Sunday, June 07, 2015

The State of SaaS

I've been reading quite a bit lately about the maturation of the market is transitioning away from the "early adopter" phase into more of a mainstream marketplace.  With all due, respect to those making such claims, I must offer a dissenting opinion.  While a big fan of SaaS, I still recognize at least three factors that must be addressed before SaaS can be considered a mature offering.  These three areas represent the soft underbelly of SaaS: integration, data state, and fear of losing control.


Perhaps your experience is different, but I have yet to see a service integration for enterprise software that works reliably out-of-the-box.  Pick your vendor:  Oracle, Workday, Amazon, Microsoft, Salesforce, just doesn't happen.  There are too many variations amongst various customer applications.  And, in all honesty, enterprise software vendors just don't seem to be all that good at writing packaged integrations.  That's part of the reason we see integration as a service players like MuleSoft and Boomi making a play in the market.  It is also why so many technology companies offer integration implementation services.  We're still a far cry from easy, packaged integration.

Data State

After spending years in the enterprise software market, I'm firmly convinced that everyone has loads of "dirty data".  Records that poorly model transactions, inconsistent relationships between records, custom data objects that have worked around business rules intended for data governance.  Every closet has a skeleton.  The most successful SaaS implementations I've seen either summarize all those records into opening entries for the new system or junk customer data history altogether.  Both these approaches work in the financial applications, but not so well in HCM or Marketing.  Until we can figure out automated ways to take figurative steaming piles of waste and transform them into beautiful, fragrant rose beds of clean data, SaaS will continue to be a challenging transition for most enterprise software customers.

Fear of Losing Control

Certain customer departments are resistant to SaaS, mostly out of a fear of losing control.  Some is borne of a genuine concern over data security.  Some is over fear of losing job security.  

For those concerned over data security, consider that data security is critical for SaaS vendors.  Without the ability to secure data, they're out of business.  It's a core function for them.  So they hire armies of the best and brightest security people.  And they invest heavily in security systems.  And most customers can't match that, either in terms of talent or systems.  Result:  the SaaS vendors provide security solutions that are simply out of the reach of enterprise software customers.  There is a greater risk in keeping your data in-house than in utilizing a SaaS vendor to protect your data.

For those fearing the loss of job security, they're correct...unless they're willing to change.  The skills of maintaining large back-office enterprise software systems just don't apply in a SaaS world (unless you're working for a SaaS vendor).  I'd lump database administrators and database developers into this category.  However, there are new opportunities for those skills...developing and maintaining software that enables strategic in-house initiatives.  There are also opportunities to extend SaaS applications to support unique in-house needs.  Both scenarios require a change - working more closely with business as a partner rather than as a technology custodian.

Overcoming the fear of losing control will require significant in advocacy and evangelism...most customers need information, training, and assurance in overcoming these fears.  But we can't really say that SaaS is "there" until we see a significant turn in perceptions here.

So there you have it.  Is SaaS up-and-coming? Absolutely.  Is the SaaS market transitioning to a mainstream, mature marketplace?  No...lots of maturing needed in the areas of integration, data state, and fear of losing control before we can get there.

As always, your thoughts are welcome in the comments...

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