Software as a service (SaaS) has become ubiquitous. On average, organizations will use 371 different SaaS apps. It is also expensive. The average SaaS spend per employee is $9,600. The return on investment has been significant, with around 20–40% productivity improvements. Now that we know SaaS works, the market has turned its attention to the problem of cost and one key area in particular: Storage.
The Problem of Markup
Markup has become a significant issue in the SaaS market, with the average SaaS company aiming for 70–80% markup on their products. These profit requirements, coupled with the extremely high utilization of SaaS, have triggered a whole new approach to data storage — one that cuts out the middleman. The ‘bring your own storage’ (BYOS) model of SaaS.
Joining PaaS to SaaS
To get the best bang for your buck, the aim is to find the lowest price for the highest functionality. The modern approach is to shop around. For example, use a low-cost storage offered by a cloud provider, which your SaaS solution can read from and write to. A common example of this is Amazon S3 which offers retention costs of around $0.02/month — far lower than any specialized SaaS solution is willing to charge; often because they are leveraging a similar solution.
S3 and its equivalent solutions in other cloud providers offer effectively infinite storage, with predictable and consistent response times and zero disk management required, even for terabytes or petabytes of data. In short, S3 solves the vast majority of storage needs, if the customer is willing to sacrifice a little performance.
This is true of many storage solutions available in other PaaS platforms, and it offers a unique opportunity. Rather than compromising on data volumes, or discarding a whole fleet of telemetry, customers can instead remove a significant component of operational cost from the SaaS vendor.
Data is Currency
Companies value their data more than ever before. Allowing it to be held hostage in the storage backend of a third-party company was never a particularly appealing concept, but it was often the only choice. BYOS models are breaking this paradigm and allowing customers to keep 100% of their data, turning SaaS into an indexing and processing service.
This is especially important in analytics-based SaaS solutions like observability, where the value that the vendor is bringing isn’t typically storage – it’s insight generation. This insight generation is mostly driven by computation and analysis, rather than storage. BYOS allows SaaS vendors to focus specifically on what they’re good at and it removes the opportunity to charge a 70% markup on a problem that has already been solved for a far less expense.
What is the Issue With BYOS?
Often, organizations leverage SaaS solutions, so they don’t need to do any of the wiring themselves. BYOS is often met with skepticism because it is the exact sort of work that the customer was looking to avoid. It is akin to buying an electric car for convenience, and then pedaling a bike to charge the car.
It Requires a Technical Capability
Underpinning this approach is the assumption that a company can create storage backends in their cloud providers. Many organizations do not have the required skills in-house to make this cost optimization. Indeed, the cost of hiring an engineer may eclipse the savings made. This approach works best for companies that already have an engineering function, even a modest one, to avoid adding additional cost to the bottom line and endangering any savings made.
BYOS Alone Doesn’t Bust Vendor Lock-in
If a company has your data, in their proprietary format on their servers, you are locked in. Even if you have been cautious to avoid their hooks in every other aspect of your platform, you are going to take a significant hit if you need to leave that data behind. BYOS is one half of the equation that breaks data-based vendor lock-in. The other half is the format in which the data is held.
If the data is held in your storage backend, but in a proprietary format that only the vendor will ever be able to understand, then what you’ve entered into is a kind of consensual ransomware, where your data is only available at a cost. However, when data is in an open format and is stored in the customer’s backend, it is a key move in beating vendor lock-in, improving your negotiating position and building a truly vendor-agnostic solution.
Bring Your Own Storage is Here to Stay
Whether it is on your roadmap or not, the BYOS approach to SaaS has changed the market for the better. Now, organizations can be laser-focused on the services that they are consuming from their most expensive vendors while leveraging existing, cheap, battle-tested storage solutions, avoiding markup and maximizing ROI.
