Marketing SaaS-Every New Customer Costs you Money, but you do Really Make it up on Volume Reply

The demand for SaaS continues to grow – from a 2012 worldwide market estimated at over $80 billion, leading analyst firms project that SaaS will continue to grow at nearly 19% per year on a compounded basis through 2015.

The Benefits of SaaS/Cloud Computing:

The primary benefit of Software as a Service is reduced cost for everyone involved.  Software vendors do not have to spend thousands of hours supporting users over the phone.  They simply maintain and repair a single central copy of the product for use online.  Conversely, customers don’t have to contend with the large up-front costs of enterprise licenses for word processing, spreadsheet, or other end user products.  The customer instead pays nominal rental fees to access the large central copy of the application software.

Platforms rely on support infrastructure that ensures maximum uptime, while updates, upgrades, patches and maintenance releases are taken care of as part of the ongoing monthly fee that is usually based on the number of named users

The “Cloud” has simply become a very handy, trendy way of describing all things that occur “outside the firewall.”  If it’s not happening on the customer premises, it’s happening in the cloud.

A clear advantage of the SaaS environment is how the march of progress is constantly managed.  Since all development is done off-site, any new versions, upgrades, patches and more, are completely in the hands of the software provider.  No more hassles with receiving new software packages, installing, testing, re-testing, adjusting / tweaking and finally launching a simple patch upgrade – all of that is done for your company by the software vendor remotely with SaaS.

With SaaS, the applications and the data used within the applications are all stored “in the cloud,” which means the user doesn’t need any additional software or hardware on-premise in order to use and access the applications, and often nothing more than a standard web browser is used.

In summary: cloud computing offers applications that are faster to build while lowering hardware costs and increasing scalability.  There is no client software to install, no client software to maintain and the user has access to real-time data from anywhere there is internet connectivity.

The Unique Benefits of the SaaS Model for ERP Deployment:

Some of the articulated benefits of the SaaS model, are that it offers a wide range of financial and operational benefits for manufacturing companies including but not limited to:

  • Low initial and predictable ongoing costs
  • Faster implementations and time to value
  • Reduced cost of ownership
  • Greater reliability
  • Improved support
  • Reduced IT complexity
  • Improved business focus

On the other hand —

The Downsides of SaaS/Cloud Computing:

The risk of Software as a Service and cloud computing is that the users must place a high level of trust in the software service provider that they will not disrupt the service.  In a way, the software vendor holds its customers “hostage” because all of their documentation and productivity is now in the vendor’s hands.  Security and protection of file privacy becomes even more necessary, as the massive Internet is now part of the business network.

When a business switches to cloud computing, they must choose their software vendor carefully.  There will be dramatically-reduced administration costs to use cloud computing software.  But, there will be an increase in the risks of service disruption, connectivity, and online security.  You have to be very aware of the security and privacy controls your cloud vendor has in place so you can feel comfortable they are supporting your needs.  A certified SSAE 16 Certified Data Center mitigates these risks.

***

The market pressure on software publishers to offer SaaS versions of their customer premise based enterprise licensed offerings has reached a crescendo.  With SaaS comes a unique set of challenges in managing customer acquisition costs in a model where new customers may represent a short term loss and a long term profit.  Every dollar a software vendor spends on sales and marketing in the SasS customer acquisition process should yield at least three dollars in revenue over the life of the customer relationship.  Palm Coast Technologies can help software vendors develop and implement an effective new customer acquisition strategy.

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