosted solution.
What I seem to be witnessing is a shift from some of the established actors from a full SAAS model to a mixted model where the customer has both options (one site for example). I see this as a great solution. In spite of its potential shortcoming, SAAS allows companies with no or little experience in social communities to deploy a solution quickly (unless heavy customisations are required), with hardly any impact on the company’s web dev/IT service.
Past the initial learning curve, the company can then choose to migrate to the non hosted solution, should the benefits of managing a social community be proven.
This can benefit most from marketers who want demonstrate the interest of social community quickly and effectively within a company without having to fight for ressources internally.
Well at least that is my opinion at this point…
Hi Jeremiah (sorry about James :-),
I did indeed read your article with a smile on my face because this is just my life 🙂
I have spent the last ten years or so interfacing between the marketing and IT departments dealing with single sign-on problematics (as neither initially saw the direct benefits), trying to avoid “maverick developpement that would cause nightmarish data transfers and so on…
So I tought your article was spot on.
This raises some interesting points about SaaS…and Cloud Computing for that matter. My initial thought is that these experiences say more about the level of customer service the vendor is providing and how it communicates with it’s clients verses the practicality of this technology for the enterprise. This lack of good customer service is what the press has continued to use as reasons to “be cautious” about SaaS but those issues exist regardless of whether the software is on-premise or web based.
Love the blog, Jeremiah, thanks for the thoughts.
Interesting post, Jeremiah! I don’t think anyone has nailed the SaaS business model yet and most vendors are struggling with how to increase adoption. We will likely see much more conversation on this topic in the near future.
Re: customers being surprised by upgrades, that seems to be a communications (or lack thereof) issue on the part of the vendors. The latter must inform customers of upcoming changes well in advance, monitor feedback, and adjust their plans if appropriate.
Re: large customers influencing vendors more than small ones, one of the great things about open source is that this problem is minimized. Of course, that isn’t true for SaaS, which leads me to question whether on-demand offerings need to be better tailored to specific market segments. So Vendor X offers a SaaS suite of functionality targeted to large enterprises and another, complementary suite for SMBs. Any thoughts on this?
I don’t see much benefit for SaaS vendors to maintain multiple releases of their offerings; indeed, I think it’s not likely to happen ever. #2’s comment above about migrating customers to self-hosted versions of the software might make sense, but it would require most SaaS vendors to radically change their business model, product set, sales force, etc. Major platform vendors are much more likely than startups to provide this type of migration capability, but the complexity for even them is problematic in terms of effect on their business models.
Hey Jeremaiah,
One other thing I wanted to mention about SaaS maturing is that it’s sort of a two-way street. A lot of our customers don’t know how to deal with a SaaS company yet. As a result they don’t know where our services begin and end, they don’t know what to expect and they aren’t sure how to make their resources work with ours. This is strongly tied to the communication issue and it should get better (I like to think) as SaaS is more widely adopted.
Hi James,
Many thanks for your great blog. I only wish you spent a little less time on it so that you could finally finish the much expected Forrester research 🙂
I am currently looking at different white label social community platforms and am face with the SAAS vs non hosted solution.
What I seem to be witnessing is a shift from some of the established actors from a full SAAS model to a mixted model where the customer has both options (one site for example). I see this as a great solution. In spite of its potential shortcoming, SAAS allows companies with no or little experience in social communities to deploy a solution quickly (unless heavy customisations are required), with hardly any impact on the company's web dev/IT service.
Past the initial learning curve, the company can then choose to migrate to the non hosted solution, should the benefits of managing a social community be proven.
This can benefit most from marketers who want demonstrate the interest of social community quickly and effectively within a company without having to fight for ressources internally.
Well at least that is my opinion at this point…