On November 20, 2024, in a presentation to Tech CEOs, Gartner identified the future of business software as Service–as–Software (SaS). This reflects a new approach that respects your company’s unique critical elements: Products/Services, Operations, and Business model. Moreover, today, we’ll discuss why traditional Saas hurt so much.
Source: https://www.gartner.com/en
This blog was written at Dr. Muddassir Ahmed’s request. In a recent post, he was discussing the challenges of integrating enterprise supply chain software:
Learn More about the Challenges with Dr. Muddassir
To which I replied:
Dr. Ahmed asked if I’d care to expand on the design deploy portion of my response.
Legacy SaaS is pre-built supply chain software that requires compromise and coercion.
Because the software was already designed (pre-built), deploying it requires you to compromise how your business runs and coerce employees to the new approach. Unnecessarily raising risk, cost, and time required, often with unknown results/value.
SaS Flips the Script on Traditional SaaS
With SaaS, the struggle doesn’t end when you’ve gone live. Wait a few months/quarters, and your business model will change. You then either redeploy or go offline with tribal knowledge and spreadsheets. Most companies do not re-deploy and continue for years/decades misaligned between the business and their software.
SaS eliminates legacy compromise and coercion by letting company subject matter experts (SME) design how the software works to fit their business in just a few hours and then deploy the solution with virtually no employee training. Because the employees designed the software, they already know how it works. This dramatically reduces the risk, cost, and time required, enabling you to go live faster and validate the actual results/value before taking on legacy system integration.
Using the Blue Ocean Strategy Canvas framework, we can compare SaaS vs. SaS on multiple factors that, I feel, reveal the reason SaaS never really worked. I’m old enough to have installed traditional on-premises supply chain software when SaaS existed.
The dirty little secret of supply chain SaaS is that it is the same software that you could/can buy on-premises. In other words, they took the same product, divided the one-time traditional license fee + annual support costs by 3, added in fees for computing resources, and created their SaaS price list. Years 4+ were just gravy to them.
Time
Employees are overburdened by keeping your business running. No company can afford to divert focus to implement ill-fitting software. Time measures how much SMEs spend on implementation, including meetings, documentation, requirement gathering, status reports, configuration review, testing, and change management.
- SaaS demands significant time, often beyond a ten on the strategy canvas scale. Operations SMEs, which are crucial to daily tasks, lack this time. Companies hire hourly-paid consultants, adding time for knowledge transfer. Poor fit requires Operations SMEs to negotiate compromises. SaaS implementations can take 9-18 months and hundreds of hours.
- SaS requires the least amount of time from SMEs. The SME knows the process and can draw a workflow picture on a whiteboard in a few hours. Typically, they already work with the required data offline in a spreadsheet to quickly source and test the solution. Project implementation can take 1 – 2 weeks and less than 10 SME hours.
Cost
Time is money. The time SMEs spend away from their jobs adds to costs, often overlooked due to salaried positions. Costs include licensing, implementation, and support expenses. SaaS solutions may need external resources for implementation and support, increasing overall costs when SMEs can’t keep up.
- SaaS requires the highest cost, often beyond the 10 on the strategy canvas scale. Commonly, the total cost to implement a SaaS solution can be 7 figures, with a mid-6-figure annual support cost.
- SaS is less expensive than SaaS, partly due to the lower time required to implement it. SaS also provides you with fixed costs to design and deploy only the service as software your business needs, charging a pay-as-you-go subscription cost per use after you go live. The cost of implementing a SaS solution can be implemented for low to mid 6 figures with mid 5 – low 6 figure use charges.
Fit
Your business is unique, and ‘best practices’ often mean compromise. Fit combines process, data, and logic. No one has to compromise on their work when software fits your needs. Poor fit leads to workarounds and operational gaps filled with offline spreadsheets and tribal knowledge.
- SaaS is a low fit because the entire premise is compromised. The process, data, and logic are all pre-built; you either compromise your needs or pay high customization fees to get what you need. This adds more time and cost, which is why traditional SaaS hurts so much.
- SaS achieves 100% fit because the solution was built to be trained by SMEs. SaS vendors aid SMEs in identifying/designing exactly how the process, data, and logic should work, including the situational awareness exceptions required as an ordinary course of business. In just a few hours, contributing to less Time overall, SMEs can design the workflow their business/operations/products require. However, it says much about the difference between SaS and Traditional SaaS, which hurts all the criteria.
Productivity
Improving productivity boosts gross or net margins, enhancing profitability and competitiveness. Your supply chain is crucial to your business model, with time and cost as key metrics. Productivity measures resource efficiency, essential for managing throughput, staying ahead of inflation, and handling increased volumes or rising labor costs.
- SaaS productivity is average, reflecting the fit and compromises needed. Even post-implementation, operational gaps exist where the system doesn’t fully support workers, slowing them down. Productivity suffers as workers go offline to complete tasks and then report to the SaaS solution.
- SaS is the most productive. Your SMEs designed SaS to create digital workforce assistants that make the job easier, faster, and better. When combined with a control panel, SaS provides the necessary overview to ensure everyone knows what is happening now. Customers achieve as much as an 80% gain in productivity in a few days.
Accuracy
Accuracy ensures the right product, place, and time. Uncertain inventory or order status undermines confidence in meeting commitments. Software accuracy prevents mistakes and maintains an audit trail, boosting productivity and aiding performance monitoring, compliance, and quality control.
- SaaS accuracy is slightly above the middle of the pack. This reflects the degree of Fit and the operational gaps exposed in Productivity. These gaps also increase the coercion/Training required to ensure workers do what is expected without making mistakes.
- SaS is the most accurate because it was designed by your SMEs to prevent workers from making mistakes while recording a full digital breadcrumb that includes which worker performed which task for which reason and where they were standing (lat/long) as they did the job.
Agility
The past years have shown the need for agility in supply chains. Business models must adapt to new products, channels, and customers. Agility measures how well solutions adjust to changes, preventing operational gaps and ensuring fit, productivity, and accuracy.
- SaaS is effectively rigid. Changing how the solution operates requires redeployment of the original configuration and functionality, and we’ve already highlighted the fit, time, and cost issues. Companies tend to implement a SaaS solution once, and it immediately begins to fall out of alignment with their business needs each month/year.
- SaS was made to be agile. Unlike SaaS, SMEs can quickly design SaS in hours to fit today’s needs. SaS has a built-in advantage because it has already decoupled processes, data, and logic. Allowing more minor, incremental changes to existing workflows as quickly as creating new solutions to meet new requirements. The highest degree of fit, lowest time, and availability of expert resources give SaS the highest agility rating.
Training
Often, the most challenging part of any implementation is coercing your employees to do their jobs differently. However, this is one of the reasons why traditional SaaS hurts. Since these workers are already working, it can be difficult to schedule time, and the time elapsed between training and going live can exacerbate the issue.
- SaaS requires the most training because it is the worst fit. The process of these solutions often bears no resemblance to the vernacular or method of how things used to be, so extensive training is required—another reason why traditional SaaS hurts.
- SaS requires virtually no training because the workers train the software and themselves in minutes. SaS workflows are a series of questions that the worker must answer. If the answer they give doesn’t match the data and logic applied to each question, the worker can’t proceed, and the next question will not be asked. Changes to workflows become apparent when the question pops up on their screen.
Recommendations
In the image below, Gartner laid out a migration plan for legacy SaaS (foundational model). While most legacy software can consistently provide good answers, it lacks the remaining needs because its pre-built process, data, and logic do not fit the business’s needs.
Source: https://www.gartner.com/en
My recommendation, and the path we (Know What’s In The Box) have been fortunate to take for years, is to look for a SaS solution built from scratch. Use it to augment your legacy solution. Maintain what you have to avoid the risk/cost/time/disruption/etc. of migrating a solution built for another time.
About the Author – Steve Christensen
Steve Christensen is the Founder of Know What’s In The Box, the world’s first Service as Software (SaS) company for supply chain execution and synchronization. The first 4 years of his career out of college (Finance, University of Iowa) were spent at Kraft Foodservice, United Brands, and General Electric Aircraft Engines. While at GEAE, Steve discovered how a properly run supply chain can impact business. For the next 33 years, Steve became a supply chain planning and execution software expert in Manufacturing, Retail, and Wholesale. During this time, he envisioned and bootstrapped SaS that flips the compromise and coercion script of traditional, pre-built software by enabling company subject matter experts to determine how software needs to work to support their business.
