When it comes to choosing SaaS (software as a service) or an on-premise solution, one size does not fit all. Indeed, enterprises and small businesses have different IT needs and considerations. As a managed service provider, here are some key issues you need to keep in mind as you formulate your own SaaS, cloud and on-premise solutions.
MSPmentor touched on the cloud vs. on-premise debate back in March. But let’s take a closer look. Cloud services are only of value if (A) the service provider gains profitable economies of scale and (B) the customer benefits from reliable, cost-effective shared services.
For instance, large system integration and outsourcing companies like HP, Unisys, Capgemini and CSC exist to manage enterprise complexities. They leverage established technologies and processes that make it cost efficient to take these services out of individual enterprises and put them into a “cloud.”
Whether it’s network monitoring, desktop management or transaction processing – if the capability that is being outsourced subscribes to a set of industry specifications and processes without requiring much corporate customization, it is a good candidate for outsourcing.
Issues addressed for customers include:
- Managing infrastructure complexity,
- cost reduction through economies of scale; and
- capital outlay (or infusion of cash if assets are being acquired).
All the major outsourcing players in this space have vertical industry practices and overlay varying degrees of industry-specific support around security, auditing, compliance, etc. into their outsourcing services portfolios.
What’s Your Core Competency?
As an MSP, you need to think like your customer to understand what types of cloud services may interest them. In other words, you need to understand their core competencies.
Enterprises with 50,000 employees would not consider IT infrastructure to be a core competency, but often it is their IT department’s deep understanding of their business unit and end-user IT requirements that drive needed changes from their outsourcing provider. Those changes often become industry best practices over time.
Operating IT on a daily basis may not be a core competency. However, those large enterprises intimately understand the business value of IT to their companies and aggressively drive their outsourcing partners to deliver to that vision. They can pay management and IT consultants to infuse outside thinking. They are not significantly resource constrained. It is the economies of scale and reduction of complexities around IT operations that drive the most significant value for them to consider outsourcing and “cloud” services.
Big Opportunities In Small Business
The issue of core competency points to a different set of requirements for very small businesses (VSBs) and SMBs. With fewer resources across the board, those companies are looking to their MSP partners to enable their businesses by supporting their PCs and networks, providing email, backup, etc.
This is not about complexity – this is about utility-level IT services that are like running water and electricity to a business. Most VSBs and SMBs don’t have the time, personnel and/or expertise to define and provide their own IT services. They rely on their trusted MSP partners to provide both the management and technical oversight to define and run their IT operations based.
It has been commonly thought for many years that VSBs and SMBs would be most significant beneficiaries of cloud-based services. Barriers to entry for small businesses are being reduced by the enterprise-class capabilities that are provided by cloud services providers. MSPs can incorporate those services in their portfolios and extend the value of their management relationships with their customers.
Thanks, But No Thanks
Of course, some customers will never abandon their on-premise solutions. The reasons vary from practical to emotional considerations.
For instance, does the customer:
- Have significant data access /auditing requirements that are easier to manage in their own environment?
- Want to retain physical control of their data?
- Think of their IT infrastructure as part of their business value?
- Manage risk objectively?
- Have a conservative IT culture?
One size does not fit all. The cloud is here to stay and its utility will grow over time, but does it have to be either/or? We believe at Datacastle (www.datacastlecorp.com) that you enable the capability, and let your partners work with their customers to decide the implementation option that best suits their needs.
Lori Salow Marshall is VP of Marketing & Business Development at Datacastle Corporation, a SaaS data security solution provider serving managed service providers worldwide. Guest blog entries such as this one are contributed on a monthly basis as part of MSPmentor.net’s 2009 Platinum sponsorship.
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Tags: Cloud Services | Datacastle Corporation | IT outsourcing | Lori Salow Marshall | Managed Service Providers | MSPs | Software as a Service and Hardware as a Service
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We should stop trying to be so diplomatic. The truth is that SaaS is killing on premise-software (and servers for that matter).
It is predicted to be a $4B market in the IT Management category alone by 2013 (Forrester).
I think that there are two key concepts that help broaden the ongoing discussion.
* As an MSP, I also have core competencies
* As an MSP, I have to win business first to then gain economies of scale
As one of our customers told me last week “my core competence is service” and I want someone else to automate all of the technology on the backend. He went on to say “I would run everything out of the cloud, if I could.”
This is something that we hear over and over again and is why so many MSPs are choosing SaaS. Just like their customers, they benefit if they do not need to buy expensive servers and pay for and manage their own complex software. Who wants to deploy a server every time a new customer is signed up? Who wants to manage a cluster of servers and need to upgrade software all the time at their HQ?
This leads to the second point. You need to win business to grow a managed services business. Most of our MSP customers use Paglo for their first client assessment (sometimes pre sale and sometimes post sale – sometimes paid and sometimes not). Deploy a single crawler on an existing server and off you go. Compare that to carrying in your own server, setting up complex discovery templates, and configuring complex on-site software. It’s a no brainer.
If SaaS was not so disruptive, we would not be seeing every outdated managed services platform vendor scrambling to offer a hosted version. Let’s admit to ourselves what is happening so we can move on and talk about the different SaaS options.
Brian de Haaff
Paglo – leader in On-demand IT Management
CEO
http://www.paglo.com
follow us on Twitter at http://www.twitter.com/paglo
I agree with Brian de Haaff. You have to take a long view. Ultimately, the browser will be the operating system and application development neutrality will be restored to the PC thus compelling Microsoft to openly and fairly compete for application supremacy.
It is just a matter of time.
Regards,
Stu Kushner
http://www.progoffice.com
I just got out of a mtg with a co-lo and while he and I have our biases, I think that I’m like many business owners where I’d never want to fork over my mission critical data to anyone else or not know who might have access to it…..
With a SAAS solution, at least 2 other parties have access to my client data; whoever is hosting it in the cloud or the co-lo and the provider of the software. That’s way too many eyes to see my sensitive client info.
Stu
Stu@southernlendingsolutions.com
Have you thought about the fact that the only value your mission critical data has to the people who own the Software as a Service is that if the server is breatched or data is lost then business and crediblity are toast! That mission critical data is yours…and yours alone. It is not even considered data to the business team but a service that generates revenue for the buisness and every employees’s goal and ownership in that business is to ensure that it is secure, safe and solid?
Gina: I sort of follow your argument but I don’t follow your ultimate point.
Are you saying the SaaS service provider…
1. doesn’t value the customer data?
2. but protects the data nonetheless because the service provider wants to remain in business?
What I am saying… like a surgeon who protects your heart, vital to your survival. He is not thinking about your heart in particular but your survival. If he keeps killing his patients, nobody will want to visit his office.
So I am saying the SaaS values your data, but values his future earnings more!
Does this leave the door open to corruption? Who is the top bidder for my data?
Does this leave the door open to integrity? In order for me to be sustainable I must protect the data and my customers, even from myself?
That is the challenge!
Gina T: Thanks for coming back and taking the time to explain your thoughts. I do believe in SaaS, but your concerns are well stated.