The Symbiosis of SaaS and Soft Appliances

Phil Wainewright starts out characterizing the packaged software appliance as a competitive offer to SaaS.  But, toward the end of the piece, he opens up the argument to say that "... SaaS vendors shouldn't see software appliances as competition.  Indeed ... managed appliances will probably become part of most SaaS vendor's infrastructure, deployed where it makes sense to handle certain operations on customer sites or otherwise outside of the vendor’s own data centers." 

While this is true, Phil's missed an important point:  SaaS vendors are the direct beneficiaries of "soft appliances", since they are an excellent means of implementing and deploying SaaS on a "virtual data center."  That is, the SaaS provider will employ infrastructure on demand, packaging their multi-tenant offers as soft appliances that can be provisioned as customer demand warrants.  Companies such as 3Tera make a strong case for (and hopefully a good business from) precisely this scenario. 

The bottom line is that SaaS has much to gain from embracing packaged software appliances, as both an infrastructure for on-demand service and as an on-site adjunct to their network-resident services.

» SaaS and the packaged software appliance | Software as Services | ZDNet.com

... Put all of these considerations together and you can see that appliance packaging — especially of open-source platform components — is a way of eliminating a lot of the problems associated with conventional software; but without moving entirely to a vendor-hosted SaaS model. “This is independent of the delivery model,” says Dietzen. “This is about cutting the cost of owning and running the software.”

So there’s a sense in which appliances are not so much a part of the SaaS model as competition for it. The appliance model provides many of the benefits of SaaS without forcing customers to store and access their data outside of the firewall. With a product like Zimbra, where the most intensive use is within the organization in any case, and where integration to other on-premise facilities such as telephony equipment is often important, it is often very difficult to argue for off-premise deployment anyway because that simply adds unnecessary cost and network latency. ...

On the other hand, there are many more applications that run much better off-premise because they involve a lot of interactions beyond the firewall anyway. So I think SaaS vendors shouldn’t see software appliances as competition. Indeed, as I hinted at the outset of this article, managed appliances will probably become a part of most SaaS vendors’ infrastructure, deployed where it makes sense to handle certain operations on customer sites or otherwise outside of the vendor’s own data centers. This assertion is especially credible if you count client-side platforms such as Silverlight, Apollo, Google Gears and so on as part of the managed appliance spectrum.

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Comments

[Mehnaz]

I have been doing some research on SaaS and its future impact. SaaS can reap all the business benefits while eliminating the traditional barriers, such as technology infrastructure expense, high licensing and maintenance fees, lengthy implementations and the need to invest in and manage an IT department to run the network and software system. Some industry strategists such as Sramama Mitra have even coined a term called Enterprise 3.0 which is a combination of the extended enterprise and SaaS. Do check it out Enterprise 3.0 = (SaaS + EE) by Sramana Mitra.