Months ago an off the cuff comment by Fake Steve Jobs got me thinking about the differences between SaaS vendors who control their own infrastructure, and those who take advantage of a cloud based PaaS solution. The thought went that anyone hosting their own solution (ie not taking advantage of a PaaS provider) is somehow undertaking an "old school" strategy. Indeed the CEO of SaaS vendor Sonian Networks already uses the term “Legacy SaaS” to refer to those player of old who actual do their own hosting and serving. Clearly there are some good reasons to use outsourced infrastructure – it allows the vendor to focus on their own core competencies, allows them to leverage the scale and investment of the big platform players and forces them to move towards a more standard and open way of doing things. But is it all rosy? Sarah posted on RWW about some of the negatives around farming out the control of infrastructure – true her post was largely focused on consumer apps of the likes that Facebook, iTunes et al host – but I wonder if some of her arguments and concerns don't also hold for business level applications? Given that encouraging a move away from installed apps by mainstream business users requires large amounts of credibility and trust, perhaps keeping the infrastructure in house is a smart strategy for SaaS vendors – we'd be keen to hear your thoughts about all of this.Related articles by Zemanta
Is a Move to Outsourced Cloud Application Hosting Positive?
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Ben Kepes
Principal of Diversity Analysis, Ben is an analyst, entrepreneur, commentator and business advisor. Areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users. 
I find myself having to look up terminology as I read here because to be honest I am such a noob in this area. It seems to me definitions of terms are shifting. I looked up infrastructure (http://en.wikipedia.org/wiki/Infrastructure)and find that over time that word has changed.
I remember when I first became aware of Google docs. I considered the positives of having my docs easily accessible anywhere, along with the downside of being dependent on Google for access. In the end, I decided I could trust Google enough to have access. I viewed Google like a power plant. I expect to have the power plant provide the electricity to provide power to my computer, so too I expected Google to provide access to the docs that I had written whenever I wanted. I felt secure and so did others.
However, being new it was buggy, with frequent downtimes, and people losing their documents. There was great frustration for some because when they needed their documents, they couldn’t access them.
Finally, I decided to try a company with less credentials (in my mind) than Google, but who seemed to provide a consistent service, that constantly upgraded their service without significant disruption in service. Those documents I felt were necessary to have redundancy I had in both the new company, Zoho, and in Google. Occasionally, I still do, though with considerably less frequency.
The point I guess I am making is that we come to expect service from the infrastructure we use, whether it be a road, a power plant or apps. I don’t wonder each day whether I will have electricity. I just expect it to be there. For those companies that require non-interruption of service like hospitals, they have generators to carry them over the period of time till the service is back on. If you can’t afford loss of service, including apps, then redundancy or duplication is critical.
Sorry for the length of comment, got carried away,
@Less – great comment – the utility analogy you give is excellent – and very apt
Keep up the dialogue!
As you noted, moving away from traditional software to SaaS offering requires trust and credibility, two things that most (new) SaaS vendors usually do not carry. I think a better strategy for new vendors would be to outsource instead of manage in-house so they have an shot at gaining that credibility by hosting with a known brand (force.com or Amazon are good examples).
Another point worth mentioning is SaaS offering certifications. For example, when you build your app with force.com you have to go through a 3rd party certification process before they can be made available to salesforce’s customers. So here you have a PaaS vendor that actually helps you gain more credibility and user’s trust which you won’t be getting elsewhere as a new vendor.