SaaS: What's in a name?

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There are times that I shake my head over what I’m going to call the “nit-pickiness” of some folks.  Last night was one of those times.

I read an article in IT Web with a headline that caught my eye: “SaaS fails to deliver,” it proclaimed.  As I read through it, it became apparent that the person being interviewed was, frankly, playing semantics.   He claimed, “the only players that have gotten SaaS right are the infrastructure service providers.”

Well, wait a second.  At Hosted Solutions, we are proud of our work, delivering Infrastructure as a Service (IaaS).  In fact, we note that about 80 percent of our customers have outsourced their production environment to us.  That demonstrates an incredibly high level of trust on their part, and what we’d like to think is an equally high level of capability on ours.

But there are a number of companies out there that are successfully delivering software as a service.  Salesforce.com is the most obvious example, but there are many others implementing SaaS for their customers on smaller scale.  We provide key services for several SaaS firms, including MediClick, that designs supply chain and financial applications for hospitals and healthcare organizations.  We’ve recently announced a partnership with Kognitio, which delivers business intelligence through its Data Warehousing as a Service (DaaS) offering.  And we have a strategic relationship with the national SaaS User Group, which is based here in North Carolina.

I’d challenge anyone to suggest to them, or their customers, that they haven’t gotten SaaS right.  Moreover, the article notes that Gartner analysts say worldwide SaaS revenues will surpass $8.5 billion this year, saying “the forecast means the SaaS market has grown by 14.1% compared to 2009 revenues, which the analyst firm says totaled $7.5 billion.”  With those numbers, somebody’s doing something right.

The interviewee also claimed that “massive economies of scale” are needed to get the SaaS platform to work, and that it’s capital-intensive.  On both these counts, I’d suggest he’s at least partially wrong.  End-users don’t need huge amounts of money to make SaaS work for them.  Quite the opposite; the key advantages of SaaS for end-users include rapid deployment, flexible scalability…and lower costs.

I think what’s going on is a game of definitions; how one person defines “true” SaaS may differ from another.  It’s like getting 10 people to agree on a common definition of “cloud computing.”  At the end of the day, however, it’s not the definition that’s important; it’s the real economic and strategic benefits that companies are realizing on a daily basis from SaaS.  Or whatever you want to call it.