What's in a Name: Is 'SaaS' Really New?

Friday Nov 2nd 2007 by Matt Villano
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To those who knew ASPs, 'software as a service' seems all too familiar.

It was Juliet Capulet in Shakespeare’s “Romeo and Juliet” who uttered the famous question “What’s in a name?” in her biting commentary on names as meaningless conventions.

If only she were around to comment on IT services: What would fair Juliet say about the evolution of Software as a Service?

That’s right, SaaS, that software application delivery model where a software vendor develops a Web-native software application and hosts and operates it for use by customers over the Internet. The moniker (for you grammarians, technically it’s a “camelback acronym”) came in to widespread use after a conference in 2005.

But some vendors and experts alike say the model has been around for decades under a different name: Application Service Provider, or ASP.

Remember the ASP? The software model coined the notion of delivering computer-based services to customers over a network. It emerged out of service bureaus of the 1970s and 1980s, fueled the dot-com boom of the 1990s, and largely was blamed for the dot-com bust of Y2K.

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Now, at least according to some, it’s back, only with a different name. What in the name of guerilla marketing gives?

That depends on whom you ask. Some say SaaS is nothing more than a marketing ploy to repurpose the ASP model under a different, less controversial name. Others admit that while the SaaS and ASP models once were cut from the same cloth, SaaS is a new-and-improved version, ASP 2.0, if you will.

Oli Thordarson, president and CEO of Alvaka Networks, a managed service provider in Irvine, Calif., is a critic.

“We don’t call Splenda ‘saccharin’ after saccharin was found to be cancer-causing,” Thordarson says. “People latch on to names, and ASPs got such a bad rap in the 1990s that I don’t think anyone would go near it if you brought back the name ‘ASP’ today.”

Mike Masnick, CEO of Techdirt, a technology analyst firm in Sunnyvale, Calif., agrees, going so far as to say that he doesn’t see any “major” differences between the two at all. “Sure, the technology has changed a bit, but when you look at functionality, they’re identical,” Masnick says. “It’s a classic example of marketing a newer version of the same thing to avoid negative reaction from those who might have been turned off previously.”

Others have a different perspective. David Sockol, for instance, CEO of Emagined Security, a managed service provider in San Carlos, Calif., says he prefers to think of SaaS as a dramatic evolution of the ASP model, the same idea only better.

“When ASPs were first designed, they were mostly people using the Web to interface with backend software,” he says. “By allowing organizations to put software on their machines that interfaced over the Internet with backend processes, SaaS takes this another step.”

According to Sockol, the primary differences between SaaS of today and ASP of yesteryear are in where the native business data resides and how much control (in terms of application software licensing, possible system failures and security breaches) the native business has.

Under the ASP model, he says, customers really never really had much code running locally – all of it was running off of a server or other engine at the host. Under the SaaS model, however, customers have the code conveniently sitting on their networks in the form of application programming interface (API), which communicates with a host server remotely.

Greg Olsen, CTO of Coghead, an application vendor in Redwood City, Calif., takes this dichotomy even further, saying that other than the word “service” and monthly payment plans, current SaaS models and the ASP model of the late 1990s share little.

According to Olson, the service provider in the ASP model basically offered an IT infrastructure for rent – an inefficient method of delivering services, to say the least.

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“ASPs didn’t provide applications, just the infrastructure, and the deployment and management expertise to run those applications,” he says. “Today, with SaaS, customers of all sizes (both businesses and individuals) can procure a very broad array of applications in very fine grained increments by service subscription.”

SaaS certainly provides customers with a bevy of individual applications. A quick count indicates that there are more than 1,700 SaaS providers out there currently, including Instill, which offers business intelligence technology for companies in the food service industry, and Convoq, which peddles video conferencing.

These and hundreds of other SaaS entities can be found on the SaaS Showplace, a Web site put together by Jeff Kaplan, managing director of THINKstrategies, a consulting firm in Wellesley, Mass.

Kaplan, who has studied SaaS for years, bolsters comments from Sockol and Olson by summarizing that the new iterations differ from ASPs in three important categories:

• Attitude: Why sign up for more applications than you need? SaaS, unlike the ASPs of old, lets customers receive only those applications they’ll use.
• Economics: Under the SaaS model, customers pay as they go, instead of paying one price for a monthly subscription service that encompasses stuff they might never use.
• Technology: The one-two punch of broadband networking and Web 2.0 makes SaaS quicker, nimbler and more agile than ASPs ever were with slower, older technologies.

“Don’t get me wrong, the value proposition of SaaS is the same as it always was with ASPs in that customers need not have to do these things themselves,” says Kaplan, who notes that Managed Service Providers (MSPs) fill a different niche entirely. “Is SaaS just a new and improved version ASP? I’m not sure I’d say that at all.”

With this in mind, then, perhaps there’s more than separates the SaaS and ASP models than marketing or semantics (that’s semantic, not Symantec) after all. What’s in a name? In the case of SaaS, apparently quite a bit of innovation over its much-maligned predecessor.

Juliet Capulet would be proud.

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