Tuesday, May 23, 2006

Benefits of Software as a Service

SaaS provides the following benefits:
  • Transferring IT responsibilities. A much larger percentage of the IT budget is available to spend on software, typically in the form of subscription fees to SaaS providers. The budget spent on hardware and professional services will be much less.
  • Leveraging economy of scale. Even accounting for the hardware and professional services costs incurred by SaaS vendors, customers can still obtain significantly greater pure software functionality for the same IT budget,
  • Selling to the long tail. SaaS vendors can offer solutions at a much lower cost than traditional vendors, not only in monetary terms, but also by greatly reducing the need for customers to add complexity to their IT infrastructure. This gives SaaS exclusive access to an entirely new range of potential customers that have always been inaccessible to traditional solution vendors, because it has never before been cost-effective to serve them.

Adopted from Architecture Strategies for Catching the Long Tail by Frederick Chong and Gianpaolo Carraro.


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