Debates rage all over the planet about SaaS and what it is and is not. Some claim, as they do for Cloud, that has been "around forever" and is just marketing making up new jargon.
If you are a Linkedin member you can check this discussion where one of the participants insists that SaaS has been here for 30 years and that it was invented by airline industry who continue to understand it best.
For my part, I disagree that Cloud is not something new (according to my definition) and that SaaS is not something new - again according to my definition.
In fact I think the reason that many software companies fail to make to transition to SaaS is precisely because they limit their thinking, and their business transition, to the "on demand" mindset, or the "managed service" mindset. That's way I was pleased to read the work of Michael Dunham of Scio who has written two very useful articles - SaaS & XaaS: What Makes Up A "Service?".
I particularly noted this comment:
ISVs build a lot of expertise in building software and internal operations to fit that model – expertise in managing the development, marketing and sales processes to match the cyclical nature of licensed software sales. Moving to an incremental revenue model is one aspect of SaaS and many ISVs have made the transition – however difficult that might be. But when it came to marketing the product – they are still selling it as a technology – even if they see it as embodying special expertise for their market and not as a service.
That's why we focus on the business modelling and the Go-To-Market transformation for ISV's to SaaS, and why we have explicit frameworks and methodologies to address this issue.Michael continues: a true SaaS product needs to embody the relationship between the vendor and the end-user community they are serving. But – unfortunately – very few vendors have figured out how to market that service-based relationship successfully. Not just because it is hard for established vendors to do – primarily because it is just not a part of their strategic view of their product. They still see themselves as technology vendors, not as service providers.
And he addresses the business modelling and cash flow issues, which we also focus on: Further, the standard model conveniently supported a split set of payments to the vendor. The vendor set license fees for the product and a separate set of support and maintenance fees to provide ongoing services. In other words, the support services were almost an “optional add-on.” Those same vendors, moving to a “as a Service” model, have to rethink their cash flow and put services in all its various aspects up front while still maintaining enough bandwidth to support ongoing development.
These ARE the big issues, along with business agility, in converting to a SaaS model. It's nice to see others confirming our experience, which we have gathered over hundreds of assignment. Mikael Blaisdell of MBlaisdell & Associates contributed to the discussion, and I often find myself agreeing with him on SaaS business matters.