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Open SaaS: Blessing Or Curse For The Digital Asset Management Industry?

by Naresh Sarwan on September 9, 2011

Jim Shaw, general manager of Acquia writing for UK VAR channel publication: CRN discusses the benefits of an open source solution when using SaaS or Cloud software solutions.  He outlines the issues of using proprietary SaaS products, namely that if users decide they wish to move away from the vendor (e.g. because they no longer support their needs):

One of cloud’s best-kept secrets has been a lack of portability for the applications delivered using the software-as-a-service (SaaS) model. Many resellers have helped customer companies sign up for SaaS applications, backing up the move with the belief that it will be easy for them to migrate to another service provider if they need to.  But that goes against the plans of the SaaS vendors, who will be looking for long-term agreements to lock in customers by providing no exit strategy.” [Read More]

Jim argues that ‘Open SaaS’ represents a favourable alternative for end users because it makes it easier to transfer from one provider to another:

Many resellers are recognising open SaaS, where software is delivered as a service but with open-source principles at its core, as a viable alternative. The advantage is that when organisations want to leave, they export a copy of their application – code, database, and design – and move it wherever they choose, whenever they choose.  Open SaaS allows buyers to obtain business value from the software delivered as a cloud service, while retaining the control they would get from running software themselves. Of course, this is without investing in the hardware, resources and overhead that comes with managing a datacentre.” [Read More]

The article is slanted towards resellers because of the readership of CRN, however, the issues discussed are equally valid for client companies also.  The same observation about proprietary SaaS vendors locking in users with potentially high risk consequences has been made by others.  Many open source DAM vendors offer SaaS options and one could see them gaining a short-term advantage if corporate buyers especially deem Open SaaS to be a safer alternative (which is clearly what open source DAM vendors would like the market to believe).

From a DAM industry business perspective, however, simplifying the ability to transition between SaaS offerings is likely to exert greater price pressure.  Right now, SaaS is a high margin business model and some public DAM vendors with shareholders to keep happy are basing their investment case on long-term contracts and the ability to lock-in their customers.  While the industry might be booming currently, the large number of vendors, low barriers to entry and concepts like Open SaaS might make it a tougher business environment in the not too distant future.  Whether this is entirely good for end users is a moot point.  The cost of solutions may come down, but without the margins to cover their R&D costs so may also the opportunities to innovate and re-invest in new features.

My personal view is that basing a business case on being able to lock-in customers is not sensible and very few tech vendors (except maybe Apple) have managed to get away with it successfully.  Those SaaS vendors that do not wish to go Open SaaS may be better advised to develop and promote the interoperability features of their products, i.e. the ability to transfer and integrate their customer’s data easily.  These are more likely to encourage customers to remain with them and the benefits of an open source platform may become less significant as a result.

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