SaaS, and the decline of self-hosted software
Last night I saw this tweet:
Back in 2004 – the year we launched – we used to get a lot of requests from people who wanted to host the FreshBooks service (then called 2ndSite) on their own servers. In fact, we used to get so many that we seriously explored making our software available for installation by third parties.
Why would we consider such a thing? While it may seem crazy today to offer your product as licensed software instead of as a hosted service, back then Software as a Service (SaaS) was not common practice – and I’d argue it still isn’t. Because we had almost no customers and no revenue (we were working out of my parent’s basement back then), the thought of licensing our service was pretty attractive because you could get a lump sum payment of revenue. When I think about it, it’s amazing how far things have come in these five years.
Today, almost no one asks to host FreshBooks on their own servers, which tells me the market is becoming much more comfortable with Software as a Service. And what’s not to like? No installation, automatic upgrades, outsourcing of backups and security… Instead of having to become an expert and provide support to your users, you have experts serving you. If you have a question all you have to do is call, post, twitter or email – not too shabby.
Hosted Software is dying, and with good reason. Long live SaaS.
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11:18 am
I switched my home PC from Windows to Linux a couple of years ago. One of the deciding factors was that most of the “applications” I used, I used from within a web browser. I figured that as long as I had a browser, it didn’t really matter which OS I used. Things have worked out pretty well so far!
1:06 pm
It’s interesting, I went to a Salesforce.com conference in Toronto this week, and they spent more time than I would have expected explaining the benefits of the SaaS model. I agree with you about the advantages, but I think there are still some kinds of data that firms aren’t comfortable running through a hosted application. I haven’t seen a lot of SaaS-based BI in the banking sector, for example. But for the SMB and mid-market, it’s definitely an increasingly worthwhile option.
1:18 pm
My main concern would be what if that company (for example, Freshbooks) goes under and all the data that they are holding is lost. This happened with a certain hosting company that all of a sudden went offline with no warning whatsoever. Granted, if you are making regular backups it wouldn’t be a huge issue, but it would be a major inconvenience and some people prefer to host their own applications. I personally don’t mind having someone else do all the work, but I understand the concern.
3:06 pm
@shane – yeah…Salesforce is doing a lot of market education. Their customers (enterprise grade customers) are the ones that are holding on tightest to traditional IT ways of looked at things.
@laura – so true. I think it’s really important to do a sniff test when you are choosing a vendor. Call them, look at their forums, do google searches to see if they are going to be there for you and if your communication is open. There are risks with every choice you make, but you can lesson the risk you mention by kicking the tires.
With respect to your data being around though, it really ought to be a benefit of a SaaS company. I know we keep several copies across multiple data centres, which are all backed up off site.
3:50 pm
I long ago realized that the servers of responsible SaaS companies are more reliable than my laptop’s hard drive. When my computer suddenly died a year ago my biggest worry was getting a replacement. In the meantime I borrowed a beast of a dinosaur sitting retired in a closet at work (Windows 2000!) and was up and running again the next day. My mail was on Gmail, my to-do list on Remember the Milk, my notes on Backpack and my client information? On Freshbook of course! The only thing “trapped” on my old computer were some family photos, which I could get off at my leisure (the best were on Flickr anyway).
Freshbooks and the other SaaS services turned what would have been a disaster five years ago into a minor inconvenience.
Whenever possible I do have the SaaS information archived on my machine. I make PDF printouts of my Freshbook hours and of all invoices (which I put into Evernote) but it would be nice to have something more automated and comprehensive. I wonder if there’s a way to have an automatic report sent by email (Google Analytics does this). I trust Freshbooks, and trust that if you did ever have to shutter the doors (gasp!) you’d do the right thing and figure out a way to get our information back to us. But a regular report would ease the minds of potential customers still worried about the SaaS model.
4:14 pm
Thank you Martin – really appreciate you sharing your story and perspective, and thank you for your kinds words.
5:24 am
I’ve been quietly impressed with Freshbooks ever since joining up. Like others have said above, much of my daily work is carried out through a browser window. I too have had the hard drive crashes, so I now use hosted services for a lot of key data.
There are so many around now, that it’s now more efficient, flexible and economic to maintain data and apps online. Working from home, moving around and dealing with people half way around the world, it makes sense to work that way too.
I think many SaaS providers will not be in business long without providing data backup and security to their users. That’s the main reason a lot of businesses still want self-hosted solutions.
On that point, I would echo @Martin and request that you might provide a regular zipped data dump in CSV format, that could be accessed after login for download, with the option of auto email (although that’s hardly a secure mechanism
.
Maybe accessible via SFTP via the API? I haven’t investigated the API options, but that would probably be the route I would go down – if I have the time!
8:04 am
@Steve – noted. For the record, you can get all your data out in CSV format, but it’s not automated. We’ll have a look at something along those lines. In the meantime, just run your reports and download them as CSV and you’ll have all your important data.
Cheers!