Today, Apprenda, a company that I’ve been tracking for a while emerged from stealth mode. Some of you may be familiar with SaaSBlogs which is managed by the company’s founders. The timing couldn’t be better from my perspective, because I’m in the middle of this series on SaaS Model Economics 101 that I kicked off this week, concerning the creation of economic value and competitive advantage for SaaS vendors.
Apprenda’s SaaSGrid is a potentially game changing approach to Platform-as-a-Service ( PaaS ) which is a sector that up until now has largely been limited to hosting, billing etc. solutions for existing multi-tenant SaaS applications on one end of the spectrum, and do the whole thing our way solutions, like Force.com from Salesforce.com, on the other end–without much in between. The reason SaaSGrid is potentially game changing is that Apprenda proposes to allow you to take your single-tenant software application, rapidly plug it into their Web services, put it out on the cloud, and voila! what was not SaaS, is now 100% multi-tenant SaaS.
Before you say that it is not possible, and even if it is it has to be less efficient than native multi-tenancy, here is what the CEO, Sinclair Schuller, has to say about it. “I’ll go out on a limb and bet my reputation that in most cases, a SaaSGrid application will be more efficient in almost all regards than most native multi-tenant applications…In some cases, a native multi-tenant app can be more efficient if it can exploit some sort of specialization in its architecture, but this scenario is not common.” My personal view is that storage and processing are free, so who cares. The real cost advantage comes from aggregating customers onto a single infrastructure, not the 30% higher computing efficiency of a specific infrastructure. So much for your sustainable cost advantage SaaS vendors–legacy software companies and IT departments may be following hot on you heels.
If PaaS offerings continue to move in this direction, then current SaaS vendors will need to focus much more keenly on creating product differentiation and lowering acquisition and adoption costs. Something I personally believe is only good business. Cost advantages NEVER last. In my SaaS Top Ten Do’s and Don’ts I assert that the technology cost advantage commoditizes SaaS markets. It is something you must achieve to play in this game. But, it does not guarantee that you will win. Without proficiency at mass customization, driving down cost of acquistion and differntiation, you are simply a commodity in a commodity market. And, that market just got a lot more crowded.