In a recent blog post, David Meerman Scott talked about challenging conventional wisdom. The current conventional wisdom is that Software as a Service (SaaS) is always right and that on-premise applications are always wrong. In today’s challenging economy, many customers are looking at SaaS as the holy grail to help them cut costs. While SaaS has a lot of advantages to lower costs, sometimes it may cost more. If a business has already purchased hardware infrastructure and software licenses, it may make sense to keep what they have rather than switching to SaaS; especially if finance has already banked on depreciation costs. It also depends on the specific application. Even though there are numerous SaaS applications on the market, there isn’t one for everything that does all I want. Just look at your own PC. Could you replace everything you run with a SaaS application? Read More
Today I got an email telling me that Microsoft is planning a jumbo patch day next Tuesday. Microsoft today said it will deliver 10 security updates next week to patch serious bugs in Windows, Internet Explorer, Word and Excel. I don’t want to pick on Microsoft, since this is a common occurrence with software vendors. Microsoft gets the lion’s share of the grief, since they have a large percentage of the OS and desktop application market.
Most organizations today view the move to SaaS as a cost cutting measure. While this is clearly a major benefit, it is small when compared to the advantages of continuous improvements in functionality. In a recent blog article, The Next Wave of SaaS, Jim Frome of SPS Commerce talks about 3 waves of SaaS. In it he discusses that a major value of SaaS is the continuous feedback that SaaS vendors get from the usage of their software. This in turn enables the vendor to provide this information to its customers who can benefit from understanding their usage patterns. With on-premise systems, each customer works on an island and feedback is elusive; this is more so within a company. If you are a large enough customer, your requests may get into the next release. Between bug fixes, patches and upgrade cycles, your system may not give you the functionality you want in a timely manner. With SaaS, customer usage patterns are continuous and feedback mechanisms provide an easy way for vendors to provide continuous improvements. Providing that information to customers completes the feedback loop.
With all the talk about Software as a Service (SaaS) being great for customers, I wondered if it’s a good deal for a vendor. Creating a service can be capitally intensive and you may not get a payback until years later. Some of the benefits for a customer are no upfront hardware and software investment, faster deployment, lower operating and maintenance costs and easy access through a browser.
One key that excites any customer is the pay-as-you-go model. This makes it easy to add and remove users and capacity as needed. Rather than worrying about how many software licenses to buy and if some of those wind up as shelf ware, a customer only has to worry about how many users they need today. If they need more, they add them. If they need fewer, they cancel them.
These are all compelling reasons for any customer to use SaaS. So what are some of the benefits to the vendor?
- Access more customers (global)
- Lower operating cost per customer
- Simplify upgrades and maintenance
- Easy to add features to meet customer needs
- Acquire more customers with self-service