9 responses to “SaaS and Software: A distinction with a difference”

  1. Ron Arden


    I agree with you differentiating the terms. Just like it wasn’t a horseless carriage, it was an automobile, the same is true with software and SaaS. Companies that started by developing and delivering a service have a different mindset than those who develop and deliver software. I find that SaaS is more than a just a difference in product, but a cultural one within the business that sells it.

  2. dpilling

    I really like the horsless carriage/automobile analogy Ron. Logging that in my memory banks for future use.

    And the point you make about culture is insightful. This and the operational complexities of trying to do both (SaaS and software) are reasons we venture guys like pure-plays. Too hard to manage SaaS and software delivery simultaneously and can pull an organization apart.

  3. Joe Piekarz

    Nicely succinct explanation (and comments). However, I would also add that there is a distinction within SaaS as well. Specifically there are hosted apps which fit the recurring revenue model, but remain “walled-gardens” when it comes to collaboration.

    The next level of promise for SaaS is cross-organizational collaboration where my instance of the service allows my people to collaborate with your instance and people via invited permission (self-service). This is not only something software doesn’t do, but also a model that can emulate real world business situations and commerce.

    Just my two cents.

  4. Derek Pilling

    Thanks for the additive comment Joe. I agree with the vision of cross-organizational collaboration enabled by SaaS that you’ve outlined. In the long-term view, I’d go so far as to say SaaS vendors must execute on this vision if they are to create sticky relationships with their customers.

  5. Pankaj Taneja

    One of the most wonderful things I find about SaaS is what Phil Wainwright has insightfully titled the “community of interest” which leads to a win-win convergence of objectives between vendor and users.

    – The vendor has instant access to usage data, which it can use to improve application performance and support.
    – The vendor can monitor usage across customers, and share best practices.
    – The user communities thrive, because they share a common application, and it is in the vendor’s interest to promote these communities.
    – The vendor wants to keep continually improving the application (to retain your business on an ongoing basis), you want the same (of course!)

  6. Joe Piekarz

    Thanks Derek. I’m betting on it, so I hope you’re right. Furthermore, APIs that extend the SaaS application to mobile companion apps on one end and other APIs for the back-office applications on the other are what we think will make a true “cloud” solution.

    Keep spreading the word, because you’re dead on. Some of this will take time, but some of the fruit is ripe right now.

  7. Derek Pilling

    Great comment Pankaj. The alignment of interest between vendor and customer and between customer and customer is one of the truly unique elements of the SaaS business model that; (i dare say); software companies have not had to manage. I use the word “manage” with clear intention because identifying this issue is only step one in the process.