SaaS Approach Not A Fit For Enterprise Search

An accurate way to describe Software as a Service's (SaaS) impact on the enterprise software market would be "all the rage." Buoyed by high profile success stories, such as Salesforce.com and Google's Gmail, vendors have been quickly moving to adopt this computing model, with one very notable exception: enterprise search. "The SaaS approach has had little impact on the enterprise search market to date," stated Paul Sonderegger, chief strategist at Endeca.  

Search suppliers, such as Blossom, Northern Light and Pico, have tried to build up enterprise SaaS search services, but they haven't gained significant traction. Meanwhile, most of the prime search suppliers have stayed with traditional licensing models even though SaaS has become quite popular in many other market segments. A couple of factors have tempered users' and vendors' interest in SaaS search.

Search boomed at the turn of the millennium as the Internet became a common way for business professionals and consumers to find information. At the time, host based computing was the dominant model that enterprises followed. So, most search products were designed for that approach. Transforming these systems so they follow a SaaS formula can take a lot of time, effort and money. To date, most vendors have not thought that such an investment would be worth the potential rewards.

In fact, SaaS offerings have been limited mainly to scouring web sites. They do offer companies help in cataloguing information on their sites and then presenting it to users, however, that is not what corporations desire from their enterprise search systems. Instead, they need a system capable of examining information stored in multiple repositories and then presenting the most relevant data to employees.

One challenge in delivering such features is that the information is squirreled away inside the enterprise. Corporations house information in a variety of places: Enterprise Resource Planning systems, email messages, text documents and spreadsheets. Cataloguing and then providing access to the different data sources via a SaaS service has proven to be a significant challenge for suppliers.The vendors also run into cultural inhibitors. Concerns often start with the fact that a business no longer has control over its information because it moves off site to the SaaS supplier's data center. "Companies view search as a corporate asset," explained John Turnbull, president & CEO of Thunderstone Software LLC. Larger corporations especially desire to have firm control over their corporate data.

Another factor is SaaS options present companies with new security challenges. Information no longer sits in a data center behind a firewall and other security systems. The customer not only has to find a way to let the SaaS supplier in but also still restrict access to outsiders. In addition, the client has to make sure that the vendor has put sufficient security checks in place to ensure that its data center is secure.  In essence, the corporation ends up managing two security sets of security systems rather than one.

Because SaaS solutions are relatively new, best practices are just beginning to emerge, so how to ensure that these services are secure is still a work in progress. In addition, it is unclear if a SaaS approach meets the growing number of government regulations, such as Sarbanes-Oxley.

Companies also have no financial incentive to turn to a SaaS option. Traditionally, prices for enterprise search systems started at $50,000 and quickly raced past the $100,000 mark (deployments costing more than $1 million have been common). However, pricing has plummeted recently. "When it introduced its search appliance, Google dramatically changed product pricing," noted Whit Andrews, vice president at Gartner. After this change, customers could buy a search system for a few thousand dollars. Microsoft pushed pricing down even further by bundling search features in its SharePoint system. Consequently, SaaS solutions have not had clear cut cost advantages.

While SaaS options have had a major impact in many enterprise software markets, their influence has been minimal in the enterprise search segment. And nothing is looming on the horizon that will change the status quo.