The rise of private SaaS

Software as a service (SaaS) is now firmly entrenched as the default way to deliver most software offerings, as well as the dominant way to monetize open-source software. On-premises software continues to maintain a strong foothold, however. Various sources put 50%–70% of workloads still on-prem, depending on who you ask and how.

The natural result of this landscape has been cloud vendors continually reaching farther back to easily onboard and integrate with on-prem workloads (e.g. AWS), while traditionally on-prem vendors (e.g. HPE, VMware) move toward subscription-based pricing models or build offerings in partnership with the hyperscale clouds.

However, now that many companies have enjoyed the benefits of fully managed cloud services and SaaS, they’re looking for the same experience in their on-prem footprints. Some vendors have tried this approach over the years, but the market timing wasn’t quite right. Customers wren’t ready. An emerging trend in the market today is the rise of private SaaS, which blends the SaaS experience with on-prem systems and applications.

Private SaaS is a new way of delivering software that allows customers to run vendor-managed software within their environment, whether that’s application-layer or platform-layer. This approach offers greater control and integration for customers while still allowing vendors to manage and maintain the software, ensuring that it’s kept up-to-date and is easy to support. This style of private SaaS is showing up more and more frequently, with companies looking for more control over their data and integration with their environment.

One of the main benefits of private SaaS is the ability to integrate software solutions with the rest of their environment. This allows companies to more easily manage their services in a consistent way, tailored to their unique requirements, rather than relying on generic software offerings or long-distance, latency-killing connectivity across a series of SaaS offerings and on-prem services.

Although private SaaS offers benefits such as integration and control over data, it also raises concerns around data security. Companies must ensure they have appropriate security measures in place to protect their data, particularly in regulated industries such as finance and healthcare. They should carefully monitor all inbound and outbound network traffic, reviewing each new destination to mitigate against vendors who have been compromised.

Certain industries such as healthcare and finance (or anyone handling card payments and thus subject to PCI) may have more stringent security requirements and may require customized solutions, making them potential targets for private SaaS vendors.

Some examples of companies targeting private SaaS include Instaclustr RIYOA (Run In Your Own Account), Aiven BYOA (Bring Your Own Account), Dynatrace Managed, and Snowplow. These vendors offer a range of solutions, from data management to application performance monitoring. Replicated and Nuon are also startups that exist to make private SaaS easier for companies to adopt, providing tools and services to manage and deploy private SaaS solutions effectively.

Private SaaS offerings are poised for growth, with customers’ cloud maturity paving the way for new opportunities. Key trends such as the rise of multi-cloud and the increasing demand for fully managed cloud services are likely to shape the market in the coming years.