It's known very well in the computing world that SaaS (Software as a Service) almost met its doom during the dot com bubble in 2001. While this concept was a revolutionary concept, it basked upon highly expanded expectations and boomed initially. When the dot com bubble burst, SaaS services came to a decline competing with most other new technologies which had an edge over it. However, after the dot-com bubble burst, SaaS regained its stature and has ever since marching forward, never looking back.
In the late 90's few people disagreed with the concept of subscription pricing along with the hosted delivery and outsourced expertise features. However, the applications present during that time were not capable of operating in the limited bandwidth environment of the Internet. Even the software vendors were not even slightly interested in tweaking their pricing models which was an all-money-up-front approach. The SaaS approach was basically a deferred revenue collection over the life of the customer and vendors needed serious convincing to switch in with the pricing model. The high-profile CRM vendors too which consisted of big shots like Microsoft, Oracle and SAP ignored and ridiculed the SaaS approach. Most of the vendors did not embrace this application software evolution at that time.
The SaaS products which belonged to the first generation CRM had their birth as point solutions. Some of the most prominent niche players consisted of UpShot and SalesNet. These solutions provided an application-specific solution to assimilate specific business needs, but were not useful or appealing to the customer in the broader sense. These providers had limited features in their products and also limited resources at their disposal. Hence when the market took a turnaround and competitors offered better products, they lost their importance and eventually vanished in to thin air.
This led to the advent of Salesforce.com, NetSuite, and the like who created intentionally-built SaaS solutions and marketed them as software subscriptions. These then formed applications have later helped the evolution of this business model and reap much of the profits and the industry's market share.
Major growth drivers for SaaS services have been:
1. Today’s world boasts of an omnipresent Internet access especially broadband access, online media solutions are flourishing extensively, while wireless access is growing tremendously too. Penetration rates are recorded to have reached 50% or more in most developed countries. Amazon, eBay and similar sites have created faith in people to do business online and have literally wiped out their hesitance in dealing online. People do business and communicate online extensively today.
In the late 90's few people disagreed with the concept of subscription pricing along with the hosted delivery and outsourced expertise features. However, the applications present during that time were not capable of operating in the limited bandwidth environment of the Internet. Even the software vendors were not even slightly interested in tweaking their pricing models which was an all-money-up-front approach. The SaaS approach was basically a deferred revenue collection over the life of the customer and vendors needed serious convincing to switch in with the pricing model. The high-profile CRM vendors too which consisted of big shots like Microsoft, Oracle and SAP ignored and ridiculed the SaaS approach. Most of the vendors did not embrace this application software evolution at that time.
The SaaS products which belonged to the first generation CRM had their birth as point solutions. Some of the most prominent niche players consisted of UpShot and SalesNet. These solutions provided an application-specific solution to assimilate specific business needs, but were not useful or appealing to the customer in the broader sense. These providers had limited features in their products and also limited resources at their disposal. Hence when the market took a turnaround and competitors offered better products, they lost their importance and eventually vanished in to thin air.
This led to the advent of Salesforce.com, NetSuite, and the like who created intentionally-built SaaS solutions and marketed them as software subscriptions. These then formed applications have later helped the evolution of this business model and reap much of the profits and the industry's market share.
Major growth drivers for SaaS services have been:
1. Today’s world boasts of an omnipresent Internet access especially broadband access, online media solutions are flourishing extensively, while wireless access is growing tremendously too. Penetration rates are recorded to have reached 50% or more in most developed countries. Amazon, eBay and similar sites have created faith in people to do business online and have literally wiped out their hesitance in dealing online. People do business and communicate online extensively today.
2. There also has been intensive and rapid improvement in application functionality. Online CRM systems are evolving from standalone contact managers to full-fledged CRM applications and in many cases, outperforming their decades-old client/server predecessors.
3. There has been severe backlash over the software licensing model as software vendors have a notorious reputation. Once they lock up a customer with a license, they do not care about the proceedings. SaaS services are much more accountable for satisfying customers after the initial sale. 4. SaaS has reduced the upfront cost and the overall risk for customers. With a modest investment under one’s belt, one can take benefit of the services and does not hold one with a non-refundable software license.