On-premise ITSM Tools are all set to crash and burn

They are. Almost everyone knows and understands this. But since the world insists on keeping that idea floating around, we want to make this point for the last and final time.

On-Premise is done. It’s declining, and has been for some time now. It isn’t going to grow. SaaS is the future.

The industry agrees too. A report from research firm Siemer & Associates concludes that SaaS will register global growth of 16.8% between 2012 and the end of 2015, or from US$ 14.3bn in 2012 to US$ 16.7bn in 2013 to US$ 21.3bn in 2015. The same report predicts that 83% of all companies will soon be embracing some sort of SaaS technology.

But why is the era of on-premise ending?

The Desolation of On-Premise

Once upon a time in a galaxy far far away, when IT systems first started getting adopted by industries and organizations, there was a specific, and in retrospect, rather trying, set of steps that had to be followed in order to get an ITSM tool in place.

From buying servers to installing the software, figuring out the infrastructure costs and implementation operations, to paying for support, training and consequent updates – all of it would come under the gambit of ‘software implementation’. And the risks were all yours, for a fix that failed or a bug that might bring down the whole system. Add the security risks of allowing all relevant employees to access data from their home computers, for example.

But everyone did it; the world adopted this system and went right ahead to deep dive into it, primarily because at that time, there really wasn’t an alternative to turn towards.

And the good times (or bad, depending on your viewpoint) rolled on.

Quoting respected analyst Stephen Mann, writing in a Forrester whitepaper published at this time last year:

“During the mid-to-late 2000s, many industry pundits considered the landscape of ITSM tools and vendors both stagnant and saturated. Large enterprises would often select a big four IT management software vendor tool by default. The mid-market would choose a big four tool if they could afford to; if not, then another traditional vendor. In either case, the ITSM market was focused on on-premise solutions where tools were hosted by the customer and bought via a perpetual licensing model.
Customer dissatisfaction with this model was rife with customers churning from their vendors every five years. Commonly cited reasons included poor usability and excessive time and resources required to move between versions.
Heavily customized big four ITSM products in particular were particularly prone to these issues.”

Stephen Mann uses the terms ‘excessive time and resources’ as commonly cited reasons for customer dissatisfaction. This is the routine he means – every time a vendor releases a new update the ServiceDesk team has to run to IT to request test servers; sometimes even having to update hardware, run acceptance tests to see if their data or customizations are broken and then schedule a time for an upgrade. All of which, if you think about it, means having to actually do Change and Release management for a Change and Release management tool!

And this is when SaaS arrived, almost like an invincible Clint Eastwood riding out of the desert in an old western, and proceeded to do the IT equivalent of saving the world from the quagmire it found itself in.

The past

Most analysts credit the IBM’s 1960 time-sharing projects as the truest predecessor of the SaaS revolution. And then in the 90’s came what were then called ASP’s, short for Application Service Providers, which tried to keep costs and operational time down for small organizations who needed specialized business applications.

on-premise ITSM-sap vs salesforce

It was only in 2003 that true SaaS came in, as high speed internet connections and the ubiquity of computers paved the way for one of the fastest adoptions of technology in the modern era.

on-premise gmail vs outlook

User adoption sped up, as organizations and startups shifted to SaaS in droves; once scalability was established, Salesforce started taking market share from Siebel, companies like Workday moved in on Peoplesoft, and much closer to an individual user, Gmail started taking over from the cumbersome and stagnant MS Exchange.

The present

It’s 2014 now, and you’d think that everyone would be using SaaS by now, and that this debate would be as unnecessary as asking people to keep their guns out of the reach of their children. But no, on-premise is still on the market, people still use it, and people still ask if the solution is cloud based or on-premise.

We think that the question is wrong. It shouldn’t even be asked. But it is. And that is why this reiteration of something everyone already knows.

The only reasons that on-premise still survives as an option, albeit a rarely considered and exercised one, is due to three things –

1. Security

This is PR gold for on-premise folks, and though the argument that an ITSM SaaS product might not be secure enough might have made sense a few years ago, it doesn’t today. The security practices followed by today’s SaaS ITSM products are several times more robust than what on-premise solutions used to be. As early as 2011, there were reports of the CIA moving data to its own private cloud, and that SaaS might actually be safer than on-premise. Though you may have to go through their literature to know how specific service providers manage and protect your data, you can be assured that your data is as secure as it could be anywhere. You can read Freshservice’s security policies here, and you can reach us at support@freshservice.com for detailed inquiries.

2. Customization

For niche businesses and organizations whose operations cannot be brought under the usual operational labels of the general ITSM infrastructure, there might be customizations needed. And these customizations are sometimes only possible if you have an on-premise solution, as SaaS vendors are (often) loathe to customize a lot. This is a myth, as most SaaS tools are often quite customizable, and often deeply so. But again, the fact that the ITSM infrastructure exists is because of the immense amount of convenience that the approach offers. To reiterate, customization that will help the organization should be implementable, but to change everything that can be changed goes against the logic of bringing forth an ITSM implementation in the first place.

3. Integrations
This is the weakest argument of the three. Integrations with other products that businesses use will, of course, be immensely useful and save valuable time for employees and departments, but the argument that only on-premise tools have comprehensive integrations is a myth. In such a commoditized market, most ITSM vendors have all the integrations that a customer might possible need. Freshservice just launched a month ago and we already have integrated with JIRA and LogMeIn, with integrations with Harvest, Dropbox and Screenr on the way (you can signup for the free trial here). Our list will be holistic in a very short time as well. This argument is, to put it succinctly, invalid.

The future

When we launched Freshservice as an easy to use, no-nonsense ITSM software on the SaaS model, we wanted to take what was seen as a boring-but-necessary something that organizations just had to use, and make it fun and engaging; something that takes these vital, necessary processes and makes it into something people will not groan at.

This is what we think is the future of all software, and we are committed to making this happen.

And the first thing we needed to acknowledge in this journey is this – we are done with the on-premise ITSM vs SaaS ITSM debate. This is our stand.