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January 14, 2009

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Peter Yared

The pay-for-software model turned out to not be sustainable either. Once you pay for it, you've got it, so vendors had to keep adding features to get people to upgrade, and ended up delivering complete bloatware. A lot of SaaS companies are actually viable freemium businesses, they are just not viable venture-backed businesses since they do not have large exit potential.

JP Morgenthal

Yes, but with pay-for-software model, I have the option not to upgrade. That may mean that I am not covered by warranty any longer and cannot get support for my version, but a) I can still use it and b) if the company goes under I'm not scrambling to find an alternative.

It seems to me that that PaaS and SaaS have a customer trust issue. You have to believe the company is rock solid or the company has to have some sort of escrow account to ensure operations for a period of time if they are failing.

At least with IaaS, most of it is virtualized and you can hopefully move your image to another provider in minutes.

T. Fustos

I work for a european Telco. We looked several times into Salesforce Automation software, and made feasibility studies for our situation, including "XaaS" models. I don't know why, but for our 500 Sales Reps, the "aaS" Model came in very expensive, plus the vendor could not satisfy our needs for data protection. I know of another case where the re-branded webmail of a big provider is offered to telco customers, but the wellknown company does not comply with the local telco LEMF rules, so the telco is running a parallel email platform and re-routes the emails to the global player. So there are limits.
Still, the most striking for me was the missing business case in our Salesforce Automation project, and finally it's going to be a normal, on-premises solution.

Alexa Weber Morales

Hey JP, nice job! I haven't given this market much thought (I actually was lured by the acronym XaaS, as I didn't know what that stood for) for some months, but last summer I wrote a piece on it for SD Times: http://www.sdtimes.com/content/article.aspx?ArticleID=32212

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