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SaaS Vendors Know Why You Buy - Do You Agree?
A detailed article on one of our favorite topics was recently published in the Summer 2010 Newsletter of the Softletter SaaS University Journal
. It talks about the reasons why companies purchase SaaS (on-demand) business solutions, or to be more accurate, why SaaS vendors think their customers by their products.The generally accepted reason why businesses buy SaaS is Capex vs. Opex (capital expenditures vs. operating expenditures) or in other terms, shifting software expenditure from capital budgets to operating ones. But Softletter's findings seem to demonstrate that the growth of SaaS has not been primarily driven by Capex vs. Opex, but by the more pragmatic considerations of functionality and simplicity.
In a 2010 survey, Softletter asked SaaS companies the following question: What do you believe is the primary reason your customers choose to subscribe to a SaaS system?
Here's what people said:
1 - Customers can quickly gain access to new capabilities and functions that they cannot obtain by purchasing existing software products and services - 40%
2 - Customers wish to replace existing licensed and/or client/server applications with SaaS applications to reduce overall IT operations and complexity at their company or business unit - 19%
3 - SaaS applications are counted as an operating expense, not as a capital investment - 16%
4 - Customers wish to replace existing licensed and/or client/server applications with SaaS applications to reduce the overall cost of software at their company or business unit - 13%
"Quickly gain access to new capabilities" is the most popular response given by SaaS companies, except for a few public companies where "Capex vs Opex" is stronger due to the fact that most of them are dealing with larger companies in established and successful SaaS application categories (CRM, project management, HR, etc). In these markets, "Capex vs Opex" is more compelling.
The Softletter full article breaks down the results by company size and sector and concludes that despite the strong reluctance to challenge the core client/server-based core applications status quo, the world is not standing still. New applications are needed to address new needs, and companies want the software industry to solve problems whilst not increasing overall IT expenditure or disturbing existing core back-end applications. According to SaaS vendors represented by the survey, this has been the primary reason for the growth of SaaS.
We at GetApp.com would also be very interested in hearing directly from SaaS buyers what they think of the conclusions of the survey. If you are reading this post from the business app store, you are most likely to be a potential purchaser of a SaaS solutions. What are your motivations? Addressing a new need with a solution that is not easily available from a traditional on-premises solution? Or perhaps that your CFO is not allowing further capital expenditure and your only route to address the business need is to use the credit card that corresponds to your discretionary operating expenses?
SaaS Vendors Know Why You Buy - Do You Agree?
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