Review: Beware the Hype for Software as a Service

I first stumbled across the article Beware the Hype for Software as a Service when I read Dharmesh's rant pertaining to how awful this article was on OnStartups Blog. My first thought is quite simply when did Business Week begin inviting non high school graduates to write for their publications? One thing that I remember from high school is we were taught to research a topic before we write about it. This article has developed such an outcry from techie entrepreneur's that it lead me to my thought that maybe this was intentional. Maybe the author was taking advice from Dosh Dosh's article on How to Say Nothing in 500 Words, particularly the point #2 "Take the less usual side." But this is under the assumption that the author uses real information to back up their claim, not "SUVs are not cool. They never were." (Which I have to make a personal note here, when my wife and I found we were expecting our 3rd child, we had to upgrade, and gas prices being what they were, we purchased a 2004 Ford Expedition with the Eddie Baur edition with 50,000 miles for over $10,000 less than what a brand new minivan would have cost. I love our SUV and it has more features than I could have afforded otherwise. Thank you high gas prices! FYI, for work driving I drive a 10 year old Jetta (35mpg)) Despite whether it was intentional or not, lets move on with dispelling this article for what it is, an attempt of someone who is using scare tactics to "stop time" and prevent the natural evolution of software delivery. But before I begin my rebuttal, from the views expressed by Mr. Marks, email, online stock brokers, Google, GoToMeeting, and etc are all bad because they are not Federally insured...

• "Microsoft Vista is not a failure" - no, really it was not a failure... so explain to me Mr. Marks how when releasing new software, your market share goes down does not mean it is a failure? Yea they sold 150 million copies.. but that is peanuts to how many copies of XP have been sold, plus most people are being forced into Vista because MS will not sell anything else. Apple has been gaining market share for a while, in fact in October of 07 it was announced that they have gained 2% market share. Employees of MS have even publicly stated that Vista is a "work in progress"... all this ='s failure to me.
• "Myth 1: SaaS is cheaper" - your answer here should have been not always... but most of the time it is. Ok in comparison, Quickbooks can cost $300 a license. To use his example, 10 users would cost $3000. With Freshbooks it will cost you $1068. Quickbooks releases new versions once a year with new features (and you have to pay another $3000), Freshbooks releases new features whenever they want (you may see one next time you log in, no additional charge).
• "Myth 2: SaaS reduces hardware investment" "you still need fast access to the Internet."- What an idiot... access to the internet is not hardware! Anyways it truly does reduce hardware investment. Most SaaS applications can be accessed via an internet enabled cell phone. I bet your cell phone cost a lot less than your computer? What reduction of IT hardware does create is an environment where you do not have to be tied down to an office. True mobility comes from being able to access your data from anywhere, including allowing your staff to do the same. That is a key benefit of SaaS and decreased requirement for hardware.
• "Myth 3: SaaS is quicker to setup" - Gene, find a new job, please. What does Ikea furniture have to do with software? Despite the author's feeble attempts at discrediting the model of SaaS, SaaS is easier to setup. Think of it this way, when you needed Quickbooks, you had to call Intuit or drive to Office Depot. When you need Freshbooks, you type www.freshbooks.com into your web browser. Now if your homepage is Google you can save some keystrokes and just type freshbooks into the search box. This does not even consider what it is like for a company to implement an ERP system such as Oracle's Applications... much of the time any employee who will use it will have to receive training on how to navigate the interface and know what codes to enter to get a desired result. Not to mention usually 6 to 18 months to implement software of this nature. Good luck with that.
• "Myth 4: Your data is secure and backed up" - Gene, do you have aluminum foil covering the ceiling and windows in your bedroom? I also ask you this Gene, how many times have you left it up to your staff to swap the tapes in your tape backup or make manual backups of your data and they screwed up? Most SaaS providers make your data their highest priority. I am not going to say that it is 100% secure, but nowadays nothing is. Hell your identity used to be hijacked by someone going thru your garbage and looking for a void or torn up check.
• "Myth 5:" - WHAT? Software needs to be FDIC insured if you are going to use it? That doesn't make any sense. Currently working for a provider of Online Banking Software, the rules are not different. In fact, there are screwups here almost every week. Majority of them caused by user error which result in having to restore tables or refresh data from the core system. But your data here is no more secure here than in Google's servers or SalesForce's.

If you read the fine print:

Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsize businesses. Marks is the author of four best-selling small business books and writes the popular "Penny Pincher's Almanac" syndicated column. He frequently speaks to business groups on penny-pinching topics. More penny-pinching advice from Marks can be found at www.xxxxxxx.com

(I refuse to put in his web address to possibly improve his search rankings.) Conclusion After looking at his website, he says he hates spending money on technology but he owns a technology company??? He markets his company thru the use of webinars, video tips, a monthly newsletter and whitepapers. Not to mention his website has a nice design to it. Gene Marks is nothing more than a fool, but one who is decent at marketing. The first line on his website states that he hates spending money on technology, which from the above is obviously a lie, he just hates spending money on new technology. What he has done here has created a controversy, he has written about a topic that many tech enthusiasts hold dear which has boosted his traffic. He plays on fears that are commonly held amongst less technology educated people and builds their trust through feeling like they are not alone. He takes them by the hand, and then most likely robs them blind with costs for server hardware, server setup, configuration services, licensing fees and support contracts. It is disappointing that BusinessWeek would let such a joke fly thru the net of their established organization. I honestly expect better. Chris *note: I am founder of a SaaS company which makes me biased, but I have been down the road and seen quite a bit, I am harsh on Gene Marks' article because it offends BusinessWeek subscribers' intelligience to think that this is good journalism.