Saturday, March 04, 2006

SaaS and Open Source

How can the popularity of these 2 very different trends be explained? SaaS delivers the value of the application without the complexity of software. Open Source is all about the flexibility of software, and there can be plenty of complexity. Where do these 2 trends meet?

I think there are a couple of good answers to this question. First, the SaaS vendors leverage open source very heavily to deliver the application to their customer. The early crop of on-demand application ASPs failed miserably because they were just re-hosting the same expensive, proprietary solution for the customer. Expensive Unix hardware and expensive software licenses disguised as a lease did not create a better model. The current crop of vendors uses Linux on industry standard servers, they own the application code, and they have created a multi-tenant architecture that allows customers to share the infrastructure. Their efficiency in creating and managing the platform is enabled, to a large extent, by open source infrastructure.

Open source has also enabled another form of SaaS that is labeled and marketed as "appliance" solutions. Does anyone believe the value of a firewall, spam, or authentication appliance is the hardware? Of course not. It is the software, and open source, notably Linux and FreeBSD, have created the possibility for these integrated solutions to be delivered at such great prices to the customer. The value of an application without the hassles of software is the hallmark of SaaS, and vendors such as Barracuda Networks and Imprivata provide software without hassles via an appliance.

As the founder of rPath, I believe another form of SaaS is going to emerge - the software appliance. Similar to an appliance solution, the freedom of distribution enabled by open source creates a platform for an application vendor to deliver a complete software solution to the customer - no integration required. In this case, however, the customer provides the hardware from their favorite industry standard server vendor according to the specifications of the software appliance. The application vendor manages all maintenance for the solution, which the customer receives via a simple web interface -- always tested, never painful.

So open source and SaaS are intersecting at the creation of the solution, and the suppliers and customers are each receiving the benefits that matter to them. The suppliers get a flexible platform free from restrictive and threatening licenses, and customers get an integrated solution free from the hassles of software integration and maintenance.


At 8:57 AM, Blogger Arun said...

The article gave a great insight about how SaaS and Open Source can dominate the market in the future. But I still feel that there is huge Chasm in the system and companies are hesitating to adopt this model as it might affect their current profitable revenue. Want your suggestions on this?

At 8:59 AM, Blogger Arun said...

The article gave a good insight about how SaaS and open source are going to dominate the next generation software markets. But will the companies adopt SaaS or Open Source as it might affect their current profitable revenue model?


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