No brainer, this is what any SAAS industry person would say why a customer should buy a SAAS product ..actually a service ..over an on-premise software. Still, the adoption of SAAS is in its early stages. Why then the uptake is not that aggressive ? Variety of reasons is the answer ..

IT establishments have long known the perils and pitfalls of buying software and requisite hardware and maintaining these 24×7. Appliances eased this to a great degree. Still, there is need for some sort of a server/data center like facility, with power, A/C and networking. But you could put the box in, got your admin console and you can get started using the product. Upgrades were automatic or helped on by the vendor. But hardware does go obsolete and has to be factored. Virtual applicances that run on commodity hardware address this to great extent. For example, Java appliance vendor Azul now sells a virtual appliance/Java VM that can run on bare metal or any hypervisor.

Be it appliances or on-premise software still commercial establishments like to have control over their application and more specifically their data. The fact that the application and data is hosted somewhere makes many executives nervous. It is quite possible that fear is heightened by the IT manager who are used to being the custodians of the company?s software machinery. Once SAAS companies, explain the multi-tenancy and the data center security standards, this fear recedes to the background. But the application customization comes to the fore. Many companies do allow customization to a great deal but probably not to the same extent as on-premise software. Some like Salesforce, even allow uploading of data from other sources and creating reports joined with the application data and the uploaded data.

SAAS companies need to navigate these sensitive issues before making the deal. A quick customization, proof-of-concept, with the application customized to some extent for the customer goes a long way in convincing the customer. The customers IT can continue to be a partner in the process uploading user or any other raw data and downloading application data to their data warehouse or for any integration with other systems. There is still security and application administration to be done by the customer?s IT ? i.e IT can now focus on IT, instead of cutting software purchase/maintenance deals. No more, scheduling downtimes to install or upgrade software/hardware/appliances. There is no need to have engineers on call over the weekend/odd times to keep the system up and running.

(If you are thinking about soft appliances on the Cloud/IAAS instead of a full-fledged SAAS ..hold that thought, I will get to it share my views/opinions on it after this)

Surely, we can see the tide tuning in favor of SAAS software. Still, the major reason SAAS would be a easy sell is there is no ?Capital Expenditure?. You just pay for the service as you go. Maybe you can get a deal paying upfront for a few years. This is the bottom line folks..

So if the customers are convinced or can be convinced to buy a SAAS product/service why aren?t all software companies building or converting to SAAS .I will explore that in my next blog post.