The European Leaders Network recently ran an article entitled Procurement Technology: The Skills Deficit where the author attempts to clarify the difference between what SaaS is and what SaaS is not.
The article points out that SaaS is not simply for the small to medium size enterprise, but for an organization of any size, even a large one, as it offers increased choice, flexibility, and scalability. Furthermore, it points out that software is only part of the solution – where technical product excellence is fully backed up and integrated with relevant market knowledge and expertise. Consulting services that include sourcing strategy development and sourcing process execution are also required for a true SaaS eSourcing solution and all the benefits of what it has to offer.
Although this should be old news (Iasta has been offering a true SaaS solution since 2002 and seen the benefits our customers have reaped), it is getting rehashed again and again as new players enter the SaaS market, and make a lot of noise in an attempt to gain traction.
What isn’t old news is that just like many customers who have not yet embraced SaaS or really strived to fully understand the benefits it provides, many providers still believe that ASP (Application Service Provider) is equivalent to SaaS, and simply wrap their traditional offerings in a web interface and call them on-demand. Although there may be no difference from a user view point, what you should understand is that a web-service interface alone does not a SaaS solution make. Not only are SaaS solutions “multi-tenant, allowing the same service to be delivered, securely, to multiple customers”, as the article points out, but they are built to be that way from the ground up. Those solutions that are not will scale poorly as the provider’s customer base increases, and your quality of service will decrease. Furthermore, an application not built as a true on-demand solution may use proprietary data formats, making it difficult to get data into or out of the solution, and you may inadvertently become “locked-in” after a certain amount of time passes as it becomes next to impossible to efficiently extract all of your data from the system.
Therefore, although more SaaS providers might sound like good news, the truth is that it is only good news for you if the component software solution was built as an on-demand solution from the ground-up. Thus, you should be sure to do your due diligence before selecting a solution.