4 Comments

Summary:

Everyone’s on the software-as-a-service bandwagon. The economics make it easy to love: Running your own applications is a costly endeavor; turnkey software, running on demand, can dramatically reduce the cost of IT. A recent McKinsey study found that over 70 percent of companies surveyed want their […]

Everyone’s on the software-as-a-service bandwagon. The economics make it easy to love: Running your own applications is a costly endeavor; turnkey software, running on demand, can dramatically reduce the cost of IT. A recent McKinsey study found that over 70 percent of companies surveyed want their software on demand — and that includes big enterprises.


But not every company that calls itself SaaS deserves the title.

One branch of the on-demand evolutionary tree is what I’d call (at the risk of yet another unfortunate acronym) peripheral-as-a-service. As we move from a desktop to a mobile client, we’re unplugging familiar devices. And they’re all getting plugged back into the cloud.

Take faxing, for example. Rather than plugging in a phone cord, I can use efax. If I want storage, Jungledrive, box.net, and the fresh-out-of-beta Joggle will do fine. Printing? Scanning? No problem: I just tell someone to use a custom coversheet from drop.io, and the document they send shows up in an online drop.

Useful as these services are, it’s wrong to call them SaaS. My fax machine doesn’t need a lot of maintenance, and my backup drive works pretty well. I’m not paying an annual support license for either of them. The economic tradeoff to software doesn’t apply.

So how should we value them? Here are two ways:

How well do they improve on old-fashioned peripherals? Joggle acts as a media player as well as storage. Box.net integrates across several SaaS tools. Drop.io lets me collect various types of content, then share it with loosely secure URLs. So when valuing these firms, we have to look at what processes they’ve wrapped around their core functionality and how well they integrate with the SaaS platforms.

How big is their addressable market? A 2006 study of Internet-connected devices showed that the vast majority of computing will be done from our pockets, on cell phones. Extrapolating from a graph in the study, a conservative estimate would be that cloud peripherals have eight times the addressable market of PC-based peripherals. So anyone with a mobility play has a huge potential upside if they let you handle printing, faxing and file storage from your iPhone.

On-demand peripherals offer reliability, scalability, and all of the other things we’ve come to expect from the cloud. But we have to use different criteria to establish valuations; software economics don’t apply.

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  1. At the risk of acknowledging yet another acronym – after a quick huddle, we’re happy to say that PaaS is fine by us!

    In all seriousness, though, this is certainly a grey area. A decent portion of our members have used Box.net as a Sharepoint replacement. So if Sharepoint is considered software, Box.net would be considered SaaS, no? Just another point of view to consider. Thanks!

    -Kendra from Box.net

  2. SaaS is in Style | Warrior Point – Latest News on SaaS & Tutorials for On-demand Software Thursday, June 12, 2008

    [...] June 13th @ 2:18 am by Darren There’s a good post on GigaOM talking about the true definition of SaaS. Alistair points [...]

  3. I always thought of SaaS as an application that once required an install on the users’ computer but now is delivered through the internet. So in other words, it’s an online application that replaces client/server or just client software.

    If Box.net is truly collaboration software, then I would say “why not?”

  4. Mike Threlfall Saturday, June 28, 2008

    I think the model with the storage vendors is not true SaaS unless they offer some form of service on top – after all this is the service piece surely. I wouldn’t categorise Jungle as SaaS. I’ve been using a pre-launch site called SMEStorage (www.smestorage.com). These guys are acutally using the cloud themselves (Amazon S3) to build there service platform on top of to provide services such as collaboration, which has security permissions, ability to form groups etc.

    These services are only going to get better and better

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