What’s True SaaS And Why The Hell Should Customers Care?

Why Buy The Cow?

When I was barely into my teens, my mother’s (every mother’s of that era) version of the sex talk was captured in this expression:  “Why buy the cow when you can get the milk for free?”  This was long before birth control pills were invented, years before the “Summer of Love,” and decades before most of you were born, and I’ve often wondered if contemporary Moms still make this pitch.

What was so very insulting when applied to their daughters was central to persuading us that those nasty boys wanted something which, by our controlling the supply, we could trade for the financial security and social position of marriage.  Yuck!  Just be thankful that those of us in the front lines of women’s liberation did indeed free our younger sisters from being treated to this demeaning crap.

Roll the camera forward about fifty years, and it’s little wonder that I couldn’t stop laughing when I saw this visual for SaaS.  The vendors of traditional licensed/on-premise enterprise software succeeded mightily by following in the footsteps of my mother’s advice, and it has provided them with considerable financial security and market position.  By not letting you have the milk of enterprise applications unless you were willing to take on the cow of data center ownership and operations, applications management and upgrades, and so much more, the big ERP vendors and many others of that generation have served themselves and their investors very well.  But the times they are achangin’. 

Enter true SaaS.  Why do I call it that?  I have long since felt forced to make a distinction between the muddled marketing of everything under the sun as SaaS, faux SaaS, and what I think was always intended by that term because there are huge differences in terms of the business benefits, to both customers and their vendors.  So what is true SaaS?  In my view, true SaaS must include all of these:

1. Software is subscribed to customers by the vendor;
2. Software and data are hosted/operated/managed by the vendor; and — this is critical –
3. Software architecture is multi-tenant with a single code base and data structures, including metadata structures, shared by all customers — a requirement of true SaaS; and
4. The vendor pushes out multiple, functionally rich, new releases per year on a mostly opt-in basis.

Well, that’s all very interesting, but why should customers, especially HR leaders, care?  What is it about true SaaS that really matters?  Before offering a list of those potential benefits, let me note that, just as you can screw up most business as well as technology initiatives, it’s entirely possible to produce true HRM SaaS software that’s unprofitable, unusable, badly architected, built on outdated or just plain wrong object models, etc. – and it’s being done all around us.  So I’m going to talk about the potential benefits of true SaaS here with the understanding that these benefits are only realized if the vendor provides half-way decent true SaaS software.

Those potential benefits include:

• Improved economics for the vendor — can be passed along to the buyer;
• Improved economics for the buyer — SaaS always turns CAPEX into OPEX;
• Improved time-to-market, quality-to-market, cost-to-market — innovation and agility matter;
• Much more frequent and lower cost/risk upgrades, bringing new capabilities much faster and with much greater adoption;
• Value added and/or new offerings via inheritance and aggregation across tenants;
• Ability to share a single instance of 3^rd party embedded intelligence by those customers/tenants who select that option, thus reducing greatly the cost/pain of doing so;
• Vendor’s ability to focus, via crowd-sourcing, on areas of greatest functional need/interest/ROI, to include transformative ideas in HRM;
• Customers’ ability to share best practices, issue resolution, configuration artifacts, etc. with every other customer because whatever one does works with exactly the same software as all other customers; and
• Vendor and customer agility, with vendors being able to respond much more quickly to market requirements, to include the pace of change in mobile devices, and customers being able to respond much more quickly to the needs of their businesses.

Are there more potential benefits?  I’m sure there are, and it’s early days for realizing all of them.  Do the benefits outweigh the risks?  Yes, but only when you pick the right vendor/product with which to partner.  So how do you recognize the vendors and products which are making these potential benefits a reality?  Stay tuned for my next post.

(Cross-posted @ In Full Bloom)