Is SaaS the Right Model for your Software Business?

IDC and Gartner Group reports that SaaS is expected to account for almost 85% of all software solutions sold in the future. If you’re a web design and development company and not working via the SaaS business model, it’s time to switch over.

What is SaaS?

SaaS or Software as a Service is way of providing software to a company in the form of web application design. Instead of the program coming on a CD or USB for thousands of upfront dollars, the software is provided on a month-by-month basis. Rather than support packages and upgrades (regular updates to the software) being provided only for an additional payment, support and upgrades are part of the monthly fee. This is possible because the software is stored in the cloud, rather than on your own hardware. By storing the software yourself and providing it to clients through the cloud, as a web application developer, you can change it and control it without the expense of going on site to a Client’s business.
SaaS is becoming an increasingly prevalent delivery model among businesses in different industries because of its flexibility and constant improvement. Gartner also estimates global SaaS revenue to be $21.3 billion USD by 2015. The market for SaaS is getting bigger – are you prepared for it?

Why is SaaS becoming popular among business owners?

• SaaS is a cheaper alternative for buying licensed applications
  Traditional software is sold as a perpetual license with an up-front cost and an optional ongoing support fee. With SaaS, businesses pay a monthly or annual fee at a much lower rate.
• There is no need to invest in additional hardware
  Since software is hosted on the servers of the web development company, they don’t need to buy additional hardware to host large, complicated programs.
• SaaS does not require high maintenance
  Again, since SaaS is hosted remotely, companies do not have to handle installation, set-up and maintenance.
• There is no need to purchase special hardware
  SaaS-based software does not have compatibility issues. All users will have the same version of software.

Now that more businesses are moving away from licensing software to the subscription-based SaaS model, Independent software vendors (ISVs) are changing their business models to SaaS models to take advantage of this trend.

What are the benefits of the SaaS model to your software business?

• You have stable, regular income
  You have stable monthly, quarterly or annual income, as opposed to unpredictable revenue from software license sales.
• Reduced customer support and personnel costs
  A web application developer supports only one instance of an application, hosted on the SaaS provider platform, instead of multiple instances hosted on individual customer platforms.
• New software releases are installed one time, on the hosted system
  All your customers will run on the same release, simultaneously.

“Smart computing” continues to grow. More and more apps provide direct access to data used for decision-making. This, in turn, will fuel the growth of SaaS.

Approximately 83% of all businesses expect to adopt SaaS technology. As long as this growth is managed appropriately, the SaaS business model will continue to provide recurring income.

For more details on how to find out if SaaS is the right model for your software business, talk to our experts at Complete Cloud. Complete Cloud can build an SaaS software for you to on sell and create custom web applications for your business’s particular needs.

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