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 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.]

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1 comment

    • Anna Smith on 5 December 2008 at 11:18 am

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