In APIs and the Growing Influence of Developers I wrote about three general eras in software business models: High-Touch, Open and Cloud.
In the so-called "open era" we saw many startups disrupt an existing market by simply taking advantage of the open model -- and specifically open source -- with either the (more common) "open core" approach or the "open crust" approach.
So the idea was (and to some extent, it still is) that you pick any established software product category and you come out with a similar product that freely provides the source code and almost always makes available a version of the product for free download.
Now, we are in the midst of the same trend but with cloud computing. Just pick any IT product category and provide it as a service in the cloud. As expected, when the trend started there were many skeptics who consistently said that for THIS product category, cloud computing won't work (whether software-as-a-service, platform-as-a-service or infrastructure-as-a-service, as the case may be).
So 10 years ago when Salesforce.com just started with their SaaS CRM app, people said that enterprises would never put their most sensitive lead, opportunity and sales information "on some web site." I remember reading for the first time the news that Salesforce.com landed Merrill Lynch as a customer. Sure it was a tiny deal made by some small division within the company, but I knew it was all over.
A similar thing happened not too long ago with Zoho landing a deal with GE, and since then both Zoho and Google Apps have won many deals with large enterprises replacing Microsoft Office with their SaaS offerings.
In the case of productivity apps, such as Office, Google Apps and Zoho, the naysayers said that the SaaS offerings are severely lacking in features. They neglected, however, to realize a few things:
- With a SaaS product, rolling out features is an incremental low-effort process, so that new features will be rapidly added
- For the vast majority of users, and the majority of uses, a relatively rudimentary set of features are good enough
- The SaaS offerings had a new set of features that desktop-installed applications would find it extremely difficult to replicate, for example, collaboration and sharing, automatic backups in the cloud, accessibility from any computer, etc.
I am increasingly convinced that there isn't any category of software for which the cloud is not a good delivery method. Here's another example:
I recently spoke to Tom Greenhaw, founder of Cashier Live. Cashier Live provides a software-as-a-service offering for point-of-sale (PoS): in other words, cash registers. What I found interesting about Cashier Live is that it requires non-commodity hardware and the software needs to interact with the hardware: open the cash register, print receipts, accept credit card and bar code scans, etc. Something that you wouldn't think is an optimal fit for SaaS.
But Cashier Live is doing well with hundreds of customers. They have overcome the technical challenge of hardware integration (for now using proprietary browser capabilities of Internet Explorer, but they are working on solutions for other browsers). And they provide compelling benefits, particularly for small and medium retailers who do not have an in-house IT staff and find it difficult to make big upfront expenditures on software licenses.
Do you have an example of another SaaS offering that is seemingly a bad fit for its category but makes sense to you? Please share in the comments.