BusinessWeek has a story today " Software as a Service Myths " written by Jeffrey Kaplan of THINKstrategies. The story is very positive on the future of SaaS and debunks some of the myths or knocks against SaaS. I wrote a story on the strategic issues for software companies that want to offer SaaS products and services. I am positive on the SaaS model but there are issues for both customers and suppliers to consider.
I encourage you to read the whole BusinessWeek story but here is a summary of the myths and responses.
Myth 1: Saas is still relatively new and untested - ADP has provided payroll services in a SaaS model for years. Salesforce.com is more than 5 years old.
Myth 2: SaaS is just another version of the failed ASP model and will suffer the same fate - The story blames most of these failures on dot com companies that were not really ready for prime time. It will be different this time.
Myth 3: SaaS only relieves companies of the up-front costs of traditional software licenses - The writer suggests that it is not just the up-front costs but also the IT infrastructure savings that makes SaaS a good deal.
Myth 4: SaaS is only for Small Mid size businesses and will not be accepted by large scale organizations - Companies of all sizes use the SaaS model. It really depends on the type of application more than the size of the company.
Myth 5: SaaS only applies to applications such as CRM and Sales Force Automation - Front office solutions certainly make sense but more and more back office applications are using the SaaS model.
Myth 6: SaaS will only have a minor impact on the software industry and will fade over time - THINKstratigies survey says that one third are now using SaaS and another third plan to in the future.
Myth 7: It will be easy for the established software vendors to offer SaaS and dominate this market - Large software companies will need to re-architect their products, and they will need to revamp their sales compensation models.
Myth 8: SaaS is only for corporate users - McAfee and Symantec anti-virus services are examples of consumer SaaS. Microsoft Office Live is aimed at both small businesses and home users.
