The SaaS Streak In Recession

'Recession' has to be the most prevalent word used across languages these days. While everything seems to be spiraling downward due to the gloomy recession cloud, nevertheless, there is a silver lining for SaaS (Software as a Service) vendors. These not-so-bright times have proved to be a boon for SaaS providers, who are witnessing an increase in the adoption of this platform. However, is it always going to remain this way? Let us explore the trend.

The Money Factor

Is it only the cost advantage, which is driving the adoption of SaaS? Ray Wang, vice president, Forrester research, says, "The recession is definitely driving interest in SaaS for various reasons like rapid deployment, pay-as-you-go pricing models and minimal initial IT dependencies. We see SaaS adoption increasing and doubling in usage from 2008 levels."

Microsoft’s Moorthy K Uppaluri, general manager – Developer and Platform Evangelism (DPE), gives us a varied point of view. "The whole notion of SaaS is not just about a software delivery model. Primarily, it leads to the business model changing to subscription computing. The charge here is not the licence cost but pay as you go. In times like this, it enables consumers to consume software in a more affordable way. This kind of economic climate has only given a further boost or velocity to the change that was already happening."

Arvind Tawde, CIO, Mahindra & Mahindra, has an opposing view when it comes to SaaS adoption. He says, "SaaS is not triggered by the recession condition. Applications, which define the strategic road of an organisation, are likely to be delivered on the SaaS model or the organisation itself will adopt SaaS as a platform. For example, we host a set of applications to be used by the group companies falling under M&M."

The SLA Dilemma

SLAs have always been an issue when it comes to this platform. Why is it so? Are SLAs always going to remain a hindrance when it comes to the adoption of SaaS? Wang says, "SLAs are the key. If you think about SaaS, PaaS, and the cloud at the core, these translate back to Apps, Middleware, and Hardware/hosting. SaaS provides distributed applications and reliability and SLAs are paramount because you are dependent on this service as a utility. If your SaaS system shuts down during a critical business opportunity, it means that all commerce has stopped. SLAs are the key and should be more than just about the time lost. The key hindrances surrounding SLAs is making sure they align with your business drivers. A key item in SLAs is not just response time but an estimated or targeted resolution time. That means it doesn’t involve just getting back to you, it’s about resolving a problem."

The adoption of this platform has evidently increased and along with it the adoption of certain SaaS applications. Souma Das, area vice president, Citrix, says, "SaaS is going to grow predominantly in the lower mid-market because that is where organisations, which are going in for IT for the first time during an early stage of business inception, are placed. For large enterprises, it will take sometime because they have already made a very heavy investment in IT infrastructure. They cannot just ignore their existing investment and go in for SaaS."

Where is SaaS headed?

If only the cost factor is driving the growth, then should one assume that the usage of SaaS will reduce dramatically after these tough times are over? A spokesperson from Kale Consultants, a SaaS provider for the travel industry, says, "Increasingly, customers are seeing value in innovative models that take care of technology obsolescence, reduce upfront costs and at the same time give them a best practice solution that is regularly maintained and updated by the service providers." Thus, we can safely conclude that SaaS is here to stay.

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Updated Date: Dec 23, 2008 16:29:00 IST