SaaS or Something Else?

I’ll admit it, the HR Technology market can be downright confusing.  The messaging coming from nearly every vendor sounds very similar, making it very difficult to determine which vendor does what and more importantly how they differentiate from one another.  Nearly every vendor offers capabilities that are marketed as “Talent Management” or “Analytics”, ranging from assessment vendors, time-keeping solutions, and organization charting vendors.  And, amazingly enough, they are all correct largely because of the lack of a generally accepted definition of what each means.

As confusing as it is to determine what a solution exactly does, its become even more difficult to determine HOW vendors deliver their solutions.  Cloud-based, Subscription, Software-as-a-Service (SaaS), premise-based, perpetual, hosted, hybrid, and outsourced are terms that often are used to describe the manner in which a technology is made available.  Buyers often are looking for SaaS, but many times don’t know exactly why they want or need SaaS and more importantly what solutions are SaaS versus a hosted solution – and why its important to distinguish between the two.

Software-as-a-Service has been defined by Microsoft as “Software deployed as a hosted service and accessed over the internet”.  This definition is as pure and simplistic as possible.  based on this definition, SaaS has a few key attributes:

  1. Software is hosted on servers that the vendor provides and maintains
  2. Software is accessible via an internet browser
  3. Access to the software is subscription-based rather than licensed

Based on this definition, there are countless vendors in the space that qualify as SaaS and just about any solution you buy can be made available in a SaaS model.

I would like to offer a more narrow definition of SaaS;

  1. Hosted and maintained by the vendor
  2. Delivered over the internet
  3. Configurable but NOT customizable
  4. Single code-base deployed across ALL customers

In the definition from Microsoft the author goes on to explain that there are different stages of SaaS, ranging from custom, hosted, single-tenant solutions all the way to scalable multi-tenant solutions. And while the architectural nuances of each model may cause an IT Director to squeal in delight like a schoolgirl, to the typical HR buyer they mean absolutely nothing. In my definition, only the multi-tenant options of the Microsoft definitions qualify as SaaS.

As a buyer I’m less concerned about the technical architectural details provided that they don’t limit me from achieving the outcomes I seek from a solution.  I am more concerned about what investment is necessary, how complex will the implementation be, how flexible the solution can be in order to quickly adapt to the changing needs of my business and whether I need to re-skill my IT or HR staff in order to support the solution.

In order to meet MY business needs, SaaS is a must for any business application as I’m always looking to decrease the reliance on IT to support HR solutions.  As a CIO I want to devote my limited technical resources to supporting the infrastructure necessary to run the business and support the applications which are most closely aligned with functions that generate revenue – which is most often not HR.  As a result, anything that isn’t core to my business I would look to have delivered via an outsourced arrangement – generally provided by SaaS-delivered software.

Given that most CIOs have this objective, HR is a market that has become ripe for SaaS adoption.  So given the explosion of SaaS-labeled solutions,  its important to understand how to determine whether the software you’re buying is SaaS or something marketed as such but really isn’t.  In order to determine what you’re buying, ask your vendor the following questions:

  • Is the solution available for installation on my servers internally?
  • Do I get to choose when upgrades are deployed?
  • Do upgrades require me to do anything other than perform acceptance testing?
  • Can I buy licenses for the software rather than pay a subscription?

If your vendor answers yes to any of the above questions, then the solution being proposed is something other than a multi-tenant SaaS solution.

I want to be clear that not every solution used by HR needs to be a multi-tenant SaaS solution.  There are plenty of solutions which make sense to deploy on site, but if a vendor ONLY offers a solution through a SaaS-branded offering, be sure you know what you’re getting.

6 thoughts on “SaaS or Something Else?

  1. I agree on most points but fail to see why multi tenancy is an absolute must. As long as we have a single code vendor how many customer per hardware box they run should be really uninteresting. As a customer you buy a service and as long as it gets delivered over the internet you really dont care what is on the other side. You care about functionality, performance and easy upgrades that just works. If the vendor runs it on Linux, Windows or something else is uninteresting for you and so should the configuration of the hardware be. It’s up to the vendor to make its profit, and if they can’t do it they are in trouble, not you.

    1. @Christian – Thanks for the comments. In a philosophical position I agree wholeheartedly. Buying a solution as a service is just simply a subscription. But, other than a nuance regarding licensing models, a single tenant solution is simply vendor hosted. To most buyers this point is a technical difference.

      The point regarding multi-tenancy is simply this, if a solution isn’t capable of being run multi-tenant, it is something that can be be licensed and run on-premise regardless of whether the vendor offers it or not. Single tenant solutions enable customers to decide when to upgrade (or not at all). Single tenancy SaaS is a licensing decision, where as multi-tenancy is an architectural decision.

      As for the ability of a vendor to make a profit being only their issue, I would have to disagree. The financial viability of a SaaS vendor is equally important to the functionality. After all, no one wants to deploy a solution which sits on servers in the process of being repossessed for non-payment by the vendor :-)

      With all that said, there is very much a time and place for a single tenant solution and for many customers anything but single tenancy wouldn’t allow them to satisfy their business objectives.

  2. Before asking the saas or something else question I think HR needs to know if they can work with a shared absolutely standardized application or if they need some extras. As you write bryon, saas/multi-tenant/single code systems are configurable but not customizable which means that many of the change requests from HR are not possible. If recruitment and talent relationship management is not crucial for business success then they usually can cope with the “not possible” answer. But if it’s crucial then they definetly need more flexibility and then it’s over with saas… even the system is as flexible as salesforce… From my experience companies with more than 10.000 or a huge invest in employer branding and talent relationship management need a very flexible platform which is deployed and supported in a single path.

    1. @Dominik – I agree wholeheartedly. Multi-tenant SaaS is not the best option for everyone. In the case of the solution not being flexible to meet the change requests of the business, there are two ways to address that.

      First, the reasons for the change need to be fully understood and agreed-upon by the business. Just because a recruiter doesn’t like the way a screen is laid out or how a process flows, doesn’t necessarily necessitate a code change. Strong system and process governance needs to be deployed in order to best address those types of issues.

      Second, during the purchasing process, the buyers would be best served by performing as much possible due diligence prior to signing on the dotted line with a vendor. Knowing the limitations of the configuration options before committing to a 3, 4, or 5 year contract is critical to determining whether a SaaS solution is even an option.

      1. Technically speaking, you shouldn’t have to sacrifice customization capabilities because of multi-tenancy. Salesforce has proven that it is possible to provide a multi-tenant solution with seemingly infinite customization capability. Unfortunately, I don’t see of the vendors focused on HR provide anything comparable.

  3. Byron…as well written as your post is I’m astounded to find not just one but all seven of your SAAS attributes erroneous.

    In #2 for example you constrain SAAS to software “accessible via an internet browser”. But clearly this is wrong as any 35-year-old non-browser ITunes or Kindle user will tell you.

    To be blunt it seems you’ve started from the perspective of one vendor, Salesforce, who can be credited with popularizing SaaS as a marketing term, and have set about preaching their gospel.

    A better title for your post would be “Salesforce or Something Else”.

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