SaaS: Shelfware as a service?

Summary:Software as a service is portrayed to be the future of information technology, but it isn't quite the cure-all it's cracked up to be. Shelfware and lock-in may not save you a lot of money.

Software as a service is portrayed to be the future of information technology, but it isn't quite the cure-all it's cracked up to be. Shelfware and lock-in may not save you a lot of money.

That's the message from Gartner analyst Rob DeSisto.

Here's DeSisto's talk at the Gartner IT Symposium in a nutshell:

The points from DeSisto are plentiful and are designed to be contrarian. Among them:

  • "Many of the bad practices that occurred in the on-premises world are also now moving their way into SaaS. The biggest example is shelfware. An early promise of SaaS is that you would pay for what you need, where in fact we see many companies over buying subscriptions leading to the new phenomenon of shelfware as a service. Shelfware as a service is analogous to on-premises shelfware but only now companies are renting the shelf from the provider instead of using their own data center."
  • No SaaS provider has come close to replicating Salesforce.com's success.
  • Vendors claim SaaS can be quicker to implement, save money and produce more rapid innovation. However, it's not that simple, according to DeSisto. Unless you can reduce or avoid hiring software headcount, skip purchasing hardware and forgo buying database licenses you may not save all that much with SaaS.
  • SaaS forced upgrades may pose compatibility issues and not be absorbed the enterprise users.
  • Ninety percent of SaaS offering are not "pay for use," but set contracts.

Of those points, the shelfware issue is the most interesting. Does it really matter if you buy or rent shelfware? It's still a waste. DeSisto writes:

Shelfware as a service is the concept of paying for a software subscription that is not being accessed by an end user. This most commonly occurs in large enterprises, but it could occur in any company. Shelfware as a service also happens when you're forced to downsize usage. For example, if you cut your workforce by 25%, then you no longer need the subscriptions for those employees. Whether you're phasing in or phasing out, you will unfortunately be part of this new phenomenon of shelfware as a service. Not only are you paying for using the software, you're also paying for not using it.

And here are a few numbers:

The main point: The verdict is mixed on SaaS thus far. The positives are relatively clear: SaaS fits in the operational budget, cuts infrastructure and management overhead, cuts short-term cost of ownership, can be implemented quicker and promise more innovation.

On the downside, SaaS can lead to shelfware, lead to application portfolio management issues, lead to unwanted upgrades, can be a security issue and clash with on-premise software.

Overall, companies need to have a system to evaluate SaaS providers and management techniques. If your governance is lacking you'll have problems whether you buy or rent software.

Topics: Data Centers, Cloud, Emerging Tech

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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