The Beauty of the SaaS business model.

Find something you love, and you’ll never work a day in your life.

Everyone’s been exposed to the clang of that cheesy sentence hovering above.

However, for those of us who truly love our jobs, that phrase resonates an undisputed truth. I am the Marketing Lead at Kodiak Rating, a SaaS (software-as-a-service) company aiding procurement professionals to know their suppliers with better business intelligence.

I love my job.

Not because I necessarily love what I do at the company (which I do by the way), but rather the value our company — and business model — provide to our customers. SaaS is a business model built upon, rather, altruistic ideals. Software may be the word often in focus, but the software is merely a means for providing relentless service.

SaaS is defined as: “Software that is owned, delivered, and managed remotely by one or more providers” (Gartner).

The days of glacial traditional on-premise software models, and their implementation teams, are long past due. SaaS offers customers capabilities that are unmatched by the likes of traditional software.

Businesses globally — within nearly every business domain — are facing a digital transformation.

SaaS vendors are, and will remain to be, at the forefront of the current technology shift. “Analysts from Forrester Research estimated the average market value growth at 56.2% annually and forecast that it will continue to burgeon by 2020 at a speed of 18.9% per year” (Chrzanowska 2016).

For some, the adoption of SaaS technology is already a reality. For those who remain unconvinced… that’s why this post exists!

This is: The beauty of the SaaS Model

I’d like to preface this post by clarifying that any, and all, the points made below exist to exhibit the benefits of adopting SaaS business model as a customer, not as a SaaS vendor.

Democracy at its finest

Software-as-a-Service offers a business model, and value proposition that mirrors democracy.

Let me explain.

SaaS is a business model highly dependent on the development of technology that finds a product-market fit. However, technology vendors (even if they’re domain experts) seldom have the exact business know-how in order to build the perfect one-size-fits-all product on their first try, and build actual value for their customers.

Insert democratic processes. In most SaaS companies, that function within the agile ideology and framework, customer feedback is a running faucet for innovation and improvement.

Don’t get me wrong. Customer feedback shouldn’t serve as the North Star for a SaaS product roadmap, but customer satisfaction should. Knowledge sharing, customer dialogues and customization are elements present within most SaaS companies. These are elements that make the model democratic, but also extremely valuable for both customer and vendor.

To further that notion, SaaS providers offer pay-as-you-go pricing models. Much like the voting process in most democratic republics; customers of SaaS providers have the ability to reevaluate, and reelect (purchase new) software providers every year or so.

Paying subscription-based licensing lowers the TCO (total-cost-of-ownership) for companies who adopt SaaS solutions. Avoiding the costs of technical maintenance, renewal, customization, consultancy, and implementation that occur in the adoption of on-premise software, easily highlights the lowered total-cost-of-ownership when adopting a SaaS solution.

SaaS “removes the large upfront license fees associated with on-premise solutions. It also allows the client to scale up and down their expenditure based on usage” (Towers 2017).

Shared Value

To further the point of the democracy of SaaS, as a business model, it’s important to mention the value and knowledge-sharing present within the user-bases of SaaS solutions.

As mentioned, customer feedback is crucial in ensuring a product-market fit, and building true value for the customers — utilizing SaaS based technology. That same value being fed back to the software vendor can be utilized to better the technology, but not just for a single user, but an entire community of users.

Business professionals, and experts, know what is needed to succeed within their roles at their organizations. Therefore, most consumers of technology know what they need from the technology and solutions that they’ll be utilizing as their work-tools for success.

Chances are, if a suggestion is made to alter and/or add an element of a SaaS solution by a customer, there is another customer who would benefit from the exact same alteration.

SaaS is a business model hell-bent of the concept of scaling together. This means scaling together in your individual function, with your team, with your organization, your competition and even your industry.

Leading into the next benefit…

Updates and Upkeep

As a customer of a SaaS vendor, you will reap the benefits of seamless, continuous and (often) free updates and upkeep.

After initial on-boarding/implementation of SaaS solutions, most vendors provide their customers with free and/or cost-efficient service and support. Customer success is a main focus for any successful SaaS business model, and success lies within direct lines of communication with service providers.

As for updates, SaaS is a model based “[…] on centralised service provision, [which] means that upgrades don’t need to involve your IT department at all. The likelihood is you won’t actually need specialist expertise to install anything, as that is all taken care of in the Cloud. The software can be updated by the host service all in one place, thus saving on costs for new releases” (Kienitz 2016).

So… You can stay up-to-date with the latest innovations offered by your SaaS provider, without breaking the bank or stretching your technical competencies.

Scalability/Flexibility

SaaS solutions typically function within the framework of cloud-based solutions.

For this reason, customers utilizing SaaS technology are able to work fast, agile, remote and with scalability in focus. Accessibility isn’t an issue when the hosting of software is decentralized to the cloud.

Teams can be half way across the world from one another, but work within the same solution without problem.

“Comparing with the traditional model, users do not have to buy another server or software. They only need to enable a new SaaS offering and, in terms of server capacity planning, the SaaS provider will own that” (Sylos 2013).

In layman’s terms: you don’t have to worry about the technological side of things, because the service provider covers those costs and responsibilities.

While you spend less time worrying about bugs and fixes in your software solution, you’ll be able to reap the benefits of rapid deployment, easy expansion, accessibility, user-friendliness and cross-organizational transparency.

Need I say more?

Until next week.

This publication is brought to you by author Sam Jenks, but also on part by Kodiak Rating — A Supplier Relationship Management SaaS functioning out of Stockholm, Sweden. Kodiak Community intends to challenge traditional business practices with innovative thinking and creation.