SaaS-querade: When On-Premise Vendors Try to Pass as SaaS Vendors

Customers who don’t see through the fakery will get stuck with old, expensive solutions

Lately, my phone and calendar are getting filled with calls from vendors who want to tell me all about their re-purposed, on-premise applications. The calls have a few familiar aspects but they’re all masquerades. And, mostly, they’re bad for software users.

First, the pattern:

An on-premise vendor, seeing softness in new license sales numbers, starts to (finally) realize that Software as a Service (SaaS) is real. So, the vendor decides that a ‘hosted’ ERP application is a close enough facsimile to a SaaS solution. All the hosted product needs is a bit of SaaS marketing and it’s a done deal. Right? Wrong!

A dear friend of mine is a software marketing pro. She told me that her ERP product is about to get a big splashy marketing campaign announcing its SaaS credentials. I immediately said that this can’t be as its an old school ERP product that the vendor sometimes hosts. She replied that whether the solution is hosted by the vendor or in someone else’s cloud is immaterial to a customer.

That’s really wrong on a number of fronts. To begin with, a hosted on-premise product is likely not a multi-tenant solution. Multi-tenancy permits a vendor to apply a software upgrade once and have it automatically work for dozens or hundreds of customers simultaneously. In a single tenant solution, the software vendor must apply the changes one customer at a time. The latter approach is very expensive and potentially error-prone.

My good friend said that this argument (multi-tenancy) is immaterial to the customer as the responsibility for applying upgrades is the vendor’s problem not the customer’s. Again, this is wrong. This leads to the second point: When solutions are not multi-tenant, they will be more expensive to upgrade and the vendor must either pass those costs on to the customer or the vendor must be willing to offer few upgrades to the product. Seriously, who wants a product with a built-in cost disadvantage? Who wants a product that a vendor is disinclined to upgrade? No one does. Multi-tenancy is a necessary component to true SaaS solutions if the customer is to get frequent upgrades and a lower cost solution.

Other on-premise vendors are trying to convince me that their SOA (service oriented architecture) stack is also a Platform as a Service (PaaS). This is another marketing stretch. A SOA stack is good for integrating other applications and technologies with on-premise applications. While these integration capabilities are desirable, they are a far cry from the cloud-enabled, rapid development and extensible platforms offered by Salesforce (i.e., Force.com) and NetSuite (i.e., NS-BOS) to name but a few. Those platforms are so powerful, third parties have built huge new product lines that are tightly integrated with the core offerings of the PaaS provider. A PaaS is more than integration. PaaS permits users, resellers and others to develop entirely new applications.

Other on-premise vendors are trying to pass off a workflow management capability as a PaaS. Again, this isn’t true. Most workflow management tools allow a customer to alter workflows and other functionality in a pre-existing software package. These tools rarely offer a full development platform that permits the creation of all-new applications. To that end, I’ve seen firms build entire MRP, harbor management, accounting and other solutions using a PaaS. You’re not going to get that far (easily) with a workflow tool.

The hype machinery is also going full-bore to convince software buyers that SaaS-enabled applets or bolt-on applications around older on-premise applications are a great value or proof that the vendor is delivering on SaaS. That, too, is a bit of a stretch as the cloud-based applications may possess different technical architectures than the on-premise applications they are supposed to work with.

Those architecture differences could make configuration changes a challenge. Suppose you want to tailor the new cloud-based application. Will its configuration changes work with the old on-premise product? Probably not. Those changes will need to be replicated with a different set of tools in the on-premise application. And, that’s assuming those changes are even possible in the older products. This spring brings an exceptional level of FUD (fear, uncertainty and doubt) to the applications world.

And, I fear the FUD will continue to grow at an exceptional rate. Software buyers really need help now. The misdirection and misinformation may create too many opportunities for bad decisions. Sir Walter Scott may have had it right in 1808 when he said “Oh, what tangled web we weave. When first we practice to deceive.” I think he’d want to update those lines today…..