I was following up on some coverage Sugar’s CEO Larry Augustin has received in the press and from the bloggers following that press. Larry has noted that the true cloud-powered solutions that are coming up are replacing (or at least evolving) the notions we have around SaaS. A nice distillation can be found here at Ben Krepes’ blog.
I agree and disagree with the notion that the Open Cloud will “kill” SaaS. I mean, it took a decade for SaaS to emerge as a truly viable alternative to client/server…and cloud will take some time to catch on as well. But the great thing is, that some levels of cloud-powered apps are very similar to what the old multi-tenant SaaS apps offer – so the competition has already begun for that piece of the application pie.
I do believe that in the higher levels, the platform and infrastructure-as-service worlds – SaaS is basically toast. The companies only offering a single application, with no ability to extend, via a hosted model will not be able to compete with portable, open cloud platforms. As developers and larger organizations begin to see the value of utility models – cloud-based solutions will take root.
The lynchpin here is open source. It enables scale, and flexibility, and the potential for “hybrids” of various levels of cloud and non-cloud interoperability. In short – it is not a “one or the other” model. The old SaaS players did not have open source to work with in making their infrastructures. Modern cloud architectures do.
Take this model by Phil Wainewright:
The key issue in this model is the notion of “shared” versus “dedicated.” The great thing about open source and the true cloud is that you get the scale you previously only saw in “shared” models, with the customization and security that only “dedicated” models offered in the past (client/server, on site web software etc.). The Open Cloud is offering this kind of flexibility, to both large and small businesses.
Now, there are “SaaS” companies with a platform offering of sorts, and I think they will linger for years. I am not saying we are going to see a widespread drop in SaaS penetration any time soon. Like I said, this is a curve of sorts, and we’re on the very front end of it.
People called the SaaS visionaries crazy when they said they were forming a multi-billion dollar industry in 1999. Ten years later, the next phase is taking shape, and those already on board stand to win big.