The software industry, by and large, has succeeded in the transition from on-premise software to SaaS as the prevailing choice. Both will continue to co-exist, but it’s time to start thinking about the next wave of change in the software industry.

Dries Buytaert of Drupal coined the phrase “OpenSaaS” half a decade ago. But the term didn’t get the attention that so many acronyms receive in the software world. It’s time to bring it back, this time with a few lessons applied after five years of innovation in the software business.

IT departments are desperately looking for new ways to innovate and drive their business—and they, in turn, rely heavily on enterprise vendors to offer them something philosophically different than the 200 page software contracts of yore.

Gus Robertson, the CEO of NGINX, recently made a compelling argument about open source accelerating innovation. The same point rings true for OpenSaaS. In fact, there’s not much of a future for software makers if they don’t embrace OpenSaaS. Here are three ways OpenSaaS will define the future of the software industry.

Code Control Is the Alpha and the Omega

We originally thought OpenSaaS was just the merging of open source software and SaaS business models. In truth, it has far more to do with open principles and code control.

From a sales perspective, closed systems are great because the customer has to come back to you for add-ons, accessories and integrations. Vendors have made a pretty penny off of this technique for decades. However, the problem with it is that it stifles innovation before it even has a chance to take hold. If you’re locked into one vendor and their toolset, you’re probably using the same stuff that your competitors are using to run their business.

Imagine if every retail store had the same point-of-sale software, the same design and layout, and the same furniture. How would they differentiate their customer experience?

Code control, particularly in ecommerce, is the equivalent to store experience design; and put in that light, no company would ever give up that kind of control in their own business. We need to give control back to the customer. They know how to innovate in their business better than any vendor.

Software Is the Only Core Competency

We’re approaching the end of the era of “one size fits all” software. The concept of the “Software Defined Economy” has been kicked around; it suggests that all businesses compete on a core-competence in software development. Everything else is tangential.

In that sense, the past decade of closed-SaaS provided a great benefit to vendors: “build once and deploy to many.” But that’s no longer sufficient for customers who are betting their business on software innovation. Everything from pricing to SLA’s to product features needs to be configurable on a per-client basis.

Nobody gains a competitive edge from Gmail or Salesforce anymore. But you can bet your life that Comcast gained an edge investing in OpenStack. Netflix gained an edge making a company-wide commitment to open source, and Capital One purchased an edge when it scooped up Monsoon.  

The line between using software and making software has never been more important. Using most software is akin to using the telephone these days. There’s little room for innovation there. But making software, customizing software, and augmenting software remains a hotbed of innovation.

Both buyers and sellers of technology are ultimately in the same business now: the software business. As a result, the vendor is no longer a software provider, but an extension of their customer’s development team. For that reason alone the legacy vendors should consider a shift to OpenSaaS models, or they’ll find their customers aren’t around to keep cutting them checks.

Software Innovation Happens In the Negative Spaces

The problem with most SaaS software is that it’s a private party—you can’t bring your friends.

What if you could apply your most valued strategic tools, frameworks and add-ons to any piece of SaaS you purchase? Enterprises have been forced to “adopt and adhere” to closed ecosystems.

“Interoperability” and “integration” are the most feared words in IT departments across the globe.

There are teams dedicated to this work, because vendors don’t want to play nice with other vendors. Yet this is where buyers find the most cost-savings. Using what you have with what you’re going to buy reduces complexity, eliminates training cycles and preserves budget for innovation-centric work.

The rise of API’s speaks to this trend more than any other technology available today. The industry has been building remarkably powerful software for decades. All of a sudden, developers realized they could tap lightweight, efficient API’s to extend application functionality in minutes, not weeks.

The result has been an explosion in innovation. Yet what makes API’s special is not the the resulting functions in your app, but the fact that they seamlessly bridge the gap between multiple pieces of software.

I call this negative space, and it’s precisely what OpenSaaS accounts for. Closed systems are designed to preserve negative space—to box out other solutions. Open systems are designed to offer choice with what to do in that negative space, allowing innovation to take root.

Whether You Like It Or Not

SaaS, for all its virtues, disrupted enterprise IT strategy for the better part of a decade. Most enterprises invested millions in transitioning from legacy systems to SaaS solutions because their vendors enacted that switch.

Now it’s the customer’s turn to demand more. There’s no reason buyers can’t have the code-control typical of on-premise software while offloading the maintenance and support in a SaaS model.

If any vendors are turned off by that, remember that price is a red herring in the software business. IT innovation is priceless, and every CIO in the world knows it.

Jason Wallis, CTO at Mozu

@JasonWallisCTO

Photo by opensourceway