The SaaS Business Model Benefits Both Vendors and Customers

SaaS or Software as a Service business model in the IT industry is the delivery and management of any Systems in a subscription-based software via the cloud is on the rise and is considered the most thriving branch on the IT market. The traditional on-premise software model is quickly becoming a relic of the past. So, what makes the SaaS business model any better than traditional software offerings?

As SaaS is hosted in the cloud, updates only need to be applied from the provider’s end. Customers will always be current on software versions and have the latest features through periodic incremental updates, all of which is built into the subscription price. Contrast this with the often-expensive on-site software upgrade model, which provides less frequent updates, greater budgetary requirements, and often must enlist the help of a consultant to apply the upgrade.

To the IT companies themselves, SaaS provides stability and predictability. It is much easier to predict revenues basing on regular subscription fees. SaaS business model lets them monitor all incoming invoices, contract expiration of particular clients, changes of subscription plan and so on. The risk of sudden revenue decrease is also minimized.

As a SaaS vendor they do not sell a license for your software, they only deliver it to their customers on a pay-for-use basis or as a subscription based on use metrics. In SaaS models the cloud becomes a platform for data that is accessible only to paying customers. It declines the risk that someone would pirate their software, as they manage servers that host their data.

Benefits to Customers and Users

  1. Scalable (Reduced Cost)
  2. Accessible from any locations
  3. Automated Updates
  4. Personalization and customization
  5. Compatible across devices

There are no upfront costs related to purchase of a SaaS application as no license fee is required. Clients are not obligated to purchase a whole product. If a customer needs a piece of software for a limited period or for one purpose, he or she pays only for a particular time span. Subscriptions can be usually halted at any moment. Buyer’s risk is scaled-down to the minimum.

One of the biggest disadvantages of licensed software is its limited accessibility. Usually a license is dedicated to specified number of devices and you cannot use it on a foreign computer. With SaaS you are able to access it from every device with the Internet connection at any time. It increases your mobility and independence in working with a software.

When you buy a licensed software and then install it on your computer, you need to remember about updating it steadily. If you exploit a cloud software, all the updates are automated and deployed by a SaaS provider. You don’t need to download and install any patches for your applications, it gets done for you automatically.

Location is not the only advantage of SaaS when we consider accessibility. This type of software distribution model enables a user to access it from distinct devices. Therefore, it is even more convenient for a client to exploit software.

Products delivered in SaaS model can be easily adjusted to particular client’s needs. Most of such companies offer fixed subscription plans, however they also provide possibility to change settings and functionalities to meet customer’s needs more precisely. Naturally, price is individually settled in line with an customized software. What is more, many SaaS providers give an access to their APIs that enable you to integrate with existing systems.

As you can see, there are many reasons to start using the SaaS business model. The benefits aren’t just for the customers either, IT vendors will also benefit from the SaaS model. Whether you want to make the switch from on-premise software to SaaS or you’re interested in starting a SaaS business, keep these advantages of the SaaS business model in mind when you’re making important decisions for your company and your future customers.

FGV Prodata Systems ourselves is moving towards the SaaS business, beginning with 3 products that will be coming soon in 2022. The products are ProDesk (CRM software), ProMpt (Project Management Software) and ProILMS, the SaaS version of our very own flagship product ILMS, developed for the overall management of logistics and distribution operation. So, if your company is in need of any of these solutions, you know who to call.