Open-Source vs. SAAS
December 28, 2006
An interesting post by Mark Suster at Koral doing a little bit of a compare/contrast of Open-Source vs. SAAS. I found it interesting since some companies are SAAS (BlueTie, Zoho) and others are Open-Source (Zimbra, Scalix).
I wonder if it doesn’t come down to the level of technical sophistication that will make one or the other more attactive to an enterprise. For example, would a small business owner of say an office of 5 to 10 people ever think about getting something they have to install or configure on a server like Zimbra for example? Surely they would go with something more ‘turn-key’ like BlueTie for email and calendar and ThinkFree or Zoho for documents.
So maybe it comes down to enterprise size, open-source for larger enterprises that have their own IT staff and SAAS for smaller enterprises or those larger enterprises that are trying to save IT staff costs.
It would be good to include a classificiation of target company size in that product chart I mentioned before.
December 29, 2006 at 4:08 am
I think you’re creating a false dichotomy here. If an open-source solution is good and has a reasonable multi-domain admin interface, somebody out there will host it as a service. For instance, if you want Zimbra-as-SaaS, there are dozens of companies that will happily provide it to you in exchange for cash: http://www.zimbra.com/partners/hosting_partners.html
December 29, 2006 at 1:21 pm
Hey Dan, Technically you are correct but from a business perspective (presuming your business is not hosting or IT consulting/reseller) it’s then SaaS, not Open-Source. It would seem to further my argument that open-source is for the more technically adept and staffed, i.e. those that plan to host or resell not for the smb end user. Which is okay, it just means that the target audiences may be different. For example, maybe Zimbra is targeting hosts/resellers where as Webmail.US is targeting the end user.
I would also refer to a recent post by Will Platnik over at Gexen.net regarding Hosted Zimbra.
December 29, 2006 at 7:11 pm
Will Platnik’s posting basically boils down to him being surprised that (a) there are fewer people selling hosted Zimbra than hosted Exchange, and (b) it costs more. That’s Econ 101. Less competition = higher prices; markets tend to correct this by adding more competition and lowering margins. You just need to give it a little time.
December 31, 2006 at 12:58 am
Thanks for the reference. I agree with your assertion, which is the point I was trying to convey in my blog posting. I had the CEO of an open source application company recently trying to convince me that small & mid-sized businesses would more likely adopt Open Source than SaaS. I have no doubt that he has hundreds (thousands?) of mid-sized companies using his product. But as a general rule I just don’t buy it that most people in mid-sized firms want the hassle of having to host their own software if there are good SaaS alternatives.
To Dan’s point about people hosting the Open Source version for you - it is true that you can have somebody host Zimbra or SugarCRM for you. But this will never be a huge business for the service provider and therefore the end user will never get the kind of investments that you see in infrastructure and service from the likes of Salesforce.com, NetSuite, RightNow and others. Sure, you can get SharePoint hosted for you, too. But would that be the same as if somebody like Microsoft really got behind the product as a SaaS offering? To me it would be like choosing a cell phone carrier that doesn’t offer full geographic network coverage, nearly 100% uptime, itemized billing, etc.
September 17, 2007 at 5:18 am
It hasn’t even been a year and the Zimbra side of this equation has developed so that there’s competition that has driven the price down, and players that have automated and built at least some of the infrastructure for which Mark’s looking for, among Zimbra’s hosting partners for example, http://www.01.com .