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Why is the multibillion dollar SaaS software market suddenly booming?


In the United States alone, SaaS (Software as a Service) sales are estimated to reach $21.3bn in 2015. This is up over 100% from 2010. Indeed, SaaS sales in 2010 were just shy of $10 billion and nearly $14 billion in 2011.

Not since the 2015 General Election in UK, when the polling companies realised the wrong way of gaining electoral insight was asking the same 15 men sat in the pub next door to their offices at 10am every morning for 6 weeks who are you going to vote for? has there been such an apparent dramatic change of thought.

So, what explains the upward trend in SaaS usage?

Firstly, it would be useful to dissect out exactly what SaaS is. SaaS, as stated before stands for Software as a Service - and as is the norm in many IT tech phrases, this nomenclature really does not do itself justice; it certainly doesn't describe the power embodied within it and how beneficial it can be to your business. We have all heard the term "cloud computing" where we access our chosen software over the web (via an app or browser), and ultimately this is what SaaS encompasses - accessing a piece of software over the internet or at the very least a network. No downloads required, no putting CD-Roms into your machine waiting for the various progress bars and 'nexts' and 'continues' for almost nonsensical blurbs and irritating mind-numbing beeps to end.

SaaS lets you use your software there and then, no questions asked.

So, tongue back out of cheek, why is this beneficial, and why is the traditional software market taking a $21 billion dollar battering this year due to the SaaS phenomenon?

Central hosting

Firstly, the software is hosted in one central location. This is clever, why? From you, the business user's view you do not need to concern yourself with mass installation on everyone's computer - costly, timely and with so many repetitive tasks - a bit risky. In fact, about 95% of the risk associated with traditional software is taken from you (bugs, IT support time, network issues, installation problems, costly updates and upgrades etc). With SaaS, your staff simply need to 'login' - you can leave the rest to your software providers.

From the host's (SaaS provider's) point of view, mass management of a single piece of software is ideal.You are bombarded with feedback, overwhelmed by user interaction, and you can quickly see, through masses of data, where bottlenecks are apparent and improvements need to be made. You can make quick modifications that are almost instantly rolled out, you can quickly update the software and provide attention-grabbing, revenue generating extra function for everyone without the need for mainstream advertising, and you have complete control of all users who utilise your product. Your product development process and marketing dominance is massively accelerated.

SaaS therefore reduces risk for both supplier and consumer and it also, importantly, promotes real time product development through high throughput user interaction analysis and data acquisition. These luxuries do not exist in traditional workplace software.

For these reasons alone, you can envisage the fiscal change that is upon us. Clever businesses and intelligent software providers are moving rapidly to SaaS.

Is there more benefit? Yep.

Integration and Collaboration

SaaS software is purposely built in, around and over networks; these being your local network among your four walls, and the internet, connecting your four walls to the SaaS provider. With this set-up comes the scope for mass integration and large-scale collaboration. What do I mean by integration and collaboration? Consider your spreadhseet software. You need to get your spreadsheet, with your highly impressive facts and figures to your colleague or boss. Let's do it......... "Save As"......"remember where you saved it"......"open your email package up"....."find the recipient's email"....."send the email"........."send another email with the attachment actually attached this time and make a joke about it"......"why is it stuck in my outbox FFS?!"......"hit mouse repeatedly"........"recipient finally gets it at the same time you are sat opposite them cursing".......they then need to send it higher up the chain and the circus begins again.

With SaaS, everyone is linked. You can easily share and access everyone's work without the hassle of emails - and - it doesn't matter where everyone is. As long as you/they have access to the internet, you are instantly connected to people that matter.

Compatibility with other software

"I want my Excel Spreadsheet to open in Candy Crush". Obviously that is impossible, but you get my point. Well - if you happen to be on the development team on a SaaS product, these types of scenarios are not uncommon. I have been asked the usual - "can i export to excel, print off a pdf from my business management system, send an image of that graph via my phone" etc but I have also been propositioned the unusual - "I need my phone to tell me the latest risk scores for operation X but only if they are in transit", "Can i text the latest sales figures to my accounting software and display the results on the office televisions after it has been translated by FTSE linked standalone financial data in the London office?", "Can I display the latest sales figures and track the movements of my sales staff on my tablet as soon as someone in the Hong Kong office leaves their seat?". All these are possible because as SaaS developers we link different software and tasks over a network, even if the initiating software is vastly different from the recipient software or interface. This would simply not be possible, at least in the same period of time, using the traditional method of software delivery.

The benefits of providing software over the internet is that they all share a common language - the language of internet communication - HTTP/SOAP/REST and JSON (not totally inclusive) and all good web architects are brilliant at linking software together using these technologies and APIs ( application programming interfaces). SaaS makes use of browsers extremely well where relevant. All browsers ultimately churn out their interpretation of HTML and various other techy type paradigms. This opens up the reality of cross-software-talk and cross-platform-talk because, essentially most software delivered via a browser and APIs leads to the same output. Imagine requesting a change to software you have just installed from a CD or from download onto your machine, and then asking for the provider to make it hook up to Candy Crush? With SaaS, all these things are possible (well, possibly not Candy Crush) but if you work with your SaaS provider, they can, in real time, integrate your specific instance of their software with other web based or non-web based software packages due to the common languages and interfaces.

Is there a downside to SaaS?

Yes, absolutely, there is one main one which I can think of, which if managed correctly is not a major issue, however you need to be aware of it:

Security - because you are sending and receiving data over a network, and usually via the internet you are open to data theft. However, there are quick fixes for this that minimise your risk. Firstly, always, without question access SaaS over a secure SSL/TLS connection, commonly seen by the "padlock" in the browser or HTTPS in your browser address bar, or over a secure VPN. Secondly, speak to your SaaS provider about what security measures they have in place. As a minimum they should have a multilevel login system, data encryption and regular data backups. Most SaaS developers and providers will have security at the forefront of their minds and you can rest assured that the security risk will be as low as it possibly can be.

In summary

SaaS is growing exponentially because it reduces the operational, financial and strategic risks for end user and provider, products (bespoke and overarching) are developed faster, solutions are fit for purpose due to real time feedback, it promotes collaboration, integration and efficiency, it is cheaper when all factors are taken into account and it satisfies the multi-location, multi-platform and multi-device demands of modern day business operations.


Risksoft blog user

Atlas Supplies 13-05-2015 16:52:33 (1565 days ago)

We used SaaS for our CRM and has saved us about 70% on software and IT costs

Risksoft blog user

Guest 13-05-2015 15:01:23 (1565 days ago)

Good post 'but' you could have described more how enterprise software is different than SaaS as many people don't get that? p.s. funny opening paragraph about the polls!

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