BusinessWeek online recently published an article by Gene Marks title “Beware the Hype of Software as a Service” where he basically stated SaaS is rarely viable (although at the end of the article he states there are situations where SaaS makes sense). Before I respond to Mr Marks myths it is important that you know my company provides SaaS applications for the SMB market. I obviously have a bias towards SaaS. However, Mr. Marks neglects to share his agenda. His company generates revenue installing computer systems for small businesses. Reading between the lines, he views SaaS as a threat to his business. Rather than viewing SaaS as an alternative for his clients, he’s doing what he can to increase business fear, uncertainty, and doubt regarding SaaS.
His article is tongue and cheek, void of facts, and laced with emotion. He starts out the article slamming people that own SUVs (yes, I own a SUV) – what does that have do with SaaS? Mr Mark’s first myth is SaaS is cheaper. First of all, no one can make a blanket statement one way or another. There are many factors a business needs to look at such as cost for hardware and software, implementation fees, ongoing maintenance (labor as well as maintenance for hardware and software), and upgrades. In this article he only compares a fictitious monthly price of $50 for a SaaS application to an unknown on-site application. Since he doesn’t use specifics, I doubt he has any experience with SaaS applications. It should also be noted that customer satisfaction is much higher for SaaS. Saugatuck Research did a study and found 84% customer satisfaction with SaaS – unheard of with on-premise software.
Myth #2: SaaS reduces hardware investment. He starts out talking about hardware and then ends up arguing about whether or not SaaS reduces IT staff. Apparently he couldn’t even convince himself that SaaS requires more hardware. SaaS does reduce hardware because the applications reside on servers in a secure data center managed by a trained staff. His other argument is SaaS requires fast Internet access which again is dependent on the customer’s situation. Our company works with customers that have a single DSL line and it is sufficient for them.
Myth #3: SaaS is quicker to setup. He uses a furniture analogy which isn’t relevant and the rest of his argument is void of any facts. One of our clients implemented Microsoft Exchange and had the service up and running within 48 hours of entering the order. Most IT professionals I’ve talked need several days after they’ve received the hardware and software. Since the software is already installed on the server (typically redundant servers), it has to be faster to implement. I do agree with Marks that businesses requiring complex integration may be better off with an on-premise solution. SaaS is not always the better solution just as on-premise solutions are not always better.
Myth #4: Your data is secure and backed up. He doesn’t state any facts other than two examples one which isn’t relevant. His claim is since SaaS applications are connected to the Internet there is inherent security risks. Every business I’ve ever worked with is connected to the Internet and most don’t have a data security expert on staff. Any credible SaaS provider has security expertise. They have to. One security breach could put them out of business just like a security breach to your business could be its demise.