SaaS Is Broken: Why Bring Your Own Cloud (BYOC) Is the Future

The Software as a Service (SaaS) paradigm ushered in a new era of high-velocity product development. Unlike the rigid and slow-moving times of on premises, SaaS vendors offer a clean, reliable experience by taking ownership of all aspects of data hosting and its underlying infrastructure. However, like the bitter end of any paradigm shift, the world has shifted again.

Today, organizations want to protect, control, and be aware of who processes their data. This is exactly where the traditional SaaS model starts to break. Trucking huge volumes of data to the SaaS vendors offers simplicity, but at the growing price of high cost and loss of data ownership.

We can’t allow ourselves to go backwards from the simplicity of SaaS — building and consuming software that way is too fundamental to just about everything these days. Instead, we must find a better model that retains the benefits of SaaS but aligns with the market’s direction. We need the rise of SaaS 2.0.

Bring Your Own Cloud (BYOC) allows customers to run SaaS applications using their own cloud infrastructure and resources rather than relying on a third-party vendor’s infrastructure. This hybrid approach preserves the convenience and velocity of SaaS while preserving the cost and ownership benefits of self-hosted solutions.

The Problem(s) with Traditional SaaS

Traditional SaaS faces two fundamental challenges across AI, observability, and anything else that relies heavily on data:

1. Ingestion-Based Monetization Is Broken

• Inflated: Subscription costs are tied to data ingestion volume, with companies paying hidden markups known only to the vendor. This has driven the SaaS market into a state of hyperinflation.
• Unpredictable: Data is dynamic. It is seasonal, spiky, and constantly evolving. When vendors charge based on ingestion, companies struggle to estimate costs, making budget planning nearly impossible.
• Unmanageable: Many companies waste excessive time solely on cost management. They dedicate significant effort to identifying redundant data transfers and filtering out valuable data to cut costs, even when that data could be beneficial.

2. Data Control and Access Limitations

• Security blind spot: Companies invest heavily in controlling data location and access, yet with traditional SaaS, sensitive data can easily reside within a third-party vendor’s premises, beyond full governance.
• Compliance concern: A company’s compliance is only as strong as the least compliant third-party vendor handling its data. In the SaaS era, sensitive data can easily find itself in vendors that are not as strict as you are regarding compliance.
• Restricted access: Businesses cannot consume the data they ship to the third-party vendor the way they like, which is a big problem for on-premises AI/ML workloads and for any internal tooling that you want to integrate with your data.

What is BYOC?

BYOC allows customers to run SaaS applications using their own cloud infrastructure and resources rather than relying on a third-party vendor’s infrastructure. This hybrid approach preserves the convenience and velocity of SaaS while balancing cost and ownership with the control of self-hosted solutions.

Building a BYOC stack that is easy to adopt, cost-effective, and performant is a significant engineering challenge. But as a software vendor, there are many benefits to your customers that make it worth the effort. Here are some of the main benefits we’ve seen since offering our customers BYOC:

1. Companies that were paying millions of dollars to traditional SaaS providers like New Relic and Datadog are seeing unprecedented 80% cost reductions.
2. As a result, they now have the budget to utilize more metrics, logs, and traces, which means greater visibility into areas they hadn’t observed before (and finding issues they otherwise never would have detected).
3. Sleeping tight knowing that observability data, such as logs, metrics, and traces that contain sensitive data, will remain on premises.

Why BYOC Is the Next Evolution of SaaS

SaaS brought speed and simplicity to software consumption, while traditional on premises offered control and predictability. But a more balanced approach is emerging as companies face rising costs, compliance challenges, and the need for data ownership.

BYOC is the consolidated evolution of both worlds — combining the convenience of SaaS with the control of on premises. Instead of sending massive amounts of data to third-party vendors, companies can run SaaS applications within their cloud infrastructure. This means predictable costs, better compliance, and tailored performance.

We’ve seen this hybrid model succeed in other areas. Meta’s Llama gained massive adoption as users could run it on their infrastructure. ARM processors became the global standard by enabling companies to customize chips to their needs. Similarly, major cloud providers now offer managed solutions built on open standards, giving customers flexibility without sacrificing the SaaS experience.

BYOC is proving that companies don’t have to choose between simplicity and control. It’s about taking the best of both worlds and making them work together.

Conclusion

These are exciting times: software is moving faster than ever with the rise of AI. We believe that adopting BYOC, maintaining open source standards, and offering customers frictionless tooling will be the key to helping customers succeed while ushering in a new era of computing.

At groundcover, we’ve seen firsthand how BYOC transforms companies’ approaches to observability. It enables them to ship and store more data than ever before, drastically reduce costs, and achieve a highly tailored experience. Just as BYOC is disrupting the observability market, we believe it will have a similar impact across every sector it touches.