When is a SaaS or Cloud Solution Not Enough?

I’ve been investigating lately the world of software as a service (SaaS).  This has led me smack into the whole “everyone has their own definition” conundrum.  It seems that most of what I’m encountering is a marketing wrapper touting the SaaS aspects of what is really a hosted solution.  This has led me to examine what other SaaS models might exist. 

The reality that what we are seeing happen in the market place is that a blending of cloud and on premise is beginning to take place. This blending is servicing the functions required by the enterprise with the solution most efficient and cost effective to the purpose.  For example, high speed, high volume warehouse automation is on premise, most enterprise business/ERP functions are on premise, but customer relationship management or transportation management are easily executed in the cloud.  This has led me to proposed four models for viewing SaaS vs. on premise.

Thus our SaaS definitions are expanded to include:

SaaS – a software delivery model in which software and its associated data are hosted centrally (typically in the cloud) and are usually accessed by multiple users and organizations (multi-tenant) at many locations (multi-site) by a web browser over the Internet.  The solution provided is often highly configurable while sharing a common central code base.  Customizations for any one tenant are really configurations applicable only to that one client.  Any solution that is a single instance of the software for a single client (tenant) or that requires on premise computing and/or solutions is not SaaS.  These solutions off load the data center burden from the client but also restrict the client from making any if not all customizations to the software.

SaaS-querades – Vendors that sell a software as a service (SaaS) solution which is really their on premise product running in a hosted environment.  To try to be more clear on what I mean, Brian Sommer, an associate of mine, has published as good an explanation of the SaaS marketing hype and scam as I have heard in his ZD Net blog post, SaaS-querade: When On-Premise Vendors Try to Pass as SaaS Vendors.  “An on premise vendor, seeing softness in new license sales numbers, starts to (finally) realize that Software as a Service (SaaS) is real. So, the vendor decides that a ‘hosted’ ERP application is a close enough facsimile to a SaaS solution. All the hosted product needs is a bit of SaaS marketing and it’s a done deal. Right? Wrong!”.  This style of solution is really more of a hosted solution.  The solution is still the vendor’s on premise solution running as a single instance in its own real, or virtual, server environment, just not in the customer’s data center.

SaaS-Plus – a marriage of SaaS with a limited function on premise solution which is required to meet very high speed or very data intensive requirements like material handling automation control in a warehouse or a very high volume auto ID collection and alerting environment.  This example focuses on business environments where very high speed decisions with very high speed communication between systems is required.  The interaction between automation control systems and warehouse house management systems like automated material handling equipment is a perfect example (high speed conveyors, sorters, tilt trays, AGVs, ASRs).  Depending on how they are implemented, these systems require decisions in response to specific events in millisecond time frames (typically 100-200 milliseconds for bilateral communications and the decision making).  It is difficult to rely on a LAN/WAN connection to a cloud based system to support such an operation.  Another environment would be a high volume automatic data identification and capture environment (auto ID).  This type environment could have 1000’s of RFID tags moving and reporting their locations and/or events every minute of the day.  Many of these transactions are meaningless/mindless duplications and passing such repetitive messages to a cloud system needlessly clogs the LAN/WAN pipe.

On-Premise-Plus – a marriage of a full function on premise solution with a limited function SaaS solution to cost effectively use high performance computing or data base power to solve calculation and data intensive business requirements like analytics, price optimization and scheduling.  Brian pointed out that this is evolving in the large on premise ERP world where the ERP solution is off loading from the on premise environment to the cloud the transaction or analysis/number crunching associated with analytics, price optimizations, and scheduling.  This is done to bring to bear expensive yet very high performance in memory data base computing without having such overhead resident locally where it would be cost prohibitive.

Conclusion

Why do these models matter to the F&B industry?  I believe that it is important that you understand the strengths and weaknesses of each solution model so that you can properly assess the value each would bring to your business, the risks associated with each model, and the costs that you would incur because the pricing models vary with each solution model.  For example, there is very little enterprise differentiating content in a customer relationship management (CRM) system.  Such functionality can be easily provisioned by a cloud based system and at a price point that might argue against using the CRM system offered by your on premise ERP solution provider.  Another example is your product R&D processes may be so unique and differentiating that the configuration and customization freedom of an on premise solution outweighs the potential simplicity and cost savings of a cloud solution.