Software as a Service (SaaS) has become the go-to model for purchasing software in most industries. However, legacy vendors offering a subscription model are often mistaken for SaaS vendors, leaving the customer without the critical benefits that define SaaS. What are the benefits?
First, here's a quick run-down to differentiate the two:
Software-as-a-Service (SaaS) encompasses both product, product delivery, and financial/contractual aspects of the vendor/customer relationship. In addition, it affects cash flow. It usually also changes sales and marketing organizations and execution.
In a SaaS model, the customer “rents” the use of a software product, the customer has the right to use the software, but they do not own it. The product is hosted by the vendor or a third party. The customer has access to a continually updating product, and pays the vendor a subscription monthly, quarterly, or annually.
Subscription models typically mean that the customer installs the product as in on-premises software sales, but pays the vendor in increments instead of all up front. The vendor does not incur the cost of hosting or integrations with other applications. Moving to a subscription model is often the first stage for traditional software companies transitioning to a SaaS model.
If you’re thinking of moving to a SaaS model, here’s 5 major reasons why you should:
1. Lower Cost of Entry – Pay for what you need, without having to buy new hardware to host your new applications. The vendor provides APIs and performs much of the work to get their software working for you.
2. Pay as You Go – The ability to pay as you go provides a clear idea of what costs will be, and allows for much more accurate budgeting.
3. The SaaS Vendor is Responsible for Upgrades and Maintenance – Since the software is hosted by the vendor, they take on the responsibility for maintaining and upgrading the software while also ensuring that the application and its data is secure.
4. Integration and Scalability – Most SaaS apps are designed to support some amount of customization in the way you do business. As you scale with a SaaS vendor, there’s no need to invest in server capacity and software licenses.
5. Higher Adoption Rates – SaaS apps are accessible via familiar web browsers, so they tend to have lower learning curves and higher adoption rates.
With the market continuing to see further growth, the time is now for companies to transition to a SaaS model. The competitive edge gained by companies that are leveraging SaaS cannot be ignored. Companies that haven’t adopted this model will be at a significant disadvantage to those that have made the migration.