According to the latest report of IDC analytic and advisory company, global expenses on software for companies offered in the SaaS model will amount to 50.8 billion USD in 2018. So, it’s not surprising that the observed high dynamics of growth and prognoses encourage startup founders to select this business model.
Software as a Service is, briefly speaking, software offered in the form of a general accessible online service. A simple form and convenience allowed Saas to revolutionise the way of providing the software for customers. In this way, more and more software companies depart from the traditional distribution model to focus on cloud solutions. Why?
Providing software in the form of services has numerous advantages, both for producers and their clients. The business model of SaaS is based on remote sharing apps to customers, who are obliged to pay monthly fee for it. Thanks to this, at the sole start, costs of a user are reduced to the minimum, mainly due to a lack of high license fees and a lack of the necessity to invest in an IT structure. SaaS users do not have to have any advanced IT hardware, dedicated servers or administrators, supervising the apps’ operation. All responsibilities related with the app management, updating or backup are realised by the provider.
We should also mind that the SaaS model means rational benefits for the app developers. The most important of them is a simplified model of distribution, allowing remote sales, directly to customers, regardless their location. We should also remember that the discussed model allows a more simple scaling of apps as they are maintained and developed at one place Thus, providing applications in the subscription model enables higher profits and significantly reduces the rate of customers’ migration.
Advantages of the SaaS business model made majority of technological startups decide to such solution. Thanks to this, developers of mobile and online apps can distribute software to a large group of clients in short time.
What is more, they obtain real time feedback what enables fast introduction of changes. Developers can also, e.g. using cohorts, measure results of all introduced changes, thanks to which their products become more adjusted to requirements of clients, what translates into a higher probability of a market success.
To sum up, we can not be surprised that the business based on SaaS model is more often used not only by startups but also the market giants like Microsoft. This model is not only safer but also more perspective and predictable. The world’s leader in SaaS is Salesforce, which is the world’s largest provider of CRM systems and one of the largest software providers in the subscription model. SaaS services are also offered by other giants like the above mentioned Microsoft, but also IBM, SAP and Oracle.
As it was mentioned in the beginning, SaaS has been showing a great growth dynamics for many years now. At the same time, all prognoses confirm that this market will reveal a high capital capacity in next years. This is favored by, e.g. a large development of the Internet infrastructure as well as increasing society trust to cloud services.
Analytic companies predict that the share of apps offered in the service model will be systematically increasing. IDC estimates that by 2018, SaaS apps will increase to 27.8%, thanks to which, their value will amount to over 50 billion dollars. This model will be most popular among developers of apps for management of relations with customers, i.e. mainly CRMs. As it is estimated by Gartner, the sales share in 2015 of the applications offered in the service model can exceed over 50% of the overall value. And this is only the beginning…
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