SaaS Application Selection – Buy Only What You Need
I have been involved in a product procurement project for the last 6 months or so and have been intrigued by a number of SaaS players in this particular market. There are a couple of what I consider to be niche players that have very high subscription fees for the service I perceive they offer.
After looking further at their offering, I believe that they suffer from a diseconomy of scale. They are forced to meet the SLA needs of the highest level company they are selling to, and have to charge everyone else for that complexity regardless of whether they need it. Sure, some services can be partitioned, but when you are talking about service availability, response time, storage capacity, etc you are talking about common services that would be difficult to partition without splitting it into multiple individual services.
Online storage is a good example of this. Amazon S3 is a robust solution for delivering fast access to big storage. But if I’m a company just wanting to remotely store backups for a rainy day – it’s overkill. And there is a company in the marketplace that realizes it:
Specifically, more generalized public cloud platforms can suffer from what we might call diseconomies of scale — they have to do more in order to grow, but as their size and functionality grow so does the cost of their overhead. Because that overhead cost is distributed across a cloud’s entire user base, each user ends up paying for complexity he or she doesn’t in fact use.
Interestingly, we do this all of the time when purchasing software. We buy into things that provide us with room to grow. That works fine for an asset you will own, but when you are purchasing a cloud solution, it makes much less since. SaaS applications are like electricity – the light bulb is on and you’re going to pay for it whether you benefit from it or not. As such, you should make sure that you are purchasing based on a model that maps to your actual consumption. This Backblaze solution is a perfect example of purchasing the right solution at the right price for cloud backups.
- The True Cost of SaaS Apps Isn’t About the Browser (readwriteweb.com)