More rapidly than any of its “as-a-service” cousins, Software as a Service (SaaS) is becoming commonplace among small businesses looking to cut costs, be more agile and ensure data security. In fact, Gartner expects that by 2016, more than 50% of CRM software revenue will be delivered by SaaS, growing at three times the rate of on-premise applications.* Forrester reports that the SaaS market will explode to $63 billion by 2014, up from a third of that number in 2011.**
Why? Lots of reasons, starting with much lower total cost of ownership (TCO). In fact 50% of respondents in a 2012 Gartner survey said TCO was the primary factor in their decision to buy SaaS-based applications. Cloud-based SaaS providers offer smaller businesses a cost-effective way to deploy enterprise-class software that they couldn’t afford otherwise. Replacing licensing fees, maintenance costs and periodic upgrades with low monthly fees means companies with small budgets can deploy the same software as the big guys now and leave their capital funds in the bank.
Another reason is the flexibility SaaS provides. Ordinarily, as a small business adds employees, it would have to purchase additional software licenses and deploy those applications to individual machines. With SaaS, it’s all done over the Internet. A few clicks, and the new employee has access to all of the applications he or she needs. Cloud-based SaaS applications enable employees to share information and work collaboratively on projects in different locations, using different platforms and types of devices. They’re simple to install and available anytime, anywhere; a small business with limited office space could easily allow employees to work from home, reducing real estate costs and offering an important job perk to help attract key talent.
Finally, SaaS offers small businesses data security that would otherwise cost a lot of money. Instead of buying infrastructure to back up hard drives, they can trust their data in ultra-secure cloud-based environments, where the latest security standards are automatically applied. The results are additional cost savings and tremendous peace of mind.
But is SaaS only for SMBs? Can’t larger companies also benefit from lower costs, greater agility and better data security? Seems rhetorical to ask, doesn’t it?
So, Why Not SaaS?
There really aren’t many arguments left for the shrinking pool of SaaS opponents in larger enterprises. Some say customization and integration are the biggest drawbacks, but more and more SaaS providers are offering better customization—such as templates or versions tailored to particular market segments—or the applications are customizable with web services. Others program in configurability, so users can pick and choose from layout options and features when they set up the application. And integration is a key focus for many SaaS providers, who recognize that easy integration with legacy systems will improve adoption. Replicon, for example, is solving customization and integration challenges by providing configurable templates of its timesheet software, and the platform is easy to integrate with virtually any third-party or proprietary financial or project management software through built-in connectivity or its RepliConnect® Web Services . This provides users with a great deal of customization and flexibility.
According to a special report from Vital Analysis, SaaS is maturing from adolescence to adulthood, and becoming equally attractive to both small and large businesses. The firm surveyed companies in 30 countries with 10,000 to 150,000 employees, and found that many have replaced one to 80 applications with a single SaaS solution, saving 50-60% over the cost of on-premise solutions. “Large enterprises are absolutely embracing SaaS applications and on-premise vendors should be scared,” the report reads.
Certainly, SaaS is here to stay and gaining traction. Small businesses aren’t the only ones benefitting, either. Soon large enterprises will succumb to its graces, and give up high-maintenance, expensive licenses in favor of a lighter-weight, simpler solution.