Products & Marketing

Product positioning and tech marketing

What is the difference between Simple ASP and True SaaS?

What is an ASP?

asp-200pxWhat an ASP does for you can vary widely:

  • They can simply providing hosting services
  • They can build and host an application on your behalf
  • They can build, host and manage an application on your behalf (what management includes can also widely vary)

It is really important to check what you are getting when you purchase ASP services. If not, you will have to perform many services yourself. At a minimum, this will be costly. In the worst case, this may leave you in an impossible-to-manage situation (especially if you are not at IT company).

What is a SaaS provider?

Of course, SaaS means “software a service,” What does this really mean? It means the provider enables you to acquire, setup and manage your software as a something you simply pay for like a utility. As a result, you do not have to allocate any more resources to manage your software than you do for other high-feature utilities, such as conference services or your benefits program. This is incredibly useful (especially if you are not a technology company) as it lets you focus on your core business (instead of managing software)

So what is the difference between SaaS and ASP?

SaaS and ASP are not mutually exclusive from each other. SaaS-based solutions are those that fall into the upper-range of the continuum of ASP-based services:

asp_to_saas

Service Continuum: From Hosting Only to Full Software-as-a-Service

Everything is included in a true SaaS model:

  • Building (or Configuring) and installing your application
  • Hosting it in a secure, high-availability environment
  • Proactively managing it in terms of monitoring, performance tuning, conducting preventative maintenance and adding or removing capacity as needed
  • Performing updates as they become available (anyone who has ever managed an upgrade of their enterprise application or infrastructure can appreciate how valuable this is)

How do I know if I am getting SaaS or ASP?

Here is a basic “truth table” that will let you roughly gauge what you will get from your provider and what you will need to perform (on contract on your own)

A. Do I need a hosting provider?

Will the Provider host the purchased software for you? If not, you are dealing with an on-premises solution. See my last post for the costs associated with this type of solution. It may seem obvious to ask this, but I encounter situations every few months in which an associate of mine has been told by a vendor they are getting an ASP or “ASP-like” solutions — they only need to hire the hosting provider recommended by the vendor (at extra charge, of course)

B. Do I need an implementation vendor?

If the answer to any of the questions is “No” (actually if the answer is anything but a clear, unequivocal “Yes”), you will need to hire an Implementation Vendor. In many cases, the vendor will be certified by the application provider (to ensure a minimum level of consistency and quality). In all cases, this will require extra money (usually on a time-and-materials basis, usually under the nomenclature of “Professional Services”:

  • Will you capture all of my configuration needs from my business and technology stakeholders?
  • Will you configure and integrate the software to implement these?
  • Will you test these configurations and certify their correctness?
  • Will you project manage this whole process for me?

C. Do I need a systems administrator or systems admin services?

If the answer to any of the questions is “No,” you will need to acquire systems administration resources. Again, these can be additional services provided by a “partner” of the ASP vendor. They are often lumped into: Professional Services, Setup Services, or Systems Integration

  • Will you analyze my proposed transaction volume and determine my hardware needs?
  • Will you configure these servers (application and database) with the correct operating system, applications, and patches?
  • Will you install the software for me?
  • Will you verify correct operation of the software?

D. Do I need support services?

If the answer to any of the questions is “No,” you will need to acquire systems administration resources. Again, these can be additional services provided by a “partner” of the ASP vendor. They are often lumped into: Maintenance Services or Level 2 Support

  • Will you monitor the software’s operation to address problems that emerge pro-actively?
  • Will you monitor load to determine when you need to change the hardware footprint (up or down)?
  • Will you add or remove capacity in response to load changes?
  • Will you provide upgrades (on your own) as they become available (without requiring time and attention from me)?

E. Do I need help desk services?

If the answer to any of the questions is “No,” you will need to aquire a Help Desk or Customer Support service. Again, these can be additional services provided by a “partner” of the ASP vendor. They are often lumped into: Customer Support, Training, Level 1 Support or Help Desk services

  • Will you train my primary users?
  • Will you setup a help desk that they can contact to report issues, problems or questions?
  • If so, when will be open and how many ways can I contact them?
  • Will you provide a knowledge base to help my users based on my configuration?

Why SaaS is different?

When you have a full SaaS solution, you get “Yes” answers to all of the above. This makes it much easier to focus on your business (instead of building, setting up and (perpetually) managing an lower-tier ASP solution.

SaaS: Culminating 40 years of software evolution

SaaS represents a culmination of a roughly forty years of journey that brought software acquisition a highly uncertain, large-risk capital investment to an easy-to-plan-for utility.

Let’s take a look at the evolution of software delivery:

  • In the beginning, there were no independent software vendors. If you wanted software, you had to build the infrastructure, hire people to operate it, hire more people to write software and hire more people to manage the process of building and deploying software. (BTW, you also had to hire people to build and deliver training to all of your users). Very expensive and lots of uncertainty–as expected in an immature market.
  • Next came professional software firms. With a contract you could bring in the people to run your hardware, build your software and manage your software and training process. This reduced uncertainty by enabling you to end contract. To combat this, vendors charged high rates and often only signed time-and-materials or cost-plus contracts. This did not eliminate much uncertainty. (BTW, these days were fun for us creative software engineers as we got to reinvent things with custom work all the time.)
  • Next came enterprise software vendors. Now you could buy finished software. However, that was just the beginning of the costs: You had to buy the hardware, hire and integrator (or hire staff to configure and integrate the software) then create something called a Center of Excellence to run the thing when you were done. That was just the first step. Within 18-24 months you would get told you needed to upgrade to retain your “low” 14%-18% maintenance support. This caused you to buy upgrades, modify your configuration, re-certify your application and re-deploy it. (Woe to the enterprise who customized what they bought or changed more than 15% of the enterprise application “out of box.”)
  • Then came SaaS. SaaS is a utility. You pay for what you use. You turn it off when you are done. You have no hardware to buy, no upgrades to manage and benefit from economies of scale from your SaaS provider. As a result, you can spend more time focusing on your enterprise

Think of the applicability of this in today’s economy. You “rent” what you need, when you need it. You have few, if any, fixed costs. You also have no capital investment to get approved by the board. The level of uncertainty on your projects — and all those “hidden risks” that arise in the “last 10%” or your projects disappears. A little less uncertainty is nice in today’s economy, huh?

This gets even better if you are not a technology company. Instead of diverting time and attention to build and manage technology you buy it like you buy electricity, allowing you to focus more attention on your core business.

To really appreciate how much better SaaS is as a model, you need to break down all the costs, risks and extra work required to acquire and deliver software over the competing, prior models:

  1. Build it in-house
  2. Buy off-the-shelf and integrate it, or
  3. Get an application service provider (ASP) and find someone to manage it

I will cover these in my next three posts to highlight how much better SaaS really is.