SaaS = Freedom from Upgrade Agony

Well, sorry for the long delay between posts, we've been focusing a lot on getting a couple of releases out with an evolved architecture for the next 10x of growth. Our usage volumes went up by three times in 2006, and our data volumes more than doubled, so I had to knuckle down to stay ahead of the curve. First things first, as they say.

In catching up with other blogs, this one caught my eye about the pain of upgrades of traditional software, in comparison with SaaS.

Vinnie Mirchandani, one of the enterprise irregulars who comment regularly about enterprise software, says enterprise software upgrades "are like refueling in mid-air; they are usually risky and they are usually low ROI."

Why is upgrading enterprise software risky? Upgrading a major release often requires upgrading to more capable infrastructure components, which the IT organization (or their consulants) have to learn all over again how to install, configure, monitor, maintain, and tune. On the user side, mission-critical systems must be upgraded in a way that is seamless to the user communities, wtih no hiccups in system availability, data conversion and accuracy, system performance, or user training.

Why is upgrading enterprise softweare low-ROI? Mainly because the investment is so high - a significant upgrade project can take 18-24 months and cost tens of millions of dollars for the required data mapping and conversion, testing effort, infrastructure upgrades, re-customization, and user training.

It's no wonder that enterprises are so adverse to major upgrades and wait many years before upgrading mission-critical systems, which leads to another cost - the opportunity cost of not upgrading. What new innovations or business value are enterprises missing by not upgrading? This is impossible to measure, and maybe some enterprises are content to stay where they are at for many years. But I think that this is because the only alternative is the agony of upgrading.

Now that SaaS offers another path, here's one way to think about it - what if you could only use 5-year-old Amazon.com, Google applications, iTunes, web email, and Blackberry software? No gmail, no Blackberry browser or Google Maps, no iTunes videos, etc. etc. The new, unexpected, and continually increasing consumer value from SaaS-style upgrades is already apparent, and SaaS is starting to deliver this to enterprises.

Vinnie continues, "SaaS, with its continuous, in background upgrades, is showing customers the alternative to upgrade chaos. Additionally, SaaS vendors are far closely aligned to features customers are actually using and want to be improved in the future."

What's it like for IT groups or enterprises to be freed from the worry about upgrade projects, to not have that distraction and overhang of upcoming pain lurking out in the future? The progressive IT groups we work with have created a SaaS-oversight function that works with their portfolio of SaaS providers to coordinate system integrations, keep up with new functionality that is available each upgrade, and oversee security policies.

This new function delivers continuously increased value to the enterprise as new SaaS capabilities are turned on, the IT group is freed up to focus elsewhere on higher-value projects, and the cost of ownership for the enterprise is reduced substantilly. (Note this isn't simply cost-shifting, where the vendor simply absorbs all the costs of upgrading - with true SaaS, the vast majority of these costs are removed from the supply chain, since the SaaS vendor has only one data migration, infrastructure, and testing effort across all customers.)

On a personal note, late last year I had a couple of months where I was in significant chronic pain, and it prevented me from working as effectively on multiple fronts at once - it forced me to narrow my focus and drastically shorten my priority list. Eliminating that pain was freeing - I could do a lot more, and more effectively, without that loadstone.

For IT groups, my perspective is that being freed of enterprise software upgrade agony has the same effect - they can focus on other areas, direct their efforts to improving the business instead of spending months and millions to make sure the new version works like the old, and get rid of the straitjacket of half-decade-old software versions to deliver continuously more value and innovations to their user communities.

Comments

[saas application development]

I agree with the author too...

[Scott Annan]

This is a great post. I agree completely. This seems to elude many corporate IT functions and the big box software vendors continue to sell "upgrades" as though they are simple fixes to outdated software.

Well done.