Global Analyst Insights by Rene Buest

Wanted: A real SaaS pay as you go offering!

By on September 17, 2011 in Comment with 0 Comments

This goes to Salesforce, Google Apps and every other vendor on the cloud computing market who is offering a Software-as-a-Service solution. When do you try to provide a Software-as-a-Service (SaaS) solution that is based on a REAL pay per use base?

We all here a lot about the benefits of cloud computing like flexibility, scalibility and pay per use. That means you only pay for the resources or the service you actually use. Using Infrastructure-as-a-Service (IaaS) or Platform-as-a-Service (PaaS) solutions you really pay for what you use. For example per hour or per gigabytes. Well, using common SaaS solutions you do not pay for what you use. You pay per user and this per month or per year! Ist this pay per use when you pay per user even when the user do not use the service 3 days a week? NO, this is not pay per use.

Good examples for the big players on the cloud computing market are Salesforce or Google (Apps). Google offers two plans for using “Google Apps for Business”. An annual plan and a flexible plan. The annual plan means you pay $50 per user account per year AND you have an annual contract – duration 1 year! The flexible plan is – like the name – more flexible. You pay $5 per user account per month and you do not have an annual plan. But you have to pay even when your employees are, for example, on vacation!

Salesforce is just as bad! Looking on their Sales Cloud – Group offering you have to pay $15 per user per month and “All per user products require an annual contract.” So again, you have to pay for a service even when your employees do not use it!

But not only Salesforce or Google Apps go this NOT pay per use way! If you take a look on the whole SaaS market each vendor is offering this model! So, please tell me, where is the real SaaS pay per use model? Where is the real flexibility? Cloud Computing means that I just pay for the service when I am using it! Does that mean that Salesforce, Google Apps and any other SaaS vendor do not offering cloud computing services?

Offering a service over the internet using a webbrowser is not cloud computing per se!

During my research for an article I found an idea every SaaS vendor can use to offer a real pay per use solution. The idea comes from HP and is called SAPS (Application Performance Standard Meter). HP uses it to make a precise daily billing for the SAP systems they are hosting for their customers. On the base of SAPS the resource consumption of every SAP system is measured every five minutes. It’s comparable with a power meter. This requires two measured values: the required processing power and the input / output throughput. With a built-in matrix, the collected data is converted in kiloSAPS-hours and kiloIOPS-hours (IOPS = Input / Output Performance Standard). The customer receives an accurate breakdown of the resources he uses, and an exact assignment to the respective SAP system.

Right this is for SAP systems, but it shows that it is possible to make a precise daily billing for each resource a customer is using. The SaaS vendors just need to do it!

About the Author

About the Author: Rene Buest is Gartner Analyst covering Infrastructure Services & Digital Operations. Prior to that he was Director of Technology Research at Arago, Senior Analyst and Cloud Practice Lead at Crisp Research, Principal Analyst at New Age Disruption and member of the worldwide Gigaom Research Analyst Network. Rene is considered as top cloud computing analyst in Germany and one of the worldwide top analysts in this area. In addition, he is one of the world’s top cloud computing influencers and belongs to the top 100 cloud computing experts on Twitter and Google+. Since the mid-90s he is focused on the strategic use of information technology in businesses and the IT impact on our society as well as disruptive technologies. Rene Buest is the author of numerous professional technology articles. He regularly writes for well-known IT publications like Computerwoche, CIO Magazin, LANline as well as Silicon.de and is cited in German and international media – including New York Times, Forbes Magazin, Handelsblatt, Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Computerwoche, CIO, Manager Magazin and Harvard Business Manager. Furthermore Rene Buest is speaker and participant of experts rounds. He is founder of CloudUser.de and writes about cloud computing, IT infrastructure, technologies, management and strategies. He holds a diploma in computer engineering from the Hochschule Bremen (Dipl.-Informatiker (FH)) as well as a M.Sc. in IT-Management and Information Systems from the FHDW Paderborn. .

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