If you've been following the tech news, specifically computers and software, you'll have seen that SaaS is in the news again.  It's there for the usual reasons - it is an efficient and cost effective solution for businesses and organizations who can't afford to spend a lot of money on IT.  But it's also in the news because people are still confused about SaaS.  What is it, exactly?

In 2005 Software as a Service (SaaS) had a 5% share of the revenue made by business software and the tendency was, and still is, towards growth.  To put some concrete numbers to it, $4.2 billion was spent on SaaS in 2004.  It is predicted that in 2009 the spending on SaaS will reach over $10.5 billion.  You would think that something like this would have made a larger splash by now rather than remaining in the realm of that quaint tech jargon. 

One reason confusion reigns over SaaS is that SaaS is merely a commonly used, but by no means, universal term.  It falls squarely into the on-demand category, but on-demand can mean a lot of things to a lot of people.  It's a little like talking to someone about a car.  Sure, he knows what a car is, but you have your sedans, your coupes, your pickup trucks, your SUVs... Well, you see where this is going.

Software as a Service does precisely one thing: it delivers software to you through a Web page.  You open your Web browser, you go to the SaaS Web page, you log in, you work.  The two things you will never need to do is deal with the software (you do not need to install it nor do you need upgrade it) nor deal with the computer the software is on (maintaining the computer or upgrading it when required).  As the name suggests, SaaS is all about providing you with a service.  As with any service, you pay to receive it and gain the additional benefit of avoiding a lot of associated headaches.

The other questions to ask are why use SaaS, and why now?  The answer to the first is that there are benefits on both sides of the equation.  Software vendors want more customers and they want to make the experience easier and better for those customers.  Unfortunately many specialized software products are expensive - often too expensive for SMBs, especially when multiple licenses are involved.  SaaS can put such software inside the price range of smaller businesses.

SaaS is currently going through a growth spurt for the same reason e-business in general grew to such a great extent: the Internet is more universally available and most businesses today have broadband connections.  Even software that has been designed or well implemented to be used through an SaaS platform can be slow and clumsy to use on a slow Internet connection, which in turn can limit or even negate the software's intended benefits.

SaaS is cost effective.  This remains true but it isn't anything that we haven't mentioned before.  Is there any other advantage to using SaaS?  Absolutely.

Purchasing software always entails a certain risk.  The software you purchased may not be what you wanted, or it may do exactly what it says it does but that may not be what you needed, after all.  Once you've purchased the product that money is spent, whether you use it or not.  That is an expensive lesson to learn.  Conversely, the software you need may not be available at all off the shelf.  This holds particularly true for online procurement and bid management.

Exploring a product through SaaS is a much smaller risk.  Buying the service is much cheaper than buying the product.  In addition, services can always be suspended or terminated.  If what you're getting isn't what you need, you stop using it and thus you stop paying for it.

In all, SaaS provides you with the means to make a low risk investment which could make all the difference for your department.  For the cost of equipping you and your people with a piece of software that might work it gives you the chance to pick and choose between different products to find the one that will work.

SaaS, or on-demand software service, is not new.  At worst it is not yet very common.  However, it will be a big part of the future.  Businesses need to move forward, even with a recession looming.  If those fears do come to pass it'll place an ever greater emphasis on "better but cheaper".  That's the niche that SaaS fills, so you really owe to yourself to explore software as a service.

 

Sincerely,