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.

2 comments:

ro said...

I don't see the point of moving between one service provider and another if the SaaS is specific enough for you needs and your relationship with the provider is productive and the SaaS is evolutionary and customizable. You should take a look at MTI's Brick N Click for eBay, retail SaaS that is cutting edge in the retail sector and is customizable for a retailer. You should visit their webpage that provides a deeper explanation of the service(http://www.mtiretail.com/SaaS_Info.cfm. They also have a webinar if you would like further details. http://www.mtiretail.com/BrickNClick.cfm?PgID=1

swardley said...

"I don't see the point of moving between one service provide" - the reasons why you should want to be able to move from one provider to another include competitive pricing, security and avoidance of lock-in.

"if the SaaS is specific enough for you needs and your relationship with the provider is productive and the SaaS is evolutionary and customizable" - these are product sentiments translated to a service world. What you want are for ubiquitous and well defined activities to be provided as services which can be combined into new activities. Those services should be portable and interoperable. It is no different from manufacturing and second sourcing.