What do you choose? Software out of the box or as a service?

Software as a Service (SaaS) instead of buying software from a box, what would you prefer? It might sound strange, but due to the economical crisis at once the SaaS approach is becoming more popular. Previously, this model used to be called ASP (Application Service Provider). Due to several reasons people were hesitating to use it. This is dramatically changing today.

As mentioned before, the concept or model is not new. For example in 2007 McKinsey published a very interesting article about Software as a Service. But still up to that moment SaaS was not so popular. The most common reasons not to consider SaaS that I heard when discussing this possibility with clients were concerns related to the reliability, performance and security of the application. People were concerned because all the information is being stored on a server in a cyber center.

Thanks to the improvement of data infrastructures, the decrease of bandwidth rates, and increasing trust in hosted solutions the situation is changing. More importantly, this situation is changing today because of the clear advantages that SaaS can offer.

For example currently my company GOYELLO is migrating several existing applications to a SaaS application. For our clients this results in:

• Decreased investment cost thanks to offering it as a hosted solution.
• Higher sales, because they are able to offer the application to wider customer base, geographical borders disappear.
• Shorter time-to-market, new functionality can be offered to every client as soon as it is ready.
• Lower maintenance cost, installation and support are being managed remotely. Hardly any visit at the client location is needed.

SaaS also provides several advantages to the end user:

• The user does not have to invest in an expensive application and is not facing high license cost.
• Implementation of the application is rather straightforward. A web browser makes the application run.
• They are not tied to costly maintenance contracts.
• They feel more in control due to the fact that they can cancel the contract more easily.
• The cost of the application usage gradually grows with the growth of the company, which gives a lot of flexibility.
• Every user gets access to functionalities that normally only would be available for big corporate companies.

Both providers and users of the applications are more cost focused today. As stated above, in the face of the current economic situation,  SaaS offers a solution that caters for the specific needs of the providers as well as the application users.