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The Emergence of the SaaS Hybrid Model

SaaS, Software as a Service, has disrupted a model that has been in place for decades (and some big companies are still trying to hold on to it) whereby businesses rent a solution rather than buying and owning that solution. With the SaaS model, businesses have really no control or say over the solution they are “renting” other than subscribing to it or configuring it. That does not mean it is a bad thing. However, a new SaaS model is emerging, the SaaS Hybrid model, enabling businesses to have some control over their systems and to also meet regulations regarding data storage.

The Advantages of a SaaS Model

  • One of the biggest advantage of SaaS solutions is that they are always up to date. Gone are the days where your IT team need to go through patch updates and upgrade cycles.
  • Another big advantage is that you don’t have to worry about infrastructure that is becoming more and more complex, gone are the days of having to add more storage, servers, memory, firewalls, etc. All that is being taken care of by the SaaS company.
  • There is of course the big incentive for businesses in all their decision making, which is cost. For the most part and for most business types, renting is going to be cheaper. Gone are the days of very heavy initial investment before you even know how things are going to work and if you are going to be stuck with huge bill and a system that no one knows how to use. The SaaS model allows businesses to assess and measure the solutions they want at a small fraction of the cost they used to pay before.

However, for certain businesses, there are some restrictions that might prevent them from renting a full solution (like banking and government) and there are other businesses that want the technology to be part of their intellectual property.

Hence there are growing calls for a hybrid SaaS model that combines ownership with rent in one solution. The ownership in this case would be on the data side (and maybe some capabilities) while the renting would be on the application side.

The Advantages of a Hybrid SaaS Model

  • It allows the businesses to maintain control over their data by hosting it in their own environment (whether on the cloud or on site) while renting the processing power and the brain of the solution from a SaaS company.
  • It enables the business to their own internal applications and capabilities on top of their data while still leveraging the power of other SaaS applications.

However, the Hybrid model comes with certain challenges:

  • Cost is the biggest challenge as it goes without saying that renting a full solution is in general cheaper than renting part of it and building/maintaining the other part.
  • The upgrades and updates need to be closely coordinated with the SaaS company (or companies).
  • Security and data privacy in this case fall on the shoulders of the business, since data is in their environment so their IT team would be responsible for its security.