SaaS or ASP 2.0?

I have been tracking SaaS (Software-as-a-Service) developments, both because my own company is interested in exploring it, as well as the fact that I think this is going to heat up quite a bit. Those of you who remember ASP (Application Service Providers) days may have been brushing this aside as ASP 2.0, but that will be a mistake. One of the major differences this time is that SaaS can now rely on technology amalgamation that Web 2.0 flourishes on. Another difference that I see is that enterprises (small and large) world over have tried to use premised software (software they install and manage on their own premise) and have failed to get real ROI unless they invest a lot in infrastructure, training, and hiring. So now there is a need in the market for SaaS, unlike 99-2000, when ASP was more of a cool thing to do.

SaaS mantra is very compelling for small and mid-size businesses (SMBs) who do not want to invest a lot when they want a software service. SaaS enables a company to manage all the aspects of running a company:

And all this at ‘low monthly fees’ as these companies like to claim! But it is very impressive: no hassles of buying/leasing equipments, or even office space in many cases and you can run your company on a monthly basis. 

Interesting twist is that this holds true for enterprises these days too, because of the fact that most big enterprises work like conglomerate of multiple SMBs within them (divisions, BU, OU, etc) who would like such a flexibility rather than expensive upfront investment in premised software that requires approvals from IT, COO, and all other people who may not have a stake in quick availability of the service desired. This opens up large market for SaaS providers, and also provides them a way to tune their existing premised solution to SaaS offering since they get ready buyers who are used to their products.   

Given the fact that SaaS is new, it is exhibiting similar phenomenon to any other startup streams: there is a proliferation of me-too in all the services area, there are tons of industry pundits out there telling us how to build a SaaS offering, and recently I have started noticing ‘SaaS platforms’ that enable rapid SaaS solution creation and deployment. All this means that there are lots of opportunities if someone is looking for new business ideas.

If you want to keep track of SaaS developments, here are some good places to go to:

Also, do keep reading my posts, I plan to continue following-up on SaaS developments and provide my insights and comments. Let me know if you would like me to comment on some specific aspects (I am thinking of ‘SaaS platforms’ in my next post).

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