I had an interesting call today. Someone inquired about using DigitalChalk and began asking the usual questions. A question that often comes up revolves around "can I install this on my servers?" Although most people use software as a service in some aspect of their lives, many don't necessarily think about the difference between that and installing software that they have purchased in a box. When I explained that this is a service that he can subscribe to, he began telling me that they (his business) had explored software services such as Salesforce.com but opted to buy box software because they "own" it and they can "control" it.
The comment and underlying mindset indicated to me that there is a basic disconnect for some otherwise very bright people when it comes to software and how it's used. The truth is that all software is a service, it lives for a period of time in a computing environment and does something for us, typically with our data. The data was really what my new friend was concerned about. He perceived that his data was either lost or not usable without my software. To some extent his concerns are valid but in reality, he doesn't gain more assurance of future value of his data by running the software on his computers verses accessing it on the Web. Here are a few things to consider when looking at a buy vs. subscribe decision:
1. Can you reasonably duplicate or exceed the level of service and redundancy on your infrastructure that your service provider is offering you? This requires that you get your service provider to give you some peek under the covers and a reasonable SLA. Typically if a service provider specializes in a software service, they have much more capacity and redundancy than you would invest for your own needs.
2. Do your box software and online service provide both provide you with the ability to extract or back up your data and IP assets into an external media that you control? If either one cannot, it should be a deal breaker. Just because the data is stored on the hard drive you manage, it doesn't mean that your content can be extracted from the software that manages it.
3. Does your software or service have a community around it? Typically the best answers for how to do something or fix something in software comes from the community, not product support.
4. Determine the real cost of software. One of the reasons SaaS has risen quickly in popularity is the relative ease of use it provides in comparison to box software. The hidden costs in servers, maintenance contracts, added staff and supporting infrastructure can often add up to costs several factors greater than the cost of acquiring the software. Lower up-front cost and most importantly, lower risk is driving the adoption of SaaS.
5. With SaaS you get to use the technology from day one and you only pay for what you need or consume. This is the Killer App part of SaaS. With Salesforce for example, we were able to start using the CRM tools within hours of signing up to track live accounts. I didn't have to pick a software package and I can't imagine out growing their service.
The final reason why SaaS is something you should get comfortable with now is because soon, it may be your only choice. Most new consumer and enterprise software technologies are being developed as a service offering. Box software is very rapidly going the way of the CD. Try it out, give some thought about your risks and then put into place processes to protect your data.
Oh, one other thing... your competition is using SaaS and they are saving big bucks.