Why SaaS is growing so fast-8Manage

2020-04-20

When Software as a Service (SaaS) was first appeared on the scene in 1999, there were plenty of concerns around issues like data security, latency and uptime. Was this new model really as dependable as running your own local licensed software? However, when the adopt rate of SaaS continued to grow，the commercial benefits outgrew concerns across most industries. And as the model matured, so did the usage.  In 2010 it became clear that SaaS was here to stay. 

Since 2010, non-engineering SaaS spend rose from about 10% to over 80%. The number of SaaS offerings and vendors have exploded along with this rise in adoption and spread throughout the organization. 

In the past decade, people found the following advantages of using SaaS: 

1.Cost -- The typical SaaS customer can enjoy plenty of financial benefits to using SaaS compared to traditional software. There is a manageable, predictable subscription cost which includes every aspect of service delivery, hosting, support, upgrades and more. The low costs are inherited from the fact that the service provider is able to share their hardware, testing and delivery costs across a large user base.

Let’s use the following example to illustrate the comparison of 5 year total cost of ownership of acquiring on-premises software vs. SaaS: The cost of acquiring an industrial-strength PPM application such as 8Manage Project Management Software(8Manage PPM) is at least US$20,000 for 10 perpetual user licenses and on top of it the buyer needs to purchase hardware, OS and DBMS and pay for the space and services in a data center to host the system.  The buyer also needs to purchase the application maintenance support from the application vendor which is average 15% of the application purchase price.  The 5-year total cost of ownership of the on-premises can be easily US$45,000.  However, the subscription fee of a Project Management Software application similar to 8Manage PPM is US$3,000 per year for 10 uses and Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and application maintenance support are inclusive.  Therefore, the 5-year total cost of ownership for the SaaS model would be US$15,000 which is about 1/3 of the total cost of ownership for the on-premises model.

2.Reduced Time to Benefits -- With on-premises solutions, it can be months, if not years, between the time a company licenses the software to when it is ready to use. As SaaS tools are cloud-based the customer can get an immediate benefit.

The SaaS deployment model can tremendously reduce the time to benefits because it solves the following two serious problems in our IT industry:
- IT bureaucracy in large corporations
- Hard for small business to hire and retain an adequate IT team

Since the above problems tremendously slow down system implementation using the on-premises model, the users have an eye-opening experience when it comes to the speed of system implementation using SaaS.

3.Automatic and free upgrade - SaaS providers upgrade the solution and it becomes available for their customers. Costs and effort associated with upgrades and new releases are lower than the on-premises model that usually forces the user to buy an upgrade package and install it, or pay for specialized services to get the environment upgraded.

4.Scalability – SaaS providers generally offer many subscription options and flexibility 
to change subscriptions as and when needed, e.g., when your business grows, or more users need to access the service.

Having an ability to develop and deploy quickly will let one have a competitive edge and also the ability to speed up the business benefits. Besides SaaS (even project management SaaS)costs less than the traditional on-premises software, it creates value to its users much faster and also offers companies the flexibility that is needed to bring in change when they need it.  Because of the reasons mentioned above, the SaaS adoption rate will continue to grow rapidly.

Would you like to know more about SaaS? Now you can apply for the free trial of 8Manage SaaS!