Software as Service

SaaS Revenue Bulks Up

SaaS or Software as a Service is bulking up in terms of market share and revenue.  In 2007 SaaS revenue was about five million dollars.  In 2008 SaaS revenue was about six and a half million dollars.  This year, 2011, SaaS revenue is expected to hit the fifteen billion dollar mark.  Even though the economy is still is somewhat of a state of despair, SaaS revenue is not impacted.  The reason many analyst feel SaaS revenue is increasing rather than decreasing in this uncertain economy is due to the fact that SaaS solutions cost less to implement when compared to on-site proprietary software solutions.  Software as a Service solutions also take the headache out of maintaining the software, performing backups, and the like.  This is because SaaS vendors manage the software through a data center.  And, the SaaS vendor performs many of the implementation steps because they own the software.  Software as a Service customers merely “rent” the software by paying a monthly fee.  In an uncertain economy, businesses like to retain their capital.  Software as a service solutions allow businesses to retain capital because they don’t require large upfront capital investments like on-site proprietary solutions do.  On-site proprietary solutions require businesses to purchase software licenses, which can get very pricy.

What’s interesting about SaaS solutions is that some businesses felt the idea would never take off.  Huge ERP or Enterprise Resource Planning giants like SAP and Oracle didn’t jump into the SaaS market initially because they were skeptical.  It now seems that those brave folks who did jump into the SaaS market made wise choices.  Some of the skepticism was regarding security matters, response time, and possible outages.  Security is no longer an issue with recent Internet improvements.  The response time issue has also been resolved as the Internet matured.  And outages are still possible; however, SaaS vendors have created backup plans and backup plans for the backup plans.  A fail proof plan could still fail, but this issue is most likely to resolve with time as well.  There is still what some may call “downfalls” to a SaaS solution.  For instance, you can’t customize a SaaS solution like you could with an on-site proprietary solution.  You can however configure a SaaS solution.  Performing a solution evaluation will you decide if a SaaS solution will work for your company.

Written by :

kristine H