What's in a Name: Is 'SaaS' Really New?: Page 2

Posted November 2, 2007

Matt Villano

(Page 2 of 2)

Greg Olsen, CTO of Coghead, an application vendor in Redwood City, Calif., takes this dichotomy even further, saying that other than the word “service” and monthly payment plans, current SaaS models and the ASP model of the late 1990s share little.

According to Olson, the service provider in the ASP model basically offered an IT infrastructure for rent – an inefficient method of delivering services, to say the least.

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“ASPs didn’t provide applications, just the infrastructure, and the deployment and management expertise to run those applications,” he says. “Today, with SaaS, customers of all sizes (both businesses and individuals) can procure a very broad array of applications in very fine grained increments by service subscription.”

SaaS certainly provides customers with a bevy of individual applications. A quick count indicates that there are more than 1,700 SaaS providers out there currently, including Instill, which offers business intelligence technology for companies in the food service industry, and Convoq, which peddles video conferencing.

These and hundreds of other SaaS entities can be found on the SaaS Showplace, a Web site put together by Jeff Kaplan, managing director of THINKstrategies, a consulting firm in Wellesley, Mass.

Kaplan, who has studied SaaS for years, bolsters comments from Sockol and Olson by summarizing that the new iterations differ from ASPs in three important categories:

• Attitude: Why sign up for more applications than you need? SaaS, unlike the ASPs of old, lets customers receive only those applications they’ll use.
• Economics: Under the SaaS model, customers pay as they go, instead of paying one price for a monthly subscription service that encompasses stuff they might never use.
• Technology: The one-two punch of broadband networking and Web 2.0 makes SaaS quicker, nimbler and more agile than ASPs ever were with slower, older technologies.

“Don’t get me wrong, the value proposition of SaaS is the same as it always was with ASPs in that customers need not have to do these things themselves,” says Kaplan, who notes that Managed Service Providers (MSPs) fill a different niche entirely. “Is SaaS just a new and improved version ASP? I’m not sure I’d say that at all.”

With this in mind, then, perhaps there’s more than separates the SaaS and ASP models than marketing or semantics (that’s semantic, not Symantec) after all. What’s in a name? In the case of SaaS, apparently quite a bit of innovation over its much-maligned predecessor.

Juliet Capulet would be proud.

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Tags: services, Microsoft, DRM, SaaS, marketing

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