Cloud Computing? Legacy SaaS?
23 April 08 11:22 PM | hagins | 0 Comments   

In working with startup SaaS vendor Sonian Networks (www.soniannetworks.com) I heard the CEO, George Nichols, use the term "Legacy SaaS" to refer to those OLD SaaS providers who build and operate their SaaS offerings the old fashioned way -- you know, using actual servers and databases and what not.

The comparison between Sonian as a SaaS 2.0 company and existing SaaS 1.0 business is a good one. Sonian has built their entire offering atop the Amazon Cloud. Sonian uses EC2, S3, SDB, SQS and will soon be using the Amazon payment services as well. Here is a company that is literally betting the farm on the use of cloud infrastructure, and far from being on the fringe, this is quickly becoming the norm.

Sonian has been in full production with their offering since January of this year, and is literally the first company out of the chute with an enterprise-level SaaS offering built on the cloud. Sonian provides email archiving and compliance as a service, and because of their solid use of the Amazon cloud, they can literally scale to any number of customers and users without having to worry about having the guys in the data center rack another server, install software, test it, bla bla bla.

This IS the future of software-as-a-service where the computing infrastructure is also provided on-demand. Sonian's cloud-based infrastructure automatically scales up and down based on current load -- so they are never paying for computing infrastructure or storage unless they are actually using it.

 Wow.

So the more that I thought about this, the more I realized that George wasn't only right about Sonian being a SaaS 2.0 company, he is also right to use the term "legacy" SaaS to refer to the SaaS 1.0 businesses. SaaS 2.0 business have an enormous competitive cost and scalability advantage over the "legacy SaaS" companies.

This Sonian case also highlights something about some (not all) SaaS 1.0 businesses that we've known for a while - that the operational part of running their SaaS business is left to Managed Hosting providers and isn't really integrated into their software product development team. With cloud computing, the product development team must have a deep understanding of the operational environment. The cloud "layer" logically sits above the operating system, but across the entire cloud computing environment, and therefore the SaaS developers have to have expertise in developing applications for the cloud.

SaaS Developer 2.0?

 

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