Hybrid SaaS Approach Is Likely Way to Go

Ann All

I addressed one of the most common bugaboos about software-as-a-service -- concerns over its integration capabilities -- in yesterday's post, citing users who say integration isn't a big issue because of the Web-services based architectures upon which many SaaS vendors have built their applications. Their good advice: Grill vendors about integration during the vetting process.


Integration was one of the concerns mentioned by SMBs that Forrester Research surveyed about SaaS earlier this year. Other issues were total cost of ownership, security, impact on application performance, lack of customization, complicated pricing models and difficulty finding the desired applications. Most of these same factors also show up on a list of SaaS concerns among larger companies.


This isn't exactly news. Over and over again, we've heard about these same worries slowing broader adoption of SaaS. And they aren't going to go away. Which is why a number of folks, including ZDNet's Joshua Greenbaum, believe that a hybrid approach incorporating both SaaS and traditional on-premise delivery models will ultimately prevail. (Sorry, Marc Benioff, the rumors of traditional software's death have been greatly exaggerated.)


Customers always want choice, Greenbaum insists. Vendors who offer both SaaS and on-premise applications -- much like Microsoft and SAP hope to -- can better offer their customers the kind of customization capabilities and control over data and processes that SaaS pureplays cannot, writes Greenbaum.


I couldn't agree more. In fact, earlier this year I opined that SAP should focus on offering online tools or services that would extend the capabilities of its on-premise software, something of interest to companies of all sizes.


Rightly or wrongly, plenty of folks just aren't quite comfortable putting sensitive data in the cloud. That's why, writes Greenbaum, smart SaaS vendors "will have a hybrid offering precisely to capture these customers and either convert them when they see the light or keep them from going to the competition."


A hybrid approach, which is inherently more flexible than a traditional suite of on-premise software, lets customers have their customization cake, eat it too and, heck, maybe even get the recipe. They can customize apps to their hearts' content, in instances in which customization lends a strategic benefit, while opting for a less costly and complicated straight SaaS model elsewhere.

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Add Comment      Leave a comment on this blog post
Sep 5, 2008 12:10 PM Sara Spivey Sara Spivey  says:
Packaging your software in a virtual machine image format (virtual appliance) with all of the stack components required to run that application as a virtual machine is an excellent way for ISV's to derive all of the benefits of a SaaS model (low certification and support costs), but still provide the customer with an on premise version of their application. Once an appliance has been created it can be run anywhere, including in a 3rd party cloud compute environment like Amazon's EC2. Achieving a hybrid SaaS model has never been more simple! Reply
Oct 24, 2008 9:46 AM ramkumar ramkumar  says:
I tend to agree to this in principleSaaS has been a hoopla. Though the concept is good, it has enough drawbacks to keep it from moving at the pace that everyone expected it toHybrid seems to be a better option. But making in-house systems and SaaS work in tandem will be another big headache..I have a question though. What are the key component or components of a SaaS offering ? Which of these components cost contribution is high e.g. application component, database component, HW, Network, security etc. Do you believe that if we can build a model in which we have the components distributed in such a way as to reduce the TCO companies would go for it ? Reply
Jan 21, 2009 6:47 PM SimonGantley SimonGantley  says:
This Hybrid SaaS model provide the advantages of the SaaS model, while mitigating the drawbacks. For example, the hybrid model allows companies to move the software and data in-house when: * They need to store highly sensitive information and are concerned that SaaS providers might have inadequate security or be socially engineered * They need tight integration with sensitive back-end systems and this is either technically impossible with a remote system, or their IT department is unwilling to create holes in the firewall that would permit an outside server to initiate actions on internal systems. * They need to transfer large files and cannot afford the delay that results from the typical Internet connectivity speeds of 100kbs - 1000kbs, as compared to internal Ethernet speeds of up to 1,000,000kbs. * They are concerned about the long term financial viability of their SaaS vendor. * They need to modify the core software itself. * They would rather pay a lump sum than monthly rental charges that every 2 years may total the cost of purchasing the application outright.The adoption of this model by vendors such as GoogleDocs Offline, EnterpriseWizard CRM and Microsoft CRM illustrates that it is gaining traction quite rapidly and will probably replace "pure" SaaS. Reply

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