This post was originally published by Ian Lowe at Crownpeak.
As companies deal with our current period of extended economic uncertainty, it’s vital to evaluate opportunities to improve the efficiency of their technology stacks. It’s a process that happens regularly inside many organizations, especially those that follow zero-based budgeting practices.
But seeking efficiency does not need to mean reducing capabilities. One of the great value contributors in the last 100 years has been the power of technology to dramatically increase the efficiency of operations, while simultaneously reducing costs. In fact, organizations can take this opportunity to create real advancements in their operating model, gain alignment and clarity for their strategy implementations, increase overall capacity, and reduce costs in their technology infrastructure.
The cloud revolution
Starting around 2000, segment after segment has been transformed by the shift to cloud. Kicked-off by Salesforce’s long-running and highly effective “No Software” campaign, the transition to cloud has provided clear advantages with radical reductions, or even elimination, of many key cost drivers, including:
- hardware infrastructure
- maintenance and administration
- security patches and bug fixes
The benefits of the migration to cloud are clear, and over the last twenty years we’ve seen CRM, ERP, analytics & BI, HCM, and seemingly every other tech space disrupted by the superior cloud architecture.
However, legacy players do not go down without a fight, and there are some segments that are still dominated by pre-cloud systems.
SaaS vs cloud
Cloud has become a buzzword that is often interpreted as meaning “works like Salesforce.” However, cloud has many layers to it, and some vendors claim cloud capabilities when they’re still delivering old on-prem solutions but installing them on a server in the cloud.
What’s the difference, and why should you care? If the solution isn’t truly built for the cloud, many of those enticing cost savings don’t actually get saved. If the hardware still has to be supported (in the cloud), maintained (in the cloud), upgraded (in the cloud), tested (in the cloud), and deployed (in the cloud)… then you’ve just moved your data center to the cloud.
The key differentiator is what’s called “multi-tenant SaaS”. “Multi-tenant” refers to an architecture in which a single instance of a software application services multiple customers, or tenants – it’s what really drives the game-changing efficiency play. SaaS stands for “Software-as-a-Service.” It’s when a vendor, such as Crownpeak, provides the final software to their customers with no need for the customer to edit or manage the underlying hardware, software or network to make it work. This completely removes the overhead from the customer, simplifying operations and reducing costs.
Because of the clear economic advantage that SaaS solutions have in the market, most companies want to be perceived as SaaS even if they aren’t true SaaS solutions. Phrases to watch out for:
- “Managed services”: Often, a legacy vendor will understand that they have a serious economic disadvantage and will try to cover it up by offering services to handle the legacy overhead. They might make promises about managing your upgrades, testing and maintenance. However, these costs aren’t eliminated, nor is the friction they add to the system. The vendor has just moved the cost to a new line item.
- “SaaS-like”: When a vendor uses this phrase, it means they don’t have SaaS but are trying to emulate it through services, just like managed services.
- “One-click deployment”: Usually, this means that the vendor’s application can be installed on a cloud server in one click. While helpful, this doesn’t address any of the issues of maintenance, upgrades, deployment, testing, etc.
When reviewing a vendor that claims to be SaaS, ask: “Is this a true multi-tenant SaaS offering?” If the answer is “No,” make sure you are adequately considering the cost categories listed above in your evaluation.
The last few cycles of economic disruption have all increased reliance on SaaS solutions across segments. We expect any period of economic disruption to be the same – companies are prompted to take a close look at where their current technology is adding overhead and complexity, and where a SaaS alternative could provide them with cost savings and reduced friction in their operations.
At Crownpeak, we’ve been SaaS for almost 20 years. Other vendors leaned into the power of servers to drive innovations, such as personalization. But the new web is built for cloud interoperability where dynamic services are faster and better served at the client – legacy vendors are not equipped to take advantage of it. Web CMS is possibly the last major part of your organization’s martech stack that is not SaaS. We encourage you to take a look and see if you’re ready to reduce friction, save costs, and empower the next wave of digital transformation in your industry.
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