Seven Myths of SAAS Debunked

By Chris Preimesberger  |  Posted 2008-10-28 Print this article Print

As with any disruptive new technology that threatens the business of established older technologies, negative talk about software as a service has elicited plenty of fear, uncertainty, doubt during sales presentations and negotiation sessions. CEO Fred Luddy and marketing director Matt French, who run a SAAS provider, offer their responses to that FUD.

What the Client-Server 'Establishment' is Saying about SAAS

Myth No. 1: SaaS is not secure.

If SAAS were not secure, it would have to be true that the Internet is not secure, Luddy said.

"That means people using banking applications would be using those in an insecure environment," Luddy said. "The truth is, that almost all traffic goes over the Internet backbone, and there are multiple techniques that can be used to secure any sort of transmission over the Internet, mostly encryption."

Myth No. 2: Using SAAS is a risk to compliance.

Co-location-type data centers that host SAAS apps must be SAS 70 Type II-certified data centers, and that satisfies compliance with most all industry regulations.

"Our public data centers that we use [in a co-location environment], in most cases, are probably more secure and have more redundancy than many of our customers' environments," French said.

"This goes not only to application security, but to physical security. We have key-card access (to the data centers), camera surveillance, fire-suppression systems-just a lot of things that our data center provides that even our largest customers don't provide."

Myth No. 3: Over a three-year period, SAAS licensing is more costly than typical client/server application licensing.

That's flat-out invalid, Luddy said. "There's a lot of FUD being put out by older, legacy vendors. Truth is, for our class of application, our SAS license tends to be less cost than their maintenance fees. Straightaway, hard dollar to dollar to the vendor, we are significantly less expensive," Luddy said.

"If you throw in the fact that customers don't have to pay for infrastructure, DR [disaster recovery] strategy, upgrading, backup/restore and other items, SAAS becomes significantly less expensive," Luddy said.

Myth No. 4: SAAS is suited only for small and midsize businesses.

Legacy client/server software companies often claim during sales presentations that SAAS applications have only limited functionality.

"They have had some success with this statement, because, the poster child for SAAS-well, their initial customers were smaller organizations. A lot of single-individual businesses, too. But there's nothing architecturally restrictive about SAAS that says it has to be for a small company or has to have limited functionality," Luddy said.

"Take a look at all the capabilities of all the social networking [sites]-those are services people are using. Millions, if not hundreds of millions, of people are using those on a daily basis. We sell to companies that have hundreds of thousands of employees, and our service works fine for them."

Myth No. 5: SAAS is offered only in a hosted model.

Wrong. "If a customer decides that it is easier for them 'politically' to want to host the app in their own data center, then we permit that customer to simply download the same exact set of code that we use, place it into their environment, and they then can run it just like any other application," Luddy said.

"It's still SAAS to us, for two reasons: It's still a subscription model, you pay for what you use annually; and we as the provider still are responsible for the upgrades, patches, etc."

Other SAAS providers also offer this option.

Myth No. 6: SAAS applications are not customizable.

"That's reasonably laughable," French said. "We anticipated early on that every one of our customers would have to change our application somewhat significantly. For two reasons: the first one is organizational. To compare McDonald's Corp. with Fidelity Investments with General Motors, for example-they each have extremely different organizational structures. No way are we going to say, 'You'll have to change your organizational structure to meet ours.'

"The second reason: Geographical, organizational or whatever other needs are going to cause companies to have different process flows. We had to actually come up with a more customizable application in our SAAS offering than our competitors do in their client/server versions," Luddy said.

Myth No. 7: Nobody is adopting SAAS.

Adoption of SAAS has been accelerating slowly but surely during the last three years, all the major IT analytical firms have reported.

"If you walked into Morgan Stanley, even two years ago, they were surprised as a company to realize that they had 700 licenses of It was all grassroots; people throughout the organization as individuals just decided, 'Hey, I'm going to use this software, since it doesn't have to be installed, and I can just use it,' " Luddy said. 

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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