SaaS For IT Management
This blog is all about using Software as a Service (SaaS) for IT Management.
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Why Vendors Are Anxious About SaaS
Posted on July 2nd, 2009 2 commentsI just read an article from Jeff Kaplan at THINK IT Services entitled "Why “SaaS Sucks”… From The Vendor’s POV", and Jeff gave an excellent analysis of what makes vendors nervous about SaaS. From his article:
I just gave a keynote presentation regarding the state of the SaaS and cloud computing market at SoftLetter’s latest SaaS University in Chicago, where the challenges of developing and delivering successful SaaS solutions were once again brought home in the discussions among the software executives and SaaS professionals attending the event………
………It was during the session focused on the latest accounting rules governing revenue recognition in the SaaS model that frustrations among the established ISV executives began to boil over as they learned that:
* After making significant investments in (re)architecting their applications to be delivered as an ‘on-demand’ solutions,
* After building hosting facilities or selecting a hosting partner to deliver their services,
* After determining how to package, price and promote their solutions,
* After developing a service level agreement (SLA) or comparable legal agreement that clearly outlines the company’s contractual obligations,
* After convincing a committee of IT/business decision-makers to try their solution,
* After determining how much ‘customization’ they can do for specific customers without breaking the common SaaS application and underlying service delivery model,
* After accepting a fraction of the value of application in an initial subscription fee agreement,
* And, accepting all the responsibility for the availability, reliability, security and performance of their SaaS solution…
* The aspiring SaaS vendors then discovered they would only be able to recognize their subscription revenues on a month-to-month basis, decimating their traditional software revenue recognition models.This harsh reality is what has kept the CXOs of the legacy, on-premise ISVs up at night hoping that the SaaS and cloud computing movement would disappear or be derailed by a major outage that would send customers fleeing back to the comfort of their on-premises software and systems safely hidden behind the firewall. Of course, the opposite has been true and SaaS/cloud computing market growth is accelerating as a result.
I think he makes some great points here and I encourage you to check out his blog. The point is this: SaaS is here and it’s not going away….and that’s because the market is demanding it. Vendors are going to have to figure out things like customization and revenue recognition because customers are making them change their model.
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