Economic crisis both a threat and an opportunity to SaaS
Economic crisis both a threat and an opportunity to SaaS
By Scott Duke Harris
Mercury News
Posted: 12/07/2008 12:00:00 AM PST
As the gears of the economy grind and screech, Silicon Valley abounds in companies peddling “solutions” bearing acronyms like CRM and ERP that they swear will help businesses make or save money in the downturn.
Trouble is, this economic crisis makes businesses more reluctant to commit money to anything new – including subscription-based office functions collectively known as software-as-a-service, or SaaS.
“There was so much angst in the air,” business consultant Jeff Kaplan said of a recent industry conference in San Jose. “Everyone is convinced that in the long term, the crisis will accelerate the growth of SaaS. But in the short term, it is already slowing down some business in the pipeline.”
Business software in any form is intended to enhance and streamline information relating to everything from sales and customer service to prosaic back-office functions like payroll and accounting. While Oracle, SAP and Intuit sell software implemented by the buyers, SaaS companies provide the functions as a Web-based service, at substantially lower upfront costs.
A difficult economy should be good for SaaS, experts say. Read more
What is the SaaS Business Model?
What is the SaaS Business Model?
here’s a quick definition that keeps it simple.
Softare-as-a-Service, or SaaS, is a business model for delivering software applications through the internet and accessible through a web browser. Generally speaking, SaaS-model companies have the following characteristics:
- Access to the service is provided through a website. There is no software to install on your computer or local network.
- Users generally pay a periodic subscription fee rather than a large up-front license fee. Access to Services is available only while the User maintain the subscription.
- Fees increase as you consume more of the Service so most Services are affordable to most organizations.
- All Uses interact with the same version of the Service so Users always have access to all new versions and most new features.
- All hosting services, including data back-ups, hardware upgrades, and disaster recovery, are managed by the SaaS provider.
Why are Companies Adopting SaaS Solutions?
here is the most common reasons
The market for SaaS companies is growing three times faster than for on-premise software companies. Here’s a list of the most common reasons why:
- Fast and Easy – Users can start using SaaS solutions much faster and with much less effort than on-premise solutions.
- No Hardware – Since there is nothing to install, there is no need for new hardware or the other software licenses that are also usually required.
- Mobility – Everyone is far more mobile than we used to be, so Users can be productive using a web-based application anywhere there is an internet connection.
- Bypass Internal IT – Since nothing is changing on the local network, it isn’t necessary to involve the IT staff, who, regrettably, often slow down most technology-related implementations.
- Try Before You Buy – Business end-users can make decisions to test-drive new services with lower financial risk
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