84 per cent of all software investments are currently made in Software as a Service (SaaS). In 2017 SaaS will generate 60 per cent of the public cloud turn over and within the next twelve months sixty percent of all businesses will be deploying SaaS solutions. These statistics clearly demonstrate that in future SaaS will completely change the business software solutions landscape and the software purchasing models. There is no doubt that the transition from a traditional to a consumption-based software purchasing model will take place – the only open question in this respect is when.
The maturity of the business processes and how well IT departments and business units cooperate with each other are relevant factors in the transition process, since the respective roles are changing as well: the business units are gaining more and more influence in the IT decision-making and budgeting processes. The business units are buying the services they need directly from the suppliers, while IT departments have to take over the coordination and orchestration part of these purchases. This implies a redefinition of roles and a new way of working together.
The traditional way of purchasing software means buying licenses and service level agreements, provisioning and managing infrastructures and designing integration and migration processes. This often translates into a long and expensive process entailing many risks. Software updates must be run regularly and security measures have to be implemented, often triggering restrictions or errors. Therefore not only qualified staff, but also test and integration systems have to be made available. This is why the total costs of traditionally purchased software are often three times higher than the initially quoted license and service costs. Furthermore it is only a maximum of 15 percent of the functionalities of business applications which is being used – 75 percent of the existing functionalities are rarely used and very few users actually need them. So, why pay for 100 per cent?
However who is buying “genuine” SaaS, purchases a simple, customized service solution with one contract, paying only for the services that are being used on a monthly basis. Server, storage, network infrastructure or databases are all included and are no longer listed and charged separately. Updates are performed automatically, security reflects the quality of the SaaS provider and businesses are no longer tied to rigid license and service agreements.
Last but not least mobile end devices and apps are important SaaS drivers, since SaaS solutions are per definition web-based and are often enabling mobile apps, so that employees can work at any time, from everywhere and outside the office. Functionality overkill and overloaded user interfaces belong to the past and intuitive apps and transparent web interfaces avoid expensive user trainings. Users have thus a simple and comfortable way of accessing business applications and data. SaaS is developing at the same pace as the business does and proves to have the necessary degree of flexibility.
The SaaS revolution is knocking at our doors – are you ready for it?