5 Benefits of SaaS Software in a Downturn Economy
By Anne Sych
Whether you call it a “hosted solution” or SaaS (Software as a Service), this model of software delivery is a perfect fit for many organizations. While the concept of ‘leasing’ software has been around for a long time, it has been gaining popularity in recent years, and for good reason.
In 2005 SaaS represented only about 5 percent of business software delivered. Gartner projects that the market is poised for strong growth through 2011, when worldwide revenue is projected to reach 11.5 billion, or 25 percent. “SaaS adoption is highest in applications that support simplified, common business processes or large, distributed virtual workforce teams,” said Sharon Mertz, research director at Gartner. “Ease of use, rapid deployment, limited upfront investment in capital and staffing, plus a reduction in software management responsibility all make SaaS a desirable alternative to many on-premises solutions, and they will continue to act as drivers of growth.”
Let’s look at how economic factors favor Saas:
1. SaaS solutions offer flexible contracts with initial lower investments than traditional software purchases. For many companies, an on-going monthly expense is easier to incorporate into their budget than a large one-time outlay. And with purchasing budgets being slashed, the SaaS option allows many organizations an entry point into a high end application that they otherwise could not afford. In addition, this low initial investment reduces the risk involved in acquiring new software and the flexibility to change usage commitments as business circumstances change. When your needs change you simply change or terminate your service – no longer throwing away costly software that didn’t fulfill it’s ROI lifecycle.
2. Quick and economical implementation – A typical software implementation involves purchasing and maintaining servers, housing them securely, and installing, deploying and maintaining the software. This requires the time and effort of busy IT personnel. Because SaaS eliminates many of the typical implementation tasks associated with licensed software and because the software is already up and running on the vendor’s data center, deployment time tends to be much shorter with SaaS applications than with traditional ones. And as mentioned, there is no need to house the software and keep it secure – that is managed for you by the provider.
3. No need to upgrade – you will not have to pay to get the “latest version” of the software you are using. Typical SaaS contracts include running the latest version of the software. Routine software support is usually built-in to the monthly fee as well. In addition, the upgrades are deployed by the vendor, so you will not have to task your IT staff with scheduling and rolling out new releases (which often may require after-hours IT staffing).
4. SaaS allows you to “Try before you buy” – perhaps you are interested in a software solution, but are not convinced it is the right fit for your internal operational needs. SaaS is a great way to minimize risk by testing the software carefully using real data and actual business scenarios. SaaS also allows organizations to perform testing in select departments before deploying the solution on a broader scale. If the application ends up not being a good fit, the cost to the company is much more manageable. Testing also allows for your staff to verify which core features (or “modules”) are essential for your organization, as well which ones might be unnecessary.
5. SaaS allows affordable solutions for temporary situations – perhaps your software need is only a temporary one. Typically, it simply doesn’t make sense to make a sizeable investment into software that is only needed to help satisfy a short-term requirement. With SaaS you can equip your company or business team with the products and functionality they need on a leased basis for as long as you need it, and then terminate the service upon completion of the contract or project.
In short, there are lots of ideal reasons for companies to strongly consider taking advantage of Software as a Service”. Whether you need a short term solution, quick and painless implementation, low up-front costs, a chance to “Try before you buy,” or you are simply trying to do business as usual while managing your budget as closely as possible, be sure to examine SaaS in your next software research project. Current economic trends aside, this may be the most logical way to gain the benefit of new software tools while keeping costs to a minimum.
About the Author
Anne Sych is the Marketing Manager for Novo Solutions, Inc. Novo Solutions, Inc. is an Independent Software Vendor (ISV) in Virginia Beach, Virginia specializing in Customer Support Software. Free trial versions of the Customer Support Software, and suite of web-based Customer Support Solutions are available. Contact: sales@novosolutions.com for more information. http://www.novosolutions.com/
Did you enjoy this article? Why not leave a comment below and continue the conversation, or subscribe to our feed and get articles like this delivered automatically to your feed reader.
By Dan D. Gutierrez
CEO of HostedDatabase.com
Excellent analysis of the attraction of SaaS during an econmic downturn and its effects on our industry. We launched the web’s first Database-as-a-Service in 1999, another well known downturn known as the bubble-burst. We managed to survive using many of the point you highlight. It wasn’t easy.