Saturday, June 21, 2008

Some basic SaaS questions ...

SaaS is simply the move of IT from a product to a service based economy and as a result it promises all sorts of benefits through componentisation. If you want to realise those benefits then there are two basic questions you need to ask:-

  1. Is there a standard service?
  2. Are there alternative providers of the standard service that I can simply and almost instantaneously switch between?

Unless the answer to both questions is yes, then you will in effect be locking yourself into a strategically weak position in terms of pricing, competition and security. Of course there are other methods of lock-in including network effects such as market reports but portability and interoperability are the most primitive methods.

Just be aware that there is a severe risk of lock-in in the SaaS world today. Whilst there are circumstances where it is reasonable to allow your company to be locked-in to a single provider, they are few and far between.

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