Why Software as a Service?
Software-as-a-Service (“SaaS”) delivers on-demand software functionality via the internet from a single application that is shared across multiple users. On Demand solutions require only a web browser for access, eliminating the need to install and maintain the software and hardware associated with desktop installed products. Furthermore, they replace the upfront licence fees and lengthy implementation cycles of traditional installed applications with a “pay-as- you-go” subscription based service.
Benefits for End Users
More Frequent Upgrades Software developers host their own applications, allowing them to update their software more regularly at a lower cost than traditional software companies.
Lower Cost of Ownership Maintenance costs are lower, no license costs and the lower distribution costs for the vendor are passed on to the consumer.
Higher Level of Service from Vendors Vendors must become more responsive to customer needs or they risk losing subscription revenues.
Benefits for Software Vendors
More Predictable Revenue and Cash Flows Customers pay for software by subscription rather than buying a license resulting in more certainty about future revenue and cash flow.
SaaS is Truly Scalable Software can be distributed rapidly, via the internet, to many new customers at almost no extra cost to the company.
SaaS Companies are Highly Valued due to capital efficiency, high profitability and the lock-in effect.