Software as a Service (SaaS)

The greatest contribution of SaaS

February 3, 2022

The great benefit of SaaS is to free the enterprise from the tyranny of the product release model.

SaaS is now a fait accompli in enterprise IT, but I beleive its primary value proposition is not commonly understood. We normally think of it in terms of consumption economics - pay as you go, with the burden on the vendor to keep us subscribed - each of which is both real and valuable. However, the greatest contribution of SaaS is to free the enterprise from the tyranny of the product release model.

Anyone who has ever implemented an ERP application knows what I mean. The one thing you know for sure after having just implemented any given release of an enterprise software product is that under no circumstances will you ever implement the next one. After all, you have just spent 18 to 24 months, and up to ten times the license price of the software, to perform open heart surgery on your enterprise. Who in their right mind would want to undertake that again anytime soon?

Indeed, you not only forego the next release, but the one after it as well, and possibly the one after that if you can get away with it. Eventually, of course, this tactic catches up with you, and you once again agree to undergo open heart surgery, freezing your enterprise's other investments in IT for yet another 18 months or so.

You have essentially paid maintenance of 20% per year for anywhere from five to ten years for the express purpose of not availing yourself of the innovation created during that time period. This is horrible for you and no good for your vendor either, who must maintain back releases of the product with increasingly painful workarounds. It is not a vendor problem or a customer problem or even a product problem. It is a business model problem.

SaaS frees us all from the tyranny of the product release business model. Yes, with SaaS there is some level of ongoing disruption that you must cope with both within IT and with your user base, but please, do not even mention that in the same breath with the kind of burden the product release model imposes. Instead, thank your lucky stars you are getting innovation that you are paying for when you are paying for it. It is current, and so are you. This is huge!

So do not kid yourself. The transition to SaaS cannot happen fast enough. We all know that our current commitments to on-premise enterprise applications are sunk deep into the IT infrastructure and that unpacking them to transition to SaaS is a major undertaking. But it does not get easier or better with age, and this time it really is a game changer.

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