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The Software-Service Continuum
As I read more about “software-as-a-service” I hear this very narrow definition being drawn of what software-as-a-service is. The definition seems to be as follows: software-as-a-service is good. The “old way” (whatever that is - more in a minute) is bad.
I have read lists of attributes (on which I have commented elsewhere) of software-as-a-service that are
- not intrinsic to a lot of the SAAS offerings I have seen and
- not limited to the SAAS offering I have seen
- not necessarily present together, even when some attributes are available.
The attributes seem to be:
- Allow try-and-buy: limited exposure to sample a piece of software
- Graduated pricing: allow control over the investment as more users come on board
- Very easy installation: minimal cost or time involved to get the first user going
- Very easy updating
- Recurring Revenue
These attributes all seem possible without having to offer a hosted software model, and a hosted software model is certainly possible without those attributes. For example:
- Allow try-and-buy: this is a classic sales approach that can be facilitated by a demo edition, low-fee pilot or small-scale implementation
- Graduated pricing: a straight-up pricing issue, which might have implications for the cost structure of the vendor, but not insurmountable
- Very easy installation: this should be a goal of any installation, and “appliance model” deployments and VMWare are making this ever-more achievable behind the corporate firewall
- Very easy updating: this is an attribute of most good software (though many firms want control over what version of software their employees use, so allowing the firm to throttle that deployment is often key)
- Recurring revenue: this is intrinsic to even perpetual licenses, because of service/update contracts that, in the long term, drive profitability of all software firms. To my mind, this is the biggest bugbear. (A SAAS enthusiast would point out the difference between recurring license revenue and service revenue, and there is an interesting debate here that can be discussed some other time)
All this is not to say that “SAAS sucks” but rather to say that there is are continuums of development, delivery and pricing that we as software providers can utilize to best serve our customers, and that each of us can and should apply those attributes of SAAS that best serve our customers.