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Decision Factors in Subscribing to SaaS

Subscribing to Software as a Service (SaaS) has its advantages over purchasing software, but to rely on these services is essentially making the Application Service Provider an integral business partner. Whether or not to use this delivery model of business applications, a small business can gain some insight into the reasoning from a service provider and a subscriber's point of view.

Overview

There have been and still are, ongoing debates about the viability of SaaS since the IT industry first conceived of the business model. From a service provider's viewpoint the question is the investment, rate of return and profitability of the application. From the subscriber's viewpoint it is a matter of trust in the service provider and projected presence of the company that offers the service.

This hasn't stopped more applications form hitting the market nor has the user base stopped subscribing. In fact, it appears to be growing. The concerns are legitimate from both perspectives but looking back at any technology innovations, there has always been skepticism and obstacles to overcome.

A Service Provider's Viewpoint

It takes time and investment to develop a robust and diverse application. The main questions being: is it a viable business model and when does it become profitable. The same questions were asked early on, when the first pc applications were being introduced as single purchases that ran on a desktop. Even those applications required an internet connection to get patches and updates or register the licenses and get support.

In providing subscribed access to an application and marketing it as SaaS, an Application Service Provider(ASP) has to consider the bursty nature of their consumers. To be diverse, an ASP has to offer an on-premise solution with off-premise extensions, or completely transitionable to off-site processing and serving. Competitiveness, more efficient business modeling and investor demands are key factors that determine the survivability and resilience of an ASP.

A Subscriber's Viewpoint

A subscriber wants to alleviate operations and minimize operating costs or sometimes needs a quick solution to get out of a jam. Those taking a long view have legitimate concerns regarding trust, reliability and performance. This is difficult to reckon especially when an ASP's rollout is relatively new or unheard of. On a long term basis, an ASP is essentially a permanent business partner; difficult to recover from should the ASP cease to exist or provide their services.

On a contingency basis, subscribing to SaaS is a lifesaver to small business. Use the service as it's needed and then unsubscribe to keep the costs down. On a long term basis, it's a judgement call. If you feel that the ASP and their service offerings are resilient then it might be a viable solution as an integral part of your business. Keep informed and subscribe to the ASP's news and notices and more importantly add it to your available options and contigency planning.

Whether or Not to Subscribe

It's a judgement call whether or not to subscribe to applications as opposed to owning software. Modern applications all have some components that are provided offsite and require internet access. There are also hybrid delivery models(Hybrid SaaS) that involve the owning the software with options to subscribe;giving the subscriber options to use both, or switch,

depending on their business needs. The SaaS delivery model is not new technology but a defined model of delivery. The IT industry is constantly evolving and with this becoming more efficient at quantizing and applying convenient labels to make it easy to identify concepts using acronyms and buzz words.

Making a Decision

The more unique an ASP's offering is, the more critical their service is to their subscribers. The more widely available a service from competing ASP's, the more opportunity exists to migrate should their be a disruption. When the service involves handling sensitive or industry compliant data,

the major concerns are security and reliability. Essentially it's a judgement call on a business manager's part. It helps to get a sense of the ASP's company, their direction and presence, and staying current with developments.

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