I’ve had this conversation a couple times in the last week, which usually means I should be writing about it. (Also, because its been ~ 15 months since there was one…)

There seems to be this myth that just because an application is not installed on the client’s premises that it must be SaaS. Ummm… no. Or at least not exactly. See, its a lot more subtle than that. Here is how I am currently distinguishing between the two in my head.

• Delivery – This is easy. If you host it for your customers, you can be SaaS-y. If you have to ship something to your customers they need to install, then you cannot.
• Tiering – At the heart of SaaS is the differentiating of customers based on service levels or other customers. And charging differently for them.
• Onboarding – Customer should be able to sign up for your service without you knowing about it. Ideally you should regularly look at your customer list and be surprised by who you see on it.
• Self-service – That thing your service does likely needs to have some sort of interaction from your customer be it periodic configuration or scheduling or whatever. They need to be able to do it. All. Without your involvement — unless you are charging a higher tier rate for that…
• No touch billing – You know you have figured out the whole SaaS thing when you can hook a vacuum up to your customer’s wallet. If you are dealing with smaller businesses, then this is relatively easy by hooking up to a corporate credit card. But even at the ‘enterprise’ level you can do it by integrating with your financial and invoicing systems
• Offloading – This is more ‘open source anarchist’ maybe than anything else, but your customers should also be able to leave your service without you knowing [hint: have a notification for when someone leaves and then follow up to see if you could have prevented it]. This includes getting their data out.
• Crazy uptime – Remember the first bullet? Your service is hosted… so if its down because you are offline because you are deploying an update, your customers are dead in the water. 100% uptime. That’s your goal, not ‘5 9s’ or whatever.
• Paranoia – Because you are hosted, and can be easily onboarded and offloaded you need to be constantly paranoid that someone will build a better ‘thing’. This paranoia is a good thing as it drives innovation.

This is still evolving, but having played in and paid attention to the SaaS-y space for a number of years now, I’m fairly comfortable with this list of attributes and is how I’m mentally evaluating all companies that call themselves SaaS.