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Sep 26 2008

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The Three Es

At the beginning of the year (see 2008: SaaS will soar, SaaS will surge), I wrote about Jeff Kaplan‘s predictions for the Software-as-a-Service (SaaS) market. Amid recent financial turmoil on both sides of the Atlantic, he has again been urging people to consider SaaS in an article The Three Es That Will Drive On-Demand Services that adds ecological concerns to economic and energy cost issues. For him the “three key drivers for continued growth of the on-demand services market” are ‘The Three Es’:

  1. The turbulent economy
  2. The rise in energy costs
  3. The fragile ecology

This explicit link between SaaS and the environment is what inspired us at BIW to start the SaaStainability blog earlier this year, and it is also something I hope will be discussed at next month’s Be2camp event in London (publicised on the UK’s Building website this week here).

Update (02 October 2008): Fellow SaaS analyst Phil Wainewright also believes that, in the current financial and credit maelstrom, “now is the time to press ahead with SaaS initiatives” (read SaaS and the downturn). He continues:

“If credit remains tight, then one of the first things businesses are going to cut is capital expenditure — either because they can’t stomach the risk, or because they can’t raise the finance. The upside for SaaS vendors is that those cash-strapped businesses will find the pay-as-you-go SaaS model highly appealing — especially if it helps deliver operational cost savings at the same time. So while the credit crunch seems certain to harm the front-loaded cost model of conventional software sales, SaaS should continue to grow by picking up some of those canceled projects. …

“Some of the best-known names in the SaaS business are going to show some short-term hurt as large enterprises cut back on subscriber headcounts, especially in financial services. But if the hurt spreads into the wider economy, SaaS could become a refuge that benefits from others’ misfortunes, finding opportunities from canceled big-ticket projects and other cost constraints. Unfortunately, not all SaaS players will have enough funding to carry them through, but those with a strong enough capital base or cashflow model will be well-placed to profit.”

Permanent link to this article: http://extranetevolution.com/2008/09/the-three-es/

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