July 30, 2008, 11:44 AM — I discovered why SaaS (Software as a Service) remains a scary proposition to many small businesses: they listen to really, really bad advice. You know, scary stories full of lies, incompetent research, and self-serving bias masquerading as journalism. The most recent putrid prose comes from BusinessWeek.com in a column called â€œBeware the Hype for Software as a Service.â€
I'm all for hype wariness, no questions. I'm all for contrarian views. However, I hate seeing small business people get bad advice from trusted sources. I'm not sure what BusinessWeek's goal is with this column, but it appears they're playing writer Gene Marks as a â€œtechnology advice shock jockâ€ or something similar. You know, a mouthpiece that spews nonsense in order to outrage rather than inform.
Here's what Marks says is wrong with SaaS: it's not always cheaper, it doesn't reduce hardware investment, it's not quicker to setup than in-house applications on your own server, your data is not more secure, and online banking isn't a good example of SaaS use. I count every comment as completely or partially wrong.
Partially wrong? Marks says the idea of SaaS being quicker to setup is a myth. After all, if you want application customization and to share data with completely different applications, you're going to have to spend some programming dollars. Fair enough. But to automatically assume SaaS will cost more to customize and integrate than applications you purchase and install in-house is wrong. Most experts say just the opposite. All the horror stories you read about corporations wasting millions and millions on a software integration project? Almost all in-house software.
Is SaaS always cheaper? If you use a SaaS applications that's appropriate to your needs, yes. If you figure the cost of buying or leasing software and hardware versus a few dollars per user per month, SaaS is cheaper. If you figure that you can reduce the number of SaaS licenses in two minutes and reduce your cost, versus being stuck with software licenses and hardware investment during a downturn, yes again.
Incredibly, Marks says SaaS applications don't reduce hardware investment. What? He believes you'll spend so much money getting Internet access to reach your SaaS apps you'll wind up spending more. Is there any company with white collar workers in the US today that doesn't already have computers, routers, and Internet access? Somehow, the cost of getting Internet access for users (which you already have) is more than buying new servers and disks for in-house applications. I think his calculator's broken.
The article portrays lost laptops full of employee records as an indictment of SaaS security. We talked about this last time. SaaS vendors have better data security than any small business network, period. When Fortune 100 companies trust SaaS data security, Joe's Flower Shop can too.
Oh, yes, the SaaS example of online banking, a truly liberating experience for many individuals and small businesses, is wrong according to Marks. Why? Because the FDIC backs banks and not other SaaS vendors, and Marks equates that with your Internet service dropping somehow. Guess what: your Internet access stays up more than most small business servers.
Access to your applications and data from remote locations makes SaaS options a great deal for many small businesses. Add in the hardware and security costs to enable secure remote access for small businesses to reach in-house applications, and the cost advantage tilt even more strongly toward SaaS applications.
You don't have to believe me. Read the comments from other BusinessWeek readers. Out of 48 comments there when I checked, 46 were completely negative, one was neutral, and one agreed.
My favorite comment came from a reader named Bob: If this were The Onion, the article would be pretty good. It's not The Onion, and it's not April Fool's Day. It's just bad SaaS advice from a source that should know better.