Welcome to the February ‘09 issue of Aspire’s newsletter! In this deteriorating economic environment, we bring the focus back to Software-as-a-Service and take a look at the changes that have been happening in this space over the last few months.

The current downturn has been harsh to IT vendors in general, and SaaS companies have not been spared. In spite of this, according to a new study by Forrester Research, SaaS providers are seeing double-digit growth in their subscription revenue. However, there are caveats as well: companies are moving cautiously with small SaaS deployments, short contracts and even month-to-month agreements.

In today's tough economic climate, SaaS can be a way to minimize capital expenditure and represent a predictable monthly operational expense to customers. It could also mean reduced IT overheads, quicker and less risky deployments and upgrades for them. Also, organizations would be looking at cutting down on big-ticket investments and subscriptions are less likely to be impacted during cost-cutting measures.

While moving to SaaS is a big decision that must be made only if it makes sense for an ISV, the fact is that ISVs facing declining or stagnant revenue streams can make use of this economic climate to start down the path of the SaaS business model and reverse negative trends. The significantly lower priced SaaS model can help slow or even stop customer attrition. In fact, according to Saugatuck Technology, a leading technology advisory firm, in late 2008, nearly half of all ISVs already had a SaaS solution besides their traditional offering or were developing a SaaS application to complement their existing offerings.

Besides, approximately 40 percent of companies worldwide were adopting at least one SaaS solution by year-end 2008. So, while SaaS may not be recession proof, it will certainly ride out the current storm, appeal to customers of all sizes and give ISVs a predictable revenue base, which can be built on in the days to come.

Insights

Right-engineering SaaS: Successfully deploying Software-as-a-Service models

Building SaaS products can be even more complex and time consuming than building enterprise systems. Hence, one needs to be really sure about the engineering aspects of moving to SaaS before making the transition. This paper puts forth some fundamental elements that can be used to right-engineer (not over or under-engineer) your SaaS product. It consolidates the technology strategies to build on-demand products and is the result of helping several ISVs transition to an on-demand environment.

Real-life examples of SaaS development success

An On-demand Concierge-supported Loyalty System

A concierge-supported loyalty solution provider wanted to optimize their product so that a single instance of it could provide all of their services to multiple clients. Aspire re-architected their product to enable SaaS characteristics and reduced the implementation timeframe for each client from 2 months to 1 week.

An e-Procurement automation product suite converted to an On-demand model

Aspire helped architect a database-driven on-demand solution for an e-procurement automation vendor that included multi-tenancy, configurability, security, internationalization, integration with third party applications and custom workflows.

Related “SaaS” Links

In a down economy, SaaS revenues rise

Can ISVs benefit by moving to SaaS in a Bad Economy

Is the Bloom Off the SaaS Rose?

SaaS Still On the Rise, Despite Down Economy

With Economy off the Rails, SaaS Picks up Steam

What happens to SaaS in a tough economy?