I came across that old phrase, “Why buy the cow when you can get the milk for free?” the other day, in the context of marriage. Why should people marry when they can just live together? Well, you can imagine I came across a lot of opinions I won’t go into here.
An article by Naomi Bloom popped up, using the phrase in a technology context. She noted that vendors of traditional licensed/on-premise enterprise software had served themselves very well by forcing customers to buy both the apps as well as owning the data center and its operations, application management, upgrades, human resources, and more. This has provided traditional vendors considerable financial security and market power.
Clearly Defining the Cloud
Today’s multiple forms of cloud computing are changing all that, but we need to be careful of what passes for cloud computing, especially SaaS. Software marketers are rebranding all their products as SaaS, whether they really are or not, to take advantage of the latest 'buzzword.' Bloom notes that “true” SaaS must include four characteristics:
- Software is made available to customers by the vendor on a subscription model;
- The vendor hosts, operates, upgrades, manages and provides security for the software and all data;
- The software architecture is multi-tenant, has a single code base and data structures, including metadata structures that are shared by all customers; and
- The vendor pushes out new releases on a regular basis that are functionally rich and opt in.
Keep in mind that software can meet all these attributes and be “true” SaaS, but still be badly written, unprofitable, outdated or problematic in other ways. However, when well-architected, well-written and well-managed, true SaaS can provide many benefits, including improved economics, faster time-to-market, more frequent and lower-cost upgrades, greater value-added and/or new offerings, and improved agility.
SaaS Doesn’t Eliminate Technical Debt
One quality even true SaaS shares with traditional on-premise software is technical debt. Another benefit of the SaaS model not listed above is the continuous review of the software by multiple users, which can clue-in the vendor to issues with the code that impact performance.
There's also a new generation of cloud-based portfolio risk analysis solutions that quantify the size and structural quality of applications, evaluate technical debt and offer information and insights that support investment decision-making. These solutions can provide continuous monitoring of the SaaS solution as well as risk and application analysis. Then, the vendor can implement a risk-based APM strategy faster, enabling better and safer decisions, portfolio modernization and transformation. It also profiles structural quality risk, complexity and size of any application to identify unexpected risks. Finally, it quantifies technical debt to proactively prevent software cost and risks from spiraling out of control.
If users think they are going to eliminate technical debt by moving to a SaaS model, their thinking is cloudy. But there are solutions to identify and help address technical debt for SaaS architectures that are just as robust as their on-premise counterparts.
Erik Oltmans, an Associate Partner from EY, Netherlands, spoke at the Software Intelligence Forum on how the consulting behemoth uses Software Intelligence in its Transaction Advisory services.
Erik describes the changing landscape of M & A. Besides the financial and commercial aspects, PE firms now equally value technical assessments, especially for targets with significant software assets. He goes on to detail how CAST Highlight makes these assessments possible with limited access to the targetâ€™s systems, customized quality metrics, and liability implications of open source components - all three that are critical for an M&A due diligence.