All my posting about accounting SaaS along with some exciting and thought provoking conversations I’ve recently had 😉 has made me step back and refix my focus.
I’ve been posting at length as to the viability of one or another accounting SaaS businesses, it’s also important to take a step back and look at the entire SaaS phenomenon in isolation.
First lets look at Web 2.0, I’m no expert but Web 2.0 has been defined as having the following traits;
- the web becomes a platform (see blogging)
- data is the driving force (wikipedia)
- network effects are created by an architecture of participation (TradeMe)
- innovation in assembly of systems and sites composed by pulling together features from distributed, independent developers (a kind of “open source” development) (Technorati)
- lightweight business models enabled by content and service syndication (wordpress, technorati et al)
- the end of the software adoption cycle (“the perpetual beta”) (google apps)
- ease of picking-up by early adopters (facebook, youtube etc)
All this pretty much begs for a new way of providing software solutions to consumers. If we compare Microsoft office to Google Doc’s (it’s an unfair comparison given one is mature and one still very much developmental) we can see that the Google offering fairly and squarely fulfils many of those above Web 2.0 attributes.
So where does SaaS fall into this?And why is it a good thing? (and by extension why are SaaS providers a good investment?)
SaaS reduces the vagaries of software acquisition for businesses. By changing the paradigm from one of “spend a heap of money on a software package and hope it fulfills our requirements now and into the future” to one of “pay for this x sofware product on a monthly basis and use it while it is relevant and then move onto y product”
For this reasons SaaS helps to smooth the expenditure and capital requirements a business has in terms of software, allowing it to be an on demand, as required and only made while beneficial, expense rather than a large and potentially unneeded one.
Further businesses are moving towards an attitude that software administration has been too costly an area for too long. The SaaS model removes the onus of responsibility for software administration back to the software vendor thus having a double benefit;
1) reducing cost for the business
2) reassuring them that required new features or administration tasks WILL occur as they do not have a cost impact on the business itself – put it this way – if you are a SaaS provider and have 10000 enterprises that want a feature or need an admin function, it’s a no brainer. If a business owns a software package themselves they’ll be reluctant to absorb the cost themselves for the independent development required internally.
And again the environment has changed to one of performance. Businesses are now in a space where the solution has to work for them. Features and functions are very distantly secondary to the experience the user has with the product and the interaction experience.
So… bottom line is that SaaS is a revolution rather than a revolution but businesses need to regard it as such. I have been guilty in the past of thinking that, for instance, MYOB could simply port it’s client/server product to SaaS and it would meet the requirements of a SaaS model. I now do not hold this view – SaaS is much deeper than this and requires a conceptual view of the business model – one that includes networks, communities and other Web 2.0 finery.
Watch this space – it’s going to be exciting!