Software-as-a-Service (SaaS) applications enjoy a number of “unfair” advantages over traditional on-premise applications. SaaS applications are easier to develop, they evolve much faster, enjoy faster/easier deployment, enable more responsive support and maintenance, deliver social benefits and more. While it may seem counter-intuitive, they also support strategic IT initiatives like data federation, integration and security. Because of the overwhelming advantages of SaaS applications, they will ultimately replace most current on-premise applications.
Software-as-a-Service (SaaS) applications enjoy an overwhelming collection of unfair advantages over on-premise applications. Over the medium-term—not to mention the long-term—on-premise simply cannot compete with the vast array of benefits enabled by the SaaS model. Because of the rapid evolution—not to mention the host of other advantages—of SaaS applications, on-premise applications simply cannot keep up, let alone catch-up, with the SaaS alternatives.
You may not even recognize it, but many of the applications you use today are SaaS, or web-based applicaitions. Examples include webmail (Gmail, Yahoo Mail, Hotmail, etc.), social applications (Facebook, Flikr, Yelp, etc.), productivity applications (Google Docs), storage applications (Box, Dropbox, Google Drive, etc.), enterprise applications (Salesforce, ServiceNow, Workday), and much more. All of these applications have enjoyed dramatic growth at the expense of legacy installed applications.
The success of these SaaS applications is not simply the result of superior business execution. The SaaS delivery model enjoys an inherent structural advantage that is overwhelming. Below is a description of some of the most important SaaS advantages. Given these advantages, it is difficult to comprehend a scenario in which SaaS doesn’t replace the vast majority of on-premise applications.
|Faster Development / Simplified QA||While on-premise applications must be developed for, and tested on, a variety of platform combinations (operating system, hardware, security, tools, applications, etc.), SaaS applications are written to run on a single controlled environment (the developer’s), resulting in dramatically easier and faster development, debugging and support. SaaS applications also don’t have to maintain old versions of their software—a significant effort for installed software—there is only one version for everyone. This results in much faster product evolution, among other things.|
|Faster/Easier Deployment||Deploying on-premise applications in a large company can take month or even years and requires a great deal of work, with no guarantee of success. SaaS applications aren’t deployed on the users’ physical machines. The user simply gets a username and password and starts using the application. If there is personalization or configuration of the SaaS application, it is only done once, instead of for each computer, like on-premise applications. As a result, SaaS applications are faster and easier to deploy and they dramatically reduce or eliminate traditional deployment costs.|
|Faster Product Evolution||Most users, or IT people, will only install software upgrades every 12-18 months, because of the time and costs involved in deploying onsite software. Many SaaS applications will deploy new features every 6-12 hours. If one deployment model enables new features every day and the other requires a year or more to get a new feature out, which one do you think will evolve more rapidly? This is a HUGE advantage! If my application can evolve 365-TIMES faster than my competition, the competition simply cannot compete.|
|Tighter Linkage Between Development & Operations||On-premise software companies develop their application, then QA it, then they ship it to customers (AKA beta testers), and then they wait for problems to emerge. SaaS vendors “eat their own cooking” because they operate and maintain their own application. In fact, SaaS companies merge development and operations into a single job function (DevOps). This linkage between development and operations results in better software and faster problem discovery and resolution. When your customer is in the cube next to you, problems get resolved very quickly. When the customer is on the end of the phone and there is a six month lag from adding a feature to when the customer calls with a problem, problem resolution can take a very long time to recognize, let alone resolve.|
|Lower Costs||SaaS applications are typically designed and built to be cost-conscious in deployment and operation. When the developer pays the cost of operation, they build the application to operate very cost-efficiently, using open source tools and running on low-cost but highly-secure and scalable cloud infrastructures.|
|Try Before You Buy||SaaS applications often charge based upon usage—which only SaaS applications can monitor—so they can reduce or eliminate large upfront license fees. In addition, they avoid the entire deployment process. As a result, users can often simply try the software and experience the benefits before they purchase it. Furthermore, SaaS applications have little or no vendor lock-in, so if a better SaaS application comes to market, switching is fast and easy. All of this makes buying SaaS software much faster and easier.|
|User/Usage-Driven Product Evolution||Unlike an on-premise application, SaaS developers get real-time analytic feedback on user behavior and usage patterns: which features are used frequently, which are underutilized, etc. These analytics enable the developer to focus on, and rapidly evolve, the features that are most important to users. Users don’t realize it, but by simply using the SaaS application, they are invisibly building the developer’s product roadmap. SaaS developers can also do A/B testing, deploying two versions of a design or feature to see which design is most appealing to customers. In other words, instead of guessing what users want, customer usage patterns tell the developer exactly what customers want. On-premise applications, on the other hand, ship a product and then wait to (hopefully) hear from customers what they did right or wrong.|
|Far Superior Support||How many times have you talked with a support person who asks you for information about your environment (hardware, operating system, software, etc.). Then they try to divine what is happening on your system. They might even have to remote in and check configuration and other files. Then they have a collection of known issues and conflicts to wade through to see if your problem has a workaround. They may also need to ask you whether you have installed the latest patches for a variety of applications. SaaS support is far easier, usually going something likes this: “Ok, let me log-in as a super user and fix that problem.” Any support engineer who moves from supporting an installed application (guessing in a fog) to supporting a SaaS application (fixing it immediately), will never go back.|
|Faster Bug Fixes||When a single user identifies a problem with a SaaS application, the developer can typically have a fix deployed for ALL customers by the end of the day. An installed application might develop and test the patch (for the various versions of the application they support, not to mention the various platforms) then alert their customers to the patch. Then it could then take weeks or months—possibly even years—for companies to deploy the patch on their various servers and/or desktops. By the time on-premise applications deploy the patches, it is safe to say that a significant number of users have lost a great deal of productivity due to the problem. The simple question to ask yourself is: “What is the turn-around time from reporting a bug, to company-wide deployment of a fix?” For SaaS, many bugs can be reported, fixed and deployed the same day.|
|Leverage Suppliers to Offload Mundane Work||SaaS can easily extend accounts—with limited functionality—to various suppliers, enabling them to handle mundane tasks like data entry. For example, DeepData enables Service Providers and Company Men to enter their data, while restricting them from seeing certain data and functionality. This dramatically reduces the Operating Company’s data entry work and reduces data errors. By contrast, ask your IT guy what is involved in extending third-party access to an installed application. You’ll probably get an hour long description of firewalls, keys, user rights and all sorts of organizational hurdles that will take months overcome…assuming they are even willing, or able, to do it.|
|Eliminates Annoying Anti-Piracy Issues||nstalled software often comes with dongles, server-specific licenses or keys, and other anti-piracy constraints that can quickly become an operational nightmare. Most SaaS applications bill based upon usage, so they are flexible about things like which computer you use and where you login.|
|Supports Corporate Data Federation or Centralization||Many companies want to centrally normalize, store and manage the data created across the entire company. They frequently believe that standardizing on certain applications and databases will make this happen. It doesn’t. It makes it easier, but it is by no means automatic. Various departments and even users will maintain their own data silos. If the installed application relies on third-party tools like Excel for charting and manipulating data, for example, you can easily end up with different incompatible Excel files scattered across different computers, undermining your data federation goal. With a SaaS application, IT people can get “Admin” rights, giving them access to the entire collection of data, across the company. Since all data for that application is available from a central location, data federation is a snap.|
|Reduce Data Loss||If your data is distributed across various laptops in the company, you might have a user leave the company and take his data with him, or someone might accidently delete the shared file, and IT only has a week-old backup. By centralizing data and limiting the export to Admin users, other users can manipulate the data but they cannot export and copy it. This enables the company to protect their data assets and reduce data loss.|
|Superior Data Integration||Companies may want to share their data between applications. On-premise applications installed on multiple servers or laptops can result in data being spread across the organization, making it difficult to integrate with other applications. SaaS applications can expose the data, or they can even expose standard integration APIs, providing a single point of integration. As SaaS applications establish market leadership, they are then able to build ecosystems of applications that leverage their APIs to deliver extended services to the users (e.g. Salesforce, Facebook, Workday, etc.)|
|Enables IT to Focus on Strategic Initiatives||SaaS offloads the mundane and often high-pressure tasks like installation, configuration, troubleshooting, data backup, creating a chart or report, etc. Instead, IT can focus on more strategic and high-value projects like application integration and data federation.|
|Security||There is a commonly held belief that on-premise applications are more secure than SaaS applications. Studies show that clouds are more secure than corporate networks. Further, SaaS applications have excellent records for data security because they only need to secure a single application with well-established access points and usage models. Corporate networks typically have multiple access points (many running legacy applications or old versions of software or firmware) and very diverse usage models (e.g. copying an entire drive might simply look like a backup) as well as potential threats introduced by users. Bottom line, securing a diverse corporate network is far more challenging that securing a single SaaS application.|
|Aggregate Data Insights||While SaaS applications never expose one user’s data to another user, there are some situations where sharing aggregate insight can be very beneficial to all users. For example, SaaS applications can show how a user’s results vary from the industry averages, or where they rank (e.g. top 10%, bottom 20%) across a variety of metrics. This sort of insight can be invaluable to users who can then discover areas of potential improvement. On-premise applications do not have access to the data, so they are unable to provide this valuable service to their customers.|
|Social Benefits||SaaS applications can also provide social benefits, or benefits that result from other users of the SaaS application. This is often referred to as the wisdom of crowds. A simple example of this is DeepData’s charting. Users can generate more than 40,000 different charts, based on the variable selections for the X and Y-axis. DeepData simplifies this overwhelming optionality by listing the most popular chart configurations across your company and also across the entire user base. Another good example of the social benefit of SaaS applications is Google Gmail’s spam filter. Once a certain subset of users flag an email as spam, Gmail removes that email from all other in-boxes, so you as a user may never even encounter that spam email message. As a direct result of the SaaS model and this wisdom of crowds, Gmail has one of the best spam filters in the industry.|
If we are going to present the advantages, it is only fair to also present the disadvantages, both perceived and real.
|Requires Internet Access||While some SaaS applications have an offline version—notably Gmail—most require full-time Internet access. This is generally not a problem in modern society. However, In the case of oil and gas companies, users in the field may not have Internet access. There are generally offline workarounds to reduce the impact of connectivity issues. In the case of DeepData, we supplement the SaaS app with a mobile app to collect data and then it syncs when/if a connection is available.|
|Data Ownership||Because it is core to their business, SaaS vendors must be good stewards of the customers’ data. However, some companies want to take ownership of their data. SaaS applications typically provide a mechanism for customers to download and backup their data, minimizing this issue. In fact, SaaS applications typically enable a company admin to access all of their data from a central point—versus disparate laptops, desktops and servers—simplifying the data ownership issue.|
|Customization||This is a red herring. SaaS applications can be customized just as much as on-premise applications. A good example of this is Gmail, where users can set-up email folders, assemble email routing rules, connect to various mail servers, add various accounts and signatures, modify the look and feel and much more. SaaS applications do provide a single core set of functionality, but modern design principles make them just as customizable as installed applications.|
|Richness of Functionality||This was once true but it has been solved. Years ago, capabilities like drag-and-drop simply weren’t available in browser-based applications. The use of java script and other technologies now enable SaaS applications to provide the same rich functionality available from on-premise applications. For example, one can compare DeepData crossplots to the graphs from the competition. Unlike the flat graphs of the on-premise applications, DeepData’s graphs are highly interactive with tooltips, pop-ups, zoom-in, and click-through to drill-down to the underlying data.|
SaaS applications enjoy an overwhelming array of advantages over on-premise applications. SaaS applications provide instant deployment, lower costs, visibility into usage patterns, far better support, social benefits and more. But above all else, the simple fact that SaaS applications can deploy enhancements on a daily basis, versus annually for on-premise applications, enables them to evolve hundreds of times faster than on-premise applications. This means that SaaS functionality will quickly surpass that of existing on-premise applications. If the initial entrant into the space is a SaaS application, like DeepData, there is no way an on-premise competitor can catch-up. For these reasons, we fully expect SaaS applications will continue to displace installed applications at an ever accelerating pace.