Home > Cloud Computing, Uncategorized > Dear SaaS Vendors: If Cloud Is The Way Forward & Companies Shouldn’t Spend $ On Privately-Operated Infrastructure, When Are You Moving Yours To Amazon Web Services?

Dear SaaS Vendors: If Cloud Is The Way Forward & Companies Shouldn’t Spend $ On Privately-Operated Infrastructure, When Are You Moving Yours To Amazon Web Services?

We’re told repetitively by Software as a Service (SaaS)* vendors that infrastructure is irrelevant, that CapEx spending is for fools and that Cloud Computing has fundamentally changed the way we will, forever, consume computing resources.

Why is it then that many of the largest SaaS providers on the planet (including firms like Salesforce.com, Twitter, Facebook, etc.) continue to build their software and choose to run it in their own datacenters on their own infrastructure?  In fact, many of them are on a tear involving multi-hundred million dollar (read: infrastructure) private datacenter build-outs.

I mean, SaaS is all about the software and service delivery, right?  IaaS/PaaS is the perfect vehicle for the delivery of scaleable software, right?  So why do you continue to try to convince *us* to move our software to you and yet *you* don’t/won’t/can’t move your software to someone else like AWS?

Hypocricloud: SaaS firms telling us we’re backwards for investing in infrastructure when they don’t eat the dog food they’re dispensing (AKA we’ll build private clouds and operate them, but tell you they’re a bad idea, in order to provide public cloud offerings to you…)

Quid pro quo, agent Starling.


* I originally addressed this to Salesforce.com via Twitter in response to Peter Coffee’s blog here but repurposed the title to apply to SaaS vendors in general.

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  1. May 1st, 2010 at 11:12 | #1


    I see your point, but I think the title is too broad. There is a lot of ground between a private data center and a public cloud like AWS.

    I work for a company that provides a SaaS solution (well technically its a hosted solution, as you can't walk up with a credit card and sign up). While we use cloud in our business – AWS for some internal functions and SaaS for email, our solution is delivered via racks that we own at a hosting provider. We do not use AWS for that. So we are the kind of people you are targeting with this post. But I don't think we are hypocritical.

    As you say, when we talk to potential customers we do discuss Opex vs Capex. But more importantly, we talk about the benefits of letting someone else run and manage the application. Some of the benefits we list:

    1. We built the application and are experts in our space, and so we know best how to run/monitor/troubleshoot it.

    2. By balancing resources across our customer base, we efficiently utilize our virtualized computing capacity.

    3. Time to market with our hosted solution is minutes (to provision a new VM), rather than months typically to provision within IT.

    4. We provide more transparency in our costs than what they typically get with their IT

    The fact that we use a hosting provider instead of a public cloud like AWS or Rackspace is not hypocritical. Our hosting provider serves the same role to us as the role we have with our customers. To match the points above:

    1. We aren't experts in ping, power or pipe. They handle this for us.

    2. We share the data center with hundreds of other customers, making efficient use of resources

    3. We can get additional capacity (rack, network, power) quickly with our hosting provider

    4. Our hosting costs are transparent – we get an itemized monthly bill.

    You could argue we could get all of that also from AWS. There are a number of reasons why we don't go that route, both business (e.g. sales friction with our very conservative customers) and technical (e.g. we are a network intensive app, so we need to be able to work closely with our provider to troubleshoot issues down into that layer).


  2. May 4th, 2010 at 02:20 | #2

    I don't think your blanket indictment of SaaS providers really rings true. Several SaaS vendors I work with have their applications running in Amazon's cloud. And Netflix just announced that rather than keep building out their own cloud infrastructure, they were moving their service to Amazon's cloud. We're pretty early in the evolution of cloud computing. There is going to be a lot of change. SaaS providers will be evaluating whether to build their own cloud or use an existing cloud. Time-to-market is a critical driver for SaaS startups, so I would generally expect them not to build their own cloud. Other SaaS vendors, like Salesforce.com, have been in business since before there were public clouds, like Amazon, so they have built out their own cloud over the years. Building a public cloud to deliver a SaaS application is not a trivial or inexpensive undertaking. Every SaaS vendor needs to determine whether they can or want to take on that piece of delivering their cloud service.

  3. May 4th, 2010 at 11:20 | #3

    I was hoping you could clear something up for me and I'll apologize upfront for the potential naivety of this question – Is it possible to have a security solution that is delivered as a SaaS model but that is also not hosted? I can’t seem to find a definite answer anywhere on this.


  4. May 5th, 2010 at 09:35 | #4

    Playing devil's advocate here… What if you think that IaaS is only beneficial at small/medium scale? What if you think SaaS is good but IaaS is bad?

  5. May 11th, 2010 at 16:55 | #5

    Great debate! Good points on both sides. Thanks for the "Food for Thought"!


    Surge Consulting Group

  6. Andrew
    May 25th, 2010 at 13:15 | #6

    Salesforce did not fit our company and they would not allow us to leave even though it was not a good fit. They keep saying you got a contract and such and say there is nothing they can do except have you pay out the contract. Do not work with them! Plus if you want your data they charge for it! Stay away! Here was the rep we had that is doing his best to not help at all. Was nice in the beginning but now we see what he really is!

    Doug Baudler


    Account Executive


    T: 415-836-2210

    F: 650-376-9859

  1. May 1st, 2010 at 15:02 | #1
  2. May 7th, 2010 at 11:20 | #2
  3. May 28th, 2010 at 08:41 | #3
  4. July 7th, 2010 at 08:55 | #4
  5. July 24th, 2010 at 01:03 | #5