Future SaaS Development Invites Customers into Cloud

MBA (10/10/2008 ) Palaparty, Vijay
Software-as-a-service’s future will expand on customer/vendor partnerships, in which vendors provide programmable platforms that yield customized technology for customers.

The model presents opportunities for customers to guide their own development, while expanding vendor offerings.
“Future trends in SaaS include the ability to provide customer-driven software development,” said David Hultquist, vice president of marketing at Dorado Corp., San Mateo, Calif. “No software vendor can have everything but technology-wise, it will become a future need of SaaS. Customers will require classical benefits such as the ease of use in a monthly subscription format, but will also demand having benefits of customization.”

London-based web hosting provider Hostway said in a recent study that 72 percent of organizations believe virtualization will drive SaaS adoption. Furthermore, two-thirds of organizations reported plans to adopt SaaS within the next five years.

"SaaS reduces overall software license spending for larger companies, while helping smaller companies adopt enterprise-level software without the large upfront investment or the need to train staff to manage and monitor applications," Hostway said. A further 72 percent of companies are certain that SaaS will make their application usage more cost-effective because of reduction in software management costs, and the ability to eliminate buying too many or too few software licenses.

"Furthermore, around half of all organizations believe that it will enable smaller companies to use enterprise-level software without the need for large upfront investment, or having to train staff to manage and monitor these applications," said Neil Barton , director of Hostway. "Given these benefits, it is unsurprising that two-thirds of organizations are planning to adopt SaaS within five years."

Hultquist said benefits of SaaS include vendors' ability to better project revenue streams and business, helping companies realize cost benefits. He said the adaptability of SaaS can more appropriately respond to market fluctuations.

“Years ago we had to do a lot of education against a built-in bias among companies that said they require all technology to be in-house," Hultquist said. “That has changed quite a lot, and we’ve observed not completely universal but growing awareness of SaaS and its benefits. The overwhelming advantages of setting up and running quickly compensates for the lingering feeling that some companies want all software in their own control.”

To deal with such reservation, along with a slow business market, companies such as Dorado have revised their marketing strategies to acquire customers in a piecemeal approach.

“We are helping companies in a phased approach in which they can move part of the business to our technology and ramp up over time," Hultquist said. "They realize quicker ROI this way and can do that without having to take an entire year to make one great big decision. The ROI will demonstrate itself.”

From a data management perspective, Hultquist said SaaS vendors are better able to meet customer requests in both managing and securing data as well as running data and formatting it as requested. “Meeting the changing regulatory landscape is a good example of companies requesting data in different formats—even management reporting,” he said.