SaaS Revolution

Recent press: Google's office apps are all the buzz; outlets question threats various threats to SaaS model

By SaaS Revolution
August 31, 2006 9:04 AM EDT
The big story of the week has been Google's launch of Google Apps for Your Domain, a suite of productivity applications that it plans to market to small and medium businesses as an alternative to the expensive Microsoft Office. There'll be a free, ad-supported version and another paid edition oriented toward use behind the firewall.

Google was the subject of other coverage unrelated to the new office apps.

  • Red Herring suggests that SaaS vendors might do well to hitch their wagons to the Google star, even though Google is a potential competitor. The theory is that Google can give small SaaS companies great marketing reach while the small firms can return the favor by providing the vertical market expertise that Google lacks. The common enemy is Microsoft, which competes with SaaS companies in a lot of vertical markets.
  • InformationWeek's weblog has an intelligent analysis of how Google could fail. Risk factors range from spiraling energy costs to litigation. It's a blue-sky analysis, but an interesting exercise in speculation.

Informationweek has an interesting take on the SaaS phenomenon, pointing to SANS Insitutute research that says that SaaS apps are less secure than desktop ones. But the story is a little schizophrenic. While raising that initial alarm, it then goes on to point out that SaaS apps are also easier to patch. And the story acknowledges that because the apps are less mature, comparing them to entrenched desktop programs like Word is kind of an apples-and-oranges thing. In fact, the piece concludes with the SANS's Alan Paller saying that on-demand software is inherently more secure.

In case you still labor under the belief that large enterprises don't use SaaS, consider that RightNow just signed P&G as a customer.

EWeek Labs Director Jim Rapoza raises the possibility the SaaS apps have an inherent risk: the vendor could get shut down by a lawsuit. He cites recent litigation between NTP and RIM as well as Tivo's suit against EchoStar as examples of healthy companies potentially being put out of business by the courts. I don't think I buy that one. It seems to me that packaged software vendors face the same risk.

InternetNews.com raises the possibility that big, established software companies may come into the SaaS market and pound pure-play upstarts into dust because of all their systems integration expertise. That could be true, but can you think of one example of a company that managed to dominate a market through a major platform shift? I can't.

Over at UtilityComputing.com, Ahmar Abbas of Slashsupport Inc. points out that SaaS companies, unlike traditional packaged software vendors, have to provide robust 24X7 infrastructure in order to play in the game. That means there are a few extra questions you need to ask these software providers that you didn't have to ask a few years ago, he notes. Good point.


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