We are already seeing that some services, such as storefront and monitoring, are clearly non-core. Here’s the question for SaaS vendors: What do you offer that’s unique and is it yours?

@Alex: Except that I prefer risk management as #1, absolutely correct, especially in light of Amazon’s downtime after this article came out. Your take on SaaS SLAs didn’t even mention how losing a key employee or two before a less disruptive event can be just as bad.

@Troy: People say they want accountability, what they really want is results and communication. Amazon’s results are fine. Their communication needs to improve. I like Alex’s list for evaluating results, starting with ROI and Scalability. Look at what happened to Friendster, with great financing and great people: poor site performance killed their lead.

No one wants poor performance in-house that could be improved on by going with SaaS.

@Suaad Sait: The featuresets SaaS makes available are remarkable, but value still needs to be measured as ROI, as Alex points out.

In all the noise about the evolution from enterprise software to SaaS, I think the real value of SaaS gets lost. While this David and Goliath (SaaS vs. Enterprise Software) story is interesting, the real value is that the, until now, unserved mid-market can now access these sophisticated tools within their budgets. With a SaaS model there is typically no need for IT involvement, there is no deployment and no need for a professional services team to be onsite for 3 months. There was, in the past, no question of on premise vs. hosted or redundancies in data – the mass target market had the option of paper, MS Excel, or a $99 app from CompUSA as the options, now they have a fully featured application at their finger tips – the same their much larger competitors may already have. SaaS is like being able to afford a Porsche on a rental model (no maintenance Required but you), who cares if it’s only a Boxter (do you really need the Carrera GT that goes 300 mph – where would you drive it?).

Adapt or die. Simple as that. Oh, and have a backup plan, just in case Amazon.com goes down with all your SAAS data and software on it.

Meanwhile, in a beautiful irony, S3’s doing a good impression of a whore’s drawers (maybe “Christine Keeler’s drawers” would be a more apt analogue). And, just at a guess, I’m betting that Amazon engineers will be focusing on a) getting those bits of S3 that Amazon depends on up and stable and then b) getting home for the weekend. If that doesn’t sort out the bits relied on by the Uncov fodder then hey, sucks to be them. After all, how much service do you expect for $.15/GB/month…

That has to hurt just a little bit in light of the headline at the top of this site: “Amazon S3 Storage Service Goes Down, Still Not Up”. That’s why people want their own services sometimes. Do you think anybody is going to get compensation for S3 going down? I doubt it. If it was your own infrastructure that went down you could probably get it up much faster.

The organic restaurant is a great example. Here’s a place with a 0 carbon footprint — a great selling point to the greenies. Yeah it fails to leverage existing pay as you go options, but when those options don’t match what you need, or do it in a wasteful, half-assed way, and you can do it better, why not do it yourself if you can get your customers to pay for it? Just make sure you don’t include a parking lot, otherwise you’re a hypocrite.

Ryan: These services.., Amazon being the main player.., are very cost effective for startups. Being able to have cheap redundant storage, and processing power that you can scale out on-demand is a great thing. There is no “variable pricing” on Amazons services.., you pay a flat fee per gig storage, or time based for EC2.

As a buyer of these services you have to measure ROI. PERIOD!!!! It’s not a matter of privacy or security. I receive my pay-stub electronically? I view my financial information online? I would argue that a person will weigh this much more than the business offering.

SaaS is about:
1) ROI
2) Selling to the CFO not the IT guy/gal
3) Scalability
4) Having 24×7 Presence
5) On-demand features add on functionality (i.e. CRM + IP Telephony)
6) Peace of mind…. well maybe this last point is a stretch:)

Networking benefited tremendously from the ISO standards that isolated the layers of communication transactions. Huge leaps in innovation, competition, and scaling occurred at the layers of TCP/IP, for example, that were completely independent of the application layer. I’m no expert, but I don’t think it’s trivial to port SQL database transactions between SaaS providers.