SAAS Business Model
The SAAS business model refers to the delivery model of software-as-a-service that is completely online and the software is accessible in a Web browser. The model SAAS is applied at the application end using highly special application interfaces by end users. Such SAAS solutions are highly specialized towards one specific application goal in private domains or for supporting business processes. The business model offers a modern delivery model for many software applications in business today including Customer Relationship Management (CRM), Enterprise Resource Planing (ERP), and many others. As a consequence SAAS has been incorporated into the strategy of nearly all leading enterprise software companies today. The business model is best understood when considering the two following perspectives.
The first perspective is the software user perspective whereby no local desktop setup is required since the software is used as a centrally hosted solution in a remote data center. In other words no long installation process or download is required, instead just an Internet connection with a Web browser is used. The SAAS solution is accessed using a ‘thin client‘ (phone, tablet, laptop) via Web browsers or Apps. This enables (temporarily) use of ‘on-demand software’ and flexible payments depending on how long the software is really used. The business model thus includes much more flexibility for SAAS end users as with traditional software delivery models. If a large company is engaging in a SAAS solution there are further benefits such as no upfront investment in server or software maintenance teams.
The second perspective is the software provider perspective whereby the software is not anymore distributed physically to SAAS consumers. Instead the business model is driven by instantaneously deployments in clouds per consumers. The customer big data is stored in the cloud that could be an underlying PAAS or even IAAS solution. Also as data of customers is stored at the software provider side it is often analyzed in order to understand the SAAS consumer better and to offer more attractive SAAS usage deals such as optional plugins that might be interesting for a specific consumer.
Using trial and free registration of SAAS consumers enable more flexible discounts and automatic renewal business models for software providers. This in turn leads to a much more closer contact with customers.
SAAS Business Model Details
The following video provides more details: