SaaS – What’s in It for Customers and Vendors?

SaaS (software-as-a-service) is here to stay. This is evident from the widespread adoption of business applications hosted in the cloud such as CRM, payroll processing, collaboration and human resource management software over the last decade. And it is not just business applications these days. Increasingly, networking and security has also moved to the cloud.

SaaS is a delivery model where the software is centrally hosted by a vendor and buyers consume the service from the cloud. Whether you are an organization using applications to run your business or a vendor providing critical software as a service to your customers, there is something for everyone in a SaaS model.

What’s in it for consumers of SaaS:

• Reduced IT overhead – Organizations consuming services from the cloud do not need to install or maintain expensive hardware or infrastructure on-premises. If consuming security from the cloud, this is a big advantage because now security can be deployed even in locations where no IT expertise is available.
• Immediate Access to Functionality – Customers get access to the SaaS service immediately upon signup without having to wait for shipment and installation of hardware or software. For example, organizations can immediately improve their security posture by signing up for a cloud based security offering.
• Flexible licensing/payment options – SaaS model provides companies an alternative to the traditional capex model where they pay upfront for any hardware needed and a perpetual software license. By shifting to an opex model, they can take advantage of lower upfront costs and more predictable recurring costs thereafter.
• Seamless upgrades – Customers don’t need to worry about updates for latest features or patching their software for vulnerabilities. The SaaS provider always has the latest secure code in the cloud. This enables customers to get immediate access to new innovations and features.
• Scale as you grow – Organizations don’t have to plan for peak capacity like they do when purchasing infrastructure. They can scale by purchasing higher tiers of the service as they grow.
• Extend reach – Since SaaS services are delivered from the cloud, it is possible to extend the usage of the services to beyond the traditional on-premises network. For example, security delivered from the cloud can easily be applied to devices on or off premises which greatly expands the use cases that can be addressed.

What’s in it for vendors:

• Latest code for all customers – Vendors can allocate resources to provide the latest and greatest to all their customers at the same time, without having to worry about a legacy of old software they may need to support.
• Speed of innovation – The speed of innovation is also much greater as vendors can make available new features and functionality to their customers much faster than with a traditional 6-month release cycle for on-premises software.
• Better Customer Insight– Companies with SaaS offerings are much closer to the customer than companies with only a traditional model because of more frequent involvement with users of their service. This means they can provide features that the customers actually need based on the feedback loop.

Many businesses are in the process of making a shift to consuming services from the cloud because they see greater business value through SaaS.