Examiner.com openly wonders if software as a service (SaaS) is the next tech bubble that will burst. The piece was written March 13 — a day after I asked if the MSP bubble would pop. But I think the Examiner’s views are painfully out of date. In fact, our own SaaS 20 Stock Index shows the SaaS market bubble burst in early 2008. Now, I think the SaaS industry is on the road to recovery and doing just fine, thank you. Here’s why.
Rewind to December 2007. NetSuite was preparing an initial public offering and just about everyone was busy hyping SaaS. But the bottom dropped out on SaaS stocks during Q1 2008 and we’ve yet to see a recovery.
Still, there are at least five reasons to keep the faith in SaaS:
1. For starters, SaaS works: Just ask any MSP (managed service provider) or PSA (Professional Services Automation) software company. The vast majority of MSP and PSA software companies — from Autotask to Zenith Infotech — have successful SaaS business models.
2. Entrepreneurs Don’t Buy Software: As more small businesses launch during the recession, I suspect most entrepreneurs will demand SaaS applications because they don’t want to buy, build out and manage dedicated servers. Think about it: When you need a new application you look for it online — from a service provider.
3. SaaS Can Be Profitable: Still skeptical? Check out Q4 financial results over at RightNow, the CRM SaaS provider. While financial markets were imploding and businesses cut spending, RightNow grew its Q4 revenues 18 percent and generated a profit.
4. Everyone’s In the Game: From Microsoft to Google, major software companies are launching, polishing and refining SaaS reseller programs for partners. Those partner programs will experience growing pains. But they will grow.
5. SaaS Is Simplified: Even small VARs focused on open source are pushing SaaS applications into Amazon.com’s Elastic Compute Cloud (EC2). Still skeptical? Check out some recent work by OpenBI and Levementum, two integrators profiting from Amazon’s cloud. And keep an eye on startups like JumpBox, which are offering a range of turnkey applications in EC2.
The next time someone predicts the SaaS bubble will burst, tell them it already did — roughly a year ago. Since that time, SaaS has done nothing but gain momentum.
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Posted In: Sales | Software as a Service and Hardware as a Service
Tags: | Amazon EC2 | Amazon Elastic Compute Cloud | Autotask | JumpBox | Levementum | MSPmentor | NetSuite | OpenBI | Professional Services Automation | RightNow | SaaS | Software as a Service and Hardware as a Service | Zenith Infotech
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Dreaming on a cloud – migration as an obstacle to cloud computing: an IT Skeptic Special Report…
The IT Skeptic will look closer at cloud computing in 2009 – the concept seems to need some skeptical scrutiny. Or rather the concept is a pointer to the future, but the vendor hype around the present seems on shakier ground. Quite simply the idea is…
SaaS is the way forward, I have been listening to customers moan about their multiple software running costs, license coss, maintenanct and support costs, the nightmare they go through whenever updates are up and suddenly sync is lost, worse, data isnt linked as expected. Backups that failed 3 months ago and they realised that when they need a restore…
I implemented quickbooks, Sage L500, Great plains, JDEdwards, Saleslogix, MME, etc etc et for over 10 years. And the frustration of integrating these were almost fully accepted. Then I met NetSuite and I started hoping again. 1 system to rule them all. Automatic updates, 99.9% run time, only 100 euros per user per month, no need for servers or backups. Administrators of CRM, ERP, BI, ECommerce, Calendar maintenance tools, project management tools were all replaced by the NetSuite administrator (a.k.a The One)
I decided I wanted to help customers across to the 1 system which has it all and keeps growing and growing, and costs as much as my employee’s mobile phone charges per month.
For those who seek control over their company through live global (Even multi-subsidiary) accounts, simply make contact with us at itscontrol.
Dom: Thanks for pushing this discussion forward. NetSuite is a member of our SaaS 20 Stock Index, so we follow the company closely.
My key question for you: As a solutions provider can you actually generate profits and build your company around SaaS offerings like NetSuite? Or is it a side business for you?
-jp