The flavours of SaaS
When you think about outsourcing your payments business, flavours are not the first thing that come to mind. Instead, it is the widespread and ‘standard’ definitions of the Software as a Service (SaaS) and Platform as a Service (PaaS) deployment models that come to the fore, whereby SaaS means that FIs are heavily reliant upon their processors, with the introduction of new products and services resulting in change requests and long development queues, and with PaaS being for the true innovators who want control over their differentiators. However, SaaS is no longer restricted to one ‘standard’ definition or ‘flavour’ and the understanding the majority of people have of this model and its capabilities is outdated…
It’s safe to say that all processors offering SaaS would be able to support the majority of an FI’s issuing and acquiring needs, such as card issuance, xPays, out of band authentication, etc., but the problem lies in the how – how quickly? How smoothly? How cost-effectively?
What it comes down to is the ‘flavour’ of SaaS you have – by this we mean, the underlying platform that is actually running your SaaS deployment. The payments platforms powering these SaaS systems vary widely in terms of their capabilities due to the technologies they are built on and will have a direct impact on how quickly products can be brought to market, how independent and innovative an FI can be and of course, cost. However, questions about the platform are rarely asked in RFPs, with prospects focussed on migrating their business proposition like for like but ‘newer’ with a few new value-added services.
There are loosely three generations of payments platform – first, second and third – with each offering a higher degree of flexibility than the one before it. Yet, even within these generations, there are different flavours and capabilities offered.
The traditional definition of SaaS relates to second generation SaaS systems. However, there are younger, or newer, second generation systems that can offer FIs the ability to make some very limited changes to products and services themselves, without having to go down the change request route.
When it comes to third generation SaaS systems, things are completely different. The capabilities of these platforms, with their templates and advanced product inheritance functions, offer FIs more vendor independence than what would be expected of a ‘traditional’ SaaS deployment model. For example, by using the inheritance functions and parameters accessible to third generation SaaS customers, an FI could bring products and services to market by themselves, allowing them to react quickly to market changes, while innovating instantly and continuously, and, therefore, without having to rely on their processor and the change request development queue. There would still be limitations in comparison to the freedoms of PaaS, but for many FIs that lack the resources to run PaaS, these newer flavours of SaaS offer a very attractive alternative.
It’s fair to say the introduction of these third generation payment platforms has led to an evolution in the SaaS offerings available on the market today, and have turned the concept of a standard SaaS model on its head - there is no standard SaaS, and by default, PaaS is no longer the only option for payment service providers seeking more control and differentiation.
To discover more, download our free white paper, developed in collaboration with independent consultancy Consult Hyperion: Model behaviour – is your payments processor the right fit?