An excellent comment over on Smoothspan regarding differentiating factors for SaaS vendors. Bob says;

…SaaS is such a corrosively disruptive business model that the incumbents generally can’t adopt it when an upstart comes along.  For all intents and purposes a SaaS and Perpetual License Vendor may as well be in completely different markets.  The Perpetual License company has to slit their own wrists to win by accepting monthly revenue instead of the big license payoff that is all recognized the month the software is sold.  It’s all but impossible for these companies to do it it.  The short term pain in order to achieve long term success is simply too great.

…..but having decent barriers to entry, especially from big established companies, is hugely important for startups.

It’s a great point (as Bob’s generally are), all start ups know that they need to gain market share to succeed, a SaaS delivery strategy insulates them from the competition and creates a reverse barrier to entry – one where the incumbents are blocked by their own strategies but new entrants are free to exploit the potential.

It’s a strong reason why a SaaS delivery model makes total sense for a startup – even before any discussion around SaaS being the way of the future.