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The real allure of SaaS

24th Apr 2008
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One of the claims most frequently made for software as a service (SaaS) is that it is cheaper than traditional licensing models. It's a claim that we can expect to hear more often as the recessionary clouds gather over head. But is it really that solid a claim? AMR Research recently came out with an interesting insight when it questioned actual SaaS punters.

AMR noted:

“We did not find any companies that have made the case for SaaS based solely on a favourable total cost of ownership (TCO) over on-premise software. We expect the CFOs that are signing the monthly subscription checks and new long-term contract renewals to start thinking, “Why didn’t we just buy this software three years ago?” In a tightening economy, however, the outlay of cash required to deploy a new on-premises software package will likely keep those CFOs signing those monthly checks for some time to come.”

So what is the main allure of SaaS?

“Speed in deployment and value was the most frequently cited benefit of the SaaS delivery model.”

The end result? Happy customers. Well, happier than most customers are:

“Customers have higher levels of satisfaction with SaaS vendors. Simply put, SaaS vendors are completely reliant on high renewal rates (or low attrition rates) in order to grow revenue. If renewals drop, the vendor must backfill new customers simply to remain flat. Thus, SaaS vendors have adopted a culture of superior service that is clearly reflected in conversations with their customers.”

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