Technology

Software as a service (SaaS) has been in vogue for some time now and of late has gathered significance and momentum along with cloud and virtualization technologies. Global economic challenge only helped customer of all sizes and shapes to demand more value for every penny spent on IT which also helped significant increase in relevance of SaaS.

Let us look at SaaS from each of the key stake holder’s perspective - customer, vendor and channel.

SaaS’ relevance from Customer perspective

Recent economic slowdown has made the CXO wiser and more demanding. Business demands agility and alignment with IT. Critical business application needs have to be made available anytime, anywhere through any device to address dynamic business challenges without compromising on security and compliance aspects. Business needs keep evolving and IT is better equipped to address this through a SaaS model. Investment in IT needs to show tangible ROI / business benefit and SaaS model provides both vendor and customer statistics to prove through this model. During the last 15 years, the trend of IT spends show that management cost has been the one which has grown the fastest and not hardware or software spends. SaaS model thus helps customer tame this dangerous spend trend with an opex model payment tied to SLA, gaining control of application and vendor. As more and more customers look to leverage on cloud, virtualization trends, SaaS is one of the key components in this new trend which will gain relevance and significance. Customer through SaaS can focus more on its core business than worry about IT infrastructure and application delivery/ management which will be managed by vendor based on customer SLA.

Relevance in business

Software piracy has been an ongoing challenge for every software vendor especially in emerging markets. Of late dependence on emerging markets is relatively high for every software vendor and hence the dilemma. It is a chicken and egg story between price and piracy for a long time now and SaaS can be used effectively by vendors to break this cycle. SaaS can make it more affordable for customers across segments driving volumes and reducing prices along with piracy. SaaS can ride the adoption trend of cloud and virtualization to maximize IT budgets for application and software to make it compelling for customer of all types and sizes. This trend will help customer reduce investment on hardware and allocate more of their IT budgets for applications. This will help vendor to make the prices more affordable with opex model. Vendor can also use this opportunity to keep in constant touch with customer in a SaaS model thus helping him to spot and address new/emerging opportunities at each of the customer base. SaaS will also help enhance vendor role and relevance in customer mind which is rather low in traditional capex model post implementation.

Customer through SaaS can focus more on its core business than worry about IT infrastructure and application delivery/ management which will be managed by vendor based on customer SLA

Though at lower price points due to opex model, business will also get more predictable and profitable through SaaS model as compared to capex model. Customization is another large area which will help organization in building trust on this model. Hardware revenue might slow down with virtualization and cloud which can be handsomely compensated through services and support along with SaaS volumes in the coming years. Gaining domain knowledge on customer business for every focused vertical there focus will become critical moving forward. In addition more relevant applications around current offerings can maximize the customer’s appetite for such technology. One thing can be said clearly that we have exciting times ahead for those willing to adopt and change proactively.