19 February 2009

Analysts warn SaaS assumptions are fundamentally flawed

Analyst Gartner is warning the IT community that, while the SaaS (software-as-a-service) model looks attractive, some common assumptions are based on fiction, not fact.

“In recent years there has been a great deal of hype around SaaS,” comments Robert DeSisto, vice president and analyst at Gartner. “As a result, a great number of assumptions have been made by users, some positive, some negative, and some more accurate than others. The concern is that some companies are deploying SaaS solutions, based on false assumptions.”

Hence it’s analysis of the top five SaaS assumptions, starting with the assumption that SaaS is less expensive than ‘on-premise’ software – which it finds to be true during the first two years but possibly not over five-years.

Its view: SaaS works well at first because there’s no large capital investment for licenses or support infrastructure. However, in the third year, an on-premises deployment can become less expensive from an accounting perspective as the capital assets used for the on-premises deployment depreciate.

The next myth: SaaS is faster to implement than on-premises software. That’s only true for simple SaaS requirements, but the world is becoming more complicated, says Gartner.

“Vendors often quote time frames of 30 days to implement, but neglect to say that SaaS deployments can take seven months or longer. As the complexity of the business process and integration increases, the gap advantage between SaaS and on-premises deployment times will narrow because a larger percentage of the deployment time is associated with customisation, configuration and integration, which are equally difficult with both delivery models.”

Assumption three: SaaS is priced as a utility model. Almost always false, says Gartner. Although the claim is that you’re only charged for what you use, for most SaaS deployments, a company must commit to a predetermined contract independent of use.

Assumption four: SaaS does not integrate with on-premises application and/or data sources – also false. Gartner says there are two primary methods of integrating SaaS offerings with on-premises applications and/or data sources. The first is batch synchronisation, the second, real-time integration using web services.

“Another way to combine the two methods is by having a web service trigger that is based on an event occurring in the SaaS service. And yet another involves integrating SaaS applications at the user-interface level through mashups.”

Finally, assumption five: SaaS is only for basic requirements, which is also false – although there are limits, according to Gartner. SaaS applications are highly configurable at the metadata level, with many offering customisation capabilities with platforms in the form of application platform as a service (APaas).

“There are industry examples in which complete custom applications have been built using SaaS APaas. However, some gaps remain for complex, end-to-end processes that require complex workflow or business process management capabilities.”

Brian Tinham

Supporting Information

Gartner Ltd

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