It's not often that shoddy lobbying practices take IT circles by storm. But thanks to Cambridge Analytica, what was once a largely esoteric debate over the business advantages of cloud-based Software-as-a-Service (SaaS) provisions versus custom-built solutions is now basking in the limelight. Entrepreneurs, take note.
For years, the argument revolved around whether it was better to opt for a more expensive, but carefully tailored, bespoke service or to pick a cheaper, off-the-peg SaaS platform that, while not addressing some unique requirements, would be easier to update and integrate with other software installations.
In the wake of the Cambridge Analytica scandal; however, the debate has shifted focus. The question now isn't so much whether businesses can afford to commission custom solutions, but whether they can afford to accept the responsibility for storing, processing and curating customer data in a constantly evolving, and increasingly regulated global market.
Software for businesses: a rapidly evolving landscape.
This shift would not have happened so rapidly without changing business practices and the growing need to provide company departments with specific tools, as CRM, sales and marketing divisions are increasingly taking an interest in finding the right software for their work. With many organizations now moving away from the traditional, silo process, to an on-demand 'Everything-as-a-Service' (XaaS) delivery model, the search for the ideal software solution is on.
Seizing this opportunity, the tech industry is driving the deployment of smaller - or 'micro' - cloud-based services that are designed to work together, independent of device or platform. However, this move towards increased personalization, facilitated by AI and predictive analytics that automate processes and streamline the user experience, has only been achieved via the aggregation of vast quantities of customer data - a development that has rendered individuals and governments alike increasingly suspicious.
Data transparency has become a global issue.
The upswing in SaaS is now as much about agility and speed of delivery as it is about bottom-line savings. For many businesses it's not only allowing them to meet evolving business needs, but it's also helping them to tackle digital transformation and empowering them to leapfrog potential disruptors. And, if they weren't considering it before, SaaS has also become an ally in the battle to curate customer data more ethically.
Put simply, a SaaS company will likely have much higher levels of server and client data protection than a business managing its own platform.
Regulatory changes are imminent.
Ensuring adequate data safeguards are in place is more essential for businesses than ever. Massive regulatory changes are now on the horizon with the EU's General Data Protection Regulation (GDPR), which contains harsh fines for violations, becoming enforceable at the end of May.
Although technically confined to companies marketing to customers in the European Union, the influence of this legislation is quickly becoming the de facto global standard. Savvy companies are already looking to build in mechanisms for transparency and security as part of their business processes, so they can prevent deliberate or accidental abuses of customers' data.
Up till now, the use of customer data in the U.S. has been largely unregulated, which means there are few rules to govern the type and quantity of personal information that can be collected and abused by companies. Even when companies publish privacy policies, the policies often serve as an instrument for enabling virtually unlimited data collection, rather than acting as a tool for public empowerment. But change is inevitable, particularly in the wake of the Cambridge Analytica scandal and as the GDPR fully enters into force.
The GDPR is likely to act as a catalyst to force companies to obtain 'informed consent' from consumers before gathering and storing their data. Social media companies are already reacting; Facebook has initiated a crackdown on thousands of third-party apps designed to restrict their access to customer data and recently suspended roughly 200 apps pending a more extensive probe.
Informed consent will become the new normal.
These ongoing changes made by platforms like Facebook will hit some companies and some sectors particularly hard, especially those built directly on top with the purpose of enabling brands to do business on social media. Those companies offering custom social media management software will be unable to quickly adapt their platforms and will therefore be at a disadvantage, while single codebase solutions will grab increasing market share.
Some companies as Hootsuite, HubSpot and Spredfast have always focused on a SaaS platform with a single codebase, while others such as Sprinklr, Pegasystems and Verint are increasingly emphasizing this part of their business in their communication.
There are a number of reasons why companies are choosing to underscore their SaaS work with a single codebase. They're easier to maintain, glitches are easier to resolve and new features that benefit the majority of clients, or that are mandated by regulators, can be added quickly. Custom-built software may accommodate your company's idiosyncrasies, but it will ultimately cause problems if it is unable to keep pace with a fast-moving market.
As companies navigate the rocky waters of the Cambridge Analytica fallout and the implementation of the GDPR, the scales are likely to be tipped even further in SaaS's favor.