Software-as-a-Service (SaaS) expert Phil Wainewright has been looking at a couple of reports from Forrester Research analysts reinforcing the view that “SaaS thrives in a cost-conscious, capex-constrained economic environment“.
In Recession Pushes Enterprises to Adopt SaaS, Phil firstly talks about Ted Schadler’s comparative cost analysis (Should Your Email Live In The Cloud?) suggesting that hosted email systems are more cost-effective for enterprises with up to 15,000 users (this, of course, would cover the vast majority of architecture, engineering and construction, AEC, firms; UK-based contractor Taylor Woodrow took the plunge with Google Apps last year – see post).
Phil then outlines the key points of a report from Ray Wang that recommends software buyers to Shape Your Apps Strategy To Reflect New SaaS Licensing And Pricing Trends:
- “Rich user experiences and intuitive Web 2.0 approaches reduce the overall cost of user training compared with fat-client user interfaces that reflect older user-experience practices.”
- “True multitenant SaaS users experience frequent upgrades with minimal downtime and minimal reduced testing resources — leaving business users time to get value from the software. “
- “Forrester’s Total Economic Impact (TEI) studies show that in most cases, SaaS delivers better TEI and lower cost.”
- “Constant innovation with quarterly and even monthly product updates deliver product road map predictability.”
Update (30 January 2009): Phil has written a follow-up piece (SaaS is surging in the downturn, says IDC) in which one of his contacts says recession SaaS adopters will be unlikely to return to on-premise solutions when the economy eventually rights itself. He agrees the tipping-point from conventional software to SaaS “is now a lot closer than anticipated. And once tipped, no matter what brought you to that point, it will be counter-intuitive to go back.”
But SaaS little help to recession-savaged AEC firms
Working for a SaaS collaboration vendor, I – and Phil – have been making similar arguments about the attractiveness of SaaS in a recession for at least a year (see related posts listed below). However, such overhead savings will probably only scratch the surface for most AEC businesses. They face major problems of basic survival. Saving small sums will not be enough. Entire projects are disappearing, staff have no work and many reputable businesses have gone into liquidation (eg: Pettifer Construction, and, just last week, listed housebuilder Oakdene).
Within BIW, it has been noticeable that the number of enquiries about vacancies has grown, often from individuals looking for new jobs after previous posts as document controllers, etc, have come to sometimes quite abrupt ends. Sadly, we cannot take such people on as we too have to be wary of the knock-on effects of the recession. The “SaaS is attractive in a recession” argument is not going to cut much ice in the heavily-impacted AEC sector.
The private house-building and commercial office sectors have been decimated, with numerous projects mothballed or even cancelled altogether, forcing contractors, consultants and suppliers to lay-off staff – sometimes 100s at a time (eg: Atkins, Corus) – even in previously buoyant markets such as Dubai. With fewer projects coming on stream, this will, I believe, also mean a slow-down in the previously healthy growth of many construction computing businesses (Autodesk has already started making 750 lay-offs across its divisions), and the main construction collaboration technology vendors cannot be completely immune.