Who is Using Software-as-a-Service?

Software as a Service (SaaS) has been touted as the answer to I.T. Manager software administration’s nightmare. Simply stated, SaaS is a replacement for business software that is not available for a paid subscription model when you travel for software use. The use of subscription software is most often via the internet to software vendor websites that are hosted on their computers. For I.T. Manager, the benefits are many; no hardware to buy or maintain, no software patches and updates to apply, no complicated licenses to decipher, and no deployment of applications to corporate PCs and laptops.

So who is actually using SaaS? The frugal who understand value, of course.

This author has been actively selling software services to small and medium businesses and has noticed this interesting trend. While everyone has heard of the poster children of SaaS: Google Apps, SalesForce.com, RingCentral.com, and so on; the true success of SaaS will be the proliferation of many niche products that are migrating to the subscription payment model. This author has found that thrifty organizations are most open-minded to the value of membership software. Concentrating marketing and sales on these groups yields the most results.

Early Adopters
Being frugal does not mean being cheap. Quite the opposite, it’s knowing how to stretch a dollar the furthest and be willing to spend that dollar. It’s no surprise that the early adopters of SaaS are the small technology and start up companies. Entrepreneurs are never shy about trying new ideas and rewriting the book on how one should run a business. If there is a service that can stream line running a business, then it’s a no brainer. SaaS products often replace the need for a dedicated employee for routine business tasks. FreshBooks.com is a great example; a small company certainly can save time, money, and possibly a new hire when implementing this totally online invoicing system.

The Surprise Users
Industries that have been around for a long time, manufacturing, transportation, and so on, are embracing SaaS. One can not judge the tech savvy level of an organization by the size of its I.T. budget. Traditional companies often have small I.T. departments, but they understand and appreciate technology as much, if not more, as their larger I.T. department counterparts. They have been taught over the years, over the decades, the success to technology is evaluating the actual cost and benefit to any capital purchase. Let’s give them a star for following common sense.

Who’s Not a Fan
Self proclaimed sales experts often teach to pursue organizations with the largest budgets. This least cerebral approach dictates that if someone spends millions every year on software, they would have no problem parting with a mere few thousand on yet another software product. This is completely false within the real world. Large I.T. departments, relative to any size company, are often the least likely to pursue subscription software. There may be many reasons why, but essentially they boil down to two motives. Large I.T. departments are often mini software companies themselves. Teams of software developers, often with no decision making powers, easily dismiss reviews of software service products out of complacency for their own projects and desires to make the next cool app themselves. SaaS often leaves a sense of obsolescence for the team that should have already been providing this service.

Secondly, organizations with large technology infrastructures often fall under the I.T. black hole mentality. This is the paralysis of everyone else in the company to shut down common sense and channel all technology related thoughts to the I.T. Department. Bureaucracy here kills innovation.

Software-as-a-Service is many things. This is a new approach to software, as you might expect, with service as its main benefit. Services for managing software, and sometimes building it, have been handled by internal I.T. department. This is a service that can now be purchased as a subscription such as fees for your favorite country club. Why build and maintain your own golf course when you can play rounds whenever you want with your club membership?