Billion dollar SaaS sectors

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Fact Checking 101

I completely understand that your post was intended to fuel debate. But your position is drastically undercut by your representation of traditional installed application providers as SaaS providers.

As a reminder to your readers, SaaS is about an entirely new business philosophy in which applications, content, and services are delivered as Web-based services from a shared, multi-tenant infrastructure that can be accessed on a pay-as-you-go basis. SaaS eliminates the costs and burdens of installing and managing software and hardware -- instead delivering business process and intelligence capabilities as a service. (A point noted in your own musings on the subject.) SaaS offers benefits over traditional installed applications in a number of areas, including deployment cycles, TCO, rapid and frequent application development/ enhancements, and community intelligence (Web 2.0).

More important to your readers is what SaaS is not. SaaS is NOT merely the next-generation of application hosting. I think even you would agree that vendors that merely host a dedicated instance of their application for each individual customer are not SaaS providers. They lack the multi-tenant architectures, pay-as-you-go-pricing, and flexible service and delivery to deliver the economies of scale, cost, and performance benefits of true SaaS.

In short, these vendors are equivalent of application vendors in drag. They might be able to affect the dress (and possibly even the voice) of Barbara Streisand or Cher, but they are still not the real deal. Underneath, they still have the plubming and the chromosones of an installed application provider.

For example, in your list of supply chain and spend management vendors, the only real SaaS providers are Concur, Ketera, and Rearden. The others -- like Emptoris and Frictionless (now SAP) -- are supply chain vendors that are now offering a hosted version of their application. They are hosting a dedicated version of their application. In many cases, they are still charging the customer for the software, the hardware on which it is hosted, and an ongoing maintenance fee. I think you would agree, this not SaaS!

You are doing your readers a disservice by referencing traditional installed application providers masquerading their dedicated hosted solutions as SaaS. There is no doubt from your coverage -- and the coverage of all the leading analyst firms and others like TripleTree and SIIA -- that SaaS is an important component of the future of enterprise applications. (In fact, their sizing figures for the current and future SaaS market far exceed those listed in your post. See IDC or TripleTree.)

Considering the importance of SaaS, I hope you will take the time to develop and utilize a litmus test by which to examine purported SaaS vendors. That way you can accurately inform your readers as to which vendors are the genuine article from which your readers can anticipate all the cost and performance benefits of SaaS; and which are merely appplication vendors in drag, attempting to trick your readers into believing they are something that they're not.

Posted by: Supply Insider   Posted on: 09/25/06 You are currently: a Guest | Members login | Terms of Use

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