SaaS Hits Tipping Point but Does it Make Sense for You?

The viability of SaaS (Software as a Service) has been confirmed.

Software Insider reports that SaaS vendors grew an average of 8% last year while almost every on-premise vendor lost revenue. SaaS offerings and subscriptions increased in every category of enterprise apps, while on-premise vendors relied on an exceptionally high ratio of maintenance revenue to offset all those customers who chose not to upgrade last year, as well as the market share it lost to SaaS. Yikes!

However long SaaS’ popularity lasts, 2009 will be remembered as the SaaS tipping point. But that doesn’t mean you should jump on board. The SaaS model makes sense for you only if you can answer affirmatively to the following:

1. Your functional requirements are not complex. SaaS services typically provide standard capabilities for the application domain with very few bells and whistles.
2. You don’t need a lot of customization work. It’s not that you can’t customize your SaaS app, it’s that once it becomes unique to your business processes, you’ll likely want to own it on-premise rather than rent it at someone else’s data center.
3. The SaaS application is relatively stand-alone. Integration into Outlook and maybe one other app makes sense, but SaaS’ limitations show up quickly if you need to integrate it into multiple apps in your delivery chain.
4. You’re okay with product upgrades on the SaaS provider’s schedule. SaaS providers update all of their customer servers on their own schedule. Your users need to be comfortable with this, and you’ll need to stay within vendor deployment guidelines so that customizations and integrations won’t require any maintenance every time they upgrade.
5. It’s okay for another entity to be guardian of corporate data. Some business models and some executives just can’t get past mission-critical data being anywhere other than behind their firewall. SaaS data centers tend to have excellent security; it’s the idea that can take some getting used to for some.

If you can say “yes, this fits” to each of the statements above, then SaaS is definitely worth looking at. It makes deployment of any enterprise solution faster, simpler, less expensive and less hassle. Its pay-as-you-go model means there isn’t a huge cash outlay up front and it puts you, the customer, squarely in the driver’s seat of the relationship. Now aren’t these really good reasons for the Year of the SaaS?

 

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