7 Comments

Summary:

The most successful vendors of software-as-a-service, or SaaS will be those who can offer a model similar to banks, giving customers the option to withdraw data at any time.

If you want to lock customers into your service, get ready to hand them the keys to their data. That was the point hammered home in a talk today at GigaOM’s Structure conference that included SugarCRM CEO Larry Augustin, Eucalyptus Systems CEO Marten Mickos and Kim Polese, founder and CEO of SpikeSource.

The most successful vendors of software-as-a-service, or SaaS, according to Mickos, will be those who can offer a model similar to banks. “Today we put our money in the bank because we know it’s safer there than at home,” he explained, and because we’re confident that at any point we can withdraw our money. “That apparent lack of lock-in is what creates the real lock-in, which is loyalty from the customers.”

Augustin described a scenario where this would matter in the marketplace. “If all your data is at one place in the cloud, and all of a sudden that data goes away,” (due to a power outage, for example, as small businesses relying on Intuit’s services experienced first-hand this month), then you lose all access. But with a more open SaaS model, you could run a local copy or “go over to a cloud service provider for a day or two,” said Augustin. “Of course, you don’t just need the data; you need an application that can get to it.”

Eventually, Mickos predicted that customers will demand the same sort of freedom with their data that we currently demand from banks when it comes to our savings. “I would like to go to Google and say, ‘Give me all the searches I’ve ever made, and stop using them,’” he said. “But I can’t.”

http://cdn.livestream.com/grid/LSPlayer.swf?channel=gigaomtv&clip=pla_a7f67ee6-c949-4f54-a95c-ac835d3143ee&autoPlay=false&mute=false

gigaomtv on livestream.com. Broadcast Live Free
  1. [...] Let My Data Go: Why Total Freedom Is the Real Lock-in [...]

    Share
  2. [...] The full story Share and Enjoy: [...]

    Share
  3. “Eventually, Mickos predicted that customers will demand the same sort of freedom with their data that we currently demand from banks when it comes to our savings.”

    I’m not sure what would prompt that change. Plenty of people seem to be perfectly happy using sites like Google and Facebook without demanding that kind of freedom today. What would cause that shift?

    And the bank analogy as he described doesn’t quite work because the bank isn’t providing you a host of services based on what you’re giving them (I’m talking about for a regular savings account), aside from something like accruing interest and insuring against loss. Websites do a lot with the information you provide them, whether it’s search results, social networking, etc. and this is often the compromise made – your data isn’t as free, but you got a lot of value addition from the services attached to it. If this weren’t true, people wouldn’t be using sites like Facebook or Google in the first place. (Facebook and Google are just two of the most obvious examples, not trying to pick on them specifically)

    Share
  4. I think there’s a typo on the word Structure in the title. Thought I should point it out. :-)

    Enjoying your blog,

    Hussain

    Share
  5. Wait, so you’re saying I can withdraw my transaction history from my bank account and tell them not to remember it? I think his analogy is a bit leaky.

    Share

Comments have been disabled for this post