Ask HN: What Are SaaS Adoption Hurdles for Large Enterprises?
Dear All, _Not sure if this was discussed earlier_
The Large/Mega Enterprises are still a tad shy of adopting SaaS in their Core Processes. What do you see are the biggest Hurdles?
Say, - Heavy customizations needed for Business Processes? - Unable to Host Customer Data outside? (eg. GDPR) - Deep Integrations needed, to other 3rd Party systems in the landscape. - Too much legacy code?
Context: Sure, a lot would probably use an Office 365. Or a Social Media CRM System or an Accounting System or an HR System. They are usually not the core business of most companies, unless you are in the above business.
But - what I am referring to here is more of - in the Core Processes. For example, - A Telecom company still is reluctant to bring in SaaS offering in the Network Management - A eCommerce Retailer in it's Customer Management - A Manufacturer in the core ERP
(_Sure, there are exceptions, but the above are just my observations, happy to be corrected_) But - what I am referring to here is more of - in the Core Processes. For example, - A Telecom company still is reluctant to bring in SaaS offering in the Network Management - A eCommerce Retailer in it's Customer Management - A Manufacturer in the core ERP I think any company would be understandably cautious about this because that's their core business. I probably wouldn't adopt a Saas or outsource that either if I was in charge. I think it's better for a SaaS to focus on doing well something that the business needs to do but is not replacing something along their core stack and offering. I'm founder at Tesults (https://www.tesults.com) and the biggest hurdles I would say are around the general fears around not having an on premises solution. Some people are totally fine with this, usually those who have already adopted and are used to services like Slack, Asana, Google Docs, Trello, BaseCamp etc. Then there are also concerns about where data is stored. Usually though I think they're concerned most about the fear of embarrassment internally for introducing something that doesn't 'work' as expected or has bad support. Most people want to solve a problem but also want to cover their backs so trust is a big part, often more than the features being offered. Large enterprises are mostly concerned about whom to hold responsible and get support when stuffs break. For this reason, they have no problems shelling out big $$$ to buy from big players (even if your SaaS product is better) because they are guaranteed to be around when required. You are right, accountability is one valid point, and large companies typically are used to having people on speed dial, when things break. But then - aren't there questions about - how really agile they really are? Large operations with a lot of custom software, and license based models and Time & Material based customization - it is always very hard to get things moving faster. Also, I feel Large Operations have to hire a lot of people - just to manage what vendors are deploying. Very large operational costs. I consult on Oracle ERP software who are attempting to transition customers from their legacy, on premise (EBS) system to their hosted / managed SaaS (Cloud) offering. Main issues are: 1) Lack of customization options - in Oracle's case, their Cloud offering is hardly customizable (no database access) compared to the on prem version. Thus, key functionality is lost which makes running a business difficult. 2) Cost - you basically need to re-implement your business, which is a $1MM+ affair and tons of time and risk and consultants and work for your team. Plus the Cloud solution isn't that much cheaper in the end. 3) Bugs - the Cloud software is new and still has many problems. Let someone else fight those. They all have SaaS. Have done since the 1970s. Meaning they have software licenses with renewing service-level agreements and support contracts. The difference is the mainframe is now AWS. They understandably don’t want to host outside their own infrastructure. Can you host on their infrastructure? That I find is the biggest hurdle. Beyond that it is the usual switching cost set of questions. You have to find the problems their current solution offers and sell a unique new value proposition only available on the new platform. You bring a valid point. But then, What stops SaaS providers from Hosting in their own environment? With Modern day Containerization technologies and orchestration layers, I believe it is not as difficult as it used to be - to be infra agnostic. A lot of large Enterprises are now - investing in their private cloud (AWS, Azure etc.) IMHO, it is much beyond the Hosting part (which is mostly applicable during the installation stages). There are questions about,
- Accountability in case of failures.
- Continuous Support and Customizations
- Is there a Dedicated Support team etc.
- more ... > But then, What stops SaaS providers from Hosting in their own environment? You mean why SaaS providers are reluctant to provide their stack on-premise? If your main tech is providing a web daemon that "just works" it is simpler (cheaper) to provide (install, update, configure) it on your (the SaaS-company's) infrastructure, as otherwise you have to support integrating your SaaS into the security domain of your customer which is very non-trivial (that's why you often see Team-Support and certain variations of authorization and authentication in the higher-priced plans). I understand that many customers would like that but I also understand that it is harder (more expensive) to support for SaaS companies. I wonder how long GitLab will support their dual-approach using .com and the self-hosted, on-premise variant. Yes, a lot of people think SaaS = Deployed on Cloud. But a significant part of sustainable deployment is the Service part, in Software as a Service I understand, it is much harder for many SaaS companies to provide that 1:1 attention. Specially when the company would like to focus on the Product. But there are ways to offsetting it, such as System Integrator, Localized Partners etc. Large enterprise companies have been traditionally doing the same thing, Seibel for example grew like that. SAP, Oracle, is thriving on it. But my question was also from the companies purchasing the service?
What stops them from adopting SaaS in their environment? I think it´s not only GDPR and the problem who would be responsible for support, technical failures and other problems. It´s most likely that large enterprises don´t want to use a SaaS because it needs time and resources to get all information from your old system into the new one and get everyone trainings with the program. Compliance (GDPR, SOX, PCI...), or more in general lack of a standardized security questionnaire (where do you store my data, how do you protect it, who are you sending my data to, what do you do in case of incidents...). Plus there's the business - will the SaaS still exist in 2 years?