Less Cash = More SaaS?
Posted by Amy Dugdale on Tue, Oct 28, 2008 @ 12:14 PM
For those of you who know Nick, you realize that he likes to mix things up and keep life interesting (actually, he'd probably say "awesome," instead of interesting). In this vein, he has invited some of his fellow LiveOffice'rs, me included, to guest blog from time to time. My posts will focus more on the business value and economics of SaaS - and occasionally touch upon the media's coverage of SaaS and cloud computing. So here goes Post #1...
Less Cash = More SaaS?
The other morning I was on the elliptical trainer at the gym with the Bloomberg ticker flying across the TV screen in front of me (does anyone besides me think the art of "getting away" is lost even at the gym these days?!). Still sleepy-eyed and operating without my morning caffeine, all I could see was a single red streak of ticker symbols and red downward-pointing arrows. It was clear that this was going to be "another one of those days" - days that have become too much of the norm recently. Working in the SaaS industry, I started thinking about how we may be affected and so I asked myself ...
"Will the economy's demise lead to SaaS's rise?"
Having been in the SaaS business for the last six years, I realize this isn't the first time SaaS is being hailed as the little train that can, while the rest of the technology sector slows (just look at all the software and hardware stalwarts jumping on the SaaS bandwagon - they apparently got the memo from their accountants re: the recurring revenue model). But I also believe things are different for SaaS companies this time around and that this is in fact may be our promotion to the big leagues. The model is more mature, which provides us with a better chance than ever before to make a fair and accurate assessment of SaaS's viability during ...gulp ...a possible recession (or at the very least, a downturn).
What's different about SaaS this time around? The model, and its applicability outside of CRM, is finally gaining credibility within the enterprise and among industry visionaries and pundits alike. Even the national business press is on the SaaS train.
Consider the following:
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Rising media attention for SaaS and cloud computing - especially in the
enterprise IT trades (the toughest audience of all!)
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Plus, SaaS's predictable pricing model is increasingly attractive to cash-strapped companies, who by moving to a service are able to transform their capital expenditures on technology equipment into more balance sheet-friendly operating expenses.
What do you think? Will less cash mean more SaaS?