SaaS: The Better Way to Buy
For growing businesses, I know of no better way to purchase software than as a hosted service, paid for on a per-user/per-month basis. While the equation may not work for the smallest companies, and some IT departments avoid it in order to build an ever-larger empire for themselves, Software-as-a-Service (SaaS) is the up-and-coming thing. And it's a perfect solution expand or contract in a roller-coaster economy.
With SaaS, your company's applications are hosted by the vendors and accessed over the Internet. All sorts of applications are offered this way, from desktop productivity to industry-specific applications, accounting, databases, e-mail archiving, content management and most everything else.
Usually, SaaS saves large upfront costs and allows the customer to benefit from economies of scale and making the vendor responsible for the care and feeding of the application. Throw in cheap bandwidth, necessary to access the hosted SaaS application, and you have a trifecta of reasons for SaaS's increasing popularity.
I am writing about this today not because of any news story, but following a conversation I had with a friend whose company is considering Safeforce.com's customer relationship management application. Salesforce is the poster child for SaaS, though many more companies have adopted the model.
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Good article
This is a great introductory article on SaaS, and it does a good job contrasting traditional software vs. SaaS solutions.One of the more recent problems with SaaS applications is that metering and billing are usually inaccurate and sometimes confusing to customers. However, companies like eVapt (www.eVapt.com) have came up with solutions to this problem.
Other problems include integration, which are solved by startups like Boomi and SnapLogic, many of which are backed by VC firms.
Tips to Consider When Evaluating SaaS
As an employee of an online database company, I may be biased but I agree that SaaS offerings are great solutions for growing businesses.With more companies exploring SaaS offerings, it is important that companies take the time to evaluate different SaaS options and try them before they buy. Month to month subscriptions and free trials make this possible. Our CTO and CEO recently recorded a podcast with some tips companies should consider when evaluating SaaS offerings. For example, look at the price to determine if the price is sustainable. There is no such thing as a free lunch. Click here to read/listen to the podcast with tips to consider when evaluating SaaS options.
Great Intro to SaaS
I agree with Beibei, there are definitely problems integrating SaaS solutions, but companies like Boomi and Cast Iron Systems have done a fantastic job at solving those problems.The problem that isn't being addressed on the monetization front is the clear lack of the proper handling of billing information and adherence to PCI DSS standards by most SaaS billing companies. There are only a handful (if that) of SaaS/Cloud billing providers that are PCI Level 1 certified. Aria Systems (www.ariasystems.com) tops the list, in terms of scale and experience in the space.
To see the full list of PCI certified providers, check out http://usa.visa.com/merchants/risk_management/cisp_service_providers.html.