Save Money with SaaS: Here’s How
With computers becoming small and inexpensive, the ‘timesharing system’ which dates back to the 1960s is now known as a form of cloud computing or SaaS.
The year 2000 observed the rise of software-as-a-service (SaaS) when Salesforce being the first SaaS startup promoted the “The End of Software” campaign for expensive enterprise software licensing models and adopted SaaS as its business model.
While Salesforce was initiated as a SaaS, Concur was started in the pre-internet era on the floppy disks and CD-ROMs shifted to become a SaaS business. Concur worked like any other packaged software business by selling out physical copies related to its expense and travel software as floppy disks and CDs, with its then market value of $18m. However, the company moved its business model to SaaS, offering software that just required a browser to work and acquired more than $600 million in annual revenue. Owing to its rapid growth, the company was bought by SAP and it’s now known as SAP Concur (a company that provides travel and expense management services to businesses). This marked the largest SaaS acquisition of that time.
Here we can see that the enormous success of Concur lies in transitioning from a traditional licensing model to SaaS.
Let’s compare both the models:
Ease of Access
SaaS doesn’t need to be installed; it can be accessed from any computer and needs only an internet connection.
Many Users
SaaS can be easily used by multiple users from anywhere in the world as compared to a traditional licensing model.
Service Performance
SaaS is more secure and reliable; you can easily recover information and data backups which is comparatively a diligent process in the conventional model.
Periodic Payments
SaaS is subscription-based software. Customers have to pay the monthly or annual subscription fee as compared to the traditional model where the upfront cost is very high.
So here’s how you save money with SaaS:
1. Just as mentioned above, SaaS applications run on a subscription fee, so you don’t have to worry about the large upfront cost of buying the license. This fee covers the cost of the software application, the hardware, maintenance, database, support, training, upgrades, and people services. Subscribing to a SaaS app can become effective if the people services are rightly associated. It’s on you — paying only what you use.
2. A surplus infrastructure cost is associated with traditional software. You contribute largely in terms of software maintenance, hardware repair, and system upgrades. With SaaS, you can be carefree with no incremental infrastructure costs.
3. SaaS has variable pricing models. There is no fixed rate. You get to choose the price as per your business needs, team members, and service usage, whether you require a single service or a range of features, the pricing model can be customized accordingly. For example, Slack adopts per active user pricing model, which means, users only have to pay for what you use, you are not charged for inactive users and in case if you have already paid for the users who turned inactive later, Slack adds prorated credit to your account based on the unused time.
4. The cost of the people’s resources is not defined at the time of deployment in traditional software which includes the monitoring, maintenance (network, security), performance tuning, and upgrading application cost, and providing training to the end-users. These costs can vary and can sum up between (50–85)% of the total cost for owning the application. While SaaS takes care of it in the initial stage when it charges the subscription fee.
Today, thousands of software-as-a-service (SaaS) apps are instantly available for any role in the workplace. Companies of all sizes are investing in SaaS because of its nature which makes it easy for SaaS providers to launch new features to their user-base.
If you’re wondering how much money you can save to power your business model with SaaS, book a free consultation with Psmorfia. We can build you customized Saas applications for your business and transform them into profitable software solutions.
