The end of SaaS? Not so fast.

September 21, 2018

Editor’s Note: This article first appeared on Inc. here.

Declaring the end of something — whether it’s brick-and-mortar retail or Facebook — always grabs attention, which is why people make such declarations. So when Work-Bench’s latest report predicted the end of Software as a Service (SaaS), a software licensing and delivery model employed by many of today’s best known technology providers, many took notice.

The gist of the report is that containers and microservices have made it easier for companies to create their own homegrown solutions instead of contracting with a SaaS vendor. SaaS thrived in an era when making your own software was hard, the report states, but thanks to containers, software can be installed anywhere and go live in minutes.

One example of this market shift is Mattermost, an enterprise-grade virtual private cloud (VPC) alternative to Slack that’s cheaper and more secure. Another example is Contentful a decoupled and developer-friendly alternative to a traditional CMS. “Enterprises already prefer VPC to SaaS for enterprise tools,” the report states. “We expect business software to follow suit.”

The report makes a valid point. But I disagree that these factors comprise an existential threat to SaaS. The world as we know is shifting, but to say we’re completely moving away from SaaS only tells part of the story. It’s important to understand the value of SaaS to your business and why using out-of-the-box solutions and ready-made tools are here to help and likely not going away any time soon.

Here’s why:

1. Microservices and containers help SaaS companies too.

While it’s easier than it used to be for corporations to create their own software solutions, it’s also easier for independent software vendors. As some SaaS vendors themselves have noted, using microservices allows them to hire fewer programmers and save money. They can also help speed time to market. The real question is whether you get to the point where the additional value a software vendor can provide is lower than it used to be. I don’t think we’re near that point.

2. Maintaining software is a headache.

Creating your own software solutions is the fun part. But debugging it, making sure it works, figuring out how to make it drop-dead easy for your users to use, determining how to create more value for users, and refining the software all take constant work. Some companies are adept at this while others would rather avoid the headache and the cost (which can often run as high as 75 percent of TCO). The fact is that companies have always been able to create their own software and there will always be the option to rely on third parties to do it instead (see the success of, WordPress and other out of the box solutions).

3. Creating your own solutions doesn’t always make sense.

Businesses constantly face the option of DIY or outsourcing. That goes for pretty much everything they do, ranging from accounting to transportation to programmatic advertising. The calculation is based on assessing your resources and your core skills and it boils down to focus. When it comes to software, it usually makes sense to use someone else’s solution for some things. For instance, there’s no need to create your own spreadsheet because there are some great ones on the market that don’t cost much (or in the case of Google Sheets, are free).

4. SaaS provides economic value.

The Work-Bench report argues that SaaS won’t face an imminent demise largely because of inertia — businesses that use such services have an “if it ain’t broke, don’t fix it” rationalization for staying with what they know. I think that the lure of SaaS goes beyond that though. Apps that help you execute your business more efficiently have an economic value. While a DIY software system may have bugs and require IT intervention, that’s usually not the case with SaaS solutions, which are constantly stress tested and have dedicated teams that ensure that they run smoothly. With some popular SaaS products — like – there’s also value in using something that is an industry standard that has a small or non-existent learning curve for new employees.

My final point is that the idea of the cloud replacing SaaS is a semantic sleight of hand. Whether it’s microservices or, both are software as a service. To underscore the point, Salesforce offers microservices via its unit.

What we’re seeing, in other words, isn’t the end of Software as a Service as we know it, but rather an expansion of the definition of SaaS and a vast improvement of what such services can offer. That doesn’t spell the end of a market, but may instead signal a new beginning.

Founder & Partner

As the founder of OpenView, Scott focuses on distinctive business models and products that uniquely address a meaningful market pain point. This includes a broad interest in application and infrastructure companies, and businesses that are addressing the next generation of technology, including SaaS, cloud computing, mobile platforms, storage, networking, IT tools, and development tools.