Private SaaS and Flying Pigs

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by Merrill R. (Rick) Chapman, Managing Editor, Softletter

The advent of the “Cloud” has brought about the biggest buzz word explosion seen in high-tech since the 80s, when everybody was fighting over who was more WYSIWIG, relational, and16-bit. Not to mention Microsoft repeating the phrase “rich text” to the point where we were all practically in tears. It’s the type of thing this acronym-crazed high-tech does.

As I’ve written in the past, the “Cloud” is the most vaporous buzzword yet produced in the business. In and of itself, the term “Cloud” has no meaning except as a synonym for “Internet.” However, this hasn’t stopped pundits, the press, bloggers and anyone who can put word to “paper” from creating an endless series of articles about the “Cloud.” Articles that start off with titles that tell you nothing about the piece’s actual topic. Here’s a recent example of what I mean.

Cloud Computing: Piracy Killer Or New Infringement Avenue?

(http://www.crn.com/news/cloud/240006089/cloud-computing-piracy-killer-or-new-infringement-avenue.htm)

Halfway through the article’s first paragraph, you discover that the actual topic is SaaS and that the rest of the piece, despite the obligatory scattering of meaningless Cloud nouns throw into the text, (“dark clouds, “gray clouds”, etc.) makes perfect sense if you simple ignore every cloud reference and focus on SaaS systems. (If you’re interested, the focus of the article is on the BSA’s worries about piracy and SaaS. As the article makes clear, it isn’t much of a concern, except for the BSA, whose raison d’etre for existing is coming to an end as SaaS takes hold.)

The phenomenon I describe above has spread through high-tech journalism like virtual crabgrass. It’s the precise opposite of what clear topical writing is supposed to do, but bad as the above all is, it can get worse. Recently, the most misbegotten Cloud buzz phrase of all has been attempting to spread its crooked wings over the industry and darken clarity and meaning. (Again. The first attempts at launching this misshapen apparition began in 2009 and despite the best attempts of quite a few people, this bizarre phoenix refuses to die). This Frankenterm is:

“Private SaaS.” (As well as “Virtual Private SaaS,” “Cloud Private SaaS,” “Secure Private SaaS” and probably half a dozen other just as nonsensical formulations).

The problem with private SaaS is that it’s a contradiction in terms. SaaS is defined by three primary characteristics. These are:

  • I (or my company) do(es) not license the software.
  • I (or my company) do(es) not install the software.
  • I (or my company) do(es) pay for usage via a recurring subscription model. (There are a few exceptions to the above in terms of ad-based systems, but most of these offer customers the option to migrate up to a paid version of the system.)

And that’s it.

There have been attempts to justify the use of “Private SaaS” by claiming that SaaS is simply a “technical delivery model.” These are wrong. SaaS is primarily distinguished from its desktop and internal IT counterparts by financial issues. CapeEx vs. OpEx. Revenue recognition rules. Tax rules. Recurring basis payments. All are different in SaaS and these are all business issues. (Well, OK. I suppose you can argue that not installing something is the “lack of a technical issue.”)

Others appeal to the desire of corporations to develop better in-house applications and smoother, deployments of software applications. Sinclair Schuller, CEO of PaaS provider Apprenda, makes his case on his SaaSBlogs site this way:

We started realizing that ISVs weren’t the only entities trying to deliver their software to thousands (or even millions) of customers via a services model instead of a shipped bits model. We found that huge numbers of home -built enterprise IT apps were essentially being written as SaaS offerings because of the simplified delivery and consumption model.

http://www.saasblogs.com/saas/private-saas-understanding-how-cloud-will-evolve-for-enterprise-it/

I’m sure this is true but it’s off point. If a company wants to load up more software on servers or rent space for new applications (we used to call this “hosting” but now it’s a “private cloud”), use virtualization to stretch their hardware, hire more coders, rent more bandwidth, harness more geeks to tend more boxes, thinks HTML 5 is just too groovy for words, etc, etc, that’s fine but it’s not SaaS. Corporations already know how to buy and develop ever more software internally. They’ve heard claims that the latest wonder language combined with the latest wonder methodology will deliver oodles of payback since the beginning of time. They don’t believe that anymore. It’s just the same old, same old and one of the reasons for the growth of SaaS.

Also, while I’m sure that corporate development groups have learned lessons from SaaS developers and the accompanying advances in technology driven by the movement, the fact is that coders code one way when they are developing applications for a user (subscriber?) base who must use the application, can rely heavily on corporate training and institutional training to get up to speed on usage, and don’t have to worry about churn rates and competition from competing vendors and code another way when they do. It’s just a fact of life.

Let me back this up with some hard numbers from our just released 2013 SaaS Survey. Over the last five editions of the report, we’ve asked the following question:

What do you believe is the primary reason your customers choose to subscribe to a SaaS system?

As always, “Customers can quickly gain access to new capabilities and functions that they cannot obtain by purchasing existing software products and services” came in first at 48%.

But take a look at the other primary reasons:

SaaS applications are counted as an operating expense, not as a capital investment; 22%

Customers wish to replace existing licensed and/or client/server applications with SaaS applications to reduce overall IT operations and complexity at their company or business unit: 15%

What these numbers show us that is both finance and upper management are in alliance to get software expenses off company capital expenditure accounting lines and IT geeks off corporate payrolls.

We’ve also seen claims that NIST (the National Institute of Standards and Technology) “defines” or supports the concept of “private SaaS.”

First, we want to say that we’re not impressed by NIST, which has provided a jargon-filled wad of nothingness as a “definition” of a fast moving and quickly evolving business model. For example, as part of the definition, they state that “Cloud computing should be…rapidly provisioned and released with minimal management effort or service provider interaction.” Yes, and puppies should be cute and kittens adorable. In my opinion, NIST should stick to defining fire standards for mattresses. They are wasting taxpayer money.

Second, if you are impressed by NIST and its definitions, we suggest you download file NIST SP 800-145 (just do a quick Google search). Please note this document never refers to anything called “private” SaaS. This is what it does refer to:

Software as a Service (SaaS). The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure(2). The applications are accessible from various client devices through either a thin client interface, such as a web browser (e.g., web-based email), or a program interface. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings.

Private cloud. The cloud infrastructure is provisioned for exclusive use by a single organization comprising multiple consumers (e.g., business units). It may be owned, managed, and operated by the organization, a third party, or some combination of them, and it may exist on or off premises.

Note that “Private Cloud” can be used as a synonym for “datacenter” or corporate datacenter (or data center, if you’re old school). And there is nothing new about corporate datacenters.

Also note the reference to “consumers,” not corporate users nor “corporate consumers.” NIST is referring to paid subscribers. Corporate “consumers” NEVER controlled the “network, servers, operating systems, storage, resources”; IT did and does that. But again, if a company wants to install code on servers and roll out new applications internally, they certainly can, do and have.

But “private SaaS” can never be more than a contradiction in terms, a mythical, unwieldy fiction like the Pig with Wings. In cartoons and fantasy, winged pigs can fly. But not in the real world.

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