Misinformation About Enterprise Software as a Service


In a recent blog post, I asked you to suggest some IT and enterprise software claims you would like me to look into. Send me an e-mail or post a comment to get on the list. To kick off the process, I have picked my favorite misinformation subject in the blogosphere. It usually comes with the headline "Software as a Service (SaaS) will take over the world." Or "2009 will be the year of SaaS." Or "SaaS is the next big thing."


On December 22, I pointed out the extent to which a lot of blogo-analysis mixes up IT functions, value propositions and delivery methods. The particular subject that day was ERP vs. SaaS but the problem exists in many other areas of IT (e.g., service-oriented architecture vs. business process management, open source vs. cloud computing). As I concluded in that post:

"SaaS-delivered ERP has been popular in health-care delivery, community banking, professional services, construction and other services industries since - since back when we called it timesharing."


So SaaS is not going to be the next big thing because it is in fact the oldest way of delivering enterprise software. It is not that the IT world is going to SaaS; IT is either heading away from it or returning to it, depending on which set of statistics you use. I believe it is the latter.


The move away was primarily led by large enterprises and product-supply-chain industries (manufacturing and distribution) that did not like the services approach to IT by which early technologies were delivered. Larger enterprises perceived or actually realized economies of scale by doing their own IT administration/IT ownership, and even smaller enterprises in the product supply chain were forced to go along with the larger enterprises because the larger enterprises were their customers and/or suppliers.


Not surprisingly, services supply chain industries had no problem with timesharing/service-bureau/application-service-provision/SaaS delivery because that is how they did business. And smaller enterprises, if they are not otherwise forced to bring IT on premise, like SaaS and its predecessors because it offers more manageable budgets. They realize that they are paying more per transaction (or whatever metric they use) for that manageability.


So sorry, blogosphere, 2009 will not be the year of SaaS and SaaS will not beat ERP and SaaS will not take over the world. But it will be one of the continuing methods of acquiring IT and enterprise software that you all use for a long time to come.