BusinessWeek On SaaS: Article Smells Like That Thing In My Refrigerator

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BusinessWeek On SaaS: Article Smells Like That Thing In My Refrigerator

 

Warning:  I'm about to go on a bit of a rant.  I usually only reserve these kinds of articles for when things really irritate me, and this is one of those times.  I'm generally a patient, considerate person, really I am.

Here's the source of the most irritation I've felt from a technology article in a long time (and this from BusinessWeek, a major brand that I respect): 

Beware The Hype For Software As A Service

I actually hesitated to even include a link to the article, because you might be tempted to go read it.  But it has to be done.  It's kind of like when you smell something really awful that's been growing in your refrigerator.  Then, you give it to your spouse and say:  "Hey, check this out -- can you believe how bad it smells?" 

Disclaimer:  I work for a tiny little startup that provides marketing software as a service.  So, I guess I could be biased.  I'm not wrong on this one, but I could be biased.

Back to the article.  Here are some of the issues I had:

1.  SUVs Suck, So SaaS Must Too:  The author does some strange build-up in the opening paragraphs using "SUVs are cool" and "cell phone causes cancer" as examples.  The point?  That both of these are/were surrounded by "hype".  And, we should always beware of hype.  Think of the children!  I'm already irritated.  For the record:  I don't think SUVs are cool.  Oh, and these inane examples are what drove me to the title of this article.  Fight fire with fire and all that.

2.  SaaS Is Cheaper:  The article tries to refute the "myth" that SaaS is cheaper by providing this cogent argument:  "Most service providers charge each user by the month."  There's no discussion of the economics of installed software, drive-by sales in enterprise software, or the cost of capital for small businesses.  Hey, those SaaS vendors charge monthly, so it must be more expensive.  Right?  That must be why Salesforce.com has been so successful -- they just charge more than Siebel.

2.  SaaS Reduces Hardware Investment :  It refutes the "myth" that SaaS requires less hardware investment by arguing that although you don't have to pay for all the servers and stuff, you still have to pay for fast access to the Internet.  Here's the quote:  "Sure, the SaaS providers deal with the servers, and all the Windows headaches and patches and builds and versions and whatever. That's their problem. But you still need fast access to the Internet."  The rest of this particular argument just gets worse from there.  Now, I'm really irritated. 

3.  SaaS Is Quicker To Setup:  Yep, this is a myth that is "busted" too.  The example provided:  "It's kind of like assembling furniture."  The author provides as evidence that SaaS is not easier to setup, the fact that he's got a lopsided bookcase in his den.  This "proves" that little theory about SaaS being quicker to setup, wrong.  Sure, setup costs for SaaS can be high (based on level of customization), but on average, SaaS offerings are simpler and quicker to get going on.

4.  Data Can Be Secure In SaaS:  The article argues that data backup and reliability in SaaS is a myth.  Once again, we have extreme (and in one case totally unrelated) examples offered as proof.  Yes, data security is always a risk, but I'm not convinced that the risk is any higher for SaaS than businesses (especially small businesses) than running the software on your own servers, sitting in your closet somewhere.

If you think I'm being overly harsh, please read the article.  I dare you.  And, if you do go read it, please don't forward it around to your colleagues.  Sometimes, you don't need validation that the thing in your refrigerator really does smell that bad.

End of rant.  Back to our regularly scheduled program next time.

Posted by Dharmesh Shah on Tue, Jul 29, 2008

COMMENTS

The funny thing is that, after a series of ridiculous arguments and "revelations", the article ends up with a pretty coherent and sensible paragraph (except for that Hummer reference again).

posted on Tuesday, July 29, 2008 at 4:42 AM by Berislav Lopac


I thought the article was good and realistic. I definately wouldn't have any critical data hosted in the cloud, the only way I'd do that is if that data is encrypted and only *I* can decrypt it on the fly on the client with my password. Until this happens I'll stay away from saas. I can see this happening eventually, things such as Live Mesh are moving in that direction where the data can also be offline, synced and in the cloud. And importantly this data can be stored encrypted in the cloud that I have protection over.

posted on Tuesday, July 29, 2008 at 5:13 AM by John


As I read the article, I found myself thinking, "So what? What if that's what I want?" This article is written totally from the perspective of "I believe all SaaS salespeople are pushy salespeople that don't care about what their prospect wants or needs and will do anything to make the sale." When you look closer you find out that the author sells the traditional systems and is just hawking his own wares by slamming the competition. HMMMM! Slimy sales tricks by a CPA. Hoodabeleevedit?

posted on Tuesday, July 29, 2008 at 6:07 AM by Rick Roberge


The guy is a suit. What can he really possibly know about Saas? What kind of research did he do? I just see arguments and assumptions but I dont see any real data or evidence to support his claims. 
 
Saas is a good alternative just like any other. If it is good then use it, if is not, dont go around yelling how it doesnt work.

posted on Tuesday, July 29, 2008 at 12:49 PM by Francisco Antonio Muñoz Soto


From Gene Marks website: "Welcome to our world. Meet our certified consultants, CPAs and Microsoft developers who will help you design the right processes and get the most out of the applications we recommend and support." 
 
Gene, Would you care to interview real customers whom have been using our SaaS products before that term was even popularized?

posted on Tuesday, July 29, 2008 at 1:46 PM by Steve Ireland


That's so bad it has to be link-bait.

posted on Tuesday, July 29, 2008 at 10:23 PM by Damon Cali


Business Week doesn't get it. They want to be hip and write about these topics, but they just don't get it. This article was bad, but Sarah Lacey's (she of the botched Zuck interview) recent article on "The Brutal Slog" of SaaS was no better factually or conceptually. It was just slightly more cleverly written. More on my blog: 
 
 
 
http://smoothspan.wordpress.com/2008/07/21/do-you-read-the-saas-curmudgeons-do-you-enjoy-saas-schadenfreude/

posted on Wednesday, July 30, 2008 at 10:52 AM by Bob Warfield


Dharmesh, 
I agree. I wrote a post about it on my blog. Honestly, I think that Mr. Marks was intentional in playing with the fears of people less educated on technology. His goal is quite obvious to drive people from SaaS and towards his crappy tech firm. I would never buy from a tech company whose owner states that he hates spending money on technology. It doesn't make sense. 
 
Chris

posted on Thursday, July 31, 2008 at 4:21 PM by Christopher Mancini


This information is full of inspiration. Call me crazy, but I see an enormous market for SaaS. I foundedwww.proposalware.com which is proposal SaaS for small businesses that don't have an IT department...you know the local service company with one truck. From what I have seen in the marketplace, if you want installed software to perform tasks, it doesn't always do what you envision with out a smart IT person to tell you "sorry it can't do it just like you want it to" or "we did not buy that version" or "it can for a boatload of money". With SaaS it appears the creators really focus on basic, simple, affordable and accomplished.

posted on Tuesday, October 14, 2008 at 3:38 AM by Mayo DeLeon


Saas is a good alternative just like any other. If it is good then use it, if is not, dont go around yelling how it doesnt work.

posted on Sunday, July 19, 2009 at 11:34 AM by sohbet


Business Week doesn't get it. They want to be hip and write about these topics, but they just don't get it. This article was bad, but Sarah Lacey's (she of the botched Zuck interview) recent article on "The Brutal Slog" of SaaS was no better factually or conceptually. It was just slightly more cleverly written. More on my blog:  

posted on Sunday, July 19, 2009 at 11:37 AM by yonja


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