SaaS - Is it a transitional term?
It gives me great pleasure to introduce Ashish Birla who has joined us as a Lead Consultant in Infrastructure and Service Management transformation practice. He brings with him more than 13 years of rich and extensive experience in the field of IT Infrastructure and Service Management transformation, with many Fortune 500 clients in US and India. And now without further ado, his blog - SaaS, is it a transitional term?
Ever wondered if SaaS (Software as a Service), is a transitional term. You will be pardoned for raising an eyebrow, since it’s a “term” which has entered in the IT arena very recently, and I am talking about it becoming obsolete already.Well, let’s talk about other “Services”. What terminology are you likely to use, “Transportation” or “Transportation as a Service”; “Hospitality” or “Hospitality as a Service”; “Consulting” or “Consulting as a Service”? As soon as you as you answer this question, you probably have understood why “SaaS” is a transitional term.
Let’s step back a little and analyze what usually transpires for a service to be born or developed. Acceptance of a “service” in a particular area is inversely proportional to affordability or desire to “own” a product. That’s true, a lot of us, see service as “loss of control” over something that you used to own.
Let’s take an example. Although using a public transport is economical from money and carbon foot-print perspective. In a public transport, you don’t have control over the temperature that is maintained inside or where it stops or its schedule or your seat. This leads to owning your affordable mode of transport so you can control most of these constraints. However, can you apply the same principles to Airline or Hospitality services? Probably not, since for most people “owning” the infrastructure would be out of question.
Services also face other challenge vis-à-vis products. While an inventory of products can be maintained for the “season” of anticipated demand, same does not hold true in case of services. Services need to be supplied synchronously when they are demand.
As you begin to manage or remove the constraints, the product becomes a candidate to be offered as a service.
Inferring ITIL® definition of Service, a customer is looking to buy a “solution” and not necessarily a fancy “product” with great features, while many of its features are at best underutilized if not unutilized. Services would mean that you pay for what features you want to use. For example, a customer really wants printing service and not necessarily a fancy printer full of non-essential features in its office. Similarly think about an organization which has begun to offer “carpeting service” instead of making their customers own their carpets. This addresses environmental issues also to a big extent, as carpets owned by customers would end up in landfills after their life where it may take up to thousands of years for it to degrade, while carpeting services would mean the customers get the finest carpeting experience without having to worry about buying-replacing their carpets.
Customers being able to buy “services” would mean that they no longer have to worry about huge capital costs associated with buying a product and can switch to another solution once the current one is no longer able to serve their requirements. This will foster competition. Competition fosters innovation.
Service Providers apart from specializing into a particular set of services, will also be able to offer “economies of scale” hence driving down the costs further.
In not-so-distant-future, Software will not be a product anymore, will mandatorily be offered as a “service” and hence SaaS would become a redundant term. SaaS would be the way of life rather than exception that it is made out to be today. We have seen a spurt in number of software now being offered as service in recent times. Organizations known as Product companies are coming forward with software being offered as service. This trend will continue to grow, not just because it gives a cost advantage over traditional software as a product, but it genuinely reduces headaches (or TCO to be precise) of maintaining it.
Coming to IT Service Management, few years back who would have thought ITSM Tools can be offered as a service, but they are a reality now. More than that ITSM SaaS tools are “the future” of ITSM Tools. Since ITSM itself promotes IT as a service, which is why SaaS becomes more relevant when it comes to ITSM Tools. Refer to Shraddha Tilloo’s Blog for more food for thought.
Comments
Hi Ashish,
Interesting read. I would say more on the lines of Utility computing, eh!Demystified Saas very nicely. :)
Regards,
Ravindran
Posted by: Ravindran | February 3, 2010 04:17 PM
SaaS reminds me of a very popular quote by the Marketing Guru Philip Kotler that goes something like "The purchaser of a drill is actually buying holes". If holes can be provided to the purchaser he'll not bother about the drill. SaaS takes away the drill and provides holes to the customer.
In addition to the benefits listed above, a SaaS model can offer the following benefits as compared to a software product.
1. Lower entry barrier : owning and maintaining a product requires a lot more of upfront investment.
2. Lower exit barrier: with SaaS one can easily switch to a better/cheaper model as and when it becomes available in the market.
3. Better capability utilization: SaaS gives business an opportunity to focus on its core competency and for the IT organization to focus on better business alignment rather than maintaining the product.
Many clients have started realizing these benefits and are gradually moving to the SaaS model. However, if SaaS is an interim stage in the evolution of Software then what next? In my opining it'd be Productization of SaaS, where the services would become more tangible and repeatable through systematization. How? See this . ITSM vendors like Service Now are already reaching there. Will this give rise to another alphabet soup PoSaaS? Only time will tell ;)
Posted by: Satsang Randhelia | February 4, 2010 09:49 AM
Hi Ashish,
Interesting reading (& entertaining). An innovative idea fostered by competition, fostered by market needs and demand. As mentioned by you and a previous blogger, this is an idea that has been applied to various solutions offered by all service providers – hence their name. SaaS is an idea that may require a more mature level of development, but your efforts to identify and define is the right direction.
I have heard mentioned efforts to develop a SaaS solution in our industry, but truthfully I have seen little. I personally feel it is a service that can be developed with very successful results. Again referencing the previous blogger... a drill is an excellent example where few other benefits could be offered other than creating a hole. In the simplest term that is the key purpose and value for such a tool. When such a business considers the cost to purchase an inventory of drills, manage their use and secured storage, oversee the scheduled maintenance to ensure you receive the maximum life out of that asset, and the down-time for unscheduled repairs, there are many pro reasons to look for a "Service Hole Provider".
Posted by: Randy Gombos | February 6, 2010 09:09 PM
I would like to thank to all those who took time out of their busy schedules to read my first ever blog and specially to those who also commented on it.
Ravindran's comments have encouraged me to start writing my next blog :-).
Satsang and Randy drove home the point by quoting that we as Service Provider should provide business outcomes. This probably is the genesis of SaaS in the first place.
Thanks once again and look forward for more discussion.
Regards,
Ashish Birla
Posted by: Ashish Birla | February 25, 2010 03:33 AM