Taking SaaS both ways

Who's kidding whom about SaaS success rates? Oracle blogger Anshu Sharma says SaaS lovers want it both ways when quoting market research figures. I say it's the established enterprise software vendors who are trying to fudge the figures.
Written by Phil Wainewright, Contributor on

Enterprise Irregulars blogger Anshu Sharma posted a short rant at the weekend alleging that SaaS lovers want it both ways. Like many rants, Anshu's post makes so many sweeping statements of dubious merit that I immediately promised him a searing riposte, and here it is. I should add by the way that my ire is directed at the views expressed (or inferred), not at their author, who I like and respect.

What really annoys me about posts like Anshu's is that it gives false succour to people in the conventional software industrySo who exactly is trying to have it both ways? who still can't face up to the radical changes they're going to have to make to their products and their business model if they're going to have a chance of surviving the next decade. And that includes Anshu's employer Oracle, as I mentioned last week. They seem to latch onto this notion that, so long as they're pursuing some kind of SaaS, then they're in the clear (or as Anshu puts it in that kind of mealy-marketing-mouthed way that people use, they "talk[] about [their] success in SaaS by pointing to the wide range of options in the SaaS business.")

Anshu then has the gall (or let's be forgiving and call it naivety) to suggest that this lumping-together of all forms of SaaS to suit the worldview of unreformed conventional software vendors is somehow all the fault of SaaS purists (like me, I suppose). His clinching evidence in support of this trumped-up charge? We're always quoting market research from the likes of — no wait for it — Gartner.

I for one would welcome it if Gartner's research broke out the market penetration and growth rates of multi-tenant SaaS versus other models, but of course none of the mainstream analyst groups are doing that at present, and we SaaS purists have to take their figures as we find them. Gartner and the rest have to serve market demand, like any other business, and it just so happens that some of their biggest clients are the established enterprise software vendors, who as already mentioned above, prefer to lump together a "wide range of options" when measuring their own SaaS success. Probably their reluctance to distinguish between multi-tenant and other models is one of the reasons why the market research companies can't produce reliable figures for each model. So who exactly is trying to have it both ways?

The trouble with this is that a lot of well-intentioned smaller companies are desperately trying to figure out when and how to embrace SaaS. During the transition period, it's often right for them, as Anshu suggests, to "adopt a range of delivery model options to fit the customers need and economics of their particular business." I myself give similar advice. But they mustn't be allowed to fool themselves into thinking that's all they need to do. SaaS is a journey, and the destination is a shared services, multi-tenant model (plus a lot more besides).

In truth, as he makes clear in the comments to his original blog posting, Anshu accepts this. It's also what Gartner's analyst Ben Pring recommends in the report Anshu links to, according to a report by CIO Today:

Gartner analysts said the scale of change that SaaS will produce requires providers to keep ahead of the SaaS wave. To do this, they recommend, among other options, to use products built on next-generation Web services, SOAs and highly automated server farms to produce "multitenant, mass-customizable products that facilitate agility while sustaining uniqueness at a reduced cost."

So the only thing Anshu is complaining about is that Gartner's headline figures are for all forms of SaaS rather than purist multi-tenant forms. What a storm in a teacup! Inevitably, with a lot of established vendors still vainly trying to gain market traction with increasingly desperate variations on an ASP-style hosted applications model, a lot of the market today consists of non-purist implementations. That means the purist market share is much smaller than the whole of SaaS — although I wouldn't go along with Anshu in dismissing it as "a relatively small niche market today with limited adoption." But I would also submit that its growth rate is dramatically higher than the old-school varieties of SaaS/SoSaaS (if they're growing at all, that is) and that the multi-tenant share of Gartner's projected $11.5 billion by the end of 2011 will be significantly larger than all other forms of SaaS. By then, perhaps the analysts will even break out the figures so we can finally find out who's kidding whom about SaaS success rates.

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