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Dec 05 2008

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Economic Climate Will Accelerate SaaS

The title of an online article, Economic Climate Will Accelerate Cloud Computing, is actually misleading (the content is all about Software-as-a-Service, ie: more “in-the-cloud” than “cloud computing” per se), but it makes some persuasive points about the attractions of SaaS in a recession:

“In an economic downturn, ‘do more with less’ and quick ROI behavior become the norms. But wait, isn’t that what open source and SaaS does? As budgets constrict, as headcounts lower – demands on IT will not decrease; they will almost certainly increase. Open source and Software as a Service will all bring IT staff – and end users – the abilities and cost savings they need and the innovation they want.

“… For example, a SaaS messaging and collaboration offering like 1&1 MailXchange costs between $24 and $60 per user annually, including mobility support. Consider that $1,250 is the total yearly cost of an Exchange account.*

“In a 10-, 20-, or 50- person company, SaaS and open source software can save between 80% and 99% of the current cost.”

Talking to a BIW client earlier this week who asked about the prospects of construction collaboration SaaS businesses in a recession, I found myself making similar points. I also talked about the low up-front investment needed to implement SaaS solutions, the flexibility of the subscription model (it can be turned on quickly, and off again when a project has been finished so that costs can be contained), and the growing financial resilience of the sector’s leading players: profitable businesses with a predictable flow of future subscription revenues from ongoing projects stretching five or more years into the future.

[* Similar figures were being quoted on eweek.com last month when application vendor Serena announced it would switch from Microsoft Exchange (costing $1m a year) to Google Gmail (costing $250,000). Of course, a lively online debate ensued about the exact costs and savings (see here, here and  here, for instance), but the bottom line was still that Google’s SaaS solution was less expensive.]

Permanent link to this article: http://extranetevolution.com/2008/12/economic-climate-will-accelerate-saas/

1 comment

  1. Anna Smith

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    A good hosted Project Management software that suits my EPM needs is called valleyspeak project server, which I found at http://www.valleyspeak.com. One of the main reasons why I like the software is the fact that I could continue to work in Microsoft Project 2007 while sharing my Microsoft Project plans with my teams.
    ValleySpeak Project Server is a hosted project management solution which can be used by Project Managers to publish, control and execute projects in real time, while continuing to make full use of Microsoft Project 2007.
    Because it is a hosted service, I did not have to buy expensive software or deal with installation and maintenance headaches. The functionality that I have with valleyspeak to manage my geographically dispersed teams works well for me. We also evaluated Basecamp and some other solutions but were not impressed.

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