It’s been called an application service provider (ASP) model, on-demand software and software-as-a-service (SaaS). The idea behind all three terms is the same, though: software that marketers “rent” on a per-seat basis that resides on the software developer’s premises or servers.
Although many had dismissed the genre in the past, they can’t ignore it anymore as companies such as Microsoft Corp. embrace the model. But even with the additional attention SaaS receives today, there are still many misconceptions about it.
Chris Baggott, co-founder and CMO of ExactTarget, an on-demand e-mail service provider, clears up a few of the most common.
1) Myth: Data integration is hard.
Reality: Trying to synch up your data and applications with a remote set of hardware or software wasn’t easy in the past. Today, however, many SaaS providers will do custom software integration for you. They’ll also clean and install your data on their systems as part of your set-up fees. Even if you don’t elect these options, there are patches and bridges available to help ease the transition, Baggott said.
2) Myth: SaaS is for small businesses.
Reality: SaaS, experts always said, was perfect for small companies that didn’t have the means or the internal IT department available to install their own software. That’s still the case but, Baggott said, some of his biggest clients are just that—big. “SaaS helps larger companies be more agile,” he said. “It’s scalable and accessible at any time, anyplace in the world.”
3) Myth: Trusting your applications and data to someone else is a security risk.
Reality: SaaS vendors may outdo your own security program because most store data in redundant facilities that operate 24/7. If one server goes down, another is right there to back it up. Plus, there’s less of a chance of human intervention because data are stored behind retinal scans and armed guards. “Every major publicized security breech was on a local system,” Baggott said. “Data are safer with a company that makes it its business—literally—to protect the data. Plus, there’s less of a risk of losing data to disgruntled employees [or] natural disasters.”
4) Myth: If you’re planning on using a software program for more than three years, you’re better off—from a cost perspective—buying.
Reality: Many analysts subscribed to this theory, but they’re starting to question it. Most now agree that there is no one-size-fits-all financial analysis. Some very large enterprises may do better taking e-mail marketing in-house. However, SaaS software and hardware upgrades happen automatically and seamlessly, and—at least with e-mail offerings—things such as e-mail deliverability are included in the monthly charge. With that in mind, it can make more sense, even for very large businesses, to use an ESP rather than to buy their own program and server.