I just finished writing a post for the Idealware blog about choosing SaaS vs. Open source. I said in that post:
At one level, whether or not the software underneath the SaaS is open source is not relevant. You are not obtaining the software, and whether or not you can see the code, or modify it, is really not the key issue here.
And, at the level of most nonprofits choosing software, this is, in fact, correct. But the real story is much more complicated.
SaaS is not, by definition either proprietary or open source. There are a few examples of SaaS that are based on open source projects, although most SaaS are proprietary – the code is never meant to be released.
One of the most important things to understand is that SaaS is primarily built upon open source tools such as Apache, MySQL, and MySQL. It would not be as cost-effective (and thus, not produce as much profit) if these SaaS developers had to pay license fees for the software they use (besides the fact that these are the most stable and robust platforms to build upon.) So SaaS vendors are taking good advantage of open source software, and, in many situations, not giving a whole lot back. This is not uniformly true – some SaaS vendors give back in a variety of ways – contributing code back to those projects, having their own programs to give back in some way or another (like Google Open Source, or Salesforce.org)
Bur in any event, SaaS based on proprietary software violates the basic software freedoms – you can’t use it freely, you can’t see the code, you can’t modify it, and you can’t release the modifications to others. And, in some situations the existence of SaaS can inhibit open source development in the spaces in which it is popular, especially if the SaaS is cheap or free (how many good open source webmail clients are there, for instance?)
From my perspective, the key is openness. Some SaaS, like Salesforce.com, and increasingly the nonprofit CRM SaaS vendors, are open platforms. From my perspective, it’s all about balance, and having an active ecosystem, with healthy open source options present. The more SaaS vendors can contribute to and not detract from that ecosystem, the better.