SaaS: A Strategic Business Opportunity

February 06, 2013  

The SaaS model has become a meaningful trend in providing software to businesses, and it is not hard to see why this is such a compelling approach.

Few businesses want to invest heavily in servers and network equipment that typically have a functional life of 3-5 years before requiring replacement, or pay for upfront license agreements when the nature of their business is fluid. Why pay for 50 fixed user licenses today when tomorrow the company might only have 30 employees, or next year have a need to grow to 60 employees?

The SaaS or cloud model offers businesses the flexibility to grow, or shrink, as they require. SaaS offerings can be rapidly deployed, and if a SaaS offering does not work or is not used—it can be turned off quickly.

The demand for SaaS is growing exponentially. Some examples of the bigger players in the market moving toward SaaS include: 

  • Microsoft. Their biggest strategy shift in the past two years has been towards cloud technology. Based on published reports, 90 percent of Microsoft’s Research & Development budget (about $8 billion) has been devoted to cloud research and development. 
  • General Motors. In November 2011, the automobile giant selected Google to provide cloud-based email and collaboration tools to its 100,000 employees1
  • SAP. The leading global ERP firm acquired SaaS human capital management application vendor SuccessFactors for $3.4 billion2
  • IBM. Acquired SaaS analytics and social application vendor Kenexa for $1.3 billion3
  • Oracle. Its acquisitions of Rightnow, Taleo and Eloqua indicates how it is shifting its direction to be more inclusive of the cloud4.   

With the projected increase in the growth of the SaaS market you can expect to see a steady migration toward a hybrid IT environment. And of course the hybrid cloud provides the flexibility of in-house applications with the scalability and benefits of cloud-based services. 

The SaaS trend indicates that over time there will be less installed software as a percentage of deployments, moving towards more service and productivity tools and applications. This means that the IT requirements of a business will shift from management of on-site resources such as server maintenance, hardware upgrades and backups to SaaS and cloud-enabled solutions.

This presents an opportunity for MSPs and ITSPs. Businesses are going to need help formulating a strategy that includes SaaS. Our white paper, Understanding the Changing Landscape for IT Services, provides clear insight and actionable advice on how to navigate the dynamic opportunity that exists due to changes in technology availability and requirements of SMBs.

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