Software as a Service (SaaS), some of you might have heard of it, others not. SaaS stresses a 226 billion dollar market which according to Gartner will grow with 17% in 2020 (Gartner, 2019). But what is SaaS actually? With SaaS consumers access the software over the internet. More specifically, a service provider will host a certain application at their personal data center and a customer can access this via a web browser. This means that the service provider owns, delivers and manages the software. Although this sounds kind of risky, it is actually a convenient way of doing business.
Benefits of SaaS
The first and foremost benefit is that, given that the service provider hosts the application at their personal data center, the software is available 24/7. Consequently you are available 24/7. This comes in handy whenever you need to make a last-minute decision but still want to check some data about the matter or when you receive a high potential lead and want to plan immediate follow-up.
Second, SaaS is known for driving business costs down. The first reason for this is that it is often offered as a subscription based model with a pay-as-you-go vision. In this way you are not overwhelmed with a tool of which you will only use 10%. Second, it terminates the cost of purchase and installation. Similarly, the cost of installation are often low and upgrades are for free.
Drawbacks of SaaS
People who know SaaS are often a bit hesitant. Is it secure to transfer all my data using the Internet? And will I stay in control?. The answer is yes. Although, the point of data privacy is relevant (sensitive data is transferred over regular web browsers) data privacy and security at the forefront of SaaS businesses. The reason for this is that the software that they offer is their recurring revenue, so if there is anything not safe, they will immediately loose out on large amounts of revenue.
Examples of successful SaaS solutions
A perfect example of a perfect SaaS offering is Salesforce. Salesforce is seen as one of the first companies to successfully transform cloud computing into a business model. Together with their little brother Pardot they are conquering the world of CRM platforms.
However, not just the digital players are into SaaS. More and more traditional firms start to offer software. One of such is KPMG, one of the big four accounting firms. KPMG decided to offer Sofy, a software as service offering solutions in five different “suites”.
So is SaaS the new way to go?
Although SaaS has been around for some time, the market is still rapidly growing (Gartner, 2019). Many companies also anticipate on this. BCG for example assists companies in their transition to SaaS. As many players in the field start adopting SaaS solutions, it might become the way to go. However, always consider the fit with the business in mind.
References
Boston Consulting Group. (2020). Software as a Service (SaaS). India – EN. https://www.bcg.com/en-in/industries/technology-industries/software-as-a-service
Gartner. (2019, 13 november). Gartner Forecasts Worldwide Public Cloud Revenue to Grow 17% in 2020. https://www.gartner.com/en/newsroom/press-releases/2019-11-13-gartner-forecasts-worldwide-public-cloud-revenue-to-grow-17-percent-in-2020
Turco, K. (2020, 18 september). Four Advantages of Software as a Service (SaaS). TechnologyAdvice. https://technologyadvice.com/blog/information-technology/advantages-of-software-as-a-service-saas-2/#:%7E:text=%20Four%20advantages%20of%20SaaS%20%201%20Cost.,is%20that%20the%20pay-as-you-go%20model%20provides…%20More%20
Hi Pim and thanks for the interesting contribution. I agree and think that SAAS will be the new way to go for most businesses. Reasons for that I believe are that they can subscribe and pay-as-they-go to a SaaS offering. At the same time, they can handpick the functionality in most cases and simply pay for the appropriate features. Moreover, SaaS applications are highly scalable, allowing companies, as they expand, to access more features and services. The benefit of no investment in hardware or software for users to add storage or more resources easily and quickly will attract a lot of firms I believe.