Why some people don’t care about SaaS, but should

April 24, 2018

A blog post by David Linthicum, managing director, chief cloud strategy officer, Deloitte Consulting LLP

Thousands of SaaS applications are now available from providers as diverse as familiar tech giants to startups that may do something as niche-y as bail bonds management. Indeed, the SaaS segment holds nearly 69 percent of overall public cloud market share, but its year-over-year growth rate of 22.9 percent is the slowest of the three primary segments (Source: IDC Worldwide Semiannual Public Cloud Services Tracker).

So, we need to understand a few things:

1. SaaS is huge. Even though there are IaaS alternatives to data center-based servers, SaaS is often a more common path to the public cloud. That’s because the care and feeding of the application are turned over to a SaaS provider to help reduce costs and mitigate risk. It’s common to replace on-premises applications with SaaS analogs to facilitate the movement of workloads to public clouds.
2. SaaS is much more important to the public cloud computing story than most enterprises believe. While SaaS is one possible way to replace applications within the enterprises, most enterprises focus more on migration than replacement. Even though SaaS may be a more effective choice, the power of the hype around IaaS players is often too strong to resist.

Take the case of a larger enterprise migrating 1,000 workloads to the public clouds. If exiting patterns are similar to what I see from others, about 10–20 percent of those applications have more appropriate SaaS alternatives, such as accounting, (customer relationship management, and enterprise relationship planning).

Given this example, the cost of ownership is often much higher and the return on investment much lower. Even so, they may go for the IaaS migration solution.

The SaaS market appears to be slowing down in light of the acceleration of IaaS and, to a much lesser extent, PaaS.

The reality

SaaS and IaaS are two very different animals, and one does not replace the other. SaaS is about pre-built business processes and interfaces to access those processes, meaning a solution. IaaS has the potential to be a solution but only when you do the work to build to net new applications or migrate existing workloads to the cloud.

Thus it’s not an IaaS vs. SaaS thing, it’s a matter of picking the right solutions to meet the needs of the specific problem domain. That means you must understand your requirements and back the right solution to that solution, whether it be SaaS, IaaS, or "other." It’s just that simple.