We offer our systems both via SaaS and Appliance models and are starting to experience exactly the same dynamic in the commercial sector that we have with education. A couple of years ago the UK government practically mandated the use of a SaaS (Software as a Service) model for software delivery in schools, but there are a few fundamental reasons why people choose not to – not yet anyway. This is primarily to do with performance, availability and security.
I recently spotted a comment from Ross Mayfield, CEO of SocialText, one of the most visible in the Enterprise 2.0 crowd, saying that “of their 4,000 customers, 80% use the SaaS product, but 80% of their revenue come from the appliance”
This is the same message: sure, there are lots of people talking about SaaS, lots of people “playing with it”, lots evangelising about it, but at the end of the day those that take their enterprise technology seriously want a server in their organisation where they can guarantee it’ll be available, run quickly enough to handle their ever increasing data usage, and where they can see, touch, smell and caress it.
SaaS is, however, a very effective marketing system as it allows people to get hooked in without having to make a significant purchasing decision. Some folks use the same marketing principles with crack…
It depends what you want to do with your software as to what model is appropriate:
An occasional check into your sales force automation software between sales visits to get ‘phone numbers and type a few notes in from your last appointment. Fine. SaaS is perfect for this.
On the other hand, 300 users all logging in at EXACTLY the same time (at the beginning of class) and then downloading their various Microsoft Office documents over a broadband connection shared with 20 other schools doing the same thing. Probably not ideal…
If you can’t update your appointment notes for an hour or two on your SFA application, it’s not the end of the world. On the other hand, if you can’t get to all your teaching resources at the beginning of class, with 30 expectant faces staring up at you…you’re going to be a little more careful about where you put the stuff you “need” in future.
No confidence it’ll be there when you need it = no users.
This issue is more one of confidence and to some extent, social acceptance. Many are becoming less sensitive about where their data is held, but there are still concerns for most.
There is an important distinction to be made here though. One of the key benefits of SaaS is that you don’t need the skills or resources to manage the technology infrastructure. The concept of an appliance does differ from that of software that you buy on a CD and install yourself. Appliances are delivered as a combination of both hardware and software (think of the Sky box under your telly) – it’s a fully managed service, giving all the benefits of SaaS, but without any of the drawbacks. I expect most “mission critical” software to be delivered to organisations through appliances (or possibly Virtual Machines) for a few years to come yet (with one or two exceptions, based on application type that lend themselves perfectly to SaaS)