Conversation

This post is not consistent with my other material so be aware.  This is a copy of my presentation to my church (Grace Church of Dupage) that I gave this last Sunday.

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Good Morning. Let’s see, you might be asking yourself it’s not a military holiday, why is Tom up there? Well, I’m up here to help us all remember that Wednesday is the Fourth of July; you know the national barbecue and fireworks festival.

Of course that’s not really why we’re here. Yes, Wednesday is the Fourth of July and although it’s not a military holiday it is a holiday whose true meanings are often given lip service or are overlooked completely.

While the Fourth of July is the date everyone remembers, that is the date the document was completed and signed. Most people don’t know that it was on June 7^th that it really all started when Richard Henry Lee of Virginia presented a resolution that ultimately became the Declaration of Independence.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty, and the pursuit of happiness.” This is the line most people remember. It is the fundamental reason behind the justification of the founding fathers to rebel against Great Britain and create a new nation. While this phrase pays homage to no one religious expression, it is clearly a recognition of God as the Creator and us, as the created, forming a nation seeking to acknowledge the rights he has given us and endeavoring, ultimately, to defend those rights. Christ died on the cross for each of us individually to give us the eternal gift of salvation and an eternity in Heaven with God – this is the ultimate expression of life (eternity), liberty (the freedom from sin and the failure and punishment it brings), and the pursuit of happiness (the blessings we receive from God for our obedience to His Word).  We have existed as a nation with these as our founding principles for 236 years. We are still operating under this thought as codified in our Constitution. I don’t believe that any country has been governed for this long, by the same essential set of principles and governing structure.

Often when I’m in front of you, I try to help us all remember that individuals were involved in making happen these things that we see as God’s blessings. You see, God works through his Creation whether they are believers or not. It is not well-known that when the Declaration of Independence was passed, it was not passed unanimously. Of the 13 colonies, nine voted in favor, two voted no, Delaware could not make up their minds, and New York voted present, uh, abstained. Our country was not united in its revolution against the British; it should come as no surprise that we were not united in our declaration. Our revolution and our founding were as fractious and rebellious as our sin nature directs us to be. Despite that and despite the troubles we experience today, which we’ve experienced throughout our existence as a nation, we continue to be blessed by God.

So, when we think of the Declaration of Independence, we don’t see a military action where believers and nonbelievers are putting their lives on the line for us. But that is actually a false perception. Reflect for a moment on this extract from the final paragraph of the Declaration of Independence: “we, therefore, the Representatives of the United States of America, in general Congress, assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions (that means “look into our hearts and help us to have God’s motives for what we are doing”), do, in the name, and authority of the good people of these colonies, solemnly publish and declare, that these United colonies are, and of right ought to be, free and independent states …  And for the support of this declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes, and our sacred honor.”

You see, these men recognized what they were doing; they were committing an act of treason against Great Britain. They were not hiding from what they were doing; they signed their names to this document and then published it for the world to see. It is said that the reason John Hancock wrote his name so large was so that King George would have no trouble reading it. Instead of fear, or hiding, they placed their faith, “appealing to the Supreme Judge of the world” and “with a firm reliance on the protection of divine Providence” to protect them for doing what they felt was the right thing to do.

The men who signed this declaration were not all believers. None of them were actually captured or tortured or tried for signing this document. Many did not prosper during the war; some lost all they had, but not directly because of their signature. That is history’s view of their act, a view that they could not share, nor know, at the time that they appended their name to the Declaration of Independence.  They were seeking to replace a government of men with a government of laws based on God’s principles of life, liberty, and pursuit of happiness.  Today we continue to be pressed to accept a government of men, not constrained by laws or the Constitution, men who wish to be allowed to decide for us what is right and wrong, what is to be enforced and what is to be ignored, what constitutes acceptable ministry and what belongs in private – kept away from society, separated from the “State”.  We may need, in the near future, to examine how we can join the founders and do our part to help preserve what is the heart of American Exceptionalism – individual liberties as given to us by our Creator and personal responsibility and accountability as demanded by Him through our obedience to God’s laws and precepts.

I ask you this week to reflect on that … while you enjoy being a carnivore and making things go boom in the night.

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Much has been written about SaaS and multi-tenancy.  I have posted related blogs on this before, specifically SaaS and WMS, is SaaS enough? and So What if my Vendor isn’t a True SaaS Provider.

What I want to address in this blog is that multi-tenancy is not enough if the customer’s business model includes multiple physical sites or if the customer of the SaaS solution is a 3PL (third party logistics services provider).  This is especially true if the SaaS solution is a WMS (warehouse management system) or a TMS (transportation management system).

Multi-tenancy is an attribute of the SaaS solution provided by the SaaS vendor.  This allows one instance of their application to support multiple “tenants” where each tenant is a separate customer and it is essential to keep their data separate and secure from the data of all other tenants of the same instance.

Multi-site is an attribute of the tenant of the SaaS solution.  This attribute exists when the tenant has more than one physical site and the data about that site, within the overall enterprise, needs to be segregated for operational, financial, and/or security reasons.

Finally, if the tenant is a 3PL, then they will be providing their services to multiple clients.  Each client may be at one or more of the 3PL’s sites and each client’s data must be segregated by site from every other client while allowing it to be rolled up to the overall 3PL client level.  The following diagram shows these relationships.

Essentially, each tenant can have one or more sites.  Further, each tenant can have one or more clients.  Each client will have one or more customers.  For a SaaS solution in support of a 3PL or 4PL tenant, the solution has tenants, the tenants have clients, and the clients have customers.

This hierarchical relationship affects virtually every data set supported by the SaaS solution.  For example within the catalog or SKU data, each data record that describes the attributes for a SKU must include the tenant and the client.  When looking at inventory, each record would need to specify the tenant, the site, the client, and possibly the customer.  The same would be true when tracking transactions – it is important for a 3PL to know for each transaction executed the site, the client, and the customer it was executed for.

This level of complexity and tracking must be designed into the product from the beginning, it is not a simple customization to add later.  Insure that when you are looking for a SaaS WMS or TMS that if you need these levels of tracking that it is in there already – don’t believe claims it can be simply added on.

I recently did a guest post with an old Aberdeen and TechVentive associate and friend of mine, Brian Sommer.  Brian was the partner in charge of the software intelligence group at Accenture when I was at Gartner.  We met when we both worked at Aberdeen.  We have done work together at his current company, TechVentive.

The post I wrote for Brian  focused on some of the key issues you need to consider when negotiating a SaaS solution contract (Contract Negotiation – What changes are driven by SaaS?).  Please jump over to ZDNet and review his other posts.

I recently wrote in “So What if my Vendor isn’t a True SaaS Provider?” about the real reason that having a vendor that follows a true SaaS business model was important.  Specifically, if they aren’t true SaaS they may have a business model focused on business failure.  Their failure can cause you significant business disruption.

Well, recently Ann Grackin and Bill McBeath of ChainLink Research have written a two part series that touches on this subject in very supportive ways. In their first post, “SaaS Pricing: Part One – Insanity or Good Deal for Users?” they focus on the different pricing concepts and the technical value aspects that SaaS solutions incorporate.  These are key concepts and you should look at what they have written.

Their second post “SaaS Pricing: Part Two – Insanity or Good Deal for Users” gets to the “viability” aspects of the business model.  Specifically, the interesting part of the SaaS business model for enterprises is the transfer of risk from the enterprise to the vendor.  This can be good for both enterprise and vendor, but only if the vendor manages it correctly.  As Ann and Bill say, “… too much risk on the part of the technology provider is a ‘going out of business strategy.”

Their focus in these posts is more on the pricing and cost benefit concerns for doing a SaaS deal.  My article was focused on the financial viability of the vendor.  Both of these topics are only a portion of what you need to consider when selecting a vendor.  As I stated before, when choosing a solution provider, financial viability is a key factor to consider along with functionality, cost (and the pricing model), technology (will their platform allow viability from their pricing), vision, and service and support.  We will be writing more about the solution selection criteria we feel are important in future posts.

The recent acquisition by Amazon of Kiva Systems has been written about by many.  Much has been said about Amazon’s willingness to pay as much as it did and how that speaks to acquiring the patents as much as Kiva’s business.  I think these are all valid points but I think the real key issue is that Amazon has raised the ante in the distribution efficiency arms race; it is not just self-defense but a strategic thrust.

Unlike many retailers, Amazon is well aware that its business hinges on two key points; one is having a broad based catalog of things to sell – this isn’t just about books and hasn’t been for some time, two is knowing that once someone buys something they really want to get it and get it yesterday.  Amazon recognizes that doing retailing profitably in a fashion that thrills your customers requires that you do it efficiently and the distribution arm of their business is all about fulfilling orders cost effectively and as a service differentiator over your competition (see Tom Andel’s post on the Read, React, and Respond blog over at Material Handling and Logistics).

Enter Kiva Systems.  Their solution is about operational order fulfillment efficiency in the warehouse/distribution center; nothing more and nothing less.  They are a great fit for the retail e-commerce distribution business that moves a ton of eaches, not just full pallets and cases.  Full pallets in, parcels filled with eaches out.  Amazon anyone?

“Kiva robot delivering product to pick station”

Additionally, Kiva Systems attacked the operational dichotomy of picking efficiency; is it better to bring the picker to the product or the product to the picker.  Classic WMS solutions are really good at bringing the picker to the product efficiently (order waves, pick waves, packing plan, packing stations, etc.).  Fixed automation has been good at bringing the product to the picker (A-frame pick systems, pick to light, put to light, ASRS, carousels, carousels combined with pick and put to light, etc.).  WMS also retained more flexibility than fixed automation.  You could always, up to a point, alter your task management process and throw more workers at an order or pick wave – meanwhile, fixed automation devices are only as flexible as the steel and concrete they are made from.  Kiva offers an intriguing blend of the WMS flexibility with the fixed automation picking efficiency.

Enter Amazon.  Amazon acquired two customers of Kiva (Zappos.com and Quidsi, Inc.) and also became a customer themselves.  This allowed them to try out the technology and assess its true benefit.

Apply these facts to Amazon’s determination to grow their business, recognition of the importance of distribution efficiency for themselves and their partners (they also function as a 3PL), and the difficulty of doing all this effectively, (as Sanjay Sarma, chairman of the EPCglobal Board of Governors and one of the founders of the MIT Auto-ID Center was recently quoted by John Johnson of RFID 24-7 in his blog, “The point is that logistics is a place where we leak money. We absolutely leak money…”), you begin to see the same point I do.  Buying this technology solution company and gaining control of Kiva’s patents and other intellectual property enables Amazon’s success at their own goals.  Further, by having this control, it allows Amazon to control which of their “friends” can reap similar benefits and forces the competitors to seek other means to trump this advantage.

It is truly a new stage in the arms race of distribution effectiveness between the very large e-retailers and distributors.

I recently did a guest host with an old Gartner Group associate and friend of mine, Vinnie Mirchandani.  Vinnie was an established Research Director at Gartner when I joined as the the first Research Director to dig into the Warehouse Management System (WMS) market place and vet the different vendors and articulate what this market was all about.  He used to be one of my internal reviewed and give me a hard time with what I wrote (although I must admit he was easier than Chris Jones or, for that matter, Eric Keller).

The gist of the post I wrote from Vinnie was a then versus now look at warehouse management systems (The Real Deal: Thomas Ryan on the evolution of Warehouse Management Systems ).  Please jump over to his site “Deal Architect” and review his other posts.  Vinnie is also an author with two books to his credit now in addition to his blogging.  Please check out is new book, The New Technology Elite.

Earlier this month, I attended Modex 2012 in Atlanta.  My intent was to check out the WMS vendors (and other solution providers as well) and see which ones were offering SaaS solutions and, if so, what kind of SaaS were they.  By which kind of SaaS, I’m referring to the different SaaS definitions we detailed in an earlier post; SaaS, SaaS Plus, and SaaS-querade.  Included below are my thoughts on the solution providers I saw at Modex plus some others I have had recent conversations with.

True SaaS solutions:  These are the providers which offer a true multi-tenant solution without any reliance on on-premise components other than the handheld RF terminals and PC devices you’d expect.

Red Prairie:  Red Prairie is a Tier 1 WMS with decades of experience that offers both on-premise and SaaS solutions.  Its SaaS WMS is from the acquisition of Smart Turn.  Smart Turn is a true multi-tenant WMS that is one of the earliest offerings thus has the longest track record.  When Smart Turn was introduced it was a new business initiative by Navis.  It was then taken private after Navis was bought by Zebra.  Then it was acquired by Red Prairie.  As a SaaS solution, it has the basic functionality one would expect from a WMS offering designed for the smaller (tier 3-4) size businesses.  They have kept integration simple (standardized inputs and outputs of Excel spreadsheet data) and have kept the functionality equally trim.  Further, there is little in the way of customer based special customization or configuration beyond what is found in the standard tables related to SKUs (stock keeping units), locations, and users.  Of further interest is that the Smart Turn solution is integrated with NetSuite’s financial solution.

Deposco:  Deposco is a new (5+ years old) WMS that was purpose built as a multi-tenant WMS.  It is privately held but is the creation of the folks who brought us Manugistics.  It is also one of the few companies in the UPS Strategic Fund portfolio.  They have been up and running long enough to have an interesting customer list with few, if any, blemishes.  They do offer full direct integration with the UPS and FedEx small parcel shipping systems and have a robust integration tool set.  Their functionality is richer than what you will see with Smart Turn; it is almost as complete as a tier 1 on-premise WMS.  Their configuration and setup of work flow and business rules allow extensive tailoring for customer requirements without infringing on the underlying SaaS code.

SaaS Plus solutions:  These are the providers which include, as needed, an on-premise component(s) to meet specific high volume or rapid decision making requirements.

With the exception of High Jump Software (see below), I have not encountered a real SaaS Plus solution as of yet.

SaaS-querades:  These are the providers which act like SaaS, market like a SaaS, price like a SaaS, but are not really true multi-tenant SaaS providers.

High Jump Software:  High Software is another Tier 1 WMS provider.  They offer their on-premise solution as their SaaS solution.  It is not designed as a true multi-tenant SaaS but is definitely multi-site and multi-client.  For their SaaS business model, they offer it as an ASP (application service provider) – single instance for each customer.  A single customer instance may also be multi-client and multi-tenant (more on this subtlety in a future post).  Interestingly, they want to be a SaaS Plus solution in that they support on-premise modules to engage in direct interface and control of demanding, very high speed, decision making processes like conveyor automation and sortation.  Where their claim to SaaS Plus falls down is that they want on-premise modules to manage the communications to/from the hand held RF devices.  No other SaaS WMS (or in the “cloud”) requires this to manage those communications effectively.  Of special note about High Jump is their App Station.  This is a facility whereby users can chose to download and activate new functions that they need without all versions/instances of the core code also carrying those same functions.  This allows users to have a UPS parcel shipping interface only if needed, for example.  To the best of my knowledge, they are the only WMS vendor to offer this feature.  This is the key to High Jump’s approach to manage the “code bloat” typical of many richly featured on-premise WMS solutions.

Synergy Logistics:  Synergy Logistics is a UK based company with offices in the US selling their SaaS solution, Snap Fulfill.  The Snap Fulfill WMS is a ground up re-write/re-architect of an on-premise solution that Synergy had been selling in Europe and the UK for many years.  The company adopted the re-write and re-place plan and no longer sells the on-premise solution.  The product is not truly multi-tenant and is implemented as an ASP single instance for a single client.  It is reasonably function/feature rich although not to the same extend as most tier 1 WMS providers.  They do offer some very slick business rule and process flow modification tools that make this easier for a non-techie to execute.  An interesting aspect to their pricing is that they include everything in the monthly fee, no up-front funds are really needed to get up and running.  They include in the subscription fee, the RF handheld hardware, the dedicated internet connection to their server environment, and the initial implementation and start-up services.

Robocom:  Robocom’s SaaS solution is based on their recent acquisition of Wright WMS.  The Wright WMS solution started out as an on-premise solution that is now sold primarily as an ASP, single customer instance solution.  Robocom is a long term tier 2 on-premise WMS vendor that has been offering on-premise solutions for a couple of decades.  They are a survivor in that they have gone through several management changes, have grown their product line by acquisition, and have branched out beyond their initial AS400 focused world.  The challenge for Robocom is to state clearly to the market what role SaaS is going to play in their future and, of the various WMS solutions they now own, what role the Wright WMS solution will play and what attention it will garner for R&D investment and growth.

On-Premise:  There was one on-premise solution provider that definitely caught my eye.

Systems Logic:  I include Systems Logic both because of their well thought out critique of the SaaS business model and because of their track record of implementing their on-premise solution in about the same time frame as a SaaS solution is typically done.  Systems Logic sees this SaaS model as just another scam.  This is based on the reality that many customers are tuned into the on-premise software annual maintenance model and see it as an on-going revenue stream for the vendor that delivers minimal value to them.  Hence, more customers are seeking lower cost support alternatives or are cancelling annual maintenance support contracts all together.  Their critique sees the SaaS recurring revenue model as a replacement for the “maintenance contract scam”.  In some ways they have a point, but I don’t see them conceding the value for many customers with simpler, straight forward, industry common needs that a well architected and configurable SaaS platform can provide.  Their other claim is that their platform allows them to implement the on-premise solution almost totally as a direct result of a conference room pilot.  I have yet to see this in more detail but they do have the track record.

In conversations about what is meant by a “true” SaaS solution, or even a SaaS-Plus or on-Premise-Plus solution as defined in my last post, the topic always turns to where is the business value.  The reality is that there is a different business value for the vendor than that for the purchaser. No real surprise there.

For the vendor, the benefit from SaaS comes primarily from their ability to support their customers cost effectively.  They are deferring the up-front licenses fees, and for some the initial implementation fees as well, and converting them into an on-going revenue stream.  The concept of true SaaS allows the vendor to update once the instance running on a server and have all the customers that use that instance/server also be updated.  This dramatically reduces the support and operational cost for the vendor.  It allows one round of development for the basic platform, one round of testing for the platform, and one round of testing for each deployed instance (server instance) versus one round of testing for each customer, and potentially customer site, on each server deployed.  These benefits are what allow the vendor to grow and thrive, much less just survive, off of the lower, yet recurring, revenue streams.

One critic of SaaS vs. On-Premise sees this model as just another scam.  His thoughts are based on the reality that many customers are tuned into the on-premise software annual maintenance model and see it as an on-going revenue stream for the vendor that delivers minimal value to them.  Hence, more customers are seeking lower cost support alternatives or are cancelling annual maintenance support contracts all together.  His critique sees the SaaS recurring revenue model as a replacement for the “maintenance contract scam”.  In some ways he has a point, but I don’t see him conceding the value for many customers with simpler, straight forward, industry common needs that a well architected and configurable SaaS platform can provide.

This brings us to the value to the purchaser of a SaaS solution.  The primary immediate value that drives most initial inquiries about SaaS is the concept of minimal up-front investment for a solution that meets most of the customer’s needs.  Specifically, up-front license fees, hardware investments, and annual maintenance payments are removed from the equation.  With some SaaS providers, even the initial implementation fees are eliminated.  Instead, all of these fees are rolled into a recurring subscription fee.  The whole transaction is converted from a capital investment to an operating expense that often can be terminated with limited notice and no capital write-off.  Customers state that if they can get this cost benefit for acceptable function/feature delivered, why do they care whether their vendor is true SaaS or not?  Who cares if they are really a SaaS-querade?

I see this as a shortsighted view that misses the point about the viability of the vendor.  The investment they are making in implementation, operational processes, system documentation, and user training is not trivial.  This investment exists regardless of the type of software solution you purchase.  It is a “sunk cost” even with a SaaS solution in that even if you can dump the solution on a moment’s notice, you still need something to run your operation and that requires setup, procedural definition, and user training.  I don’t want my vendor to force my hand because they chose the wrong financial model to insure their long term financial health.  Also, if I lose my on-premise vendor because they go out of business, I can still operate by business on their software.  I own it; I have a copy running in my data center on one of my machines.  I have time to find a replacement.  If my SaaS vendor dies on me, I may very well be dead in the water.  At best I will have to get a copy of what I was running on and move it to my own data center and then go through a recovery operation.  This situation is a key point when negotiating your SaaS solution contract.

When I assist customers in finding a SaaS based WMS or other supply chain solution, I remind them of these facts.  If we have a true SaaS solution under consideration with a good track record (although probably limited to a few recent years), sufficient internal capital, and external investors or financial backing, we are probably looking at a reasonably viable candidate.  We can compare this to a well-established tier 1 vendor with multiple decades for thousands of implementations that is adding SaaS to their business model; it is a new niche for them to sell into.  Even if they are really an ASP (application service provider, single instance for a customer, not multi-tenant) instead of a true SaaS, they have other factors that also define them as a reasonably viable candidate.  However, if we are looking at a third candidate that has limited cash, a short track record, limited or no external investors, and a SaaS-querade business model, we are looking at candidate with questionable financial viability.

The bottom-line is that a SaaS-querade versus a true SaaS or SaaS-Plus does matter.  When choosing a solution provider, financial viability is a key factor to consider along with functionality, cost, technology, vision, and service and support.  We will be writing more about the solution selection criteria we feel are important in future posts.

I’ve been investigating lately the world of SaaS based WMS (warehouse management systems).  This has led me smack into the whole “everyone has their own definition” conundrum.  It seems that most of what I’m encountering is a marketing wrapper touting the SaaS aspects of what is really an ASP (Application Service Provider) business model.

To try to be more clear on what I mean, Brian Sommer, an associate of mine, has published as good an explanation of the SaaS marketing hype and scam as I have heard in his ZD Net blog post, SaaS-querade: When On-Premise Vendors Try to Pass as SaaS Vendors.  “An on-premise vendor, seeing softness in new license sales numbers, starts to (finally) realize that Software as a Service (SaaS) is real. So, the vendor decides that a ‘hosted’ ERP application is a close enough facsimile to a SaaS solution. All the hosted product needs is a bit of SaaS marketing and it’s a done deal. Right? Wrong!”.  This style of solution is really more of an ASP.  The solution is still the vendor’s on-premise solution running as a single instance in its own real, or virtual, server environment, just not in the customer’s data center.

Despite this masking of reality by many vendors, one issue has continued to bother me about a true, fully in the cloud, fully multi-tenant, SaaS solution.  What about business environments where very high speed decisions with very high speed communication between systems are required.  The interaction between automation control systems and warehouse house management systems like automated material handling equipment is a perfect example (high speed conveyors, sorters, tilt trays, AGVs, ASRs).  Depending on how they are implemented, these systems require decisions in response to specific events in millisecond time frames (typically 100-200 milliseconds for bilateral communications and the decision making).  It is difficult to rely on a LAN/WAN connection to a cloud based system to support such an operation.  Another environment would be a high volume automatic data identification and capture environment (autoID).  This type environment could have 1000’s of RFID tags moving and reporting their locations and/or events every minute of the day.  Many of these transactions are meaningless/mindless duplications and passing such repetitive messages to a cloud system needlessly clogs the LAN/WAN pipe.

This is not a slam at SaaS, on-premise solutions, or the internet.  It is a fact of life that there can be contention for band width.  A delay in the decision making process (communicate to SaaS, get a decision, communicate back) can often cause a process failure in the warehouse.  Imagine in the conveyor/sorter situation that a scanner reads the bar-code on the tote, the communication to the SaaS WMS is made asking which lane is the tote to be diverted into, the SaaS decides and communicates back.  Meanwhile, the tote was moving at 600 feet/minute (not an unusual speed for a high speed sortation system), the first diversion lane is 15 ft. from the scanner, the SaaS system decided that the tote needed to go into that first lane, the full communication and decision timeframe because of bandwidth contention took 2 seconds.  The result is that the tote had moved 20 feet in the two seconds and cannot be diverted into the first lane as necessary.  The worst impact here is that the tote will be sent to a reject lane and then have to be moved by hand, the best is that it will be recycled back on a return loop and getting another chance to make that first lane.  I know of at least one SaaS WMS that installs their own dedicated network LAN/WAN connection so that they can have control and avoid all the other possible sources for bandwidth contention.

For such environments as these, a synthesis of a SaaS based solution and a local on-premise solution is necessary.  There is some expectation that HTML 5, smart clients, or faster communications links could eliminate this but until they are real and pervasive, we will continue to see a need for a local server that deals with the limited, yet intense functional requirements.  I call this type of solution SaaS-Plus.

While discussing this with Brian, he pointed out that we are also seeing an On-Premise-Plus solution model.  This is evolving in the large on-premise ERP world where the ERP solution is off loading from the on-premise environment to the cloud the transaction or analysis/number crunching associated with analytics, price optimizations, and scheduling.  This is done to bring to bear expensive yet very high performance in memory data base computing without having such overhead resident locally where it would be cost prohibitive.

Thus our SaaS definitions are expanded to include:

SaaS – a software delivery model in which software and its associated data are hosted centrally (typically in the cloud) and are typically accessed by multiple users and organizations (multi-tenant) at many locations (multi-site) using a thin client, normally using a web browser over the Internet.  The solution provided is often highly configurable while sharing a common central code base.  Customizations for any one tenant are really configurations applicable only to that one client.  Any solution that is a single instance of the software for a single client (tenant) or that requires on-premise computing and/or solutions is not SaaS.

SaaS-querades – Vendors that sell a software as a service (SaaS) solution that really is their on-premise product running in a hosted environment.

SaaS-Plus – a marriage of SaaS with a limited function on-premise solution is required to meet very high speed of very data intensive requirements like material handling automation control in a warehouse or a very high volume autoID collection and alerting environment

On-Premise-Plus – a marriage of a full function on-premise solution with a limited function SaaS solution to cost effectively use high performance computing or data base power to solve calculation and data intensive business requirements like analytics, price optimization and scheduling.

Solution vendors should not be timid about identifying what type of SaaS solution they are offering.  After all, high volume or high speed environments are real and relatively common as are intense computational/optimization environments.  Brian writes further in his article “Purists, Pragmatists, and others re: Cloud” that SaaS solutions should really be across a distribution of SaaS types, not just purist or not at all.  Describing your solution correctly and for the right reasons helps your customers have assurance that you understand and can satisfy their requirements.