Benefits
For the Consumer | For the Provider: |
No client/server software installation or maintenance - that's right, no more 800-page planning and implementation guides. | Aggregate operating environment - as a provider, you own your domain. No longer are you sending technicians to fix or customize your software because it doesn't fit into a customer's highly-specialized (or horribly outdated) infrastructure. You have complete control to optimize an infrastructure to your SaaS application's specific requirements. This is synergy at its best, and leads to financial savings as well as less headaches. |
Shorter deployment time - potentially minutes as opposed to a phased implementation that could take months. | Predictable Revenue Stream - the subscription model associated with SaaS means that your customers will pay you on a recurring schedule. If you make this cycle flexible enough, you can get a real handle on forecasting revenues. The payment may be tied to your product (think cell phone plans) where everybody pays according to the same term, or tied to your individual subscribers where some may pay monthly, some yearly, and some quarterly. |
Global availability - sure the technology exists to make on-premise software available outside of the premises, but we're talking about functionality that is available from anywhere on the internet natively | Predictable Growth - Same as above, but here we're talking about sheer volume of subscribership. The fact that users hit your site to access the application means that with the right tools you can monitor their usage pretty closely - something that's not so easy with all your customers running the application on premise. |
Service Level Agreement (SLA) adherence - reported bugs can be fixed minus any rollout overhead. Sure the provider actually has to fix the issue, but assuming they've deployed a moderately efficient SaaS application the rollout of a patch or fix should happen in the blink of an eye. | Focus On Smaller Upgrades Instead of Monster Patch Rollouts - and while you're at it, don't worry about rollout logistics across all of your customer sites either. Your development teams can focus on fixing core application functionality, tackling bugs and enhancing features in smaller incremental rollouts because it's just easier to do so. |
Constant, Smaller, Upgrades - when you use a SaaS application, it is in the best interest of the provider to keep you happy and they can do so by constantly improving the application experience. With SaaS this can come in the form of consistent miniscule changes that add up over time instead of monster patch and upgrades that cost you time and money to implement. | Sales Becomes Customer Relationship Management - When you are selling a subscribable service, the game of gaining subscribership becomes one of balancing user retention vs. attrition more than a game of landing the 'big deals'. Sure, it's important to have a team out there pounding the pavement to sell your application - i.e. getting subscribers in the door - but the real thrust of the new sales and marketing in SaaS is customer relationship management. The equation becomes quite simple - keep retention rates higher than attrition rates and focus on bringing in new customers. |
Ease Your Internal IT Pains - This is a big one. Most of the last several points here highlight that SaaS offloads a great deal of IT pains incurred by software consumers in the traditional client/server model. This leaves IT personnel to focus on improving the day-to-day technical operations of your company instead of being called upon to troubleshoot 3rd party software or maintain aging infrastructure. | |
Redistribute IT Budget - by outsourcing software functionality to a provider, the enterprise realizes a cost savings in infrastructure requirements and IT personnel knowledge requirements. This allows the enterprise to focus on core competencies. It also means that the cost savings from using SaaS applications can be flat out saved, or reallocated to boost productivity through other services |
Drawbacks
This blog entry is a tabulated version of SaaS' Benefits and Drawbacks