Is it the Best or the Worst of Times for SaaS?

I've been stating strongly that this is the best of times for SaaS.  In an economic downturn, companies should -- and do -- find a solution that requires no capital investment and little or no labor very appealing.  When you add the fact that it can often get projects started more quickly, it's easy to see why it's so popular. 

On the other hand, SaaS is part of the larger economy and is affected by the downturn, too.  Read what Phil Wainewright wrote about Digital Railroad's failture (they were a photo storage site for commercial photographers) and you'll see why even cloud users need a back-up scheme.

Others are concerned that companies will cut or freeze not just purchased software but all IT expenses, including SaaS.  Perhaps, when they're in the first throes of trying to figure out what's happened and what to do.  But then they realize that they're still in business and that means continuing to get work done -- as efficiently and cost-effectively as possible.  That's where SaaS shines.

I'd expect that we'll see some enterprise SaaS IT managers who were cold to SaaS discovering that it's more useful than they thought much sooner than we expected.  This won't necessarily expand the SaaS market in the long run, but it may make it mature more quickly.

SaaS also offers modern, sophisticated software that permits managers better insights into their business and better control without the long lead times and big investments of on-premises software.  This can be helpful to firms of any size, but especially to smaller and mid-market firms which might otherwise have to do without such help.

We'll have to wait to see how this turns out, but not, I suspect, very long.  SaaS offers quick results and I think we'll be seeing some of them fairly soon.

Comments

[Mike Dunham]

I agree Amy - good to see your thoughts. We've seen a downturn on the product development side - but I really think the smart product managers are seeing the opportunity. Where there is a market...

But it does take guts to develop new products during a downturn. No question - but if the product is filling a need, at a lower total cost with lower risk for customers, it is harder (not impossible) to fail. The argument for purchase is staring the buyer in the face, yelling in his ear. And if a product manager doesn't see it - chances are his competitors will.