Defining saas: the faulty Touring Test AccMan

I have what some think is an unhealthy obsession with technology but I draw the line when it comes to definitions that are of almost no value to their intended audience. John Paterson discusses the Touring Test following a definition of saas offered by Duane Jackson of Kashflow who parses it in a masterpiece of self congratulation. So what’s wrong with this? Let’s start at the top. As defined by Mr Jackson and outlined by Mr Paterson, saas is:

Hosted remotely
Runs in a web-browser with no additional software required
Paid for on a monthly subscription or pay-as-you-go model
Single installation
Multi-tenanted

All of these things may be true – or not. Mr Paterson tries to make sense of it by adding:

So I’ve come up with a simple test to determine what is a “true” SaaS product.

Next time you are on holiday, walk into the hotel lobby and log on to your application using whatever machine and browser they have. If you can access all the data and all the functionality in your SaaS application immediately, without having to download any extra software, it’s a true SaaS product.

I just can’t resist calling this The Touring Test.

OK. So let’s try this in a live sales situation.

Sales person: Hi, I’m here to talk about saas – you know: software as a service

Prospect: OK, fire away

Sales person: Well the first thing to know is it hosted remotely

Prospect: Is that like a party I don’t get invited to?

Sales person: Not quite…it means the software runs somewhere else and not in your office?

Prospect: Oh

Sales person: The next thing to know is it runs in a web-browser with no additional software required

Prospect: Oh, you mean like in Internet Explorer?

Sales person: Sure

Prospect: But IE is full of security problems isn’t it?

Sales person: Well yes, but being hosted means we can make sure the service is really secure

Prospect: Oh

Sales person: Next, it is paid for on a monthly subscription or pay-as-you-go model

Prospect: So I can’t buy it…what about if I want to try it out?

Sales person: That’s right – you’re starting to get it. Many saas providers offer a try before you buy option.

Prospect: Oh

Sales person: And it’s a single installation

Prospect: Like my applications running on our server?

Sales person: Not quite because it is also multi- tenanted

Prospect: Hang on, you mean like in an apartment block?

Sales person: Yeah – that’s right. A single copy if you like but split up for each customer.

Prospect: So let me get this straight. Saas is something I can use but can’t buy and is run by someone else on my behalf for which I pay a rent along with lots of other customers? So what are the benefits?

If as a vendor you want to define a technology then by all means do so. But don’t for one minute believe that translates into a value proposition. Mr Paterson’s explanation works fine for setting out the bones of HOW saas operates but none of this works for explaining value to real people trying to do real work. As a working definition, it is utterly useless except within the saas circle jerk community. And please don’t smirk with pride by offering this kind of statement:

I can’t find anything wrong with that definition – it’s about as close to perfect as is possible I think. It’s comprehensible to the non techies, and has a name that make us geeks feel superior to everyone who hasn’t heard of the Turing Test.

It’s an insult to anyone wishing to understand what a technology is supposed to deliver but 100% typical of the way software vendors go about marketing their wares. Is it any surprise therefore that people like myself are critical of sales and marketing costs that are often north of 50% of revenue? With this kind of wasted intellectual effort you have to wonder how many of them make sales in the first place.

Put another way – if you are a professional advising clients on a new software solution, is this where you would start? It’s a bit like offering tax advice and starting out by explaining the technical nuts and bolts. Clients don’t care. They only care about the risks and rewards.

Tagged as: Cloud computing, SAAS

http://www.thisispearl.com Chris Tanner

“Hosted remotely” – a benefit for the smaller companies where they may not have the budget to secure a shared, safe server on site, and set up remote connections to their office, but otherwise we find (more often than not), remotely hosted is a turnoff for the larger users. Companies with more than 10 staff do regularly have budget for an on site hardware solution, and if backed up by decent out-of-office connections, this is in many cases a better option. Remote access is nothing new as we all know.

Pros and Cons of SaaS have been thrashed around enough for me not to spit them out again – but something that came up this week that made me think was a fast growth company looking for a system – and they needed to own the system because it was part of their exit proposal.

The system running underneath a company defines it’s efficiency and therefore is tied to it’s value. If your company is running some Joe’s SaaS app, then you may be limiting your potential buyers, vis-a-vis a system where you have 100% control of system spec, data and access. If you’re pitching for a sale in 3 years – where’s your SaaS app going to be then?

http://www.accmanpro.com Dennis Howlett

We need to be very careful here Chris. The move from capex to opex is real. Merrill’s did a monster deal with Salesforce.com – that’s a potential saas benefit. I am surprised your potential customer thought that system ownership is an exit requirement. Not sure that makes sense on the facts as presented. It’s a bit like saying I need to own my fleet of salesmen’s cars.

http://www.thisispearl.com Chris Tanner

Agreed – personally I think it's a Good Thing, but it is one of the most common walls we hit on a premium account sale – perhaps because the size clients we are dealing with are owner-managers still heavy on the "I need personal control" – less of an issue with a larger company and different management philosophies?

http://www.accmanpro.com Dennis Howlett

aaah…well…control is something that can be discussed in this context

Richard Messik

Actually, whilst obviously an over simplification, I think the Touring Test is a good definition. There is obviously a lot more to it, but it sums it up rather nicely.
http://www.askm.co.uk Emily Coltman

I guess what the Touring Test is trying to establish is "is this product SaaS or isn't it?"

More, for example, would fail the test because it needs to be loaded on a specific PC (although it uses the Internet to exchange data).

Whether the SaaS product has any benefit for the (prospective) customer is another debate entirely.

That's how I see it anyway.

M

http://www.accmanpro.com Dennis Howlett

The whole premise upon which I built this piece is that technical definitions don't matter in the eyes of customers provided they deliver value. Such definitions live in the minds of technologists as a way of segmenting markets the way they choose.

As you say, More! would fail under this definition but it is still out there delivering value.

http://www.askm.co.uk Emily Coltman

I grant you that. But Duane's post doesn't read like it was meant as a sales post to me, but as a techie discussion.

So it reads to me like you're giving him 0 out of 10 for failing in Geography, when he was actually doing a French test

M

http://www.accmanpro.com Dennis Howlett

[kaltura-widget wid="kcaz8n9wbw" size="comments" /]

John Smith

As I'm aware of your history of attacking Kashflows CEO Duane Jackson I thought I had better read the original articles from which you quote.

Unsurprisingly you have deliberately grasped the wrong end of the stick and for a large part of your article you have just made things up. You've not even got basic facts such as Mr Pattersons name right.

Did it become a "circle jerk" before or after you were forced to give up your 10% in SAAS vendor Freeagent Central as a result of you trying to use your supposed "independence" as a weapon against Kashflow in a previous attack as documented here: http://www.ukbusinessforums.co.uk/forums/showthre…

You have a strange and unhealthy obsession with Kashflow and Jackson and it reflects very badly on you. Grow up and move on.

http://www.accmanpro.com Dennis Howlett

Thanks for pointing out the typo – I'm well known for those. Now corrected. Check your facts. I never owned 10% in FAC, neither was I forced to do anything. It just made sense when having to deal with people like you that assume a shareholding = some sort of influence.

Tech companies and their reps always behave in this way ergo = circle jerk. It's incredibly unhelpful when dealing with people in the real world who don't care about delivery mechanisms but do care about value.
http://www.accmanpro.com Dennis Howlett

…and while we're at, let's not forget my history of critiquing SAP, Oracle, Microsoft, Sage and others…but if you look closely you'll see the title referred to the Touring Test which parsed something written elsewhere.

Jim Bennett

Have to say I think you've missed a trick here Dennis, as any salesperson who tried to use multi-tenanted or remote hosted in their opening gambit wouldn't be putting bread on their table. In contrast, a salesperson who used the actual touring test would probably be off to a good start, before hitting the actual discussion of benefits and value. As a metaphor for the benefits of SaaS, it's actually fairly elegant. It isn't the whole conversation, but it is memorable, concise, and helps get the message across to techie and non-techie listeners alike. In that context, it adds value to have such a definition.

http://www.accmanpro.com Dennis Howlett

@jim: I have no doubt but as I tried to convey in the piece, I'm not convinced that a tech led intro matters. It's got to be about the benefits for the simple reason that switching is so hard for people who have a 600 year old history they can look back on and say: 'What's wrong with that?'

http://www.coda.com Jeremy Roche

Against the definition from John Paterson that Dennis quotes above, I don't think the 'Touring' test works. How does the test John defines actually prove that the application meets his SaaS definition?

We have been delivering on-premises/hosted applications since 2000 that meet the test of use in a hotel browser with no plug-ins. In fact in the early years we occasionally used a hotel browser as the proof that it really was a 100% browser app (that's when browser apps were cool advanced technology, probably not something to boast about since about 2002!). I wouldn't define these apps as SaaS though and they don't meet the other parts of the definition.

Just using an app in a browser is hardly a test of anything these days. I can use exchange via webmail on the hotel receptionists PC, but it is something hosted by us and behind our firewall, not really anyone's definition of SaaS.

I guess you could modify the Touring test to say you should demonstrate that you can sign up for a trial and then pay a subscription immediately and have the app provisioned before your eyes and then use it in a real environment. That would then show that the app was more SaaS.

If John wants to define a test, then he should define one that meets all the aspects of his SaaS definition and not one small part of it, that it runs without plug-ins in a browser.

We should all remember though that prospective customers are typically more interested in what an application can do for their business than the delivery model. Customers buy apps primarily because they are compelling and you are compelling as a company, not because of the way they happen to be delivered. Part of the reason a SaaS app can be compelling is because of the value propositions such as Opex vs Capex, reduction in operating costs, less headaches with managing servers etc, but at the end of the day, it still needs to be a good app.
http://www.askm.co.uk Emily Coltman

Re your video – take your fair point

M
http://www.verisolve.co.uk Gerry Allan

Runs in a web-browser with no additional software required:

Is this really a requirement for something to be Saas. Any Windows application could be delivered in a remotely hosted fashion via Terminal Services or Citrix. The Terminal Services (RDP) client is preinstalled on all Windows PCs since XP Pro, so there is no requirement for any additional client installation. I do not understand the preoccupation with the web browser as the only delivery mechanism.
http://freshbooks.com/team/mike Mike McDerment

Hey Dennis…not going to wade to far into this, but did want to show my face.

All I can say about SaaN is it was mainly intended for the tech audience, not customers. It's a new way to approach software design and we wanted to make that point. Said another way, it is tech babble for techies…the flip side of this coin is, a significant portion of our customers are techies…and they get the benefit of this piece of tech babble…which kind of brings things full circle.
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