SaaS and the benefits of a cloud computing world

SaaS (Software as a Service) almost lost the battle during the dot-com bubble of 2001. While the concept was new and indeed changed the perception of IT implementations and delivery at the time, the expectations were simply too high. The dot-com bubble destroyed SaaS but has since regained its stature and identity.

The concept of subscription-based software development took the world by storm as it promoted hosted deployment and reduced infrastructure costs for various small and medium-sized businesses. But not many were able to take advantage of the concept as the internet bandwidth was insufficient for the success of the SaaS delivery. Additionally, some software vendors weren’t very keen on adjusting their pricing models because an all-money-up-front approach suited them best. Subscription-based software licensing was based on deferred revenue collection, and it took vendors several years to transition to a SaaS pricing model.

The big players in software development such as Microsoft, Oracle and SAP initially ignored and ridiculed the subscription-based approach. But they too had to adapt to the changing demands of the market. The recent recession has further tightened the pockets of all companies, which has forced them to opt for the SaaS mode of software licensing.

Why are companies so committed to a SaaS subscription model?

Enterprises are more interested in implementing a subscription-based SaaS software development model as increasing IT budget constraints require them to make changes to their plans. There are many companies trying to steer their hardware and software maintenance costs towards SaaS. The subscription-based licensing model observed by analysts is a lucrative and cost-effective alternative with a monthly or quarterly fee that makes it easier for companies. In addition, there are no costs for software and hardware, which also makes it easier for small companies.

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With low upfront costs, subscription-based software development and delivery can help companies build newer applications without having to invest heavily. Nowadays there are many companies that offer SaaS based services. According to a recent survey, more than 11% of US government agencies are adopting SaaS and cloud computing technologies. The percentage of users opting for the SaaS pricing model is expected to triple over the next year or so.

Most deployments remain focused on various individual departmental initiatives. Providers provide various functions for the end-to-end processes of their end customers. Microsoft Azure and Amazon services are some examples of SaaS and cloud computing done right. Organizations need to choose the right implementation provider before finally choosing a service provider. The SaaS application development provider must have experience dealing with data security and scalability. Simplified deployment and implementation is critical to customer company success. Today almost every software development provider offers SaaS services with the successful pay-as-you-go subscription licensing model. Amazon, eBay and other companies have managed to keep people’s trust in online businesses. Reluctance towards online shops has decreased significantly.

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