From the IT Examiner: SaaS is poised to expand

In a downturn there is always opportunity.

Enterprises today face enormous pressure to cut IT expenses. That takes the form of layoffs, lower capital expenditures (capex), and fewer strategic application initiatives. Even when an enterprise chooses a solution, time to market can get dragged out. And that hurts, because it delays payback.

But to us at TimeTrade this as an opportunity, because SaaS is a prudent choice for lean times. Aharon Etengoff wrote about it in Tuesday’s IT Examiner, saying 42% growth in SaaS is expected in 2009. He quoted IDC research director Robert Mahowald:

“Revenue from SaaS services will increase in 2009–2010 more than we previously estimated. SaaS thrives in down cycles, and as with the 2000–2001 downturn that gave Salesforce.com its start, the current freeze in IT and related Capex spending will help assure solid growth for most SaaS providers.”

SaaS is known to have two key benefits for enterprise adopters, but at TimeTrade I’ve seen a third. The obvious ones:

• Capex is eliminated, and there’s no longer any question that it consumes less IT resource. This means enterprises who adopt SaaS don’t face the traditional delays required to get capex approved, purchase servers, and schedule the application into their data center’s always-overloaded queue. Instead, SaaS providers provision the solution in their own hosting center. It’s ideal for lean times.
• SaaS provides much faster time-to-benefit because it comes up faster. The application gets in front of the customer quickly, which in turn shortens the horizon to achieve the original objective.

The third, though, is not so widely discussed: those factors mean whole new applications become possible through SaaS, enabling breakthrough revenue opportunities.

Case in point: Web self-service appointment scheduling. TimeTrade was born of the Web (during the dot-bomb downturn) and lives on the Web. The appointment engine that started out serving a one-man diveboat charter can today serve huge photography chains and massive retail businesses.

SaaS scales, and it lets customers tune their investment to the moment, conserving capital. It’s a lean and agile strategy. So I agree with IDC: as uncertain as 2009 may be, SaaS apps are the best bet in town. For good reason.

Ed Mallen is President and CEO of TimeTrade Systems.

Posted by ed.mallen