What is SaaS? Why SaaS is the Future.

What is Software-as-a-Service (SaaS)? The concept of SaaS was spawn from the old days of Application Service Providers (ASP) which were around since the early dot com days. However, this type of technology was not embraced due to the expensive cost of bandwidth and processing power. Today, bandwidth is cheap and processing power is plentiful. These technological changes have spawn a new breed of ASP providers called SaaS. Companies such as Google, Turbo Tax, and MicroSoft have started down this trend in recent year.

Traditional software companies such as MicroSoft, Oracle, Siebel CRM, ACT, GoldMine have felt the blow since SaaS providers like SalesForce.com were introduced. These low cost pay as you go model has created a new wave of competition for traditional software vendors. Every area of Information Technology will be affect by this new trend.

Due to the current economic trend, companies are looking for cheaper and faster ways to lower cost and increase revenues. These trends will continue as the economy swings back up. I believe this trend will forever change the software industry.

This change in corporate need will also push Business Decision makers to desire more data centralization. Descion makers will realize that silo operational system are not the key to success. Why? Because information silos or isolated systems only give one point of view and limit the decision making process.


I believe that SaaS is the alternative to purchasing and running your own software in house. I believe this new trend of low cost, pay as you go, highly scalable software solution is a major game changer for companies willing to embrace the future. Early adopters of the technology will win market share.

The key is in controlling fixed cost. Fixed cost is what defines how flexible a company is during economic hard times. By embracing a SaaS model, companies convert their fixed cost into variable cost. This is where everything is different. The power is in the hands of the business to shrink and expand cost in order to increase margins. I predict that this type of trend will continue going forward once decision makers realize the power of the SaaS model.



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