The Packet Scoop

I am curious as to the real market acceptance of SaaS (software as a service) for IT Network Management. Klir Technologies, a SaaS company focused on the middle market closed its doors last month after about seven years in business. According to their PR people, they burnt through $12 MM of VC financing before realizing that they needed to change models. By the time they changed course, they were stuck. Interesting enough, they actually signed up about 10,000 customers to a single-site free license hoping to convert those customers to sales. One problem – regardless of delivery model the product needs to work J

If you don’t know about SaaS think the old Application Service Provider (ASP) models. One example is a hosted exchange platform by a Managed Service Provider. Another example is a pure offsite services vendor, such as SalesForce.com. Basically SaaS is a hosted delivery model where the vendor stores your data at their data center and the application is accessed via a browser. Interestingly, until recently, only vendors focused on functions for accounting (i.e., NetSuite), sales (i.e., Salesforce.com), and HR (i.e. Employease) have succeeded. In the IT function, Klir was a disaster. Two startups in Austin, Spiceworks and FiveRuns, have gained at least a bit of buzz via hosted models – mostly aimed at the very small IT departments of companies with less than several hundred people. SpiceWorks is free, predicated on an advertising model (we’ll save that discussion for another entry). FiveRuns is a subscription based model.

The challenges with SaaS include security and a single point of failure. That is, if my internet connection is down I won’t have access to the host. Also, as a CIO I may not be comfortable with my data, even if it’s only meta data, sitting in an outside vendor’s data center.