Hybrid SaaS

The Hybrid SaaS model [1] [2] [3] is one in which the customer may deploy the software as a SaaS service or as on-premise solution, with the ability to switch from one to the other as needed.

Examples include Google Docs Offline, EnterpriseWizard CRM and Microsoft CRM

This model is claimed by proponents to provide the advantages of the SaaS model, while mitigating the drawbacks. For example, the hybrid model allows companies to move the software and data in-house when:

• They need to store highly sensitive information and are concerned that SaaS providers might have inadequate security or be socially engineered
• They need tight integration with sensitive back-end systems and this is either technically impossible with a remote system, or their IT department is unwilling to create holes in the firewall that would permit an outside server to initiate actions on internal systems.
• They need to transfer large files and cannot afford the delay that results from the typical Internet connectivity speeds of 100kbs - 1000kbs, as compared to internal Ethernet speeds of up to 1,000,000kbs.
• They are concerned about the long term financial viability of their SaaS vendor.
• They need to modify the core software itself.
• They would rather pay a lump sum than monthly rental charges that every 2 years may total the cost of purchasing the application outright.

Some commentators believe that the hybrid SaaS model will replace SaaS. Others, especially the pure SaaS vendors, argue the opposite.

The core argument for Hybrid SaaS is simple - it offers customers a choice of using whatever model best matches their needs and so reduces risk for the buying manager. Start-up risks are minimal because if the application does not meet requirements, it can be simply be canceled and once it has proved itself, the application may be purchased to remove the long terms risks detailed above.

There are corresponding arguments against the Hybrid model:

• All the buying risk is transferred to the provider who may sink significant start-up costs into an implementation, only to see it canceled and does not have the prospect of a perpetual annuity stream to offset this risk.
• The provider has to design the software to support both the SaaS model and in-house installations