April 21, 2010
By

Jeffrey Kaplan

I’ve been talking about the benefits of Software-as-a-Service (SaaS) for so long it always amazes me when I have to go back to basics to help the uninitiated understand the fundamental benefits of today’s online, on-demand software solutions.

So, here’s my quick list of the top ten reasons why business and IT decision-makers should start taking advantage of today’s leading SaaS solutions:

1. Limited risk: Most of the top SaaS vendors offer a 30-day trial or you can negotiate a pilot program to test how their solutions meet your needs.

2. Fewer upfront costs: Unlike traditional business applications which require users to acquire a perpetual license fee and make a capital investment in servers to support the applications, SaaS solutions can be obtained on a pay-as-you-go basis. However, you may have to pay for the first year subscription up front.

3. Rapid deployment: SaaS vendors can roll out their applications whenever you’re ready. No need to wait for servers to be deployed or staff to be hired and trained to get a new app up and running.

4. Lower Total Cost of Ownership (TCO): Not only can organizations avoid the upfront costs of traditional software perpetual licenses and servers, but they can also redirect their limited inhouse staff from the tedium of ongoing support because this burden falls on the SaaS vendor. This helps to reduce the overall TCO of SaaS solutions.

5. Greater Utilization: Because SaaS solutions are designed with the end-user in mind, they are more user-friendly and generate greater utilization rates than traditional, legacy applications.

6. Better Reliability and Security: Despite prevalent concerns about the reliability and security of SaaS solutions, the truth is that there have been far fewer service disruptions or security breaches among SaaS vendors than in traditional, on-premise software environments.

7. Easier Integration: Because SaaS solutions generally rely on a common set of web service protocols and application programming interfaces (APIs), they are easier to integrate than traditional, on-premise applications. However, it can still take specialized tools and skills to fully integrate SaaS applications to legacy applications or data sources.

8. Quicker Access to Innovation: The multitenant architecture of SaaS enables users to more easily obtain software updates and upgrades than their legacy software counterparts because every user can share the innovations of their peers without having to worry about the enhancements disrupting their unique configurations.

9. Shared Benchmarks and Best Practices: Once a SaaS vendor attracts a critical mass of customers, they can aggregate the non-proprietary activity data from their customer base to create valuable benchmark data which can give their customers useful insight into industry best practices.

10. Vendor/Customer Alignment: In the past, the idea of vendor-customer ‘partnerships’ was an allusion. Once a software vendor sold a customer a perpetual license for their application, there was little incentive for the vendor to ensure the customer’s satisfaction and success. The subscription pricing model underlying SaaS, puts more pressure on the SaaS vendor to ensure its customers are happy with its solution to increase the likelihood of renewals, service expansion and referrals.

While these value propositions may seem simple and self-explanatory, they are essential to the success of the SaaS movement. Fortunately, Datamation and THINKstrategies’ recent SaaS Survey also shows that this formula for success is working,

• 84.8% of our survey respondents using a SaaS solution said they are very satisfied.

• 80% said they would renew their services.

• 61% said they would expand their use of SaaS • Nearly 70% said they would recommend SaaS to others.