Welcome!

Linux Containers Authors: Elizabeth White, Yeshim Deniz, Liz McMillan, Pat Romanski, Stackify Blog

Related Topics: @CloudExpo, @DXWorldExpo, @DevOpsSummit

@CloudExpo: Article

Is SaaS Dead? | @CloudExpo #BigData #IoT #IaaS #SaaS #AI #DevOps #FinTech

The rapid growth of hyperscale IaaS platforms such as AWS is changing the SaaS playing field

Is SaaS Dead? Are We Headed to a World of ASP 2.0 or Dedicated SaaS?

The emergence of hyper-scale Infrastructure as-a-Service (IaaS) platforms such as Amazon Web Services (AWS) is challenging the traditional Software-as-a-Service (SaaS) value proposition. SaaS CEOs, investors and SaaS buyers must carefully evaluate the implications of "all-in" migration to hyperscale IaaS platforms that offer value-added platform services that go beyond simple infrastructure services. This article provides a point of view and insights into changes in the SaaS market, which has three principal drivers 1) technical, 2) business, and 3) security and compliance.

History of SaaS
SaaS solutions were born in 2000 with the promise of web-based delivery of hosted software delivered over the internet. SaaS solutions helped reduce the pain and cost associated with upgrades and maintenance headaches of "shrink-wrapped" software. The SaaS business over the last 15 years has disrupted major software platforms and in many ways helped set the stage for wider enterprise adoption of cloud services.

The early success of SaaS helped change customer behavior. Customers became comfortable with data and software running outside of their firewalls. The concept of management by SLAs was in many ways driven by the initial success of SaaS. In the past few years the trend towards SaaS creation and adoption has exploded with the adoption of hyperscale IaaS platforms by SaaS vendors.

This is the great paradox.

The emergence of public cloud IaaS platforms on the one hand is fueling the explosive growth of SaaS, but at the same time it will kill (or dramatically disrupt) SaaS as it destroys the fundamental value proposition.

Will SaaS Work in the Public Cloud Era?
The explosive and constantly accelerating growth of IaaS platforms such as AWS Elastic Cloud Computing (EC2) is changing the economics of SaaS.

Your Cloud or My Cloud?
The trend is unmistakable - public IaaS has won. Major SaaS providers as well as large enterprises that are major SaaS buyers are both migrating and embracing the IaaS cloud by going "all-in." Figure 1 shows the implications of this migration and shift.

Figure 1

As both SaaS providers and enterprise SaaS consumers start to operate on the same platform, the SaaS "value-stack" is significantly diminished. Artificial data silos are created for the enterprise when their "SaaS" data is resident right next to their enterprise data separated just by a contractual boundary. SaaS buyers in many ways "pay" twice for their data. Once for storing it in the SaaS platform and a second time for backing it up into their "cloud environment" for security or analytical purposes. Many enterprises often overlook the hidden costs associated with SaaS. These include hard network and storage costs associated with copying data back and forth for backup/retention or analytics purposes.

Is Upgrading and Updating Software Really That Hard Now?
A key tenet of SaaS was to help reduce the cost and pain associated with upgrading and maintaining "shrink-wrapped" software. In 2016 and beyond, upgrading and managing software and systems is not as hard as it used to be. Continuous integration/continuous delivery (CI/CD), microservices, serverless computing, and managed cloud-native services are making it relatively easy to upgrade and deliver software.

If both the SaaS provider and the consumer have access to the same set of tools on the same cloud platform, what is the real value-add from the SaaS service? Just the software, right?

Upended Revenue Model
Over the years most SaaS services have been delivered on a "per-user" based annual subscription model. If a SaaS license for one user is $100 per year, and the enterprise bought licenses for 100 users, the enterprise would pay $10,000 per year. In the pre-IaaS days, this might have been great economics for both parties - the SaaS vendor and the SaaS buyer. But not anymore.

The customer now wants true pay-as-you-go or consumption-based pricing. This means paying for actual transactions when actual costs are actually incurred. This is especially true now that SaaS providers migrate to IaaS platforms that offer transaction-based pricing. The SaaS providers' underlying cost basis for infrastructure and related components is truly hourly and consumption driven. This has huge implications. Let's see this through a sample scenario.

Assume those 100 users consume 100 GB of space and five cloud servers. The customer adds another 50 users but because of limited usage, the storage and compute requirements did not really change much. Why should the customer pay an additional $5,000 for those additional 50 users, if the underlying incremental costs did not change that much?

SaaS buyers are starting to think real hard when deciding between a "per-user" SaaS annual subscription model versus a "cloud-hosted" managed "shrink-wrapped" solution. Given that in both scenarios the "raw material" is the same cloud platform.

Security and Compliance
Most newer entrants to the SaaS market underestimate the cost and complexity associated with the "Ops" part of the business. Many SaaS providers struggle with issues around vulnerability management, security scanning, compliance reporting, backup and recovery and service uptime. There are many factors for this. One of them is the changed cybersecurity environment. Buyers are demanding evidence of security best practices. Industry recognized certifications such as HIPAA, FFIEC, FedRAMP, or ISO 27001 are increasingly required by customers from SaaS providers. These come at a heavy price.

Further, as enterprises get better with cloud services, they are increasingly seeking access to their data stored on SaaS platforms. Data residency, access control and enterprise risk management are difficult questions that must be addressed. Now that the enterprise and the SaaS service are operating on the same cloud platform, the argument for "dedicated" SaaS is increasingly coming up.

Fast Forward to the Past?
As enterprises get comfortable with hyperscale cloud platforms such as AWS, there is a serious need to carefully evaluate the SaaS value proposition. New distribution models such as cloud marketplaces are making it easier for cloud buyers to find and deploy enterprise software within their own cloud environments. Wanting control on the data and emergence of data science are causing enterprises to view their data more strategically.

Will we see Application Server Providers (ASP2) that focus on delivering great software hosted within "dedicated" cloud environments or within the clients' cloud environment? Will the SaaS revenue model change from a per user annual subscription to a pay-per-call model as serverless computing takes shape?

Making the right strategic decisions is critical for both cloud services buyers and providers to ensure their ability to sustain and thrive in the cloud computing age. The emergence of serverless computing, cloud marketplaces and pay-per-call transaction pricing offer entrepreneurs a rich canvas to build the next generation of cloud-native services.

Industry Perspective
"Pricing, governance and security are key for enterprises consuming multiple SaaS services. It becomes challenging to understand the security footprint of the system as a whole as the number of SaaS services consumed increases." - Derek Collison, CEO and Founder, Apcera.

Call-to Action
Cloud executives both on the vendor and enterprise buyer sides must carefully evaluate and understand new cloud deployment and consumption patterns. Taking a strategic look at Managed IaaS, PaaS, Container-as-a-Service or Micro Marketplace deployment models is critical.

More Stories By Gaurav Pal

Gaurav “GP” Pal is CEO and Founder of is stackArmor. He is an award-winning Senior Business Leader with a successful track record of growing and managing a secure cloud solutions practice with over $30 million in annual revenues focused on US Federal, Department of Defense, non-profit and financial services clients. Successfully led and delivered multi-million-dollar Amazon Web Services (AWS) cloud migration and broker programs for US Government customers including the Department of the Treasury, and Recovery Accountability & Transparency Board (RATB) since 2009.

GP is the Industry Chair at the University of Maryland’s Center for Digital Innovation, Technology and Strategy (DIGITS). He has strong relationship-based consultative selling experience with C-level executives providing DevOps, Managed Services, IaaS, Managed IaaS, PaaS and SaaS in compliance with US FedRAMP, FISMA, HIPAA and NIST Security Frameworks. He has a successful track record of delivering multiple cloud solutions with leading providers including Amazon Web Services (AWS), Microsoft, Google and among others.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
It is of utmost importance for the future success of WebRTC to ensure that interoperability is operational between web browsers and any WebRTC-compliant client. To be guaranteed as operational and effective, interoperability must be tested extensively by establishing WebRTC data and media connections between different web browsers running on different devices and operating systems. In his session at WebRTC Summit at @ThingsExpo, Dr. Alex Gouaillard, CEO and Founder of CoSMo Software, presented ...
Most people haven’t heard the word, “gamification,” even though they probably, and perhaps unwittingly, participate in it every day. Gamification is “the process of adding games or game-like elements to something (as a task) so as to encourage participation.” Further, gamification is about bringing game mechanics – rules, constructs, processes, and methods – into the real world in an effort to engage people. In his session at @ThingsExpo, Robert Endo, owner and engagement manager of Intrepid D...
Recently, WebRTC has a lot of eyes from market. The use cases of WebRTC are expanding - video chat, online education, online health care etc. Not only for human-to-human communication, but also IoT use cases such as machine to human use cases can be seen recently. One of the typical use-case is remote camera monitoring. With WebRTC, people can have interoperability and flexibility for deploying monitoring service. However, the benefit of WebRTC for IoT is not only its convenience and interopera...
Michael Maximilien, better known as max or Dr. Max, is a computer scientist with IBM. At IBM Research Triangle Park, he was a principal engineer for the worldwide industry point-of-sale standard: JavaPOS. At IBM Research, some highlights include pioneering research on semantic Web services, mashups, and cloud computing, and platform-as-a-service. He joined the IBM Cloud Labs in 2014 and works closely with Pivotal Inc., to help make the Cloud Found the best PaaS.
Everything run by electricity will eventually be connected to the Internet. Get ahead of the Internet of Things revolution. In his session at @ThingsExpo, Akvelon expert and IoT industry leader Sergey Grebnov provided an educational dive into the world of managing your home, workplace and all the devices they contain with the power of machine-based AI and intelligent Bot services for a completely streamlined experience.
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
Business professionals no longer wonder if they'll migrate to the cloud; it's now a matter of when. The cloud environment has proved to be a major force in transitioning to an agile business model that enables quick decisions and fast implementation that solidify customer relationships. And when the cloud is combined with the power of cognitive computing, it drives innovation and transformation that achieves astounding competitive advantage.
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abilit...
In his session at Cloud Expo, Alan Winters, U.S. Head of Business Development at MobiDev, presented a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to maximize project result...
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
In his keynote at 19th Cloud Expo, Sheng Liang, co-founder and CEO of Rancher Labs, discussed the technological advances and new business opportunities created by the rapid adoption of containers. With the success of Amazon Web Services (AWS) and various open source technologies used to build private clouds, cloud computing has become an essential component of IT strategy. However, users continue to face challenges in implementing clouds, as older technologies evolve and newer ones like Docker c...
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Two weeks ago (November 3-5), I attended the Cloud Expo Silicon Valley as a speaker, where I presented on the security and privacy due diligence requirements for cloud solutions. Cloud security is a topical issue for every CIO, CISO, and technology buyer. Decision-makers are always looking for insights on how to mitigate the security risks of implementing and using cloud solutions. Based on the presentation topics covered at the conference, as well as the general discussions heard between sessio...
To Really Work for Enterprises, MultiCloud Adoption Requires Far Better and Inclusive Cloud Monitoring and Cost Management … But How? Overwhelmingly, even as enterprises have adopted cloud computing and are expanding to multi-cloud computing, IT leaders remain concerned about how to monitor, manage and control costs across hybrid and multi-cloud deployments. It’s clear that traditional IT monitoring and management approaches, designed after all for on-premises data centers, are falling short in ...
Organizations planning enterprise data center consolidation and modernization projects are faced with a challenging, costly reality. Requirements to deploy modern, cloud-native applications simultaneously with traditional client/server applications are almost impossible to achieve with hardware-centric enterprise infrastructure. Compute and network infrastructure are fast moving down a software-defined path, but storage has been a laggard. Until now.
DXWorldEXPO LLC announced today that the upcoming DXWorldEXPO | CloudEXPO New York event will feature 10 companies from Poland to participate at the "Poland Digital Transformation Pavilion" on November 12-13, 2018.
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...
The best way to leverage your CloudEXPO | DXWorldEXPO presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering CloudEXPO | DXWorldEXPO will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at CloudEXPO. Product announcements during our show provide your company with the most reach through our targeted audienc...
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and ...