SAAS - A new way to deliver value

 

Photo by Joan Gamell on Unsplash

 

Software as a service (or SaaS) is a way of delivering applications over the Internet—as a service. Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex softw

The new delivery method which has been a buzz-word and has become a defacto request, to make the business grow in this era.

SaaS applications are sometimes called Web-based, on-demand, or hosted software. Whatever the name, SaaS applications run on a SaaS provider’s servers. The provider manages access to the application, including security, availability, and performance. This moves a lot of responsibilities to the SaaS provider than to the end user, be it security updates, compliance with regulator requirements, or even government policies in the location of business.

Change in consumer behavior

In the era of 5G, when we have good internet speeds, the possibility to use SaaS products has become a reality. Back in the days when someone had to do photo editing, had to use a high-end photo editing software, which would provide a ton of features. Customers have to buy the Highend hardware to support the software and then purchase the license and use them in that specific device. There were a few software that would need physical keys to make them run on that specific device. These would need an upgrade to the new version for new features. With the change in time, Now you don't require a high-end machine to run such photo editing tools, all you need is to log into a website, upload the photo, and can do all the editing needed. These types of services are SaaS products that most of the time work on a Job / Subscription basis. The users are required to pay per use or subscribe to it for a period. These remove the barrier of high investment costs at the start of the business, thus allowing businesses to pay as per their use/growth. Customers also don't mind paying for single use, if they are going to use it once in a while. This business model is a huge hit for a lot of once-in-a-while use cases.

Another scenario is a case where B2B services are used, a solution provider expertise the service in a single area, and provides it to scale across all businesses. For Example, Condeco software provides a way to book a workplace for working, across different corporates, This tool is adopted by many Corporates to book and release workspace by individuals. This is provided as a service by the Software company and takes care of running the interfaces ( APPS/ Websites ) for any specific organization. It helps both the software provider and the B2B clients to help run the business in a smooth manner. The corporates can focus the workforce to be more productive in their business than working on other projects which are needed but are not in their domain of work.

Small and medium businesses (SMBs) now can stay focused on growing their business. They often have limited resources, time, and expertise to spend on ancillary functions. There currently are numerous Software as a Service (SaaS) products designed and catered specifically to the needs of SMBs. These software services can fulfill the needs with minimal investment of both time and money. SaaS model enables SMBs to be part of their growth, in which the success of the SaaS companies also lies.

The growth of SaaS over recent years has been tremendous with a rapid pace of innovation. SMBs in particular have seen the cost, security, and usability benefits and hence contributed to the rise of the SaaS sector. This is one of the reason's the SMBs are able to gain business in space that was traditionally for big corporates.

Coming to the business part of the SaaS, SaaS allows SMBs to start with a lower investment for the services, They don't have to keep down a huge capital investment to use the services, these are done by SaaS providers. The SMBs use of service becomes operating cost, which is much lesser. Think of times when SMBs had to invest in hardware to support their on-premise installation, these would need more people and resources to manage and additional cost with real estate and power and cooling cost added to it. SaaS provider now owns all these, and charges a fee to the customers, Mostly subscription based. Hence it becomes important for the SaaS provider to see the success of the SMBs to make his business successful.

What is it in for SaaS providers?

The SaaS providers do look to have a lot of investment, they are running/paying for the hardware and hosting the software. That is not so, the SaaS generally work with ASP ( application service providers ) where they have a contract to provide the resources as and when they scale. The SaaS providers generally have the software running on the Internet \and allow the clients to connect to use it. This is generally a single piece of software that has the security features to have all their clients working on the same version of the software, allowing them to scale on a need basis. Generally adding users does optimize their business and brings better ROI for a small cost to resources usages. Applying cloud-native principles to their software does allow them to use resources optimally, thus keeping the costs down.

Way SaaS is preferred?

a. Opex vs Capex

The SaaS model allows businesses to put the software expenses in the Opex, which allows them to write it off, whereas Capex investment would need a long time to get the value out of it. Hence businesses prefer the SaaS model which allows them to start and use it with a small fee for usage. Businesses can invest the money on sales marketing etc, but to spend on ERP software.

b. Speed of Deployment

The business can start with the software in minutes than the month-long process in older times. All you need to do is to get a trial account to start the use of SaaS. Generally, you can evaluate and post use you can upgrade it if it gives you a satisfying service. This allows businesses to focus on their needs rather than thinking about how to get the value out of the investment made beforehand. Time is money is a saying, and the ability to start in a short time is the advantage businesses need. The success of the software is pushed back to the SaaS company, because if it's not easy to use or deploy, not fast enough to get the value, then businesses are going to move to the other SaaS company to solve their problems.

Future of SaaS

SaaS is seeing huge growth in recent times, thanks to the Pandemic, which has changed the way we work in the world. The SaaS has played an important role to support a large number of businesses to survive and grow even in the in unfavourable conditions. This makes business to have transactional based costs.

SaaS models move the problem of value creation from business to SaaS provider. It now becomes the interest of the SaaS provider to help the client business succeed in their business thus bringing revenue to the provider. Generally, the addition of customers generally adds a fraction of the costs to SaaS providers, thus improving their bottom line with the addition of more customers.

The SaaS revolution is here to stay as more companies continue to reap the benefits of customization, payment plans, scalability, ease of access, low investments, etc.

 

 



Note:
Opinions expressed are solely my own and do not express the views or opinions of my employer.