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Seven Reasons Why SaaS Would Be a Great Success

Posted on Sunday, Dec 2nd 2007

By Gadi Shamia, Guest Author

I am a great believer in SaaS (Software as a service) as a future leading delivery mechanism for small and medium businesses (SMBs). Although SaaS penetration into this space is slow, there are many reasons for SaaS to prevail. It may take a while, and it will require a leap of faith from the customers and hard work from the vendor side, but it will happen. 0.9 probability as my Gartner friends taught me to say…Here are the seven reasons why SaaS is better than the current delivery mechanisms (namely software on a CD). I encourage SMBs to think about these benefits and take them into account when buying (or subscribing for) a new software. One important comment: SaaS is only a delivery mechanism for software, so being “SaaS” doesn’t make a product any better as some people want you to believe. Claims such as “SaaS products are easier/faster/simpler/slower” etc., are not based on reality. Just like your house: the fact that it is rented or owned cannot change its location, the neighbors or its size…

  • The world is flat—SMB managers and owners work 24 hours a day, and many of their employees do the same. In addition SMBs need to interact with externals like telemarketing agencies, their accountant or vendors abroad. SaaS products allow them to access your data from where ever you are.
  • SaaS is safer—I know it is counterintuitive to many, but after visiting hundreds of SMBs over the years I can guarantee that your data, safely stored in a secure location, is safer than what you can provide in-house. It is common for small businesses to lose data due to viruses, human errors or even thefts or natural disasters, and the results are devastating.
  • SaaS products are automatically backed up—I used to run a support center that focused on SMBs. I am trying to remember one case where backup was needed and a fresh version was available. Thinking….. Can’t remember even one case. People are not good about backing up data, and with SaaS products you simply don’t have to worry about it.

  • SaaS vendors innovate faster—It doesn’t have to be this way, but the good SaaS companies innovate much faster than the rest. With no need to attend to old versions, all of the R&D resources can be focused on new versions. In many cases, the older on-premises vendors dedicate more than half of their R&D budget to previous (but still used) versions.

  • SaaS is more stable, especially for SMBs—With no IT department and hectic operations, SMBs are more exposed to stability issues in their systems. When all you need is a working browser and Internet connection, very little can go wrong.

  • Packaging and pricing—In most cases, SaaS products are packaged in a much simpler way than on-premises products. This is not a matter of technology but rather lack of heritage. In addition, adding users or functionality will usually take minutes, not weeks. I am not mentioning monthly fees since most of the on-premises vendors are offering financing.

  • The trend—According to Gartner, 30% of new software products will be delivered as a service by 2010. Since software decisions tend to last 5-10 years, you may want to select a modern platform today, that will carry you into the future. Another bothersome thought is that current on-premises vendors are likely to invest more and more in SaaS so they can catch up with the newcomers. This means that the best and brightest engineers will move to develop the new SaaS products and your on-premises product will be managed by fewer and less talented developers.
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[Quote]According to Gartner, 30% of new software products will be delivered as a service by 2010. [unQuote]

hmm… great!

nishant Monday, December 3, 2007 at 7:42 AM PT

SaaS greatly reduces the support costs on the part of the provider. If you don’t have install software for your client, debug their hardware environment, answer questions about hw/sw configuration – plus you don’t have to regression test again many platforms and OS versions – then you can devote more time (or money from your P&L) to product innovation. SaaS dramatically lightens the P&L load of customer support – allowing vendors to reduce costs for customers and focus on the real product.

Penny Herscher Monday, December 3, 2007 at 11:26 AM PT

[…] Related readings: *Trend Radar 2008: SaaS in the Enterprise *Forbes Column: Deconstructing The Cloud *Seven Reasons Why SaaS Would Be a Great Success […]

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