Cloudonomics: The Business Value of Cloud Computing, + Website

Deconstructing the Pure SaaS Model

We started off this chapter by observing that the SaaS model bundles specific software functionality, a no-installation deployment model, a managed runtime, Internet access, and usage-sensitive charging. However, strategists and innovators will recognize that it is not inconceivable that various of these characteristics could be modified, eliminated, or inverted.

Rather than running in the cloud, the same software can run in the client or in an enterprise data center. If a customer has the resources to build a private implementation, if the usage levels are not that variable, or if the functionality offered by the software generates such value that the resource costs are relatively inconsequential, why not? Trade-offs exist in areas such as loss of SaaS multitenancy efficiency, but perhaps there are gains in performance if the application is tightly coupled to a legacy data center app. I believe that SaaS providers will realize that they are in the “S” business more than they are in the “aaS” business.

Consider Starbucks. It was originally a service provider, offering a satisfying beverage experience at thousands of globally dispersed service nodes (better known as coffee shops). Searching for growth, CEO Howard Schultz realized that there were customers who wanted Starbucks coffee but didn’t want the experience or a service delivery model, just some ground coffee to brew in their own homes. In September 1998, Starbucks announced a relationship ...