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10 Strategic advantages of SaaS business models

Ben Obear

Software as a Service has become one of the more popular business models in the entire IT landscape. With growth coming in at nearly 60% annually, the market for SaaS is replacing the more traditional app landscape and has will become the dominate model in the next few years. Here are 10 reasons why you should consider making the change in your business today.

1. Low-Risk Pay Model

In a traditional model, the buyer of your application pays for the product up front, with the only information they have on the product coming from demos and reviews. This leads to risk for your potential clients. And if they aren't satisfied, they have already invested a lot of money in you.

With a SaaS development company, they pay no upfront costs. Instead, they can use your product one time and unsubscribe whenever they want. This means they are assuming much less risk and will be more likely to invest in you.

2. Anytime, Anywhere

Businesses today need fast access to their data. They need to be agile and flexible to expand and their networks as needed. With a traditional model, they could be stuck in licensing agreements that limit them to a certain amount of computers to install your application on, limiting their ability to grow their team as needed. SaaS eliminates this problem by being cloud-based and flexible to the customer's needs.

3. Streamlines Updating

One of the biggest nightmares in your potential customer's IT departments is major revisions to your software product. They have to rollout updates on all of their workstations, slowing down their productivity and possibly causing some unintended hardware issues. SaaS lets you update your program on your end, eliminating the customer's responsibility to stay up to date. They are always on the right revision, because that process is completely out of their hands.

4. Multi-Device Compatibility

In the past, most businesses stuck to one platform for their entire office. However, with the invention of more powerful smart devices, such as phones and tablets, it is not unusual for a customer's team to be on several different computer setups. SaaS is completely OS agnostic, because it is run through browsers instead of direct applications, which gives your customer's the ability to use the devices they want to use, when they want to use them. Once again, flexibility is a huge advantage of the model.

5. Keeping it Customized

Traditionally, if a potential customer needed a custom operation within your program, it meant that you would have to create an entirely new version of your product to fit their needs. This is expensive for both you and the customer, and if a program out from a competitor fit their needs better, you could lose them as a customer altogether. SaaS can allow you to adjust your program to fit your customer's needs at a much cheaper rate, and with allowing the client access to the basic APIs of your product, they can do their own custom work with their own IT department.

6. Keeps Your Income Predictable

A steady income from subscriptions is a much easier to create a future income model off of than pay per license sales. It also allows you to monitor your current income much more closely, by allowing you to look at your current invoicing and see when clients are up for contract renewal or expiration. If you have investors, this knowledge is much more reassuring than forecast created on potential one-time sales.

7. Keeps the Pirates at Bay

Software piracy was a nightmare during the first part of the century. Different schemes were tried to prevent, including CD keys, online registration, and other means, but in the end the pirates always found away around them. Not only that, dealing with these security measures tend to be a hassle for legitimate users of your product, which can be a turnoff for them even purchasing the product in the first place. The SaaS model makes it to only known entities can access your product, since the product sits only on your cloud-based servers instead of on their computers.

8. Make Sales Even When You Aren't Selling

Your software is on the internet 24 hours a day, 7 days a week. You can create a sales portal that allows potential clients to sign up for your product and access it immediately, without having to install anything on their end. This means that you can make sales without even making contacts or having your sales team out in the field. While you will still need to be out there establishing your market, being able to let a Google search make a sale for you is a bonus feature and a nice surprise of extra revenue.

9. International Expansion

Getting a traditional application into foreign markets is extremely difficult. It means mobilizing a sales team in the area or going through a re-seller to get your product out there. SaaS internet based model means the only thing you need to do to get a foreign company's eyes on your product is to create advertising and directing to them. For them to sign up for your service, all they need is an internet connection, making the process simple on both ends.

10. Disaster Resiliency

In a traditional model, a lot of the potential issues with software compatibility and stability falls into the lap of the end-user. For example, if Microsoft issues a security update and it causes severe problems with your program, even if you issue a hot-fix, your customer's might not get the update on time. Their entire project can be put on hold, which is a disaster for both you and especially them. With SaaS, the point of failure is much smaller, since the bulk of the processes are done on your servers, which takes the disaster issues away from your customer. When there is a bug or a problem, you can handle it on your end and have the program back up and running immediately, keeping a potential problem contained to only needing to be fixed by you.

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Ben Obear
San Francisco