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Tuesday, March 28, 2006

The SaaS Hype : Insider’s Take

Phil Wainewright recently brought out issues of information misrepresentation between two SaaS players – Salesforce.com & Entellium. I did not want to comment on this as I have seen on numerous occasions product companies play dirt and exchange slinging muds.In the process, some thing interesting has opened up - a new insight,coming directly from the insider camp. Courtesy of Dennis Howlettsaw this insightful assessment from one of the SaaS insiders. Entellium’s marketing director Natalee Roan lists the key issues that customers need to be aware of while embracing SaaS. Some key points with edits and my comments in brackets :

• Need to sign long-term agreements and pay upfront for a 12-month contract. Somehow hosted CRM companies get to market a monthly fee and then charge a year or more before you even get started. (I think that with awareness & skillful negotitation, the contractual terms may be changed but its indeed a telling statement.)

• They turn the sale into a "features-functions" war rather than take the time to understand what you need. (Absolutely agreed - in general, enterprise CIO's may begin to find this approach dificult to digest)

• The SLA management frameworks are loaded in favor of the service provider. The best of them o say nothing about back-up schedules, downtime notifications, incident resolution times….all critical items in Software as a Service, or hosted solutions.
( Lets give time - The industry is quite young - but seen from a buyer perspective, this is alarming)

•The industry seems to intentionally avoid standardization just to keep their high prices in tact, with hundreds of partners waiting to take a bite out of the unwary buyer. The ploy is to make the buyer believe your business so special that this extra work is needed in the name of "customization". The entire industry is a feeding frenzy on the customer. (Am not too sure on this front – most of the SaaS products are state of the art in terms of technology – Web Services & SOA standards are in reasonable shape now. However Integration brings forth complexity of its own kind – process level, data level, technology centric like that of legacy systems and under optimized topology & architecture would force efforts – not to defend anyone here. I would also like to know if some one can point me to big oodles of money made by service providers in implementing hosted solutions)
In summary,

even with hosted CRM companies that advertise "No Software" –You buy more features then you can possibly use, on a long-term agreement that you pay for up-front, with no service guarantees if something goes wrong. Further, you wind up paying them to support their own product, and needing them or someone else to make the product work the way they told you it would before you signed on the dotted line in the first place

Is this acceptable to you? A clear NO is the answer here.

We recently covered Matt Miller saying,SaaS is only at action the press level and even CIO’s tending to agree that the perpetual license model is dead, have not committed any big dollars to subscriptions. I wrote about this several months back – SaaS : Overwhelming issues coming in the way of adoption , concluding that not a very easy path lay to embrace Software-as-a-Service model. I think that the conditions have not changed much in the last few months after this got published.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"