Debunking Myths of SaaS (+ Why Software-as-a-Service is a Viable Option for Enterprise Business)

Inside San Francisco’s largest convention center one March day in 2000, Siebel CRM Systems was hosting a huge conference.

Outside, however, a small crowd was gathering, chanting, “Red rover, red rover, software is over,” and, “The internet is really neat. Software is obsolete!”

This group of 25 “protesters” were actually hired to execute a PR stunt to gain attention for Salesforce, a company which had just launched with its web-based CRM a month earlier.

So it wasn’t really that software was obsolete, per se. But Salesforce had a new perspective on the software delivery model that was diametrically opposed to that of Siebel and Oracle — leaders in the CRM space at the time.

According to Paul Holmes, Siebel and Oracle “were making billions on enterprise software that provided the same type of solution as salesforce.com’s inexpensive web-based solution, and both were fighting salesforce.com’s entry into the market.”

While the transition from one type of technology to another — in this case, on-premise software to software-as-a-service (SaaS) — has many milestones and inflection points, this protest outside the Siebel conference represents one of the earliest moments in the rise of SaaS.

Today, the largest enterprise organizations around the world use SaaS applications as part of their tech stack — and sell SaaS solutions, too. Even Oracle couldn’t beat ‘em and had to join ‘em, writing a recent blog about how SaaS apps improve the workplace experience.

But certain myths, mostly rooted in early SaaS weaknesses when compared to on-prem software, still persist.

What is SaaS?

SaaS was created as a way to deliver software over the internet. Previously, software was packaged and installed on computers individually, or loaded onto an organization’s private or public cloud server for users to access.

But internet-based access wasn’t the only difference. SaaS brought with it a change in revenue model. So, instead of purchasing software licenses, users essentially subscribe to the software as a service. Most SaaS companies charge monthly subscription fees, typically offering several different tiers of service so users can adjust their plan based on need.

SaaS in Ecommerce

Before SaaS solutions took hold in ecommerce, open source software was the standard. osCommerce and OpenCart were two of the earliest platforms to enable online stores, originally developed in the late ‘90s.

Over the next few years, SaaS ecommerce platforms emerged to provide a less expensive, less complex alternative to open source and reduce the barrier to entry. SaaS began to catch on first with small businesses and startups but — with subsequent performance advancements to the web and diversification of software providers — it started to make its way up-market toward enterprise.

Between developments in open source and SaaS, the first decade or so of the 21st century is chock full of ecommerce technology milestones, including the founding of BigCommerce (Open SaaS), Magento (open source), WooCommerce (open source) and Shopify (SaaS).

Let’s look at the benefits of using a SaaS solution and debunk the seven biggest myths keeping brands from making the switch.

What are the Benefits of SaaS?

For organizations switching to SaaS products over self-hosted open source software or cloud solutions, they typically see lower total cost of ownership in the long run, as well as lower up-front costs. The pay-as-you-go nature of SaaS means there’s less financial risk for the user as well.

For IT and software developers, switching to SaaS products can be a boon for productivity and efficiency. With self-hosted software, implementation and continued maintenance take time, and organizations are responsible for their own software updates and security patches.

On SaaS, all those things are typically included.

“Our move from Magento proved to be very wise, especially at the time we did it. We’ve gotten a bunch of BigCommerce security updates about DDoS attacks around the web” said Ben Johnson, VP Operations for Casey’s Distributing.

“It’s a nice security feeling knowing that we don’t have to watch the servers being attacked by the bad guys. BigCommerce does that for us. When you put a Magento build on some server-host out there, you don’t always get that sort of security and you certainly don’t get the communication.”

Historically, making sure the ecommerce technology is safe, reliable and resilient meant slowing down the pace of innovation. Once technical teams can remove themselves from tedious maintenance tasks, they can devote more time to projects that add strategic value.

“The primary sources of this competitive advantage are speed, both in terms of time to value and agility to make future changes; and innovation, made possible by freed up IT resources, ongoing updates to business applications, and unique advantages of cloud solutions over on-premise solutions,” according to a 2014 IBM Global SaaS study.

security isn’t just a productivity benefit — it’s necessary to keep your brand viable. Brand IT teams, engineers and developers must maintain brand safety while also balancing the need for speed from the marketing organization.

Debunking 7 Common SaaS Myths

In the earliest days of SaaS, it was assumed that subscription-based software would not be viable for enterprise business. And, in fact, in those days the enterprise typically chose end-to-end software suites to manage their complex organizations.

SaaS gained traction with small to medium-sized businesses because they were less expensive to implement and maintain. But with advances in performance capabilities and decrease in cloud computing costs, SaaS became a viable alternative to on-prem software.

Despite its rising popularity, some enterprise organizations are still wary of replacing their legacy software with a SaaS solution. Let’s look at some of the misconceptions around SaaS and its capabilities, and what the truth is today.

Myth #1: SaaS is built for low-end users.

Sure, that’s how it started — but that’s often how disruptive technologies begin. Since its emergence two decades ago, functionality and connectivity have improved to a level that enables organizations of all sizes to manage their business functions with a SaaS solution.

Large organizations are turning to SaaS for the same reasons as smaller businesses: agility, TCO, innovation, and more. An IBM blog from 2014 predicted more companies would take a SaaS-first approach to business applications, and that has played out — particularly in ecommerce.

Myth #2: SaaS applications aren’t secure.

Users benefit from the fact that SaaS is a shared resource. Economies of scale mean that security services can be much more robust than what would be cost effective for a single organization.

Myth #3: With SaaS, you’ll lose control of your data.

Part of some people’s frustration with SaaS is that they don’t fully own the data or can’t export it from the platform. But this varies from platform to platform. When researching a SaaS solution, it’s important to understand what data is most important to your business, how it is protected,  and how easily it can be exported or exposed.

Myth #4: To get the enterprise features you need, you have to use open source software.

It used to be that, to build a storefront with very specific or niche needs, you had to build on open source. That’s not so today. To varying degrees based on software provider, SaaS platforms can be extended through easily installable apps that provide additional functionality.

“When I worked agency side, we started building ecommerce sites on SaaS platforms like BigCommerce,” said Jason Greenwood, ecommerce manager at HealthPost NZ. “I quickly saw that working on SaaS ecommerce platforms was so much easier than working with self-hosted platforms, especially at the enterprise level with integrated systems.”

Myth #5: SaaS is too restrictive with a cookie-cutter look and feel.

Not necessarily. The ability to customize a SaaS platform differs quite a bit from product to product. Some platforms offer a number of powerful ways to make modifications without ever touching the source code. There’s also a range of allowable customizations within the source code.

Greenwood said, “I worked for a Magento Gold Partner agency for almost five years, and during that time I saw the many limitations and challenges of self-hosted platforms.

“Although they were designed with flexibility in mind, many necessary functions like integrating other systems or securing development talent at any kind of reasonable cost were massive money and time debt centers.”

Take the ecommerce checkout experience, for example. In the past, it was difficult or even impossible to make certain types of customizations. Some ecommerce platforms make it easier than others to modify that experience.

Integrations through APIs enable organizations to select best-of-breed technologies to build the tech stack that they want. An API-first approach positions brands to take advantage of emerging omnichannel commerce trends like social commerce, voice commerce, and more.

Myth #6: SaaS isn’t cost effective.

Consider all your costs — both in real money and in human effort. SaaS reduces the burden on IT and administrative employees. Instead of shelling out up-front for licensing fees, you pay a set subscription cost each month based on a tiered pricing model and can scale up or down as needed.

Myth #7: All SaaS is the same.

Not all SaaS software is created equally. What we’ve described so far are some essential features that differentiate SaaS from open source software, but — especially now, after years of evolution and expansion — there’s a wide spectrum of capabilities and functionality among current SaaS software providers.

From SaaS to Open SaaS

BigCommerce was born as a SaaS version of Interspire, Harper and Malaachani’s open source ecommerce software product, to provide merchants with a way to create an ecommerce storefront without managing servers and security.

The trade-off at the time was that merchants no longer had access to the source code and couldn’t customize their stores at the same level.

While early versions of BigCommerce were more limited, its founding duo never strayed too far from the open source philosophy of their roots: a commitment to flexibility, transparency and collaboration. Over the years, as the market and technology evolved, BigCommerce evolved with it, identifying more and more ways to open up the platform.

Open SaaS is a model that combines the convenience and ease of use of SaaS with the extensibility of an open platform.

Like SaaS, Open SaaS bundles the cost of hosting for your ecommerce platform and allows you to reallocate the hours your developers were spending on software updates and security protocols. It also includes out-of-the-box tools to help you start selling quickly.

Like open source software, Open SaaS provides the extensibility to add new capabilities and expand functionality through third-party apps, customizations and integrations and seamlessly connect your data across multiple systems.

Wrapping Up

While we can likely agree that software isn’t obsolete, it definitely looks a lot different than it did 20 years ago, whether you’re using open source software or you’ve made the switch to SaaS.

Early open source platforms made ecommerce somewhat more accessible, but they still required significant developer intervention just to launch and maintain. SaaS platforms reduced that reliance on developers but, particularly in the beginning, were limited in flexibility and customization.

Today, SaaS has grown beyond the boundaries we saw surround its early years. You no longer have to wrestle with open source software or on-premise servers to get the results you want, whether that’s a beautiful, functional ecommerce storefront or a powerful customer relationship management system.

And you don’t have to give up customizability, either. Software options on the market today exist across the spectrum, between flexible and restricted, between easy to use and difficult to manage. There’s no one-size-fits all answer for any brand, but by carefully evaluating your needs and the offerings of prospective software vendors, you’ll be able to find a software solution that meets the needs of your business.

Learn more about Open SaaS in our latest ebook, which explores the needs of today’s ecommerce operator — and how BigCommerce enables the business agility you need for tomorrow.