Friday, May 24, 2024
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SaaS and the SMB Market

Why is SaaS so compelling, especially to SMBs? 

  1. It lets you use software that is often too expensive and complex to implement and manage in your own company. SaaS is implemented and managed for you, by professional IT resources you economically share.
  1. It offers you function immediately (or nearly immediately).  Software that might take six months or more to acquire and set up may be available in days or weeks, gaining you its advantages and value much more quickly.
  1. It permits you to share the use of software with whomever you are working with - your own employees, contractors, consultants, customers, and suppliers - your entire value chain, without needing to give outsiders access to your own IT system.
  1. It's flexible - most SaaS arrangements allow you to vary the number of seats you use and pay for on a monthly basis, so you can buy just the amount you need.  Since it's running on the SaaS provider's servers, you won't need to buy additional hardware or buy and install additional software as your needs grow and change. 
  1. While SaaS providers will often give customers a discount for signing annual or multi-year contracts, downsizing is always possible - and moving to a different solution or an in-house version of the software is also possible.

The variety of SaaS software is dazzling.  Almost anything that you might want or need is available in a SaaS version, from email to financials, from CRM to specialty vertical market applications.  

One startup, Xeequa, is running its entire company on SaaS software - except for a copy of Microsoft PowerPoint to generate presentations.  They can trade that in too, if they want to; several on-line presentation software products are now available.  You can read about it on their blog, .  The March 11 post contains a list of all the SaaS offerings they're using. 

But most SMBs don't throw out what they've already got - they are more likely to follow what Microsoft calls the Software Plus Services route, selectively adding SaaS to the applications they've already invested in and like.  Of course, nothing keeps them from deciding to replace an existing traditional application with a SaaS offering as they continue to review what they have, how much it costs, and how well it fits their goals. 

It's really important to get an accurate cost picture.  Be sure you're looking at the cost of hardware, software, implementation, operational management, upgrades, and support for traditional software, versus a fixed monthly or annual per seat fee (which generally includes all of that) for SaaS offerings.  Often, the real savings are in the need for fewer skilled people in your organization. 

I predict you will try SaaS this year (if you're not using it already).  I believe it is very likely you will have a successful experience as long as you select your SaaS provider and his offerings carefully and make sure not only that you find the software compelling, but that you also find the provider's reputation and resources appropriate for your needs. 

The SaaS ramp is rising.  The market is growing quickly.  In a year or two we'll look back and be amazed at how many choices we have compared to the "few" offerings (already in the thousands) in 2007.


Amy Wohl is a noted industry analyst and speaker. She has been commenting on, consulting to, and writing about the computer industry for more than 30 years. Her consulting practice focuses on emerging technologies and concepts and the markets they create. She has a particular interest in web-based concepts and software.