How to Tell if Your Cloud is Really SaaS (Software-as-a-Service)

Have you heard about Software-as-a-Service (SaaS)? If not, hundreds of vendors are eager to tell you about it. SaaS is so popular – Forrester predicts that SaaS revenues will reach $92.8 billion by 2016 – that many vendors are angling every day to find out how they can get a piece of the action. Because of this tremendous growth potential, and because there’s such confusion around what SaaS actually is, some companies will swear up and down that they provide a SaaS-based solution, when really what they do is add up what it costs them to host the hardware, install and configure the software, and maintain the environments. Then they divide this total cost by the number of months in your contract (typically 3-5 years) and by the number of users. Voila! Per user pricing and not in your data center. This must be Software-as-a-Service, right? Wrong.

Real SaaS, or Software-as-a-Service, leverages the cloud to deploy applications over the internet. With SaaS, a provider licenses an application to customers as a service on demand, through a subscription or a “pay-as-you-grow” model. While customers achieve significant economies of scale by sharing the infrastructure and application, they can still create their own look and feel to the application and securely manage their own data. Using true Software-as-a-Service is much like living in an apartment building. You share all of the infrastructure – elevators, security, landscaping – but if you want bamboo and stainless steel and your neighbor wants pink shag carpet and lava lamps, you can both have what you want. The benefits of SaaS are huge: in short, SaaS-based solutions are better, faster, and cheaper than their onsite or hosted counterparts.

To clear up some confusion about SaaS-based solutions, we’ve come up with three signs that your “SaaS” is not what you thought it was (for more on this, see our whitepaper, SaaS Knockoffs: Wolves in SaaS Clothing).

1. Your application can be installed onsite. If a vendor tells you that their SaaS solution can be installed onsite, run far, far away. Onsite SaaS is completely illogical. Here’s why: for a solution to be SaaS-based, the infrastructure and application have to be shared. If the system is onsite, it’s only being used by you; others can’t share it. In the end, you lose the economies of scale that lower costs and increase flexibility and quality – a big advantage of SaaS.

2. Sure, we support multiple versions. One of the best things about true SaaS is that everyone is always on the same version. This means that you never have to worry about when your application is going to “go out of support.” Additionally, application vendors can devote all those resources that used to support old versions of the software to developing new and better functionality for you, the customer.

3. There’s only one upgrade a year. With a SaaS-based solution, you should expect anywhere from 2-4 upgrades each year. Because everyone shares one instance of the application, it’s easier to offer multiple upgrades.

Have you seen the term “SaaS” used to describe things that aren’t really SaaS? Let us know in the comments below.