Aside

Web 2.0 vs. SaaS

Web 2.0, meet Software as a Service.
SaaS, meet Web 2.0.
You two need to talk. You’re working on many of the same problems, but you don’t communicate well, and sometimes it seems like each of you barely knows that the other exists.
Web 2.0, you’re certainly fun to hang out with. Your conferences are full of exciting speakers predicting amazing things, and it seems like you come up with a new and interesting product every day. You also throw great parties.
Your name is all over the place, so much so that a lot of people aren’t even sure who you are. You seem to delight in being mysterious and difficult to pin down. SaaS secretly suspects that you may be faking it, like your older brother Bubble did.
You say that you’re interested in enterprise, but it sounds like lip service because almost all of your energy goes into consumer products. SaaS isn’t sure why that is. Maybe it’s because you want to change the world, and you believe that’s best done from the bottom up. Or maybe you just think that corporations are old and evil and you want to do away with them. That’s the vibe you give off sometimes. It’s a shame, because the corporations aren’t going anywhere, and no amount of youthful wishing will change that. Just ask your parents what they did in the 1960s, and you’ll understand.
SaaS, your conferences are about as exciting as watching a wet cat sit in the rain. You take your business very seriously, because you know how easy it is for a software company to fail. You worry endlessly about the needs of IT departments and finding ways to increase productivity by another five percent, because you know that companies and careers are often built on incremental progress. Besides, you know your customers don’t really like revolutions because they’re full of risk.
Nobody outside your circle of friends knows your name. It’s like every other cryptic corporate acronym we’ve seen over the years. Sass. Isn’t that what Sally Field had in “The Flying Nun”? (SaaS will get that joke. Web 2.0, do what you always do when you’re confused — look it up on Wikipedia.)
SaaS, you talk endlessly about how important the Internet is, but sometimes it seems all you really care about is taking your old software and delivering the exact same thing through a new online channel. When Web 2.0 hears you say things like that, it makes them crazy, because delivering old-style software is about the least interesting thing you could possibly do with the Web. It’s like you inherited Leonardo da Vinci’s brushes and you’re using them to paint houses.
But Web 2.0, you need to understand that a lot of what you say and do is equally infuriating to SaaS. You don’t respect the need of enterprises for absolute reliability and complete nonstop reliability. You’ll take down your photo sharing site over a weekend and post an amusing joke in its place, or if you lose a day’s blog postings you just shrug and tell your users to re-enter their information. “Hey, we told you to make backups.”
Web 2.0, you just don’t understand how unacceptable that is to a corporation. SaaS knows that if they lose data or if a key system fails, awful things can happen. Factories grind to a stop, people lose their jobs. If your software’s managing a hospital or an airliner, people could die. Seriously.

The ironic thing is that each of you has something the other needs. SaaS, you know enterprise’s problems, and you’ve got the understanding of business processes and the focus on bulletproof reliability that Web 2.0 lacks. Web 2.0, you’ve got a whole new way of making software that could produce a huge gain in corporate productivity.
If you could only work together, you could create something wonderful. What would we call it? “SaaS 2.0?” “Web as a Service?”
Nah, I know. We’ll call it “the future of enterprise software.”

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4 Responses:

  1. Bradley Mazurek. October 19, 2006 at 12:32 pm  |  

    Sorry Michael, but I must really be missing what you’re driving at here.
    The SaaS concept is one of the defining characteristics of Web 2.0. Web 2.0 is fully aware of SaaS and leverages it to great effect. SaaS is a subset of Web 2.0.
    You say Web 2.0 is only paying lip service to it’s interest in the enterprise.
    It’s early in the natural technology adoption life cycle. The enterprise will adopt a technology when it provides them an advantage or fills a deficiency. Just because something is aimed initially at the public, doesn’t mean it is not destined for the enterprise. Crossing the Chasm made it abundantly clear that there is a lot of work that needs to be done before a large enterprise sale can be made. You need to enlist the technolgy enthusiasts and the visionaries. There is a lot of pain in there. You describe some of it. But I don’t think either of these are the real challenge Web 2.0 faces in the enterprise.
    Or is it the challenge that the enterprise faces from Web 2.0?
    Can the needs of the enterprise really be met by Web 2.0? No. The enterprise is scared to death of giving up it’s data. You’re right, they won’t change. But many of them will die as a result. Think about how Web 2.0 (in the form of Wikipedia) has gutted an Encyclopedia industry. We’re seeing something similar in the music industry. It will take a long time, but it will continue to push from industry to industry. Currently, we’re only seeing the effects on things that can be easily duplicated digitally. But when you see physical objects being produced on the fly, like a hummer axle being fabricated on the spot from what is essentially a 3d printer, you start to get a sense of what the future may hold. We may be a long time before there is a sea change, but it will happen.
    In a nutshell, you seem to be implying that there are characteristics inherent in SaaS that are not present in Web 2.0. Precisely (and less flowery, please!), what are they?

    Reply
  2. Michael Mace. October 19, 2006 at 1:48 pm  |  

    Hi, Bradley.
    Thanks for the comments! You’re asking great questions.
    I wrote the post because I’ve been attending a number of Web 2.0 and SaaS conferences this year — Future of Web Apps, Software Business 2006, Software 2006, etc. They’re all good conferences, but to me the contrasts were incredibly stark. Based on what I’m seeing, I think ideas are not flowing between the two worlds at all well.
    I talked with a couple of other people who have their feet in both worlds, and they agreed. So I think there’s something real here, but I’m not explaining it well.
    Let me take another shot at it. Here’s my perspective on the specific disconnects between the two worlds. I’m interested in your feedback…
    Generational. The leaders in the Web 2.0 crowd are generally younger than the SaaS crowd. A lot younger. That means the two groups lack a shared context, both in terms of culture and experience. It’s hard for them to communicate with one-another.
    For example, it’s not at all unusual for a speaker at an SaaS event to reminisce about the mainframe era and draw some analogies to things that are happening today. The audience sees that as good, a sign of acquired wisdom.
    At a Web 2.0 conference, it’s not at all unusual for a brilliant 20-something CEO to announce on stage that “working for someone else is dead,” and then go on to dis the whole traditional organizational structure of corporations. Nobody blinks an eye.
    Each side views the other through a distorting generational filter. That hinders communication.
    Incumbency and attitudes toward change. A lot of the players in SaaS are established software companies, large and small, that are trying very hard to adapt their business models to the online world. They tend to make incremental changes, and focus on short-term increases in productivity. They are often trying very hard to protect their existing business models and revenue streams.
    The Web 2.0 folks, by and large, are startups. They have nothing to defend and very low cost structures. They delight in identifying incumbent companies and industries that they can disrupt (watch the feeding frenzy that’s about to develop around the Yellow Pages industry).
    Summary: A lot of the tone in the SaaS world is defensive and risk-averse. The tone in Web 2 is aggressive and risk-loving. Another barrier to communication.
    Networks of innovation. One of the most striking developments in the Web 2.0 world is the way the companies are learning to coordinate around defining new APIs and enabling their products to talk with and build on top of one-another. This goes by the cutesy term “mashups,” but it’s actually the old dream of component software being implemented in steps. This is driving very rapid growth in the capabilities of the Web apps platform.
    The Web 2 folks understand very well how to work in this world — basically, they know how to share. The SaaS folks, in general, are much less aware of this, and it’s often foreign to their way of working. At a Web 2 conference I hear all about Ruby on Rails and AJAX and Adobe Apollo. At a SaaS conference I hear all about the logistics of outsourcing traditional programming to India.
    Support and robustness Web 2 companies offering software to consumers get away with a level of reliability and availability that would be utterly unaccceptable to enterprises. Flickr brags about the way they can take down parts of their service while others keep working; a SaaS developer would ask how they can make the whole thing redundant so that none of it ever goes down.
    Have you tried using one of Google’s services for an extended period of time? I’m on Google’sBlogger for my personal weblog, and the site breaks down pretty predictably — lost posts, broken features, and so on. And good luck getting tech support.
    There’s a level of discipline needed to get a company to rely on your software, and I don’t see that in most of the Web 2 crowd. I know there are exceptions, but we’re talking overall.
    Understanding of the needs of enterprise. I think most of the Web 2 crowd doesn’t have the faintest idea what enterprises need. They talk about the enterprise market constantly, it always shows up on their list of important growth areas, but when you probe for ideas on actual problems they plan to solve, their thinking is usually incredibly superficial. Or they’ll say “salesforce.com” and then change the subject.
    The opportunity. In my opinion, the Web 2 folks are creating a much, much more efficient way to develop software, but aside from a few players like Salesforce they don’t know how to apply it to enterprise problems. The SaaS folks understand enterprise problems exceedingly well, but don’t by and large understand the new ways of developing software (at least not the companies I’ve been talking to at conferences). They get some of the technologies, but not the communities or the ways companies work together in the new model.
    If we could bridge those gaps (and I think we can), I believe the sum would be much greater than the parts. That’s the idea I was trying to get across.

    Reply
  3. Bradley Mazurek. October 19, 2006 at 10:46 pm  |  

    Hi Michael,
    Thanks for your response. I found this a lot more coherent than the blog entry itself. I understand the desire to have a style that may bring in the reader (and it did), but I think it also obfuscated some of the points you were trying to make. Thank you for taking the time to clarify.
    I think you have nailed many valid points about the differences between tne encumbents and the new market entrants. But I question framing their differences as a lack of familiarity between Web 2.0 and SaaS. You’ve characterized this as a need for two camps to meet. I think you’ve got the Web 2.0 camp mostly correct, but I don’t see that SaaS is the other party.
    Is this simply the difference between new and old? Between encumbents and entrants? (Wtih your indulgence, I’ll continue with the issue reframed that way.)
    As with any set of changes, it will take time for those changes to manifest themselves in broader contexts. And the “enterprise” is by definition one of the larger bureacracies in which the technology will manifest itself. But it will take time.
    You say that you see the Web 2.0 crowd talking about the enterprise market. I am unable to attend the conferences you are attending, but frankly, I’m just not hearing the same thing. Web 2.0 right now seems to be about providing solutions for individuals. Will those techniques and skills push into the enterprise? Undoubtedly. But I haven’t seen any evidence of how that may be done. The Internet bubble started as a belief that businesses could sell directly to individuals online. Then came B2B.
    I think we’re in the same place we were in the early Internet days, but hopefully with a lot less hype, and a lot more critical analysis about the perceived benefits.
    I think you’re very much correct that Enterprise Web 2.0 doesn’t really mean anything yet as the two haven’t found common ground upon which to build a relationship. But it’s also early. I think rather than talking buzz words, people need to talk problems and solutions.
    The problem is I don’t see that the two are even going in the same direction, and a lot of what Web 2.0 espouses seems to be an anathema to what the enterprise wants.
    But regardless, the desire for that dialogue is right where I think you started.

    Reply
  4. fiat lux. October 21, 2006 at 10:31 am  |  

    By and large, you’ve nailed it, Michael.
    One thing to keep in mind is that it’s not just the big enterprises that fear and distrust Web 2.0. Other startups do too. The Spouse is the IT manager at a successful startup and there’s no way in hell he’d recommend that Web 2.0 tools be adopted at the corporate level. The lack of control and the potential security issues are simply nonstarters.
    I think that eventually some enterprises are going to start seriously talking to some of the better Web 2.0 companies and say to them, “Either license us the software so we can run it on our own servers or give us an appliance version that we can host inside the firewall.”
    And don’t forget the SME market. There’s a whole range of comapnies for whom buying, say, an appliance version of Writerly could be a lot more cost-effective than 75 copies of MS Word.
    Eventually, I think the Web 2.0 companies who really want to play in the business space will discover that they have more in common with their SaaS bretheren than they thought. And that’s when things will really start to get interesting.

    Reply

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