Over that past several years, SaaS-based alternatives to traditional on-premise solutions have been gaining market share. Salesforce.com led the way in CRM, and SaaS solutions are becoming more common in other markets including Application Performance Management (APM). This is no surprise, as companies look to lower costs, reduce the burden on IT staff, gain speed and agility, and move to a subscription model where you pay for what you use when you use it and not before any value is delivered. Speed of deployment, time to value and ROI are also key drivers toward SaaS solutions. For smaller companies, SaaS gives them access to solutions that would otherwise be unavailable to them, but larger enterprises are also embracing these alternatives and enjoying their benefits.
As SaaS gains momentum in the market, people are taking notice, which is evident in the latest Gartner MQ for APM. In order to participate in the MQ, vendors were required to provide a SaaS component of their solution with a meaningful number of customers. As the only company in the leader quadrant that offers a 100% SaaS solution, I found it interesting to see the number of companies claiming a SaaS solution for APM.
For traditional companies, with legacy tools, the easiest way to enter the SaaS market is by creating hosted versions of their existing products. While this may be considered SaaS by the simplest of definitions, I view it as an old school way of trying to deal with disruptive market realities without leveraging the true power of SaaS for the benefit of their customers and the market at large. This approach is nothing more than a façade for old, tired technology and business models, and it raises questions about these companies’ commitment to SaaS.
There is a better way. Though several of us at New Relic did it the old way in our previous lives, we built New Relic from the ground up to be 100% SaaS: a single product, purpose-built to deliver the full benefits of a true SaaS solution. SaaS is in our DNA — it’s part of everything we do, everyday, to serve our customers. As you consider an APM alternative, I think the following criteria are worth exploring:
* Technology – How old is it? Was it built with SaaS in mind? Many traditional vendors have products with aging architectures that are 10 to 20 years old that were never intended to support SaaS. Will they scale in a SaaS environment? Is the solution a single product or multiple acquisitions glued together? Is the whole solution SaaS, or just some of the parts? Is the browser UI an afterthought? Is it multi-tenant? Has the security exposure changed? None of these questions are a concern with a purpose-built SaaS solution.
* Deployment – How quickly can you get started? Is it easy to deploy? Does the solution work out of the box or does it require a significant time investment in customization and configuration? Does the vendor have a professional services group? Why do you need them and how much do they cost? Consumability is one of the primary design criteria for a purpose-built SaaS solution and deployment should be fast, easy and self-sufficient.
* Commitment – Is the sales team motivated to sell the SaaS solution, or would they rather sell a multi-year perpetual license? Does SaaS present a financial challenge for the vendor? Most companies have traditionally recognized license revenue in advance and SaaS can have a significant financial exposure as they have to recognize the revenue monthly over the term of the contract while taking the cost of sales (commissions and pre-sales resources) up front. A purpose-built SaaS company has this built into their business model from the beginning, and things like contracts, pricing and support were created with a full commitment to SaaS.
At the end of the day, many of these companies are learning that SaaS, while simple for the customer is actually challenging to deliver unless you are fully committed to the SaaS model. The shortcut of putting a SaaS façade on legacy products is neither cost effective, nor an acceptable alternative for their customers. Traditional APM companies are now faced with the decision of building new solutions from the ground up, or acquiring (and figuring out how to integrate) companies that already have real SaaS products, just like Oracle and SAP have done recently.
If you are interested in a SaaS solution for managing the performance of your web applications, take a look at New Relic. Built for SaaS from day one, from the ground up, by people and a company who are 100% committed to SaaS. It’s in our DNA.
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