On Fri, 31 Jul 2015 00:12:26 -0400, Anthony D. Baye wrote:

> Anybody else have thoughts on the SaaS model?

Having worked for both a traditional software company and a software 
company that currently offers both SaaS and on-premise solutions, I can 
see why the SaaS model is attractive to a software company.

Recurring revenue helps you grow the business.

Traditional perpetual license models mean that the customer buys the 
product once.  They may have to license it for a number of users or 
servers, but ultimately, the cost is pretty low over the lifetime of the 
product.

That's good for the customer that doesn't want to continually upgrade.

Most customers, though, want the latest and greatest features and 
functionality - and a subscription model (which is common with SaaS 
products), done properly, funds ongoing development.  Anyone who has 
worked retail knows that the cost of acquiring a new customer is pretty 
high; the cost of retaining a customer is relatively low, as long as you 
keep the customer happy.  The SaaS subscription model works off that 
fundamental idea in retail business.

In order to retain customers, you have to listen to them and implement 
what they're looking for.  That's a lot easier when you can afford to pay 
developers a decent salary and can grow the development team (and design 
team - design is very important in software development, and a lot of 
companies fail to design well before implementing the product).

If you'd asked me 10 years ago what I thought of SaaS, I'd have said that 
I thought it was a scam.  Now that I've seen it up close in a company 
that sells with that model, and have had the growth trajectory explained 
by financial people who understand it *and* who understand how to explain 
it, I see the benefits, both to the company and to the customer and end 
user.

A loyal customer for a software company isn't a customer who buys once 
and never comes back - even if they never change products.  A loyal 
customer is a customer who continues to fund further development so the 
developers can continue to improve the product for the benefit of the 
customer.

Jim

-- 
"I learned long ago, never to wrestle with a pig. You get dirty, and 
besides, the pig likes it." - George Bernard Shaw

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