More on Software as a Service

Was reading the Sandhill Blog entry on Software as a Service, It is a really interesting entry which covers a lot of aspects of the SaaS model, must read if interested in SaaS.

Below are a few excerpts from the post,

• The vast majority of enterprise software does not lend itself to SaaS pricing. the only time you are likely to succeed with a use-based model is when the vendor is continuously delivering new value and service beyond the traditional software upgrades. Many enterprise apps categories don't really do this. Companies buy an app, customize it to their unique needs and try not to change it.
• The cheapest alternative for the customer is often a license. When selling subscription software, I have often been told by a CIO that ″we can start off on a subscription″ but if this thing really takes off, I will need to bring it in-house.″ This is due to both security issues as well as a realization that if the CIO can lock in a price one time, he will likely pay less in the long run.
• All this will change, but very slowly I have been looking for investments in SaaS over the last 2 years and have seen a few areas that truly do favor a subscription model.

I hope I see more markets start to accept SaaS, but progress will be slow since many companies own their software outright and have fear about cost visibility or value. Look for SaaS to take off where it makes sense and in new areas where old investments are not still being depreciated.

SaaS: Not for Everyone By Matt Miller Apr 04, 05

---

The Software as a Service (SaaS) model suggests an array of immediate value opportunities: low upfront investment, subscription pricing, reduced risk, ease of implementation and web-based access. Less explored, however, is the rest of the value equation. How, in other words, will the model help us help our clients rise to higher levels of business performance? How might it help them address their key priorities -- even contribute to their transformational initiatives?
As Lane suggests, there is something timely and powerful about software being offered as a service. As they say, why buy a generator when you can purchase low-cost electricity from the power company?

What stands out as particularly promising is the active and perpetual learning that such initimacy enables. Traditional software companies often have been accused of "throwing product over the wall" to the customer. Once implemented, vendors typically have had no real visibility into how their product is applied and what is learned over time. The software-as-service model, however, enables RightNow to more easily track client performance with precision, insight and immediacy.

Ultimately, the most profound aspect of the entire software-as-service movement could prove to be the idea discussed here: the ability to dynamically leverage client feedback to guide and generate continual performance growth.

SaaS and the Performance-Driven Future, By Britton Manasco Apr 05, 05Prashanth Rai