On demand versus on the shelf

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You often hear that SaaS is a more efficient way to deliver software value to the customer. The main feature people point to is “if you don’t need it – just don’t renew your subscription.” This “clouds” some other real benefits of SaaS.

Deployments are still required for SaaS, but on average they are much less involved and costly. Security is even a greater benefit of SaaS. An on-demand vendor has the greatest incentive to keep their service secure – it is called losing customers if they don’t.

One of my favorite stories is about a large enterprise (years ago) who refused to go Saas because of “data security” concerns. Ironically, thirty days after this discussion they had a major breach of their own IT operations which became public knowledge.

I believe one of the greatest reasons to seek out SaaS offerings centers around system administration. Turnover in IT operations is common these days, so why wouldn’t you want the vendor who knows the offering to be responsible for system administration?

As CEO of a SaaS company I am often asked why we don’t offer a lower cost on-premise version of our offering. I tell them I would have to charge more because we get more customer support calls due to increased system administration calls.

Having pointed out all of these indirect benefits – economics is still the largest reason to go the SaaS way. There were billions of IT monies wasted on what became “shelf-ware” - because vendors stuffed contracts with additional users or capabilities which were never used.

What I have found with SaaS is customers only order the number of users they need in the short term, because it is easy to add users later on. While there are still some “last remaining holdouts” on the movement to SaaS – it is now undeniable. A proof point is witnessing the “most secretive and data security oriented” large enterprises asking for SaaS!

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