Customization in SaaS: Drawing a Line in the Sand

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One piece of criticism constantly aimed at SaaS is that it’s not as “customizable” as on-premise software. Before examining this claim, we need first to define “customization” from the perspective of licensed software to provide the proper context. Traditionally, “customization” meant a change to the application source code or the creation of a module for a specific client, often with the result that the vendor ended up maintaining a branch of source code to support each client. With custom modules, the vendor would maintain only the modules’ source code but had to ensure that subsequent releases of the core product did not break compatibility with the one-off modules. If they did, the modules had to be rewritten or the customer could choose to not upgrade from the version for which their one-offs were built. This strategy works for licensed software vendors because all they need to do is maintain customer-specific source code and/or modules. This complicates the software development life-cycle, but it also creates massive barriers to exit for the client since their customizations are owned by the vendor. And since the vendor usually charges annual maintenance fees, plus time and materials for customizations and module compatibility upgrades, this approach...

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